/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/190912.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, September 12, 2019, Vol. 23, No. 254 Headlines 360 INTERNATIONAL: Case Summary & 20 Largest Unsecured Creditors A NEW START: Ch. 11 Trustee Has Cash Access Until Sept. 30 ABSOLUT FACILITIES: Cites High Rent, Late Medicare Refunds for Woes ABSOLUT FACILITIES: To Close Orchard Park Facility AIR FORCE VILLAGE: Seeks to Amend Final Order on Financing Motion AMERICAN PARKING: Court Confirms Chapter 11 Plan AMERICAN TIMBER: Wants Cash Access Til Final Hearing, or Oct. 31 B&G FOODS: Moody's Alters Outlook on B1 CFR to Negative BARKATH PROPERTIES: Seeks to Use Byline Bank Cash Collateral BATH & KITCHEN: Hires S. Rozenberg & Associates as Accountant BEAZER HOMES: Moody's Rates New $350MM Unsec. Notes Due 2029 'B3' BROOKFIELD RESIDENTIAL: Moody's Rates New $400MM Unsec. Notes B1 CALCEUS ACQUISITION: Moody's Hikes CFR to B1, Outlook Stable CAROLINA CARBONIC: Gets Court OK on Cash Collateral Motion CARVER GARDENS: S&P Lowers 2013A Revenue Bond Rating to 'BB+' CERENCE LLC: Moody's Assigns B2 Corp. Family Rating, Outlook Pos. CHATTANOOGA MOTORS: Court Allows Cash Use, Bad Inventory Sale CHATTANOOGA MOTORS: Seeks to Hire Real Estate 9 as Broker CHENIERE ENERGY: Moody's Rates $1BB Sr. Unsec. Notes 'Ba2' CHENIERE ENERGY: S&P Rates $1BB Senior Unsecured Notes 'BB' CIRCLE BAR T GRADING: CCG Seeks to Block Debtor’s Use of Cash COMMSCOPE HOLDING: Moody's Lowers CFR to B1, Outlook Stable COMMUNITY HEALTH: Vanguard Group Has 5% Stake as of Aug. 30 CONCENTRA INC: Moody's Hikes CFR to B1, Outlook Stable CONCENTRA INC: S&P Affirms B+ Rating on Sec. First-Lien Term Loan COUNTRY MORNING FARMS: Gets Final Nod on Cash Collateral Use CPI INTERNATIONAL: Moody's Affirms B3 CFR, Outlook Stable CPI INTERNATIONAL: S&P Affirms 'B' ICR; Outlook Negative CRR INC: Seeks to Hire Norman Law Firm as Legal Counsel CUMBERLAND BEHAVIOR: Seeks to Continue Cash Use, Modify Budget DANCEL LLC: Gets Approval to Hire Udall Law as Special Counsel DETROIT COMMUNITY SCHOOLS: S&P Affirms B- Rating on 2005 Rev. Bond DONNELLEY FINANCIAL: Moody's Affirms B1 CFR, Outlook Stable DOUGHERTY HOLDINGS: Wins Interim Nod to Use Cash Collateral DOUGHERTY'S HOLDINGS: Seeks to Hire Pronske & Kathman as Counsel DOUGHERTY'S HOLDINGS: Sep. 17 Meeting Set to Form Creditors' Panel DYNAMIC PRECISION: S&P Alters Outlook to Positive, Affirms B- ICR EDGEWELL PERSONAL: Moody's Lowers CFR to B1, Outlook Stable EDGEWELL PERSONAL: S&P Lowers ICR to 'BB-'; Outlook Negative EMERGE ENERGY: Pownall Objects to Disclosure Statement ENCINO ACQUISITION: S&P Alters Outlook to Neg. & Affirms 'B+' ICR ENCOMPASS HEALTH: Moody's Rates Notes Due 2028/2030 'B1' ENCOMPASS HEALTH: S&P Rates $800MM Senior Unsecured Notes 'B+' ESH HOSPITALITY: Moody's Rates Amended Secured Loans 'Ba2' FACEBANK INTERNATIONAL: DBRS Assigns BB LongTerm Issuer Rating FIRST QUANTUM: S&P Cuts Long-Term ICR to B- After Zambia Downgrade FLORIDA MICROELECTRONICS: Unsecureds to Get Full Payment Over 5 Yrs FORD MOTOR: Moody's Cuts Rating on Sr. Unsecured Bank Loans to Ba1 FORD MOTOR: Moody's Cuts Sr. Unsec. Debt to Ba1, Outlook Stable FRANKIE V'S KITCHEN: Files Chapter 11 Plan of Liquidation GALA SERVICE: NYC Cab Operators, Lender Agree on Cash Collateral GATE 3 LIQUIDATION: Seeks to Hire D. Lamar Hawkins as New Counsel GATEWAY WIRELESS: Unsecureds to Get $300K in 60 Monthly Payments GEORGE WASHINGTON BRIDGE: JLL to Hold Public Auction on Oct. 17 GOOD NOODLES: Seeks Court OK on $200K DIP Loan, Adequate Protection HARLAN GROUP: S&P Assigns B- Issuer Credit Rating; Outlook Stable HARLAN MERGER: Moody's Assigns B3 CFR, Outlook Stable HEATING & PLUMBING: Seeks Authority to Use Cash Collateral HERBALIFE NUTRITION: S&P Upgrades ICR to 'BB-'; Outlook Stable HERTZ CORP: DBRS Confirms BB(low) Issuer Rating, Trend Stable INTERNATIONAL GAME: Moody's Rates New EUR500MM Secured Notes Ba2 JAUREGUI TRUCKING: Seeks Cash Access to Pay Normal Operating Costs KEHE DISTRIBUTORS: Moody's Rates 2nd Lien Notes 'B3' KEYSTONE FILLER: BB&T Seeks to Terminate Use of Cash Collateral LEGRACE CORP: Court Approves Stipulation with Providence Funding LIBERTYVILLE IMAGING: Diagnostic Center Seeks Cash Collateral Use MAGNUM CONSTRUCTION: Court Ok's $23.3M DIP Loan, Related Cash Use MAGNUM CONSTRUCTION: Court OK’s $3M Berkshire DIP Loan, Cash Use MEDCOAST MEDSERVICE: Court OK’s Cash Collateral Pact with IRS MERRICK COMPANY: May Continue Using Cash Collateral on Final Basis MIDWEST PHYSICIAN: Moody's Alters Outlook on B2 CFR to Stable MS SUPPLY & HOME: Health Care Provider Seeks Authority to Use Cash ON SEMICONDUCTOR: S&P Rates New $1.635BB Term Loan 'BB' ONEX TSG: Moody's Affirms B2 CFR, Outlook Stable OPTIMAS OE: S&P Cuts ICR to CCC+ on Weak Performance; Outlook Neg. PATRICK INDUSTRIES: Moody's Assigns B1 CFR, Outlook Stable PLAIN LEASING: Court Confirms 2nd Amended Plan PLAINS ALL: Moody's Rates New Sr. Unsec. Notes 'Ba1' POSTMEDIA NETWORK: Moody's Hikes CFR to Caa1, Outlook Stable PRIME SECURITY: Moody's Rates New $3.15BB 1st Lien Debt 'Ba3' PROGRESSIVE SOLUTIONS: Oakland Proposes Sale to Ecker Capital QUENTIN HIGHTOWER: Seeks Access to Comptroller Cash Collateral RESTAURANT BRANDS: S&P Upgrades ICR to 'BB'; Outlook Stable REWARD SCIENCE: Chapter 15 Case Summary REWARD SCIENCE: Seeks U.S. Recognition of Restructuring in China RON'S EXCAVATING: Allowed to Use Cash Collateral on Interim Basis RON’S EXCAVATING: May Use Cash, Final Hearing Set for Nov. 21 SHANNON STALEY: Use of Cash Collateral Has Final Approval SHOPFACTORYDIRECT INC: Cash Collateral Motion Abated SIGNET JEWELERS: S&P Downgrades ICR to 'BB-'; Outlook Negative SOUTH COAST BEHAVIORAL: Judge Approves Cash Collateral Stipulation SPECTRUM BRANDS: Fitch Rates New $300MM Sr. Unsec. Notes 'BB' SPECTRUM BRANDS: Moody's Rates New $300MM Unsec. Notes 'B2' SUNNY SHORE: Sept. 14 Public Auction of Sunny Shore, TI Interests T CAT ENTERPRISE: Court Approves Cash Motion Thru Oct. 10 TEGNA INC: Moody's Lowers CFR to Ba3, Outlook Stable TOLL BROTHERS: Moody's Rates Proposed $350MM Sr. Unsec. Notes Ba1 TRIUMPH GROUP: Moody's Affirms Caa1 CFR, Outlook Stable WEATHERFORD INT'L: Texas Judge Confirms Prepackaged Plan WEI SALES: Moody's Affirms Ba3 CFR, Outlook Negative WPX ENERGY: Fitch Assigns BB LongTerm IDR, Outlook Stable WPX ENERGY: Moody's Rates New Sr. Unsec. Notes 'B1' YCO TULSA: Has Authorization to Use Cash Collateral on Final Basis [^] Recent Small-Dollar & Individual Chapter 11 Filings ********* 360 INTERNATIONAL: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: 360 International, Inc. 415 Raywood Drive Lafayette, LA 70503-5059 Case No.: 19-51062 Business Description: 360 International Inc. manufactures power generators, vapor recovery systems, compressors, switch gear & control panels, AFR systems, catalytic converters, marathon motors/generators, and load banks products. The Company also provides engine specific preventive maintenance services. Chapter 11 Petition Date: September 10, 2019 Court: United States Bankruptcy Court Western District of Louisiana (Lafayette) Judge: Hon. John W. Kolwe Debtor's Counsel: Kent H. Aguillard, Esq. H. KENT AGUILLARD P.O. Drawer 391 Eunice, LA 70535 Tel: (337) 457-9331 E-mail: kaguillard@yhalaw.com Total Assets: $2,688,803 Total Liabilities: $1,784,518 The petition was signed by Jonathan Mann, president. A full-text copy of the petition containing, among other items, a list of the Debtor's 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/lawb19-51062.pdf A NEW START: Ch. 11 Trustee Has Cash Access Until Sept. 30 ---------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida authorizes John D. Emmanuel, Chapter 11 trustee of A New Start Incorporated, to use cash collateral, nunc pro tunc to March 14, 2019, through Sept. 30, 2019, to operate the Debtor's business pursuant to a budget. The budget for September 2019 provides for cost of goods sold at $32,562 and total operating expenses of $287,332. The U.S. Trustee filed an addendum for the period from August 2019 through Sept. 2019, which provides for total additional expenses of $65,586 comprising of additions on premium, a 10 percent variance adjustment, and professional fees application of three professionals. A copy of the budget and the addendum is available for free at: http://bankrupt.com/misc/New_Start_151_Cash_Ord.pdf The Court approves these adequate protection payments: -- on-going monthly payments to Creditor Fundation, not to exceed $6,000; on-going real estate lease payments to Cherules, LLC and EG Holdings, LLC for the Debtor's facilities without prejudice to the Debtor's future acceptance or rejection of the leases; and -- on-going equipment lease payments to U.S. Bank Equipment Finance for an office equipment. The hearing on the cash motion will continue on Sept. 26, 2019 at 10:30 a.m. About A New Start Inc. A New Start Incorporated -- https://anewstartincfl.com/ -- is a treatment center in Palm Beach County, Florida, providing outpatient treatment for substance abuse and chemical dependency disorders in adult clients. An outpatient program allows clients to continue working or attending school while receiving treatment and support from the company's program and team of specialists. A New Start Incorporated filed a voluntary Chapter 11 petition (Bankr. S.D. Fla. Case No. 19-13294) on March 14, 2019. In the petition signed by Eugene Sullivan, CEO, the Debtor estimated $1 million to $10 million in assets and $100,000 to $500,000 in liabilities. The case is assigned to Judge Erik P. Kimball. Angelo A. Gasparri, Esq., at Law Office Angelo A. Gasparri, is the Debtor's counsel. John D. Emmanuel was appointed as Chapter 11 trustee for the Debtor. Buchanan Ingersoll & Rooney, P.C., is counsel to the Trustee. ABSOLUT FACILITIES: Cites High Rent, Late Medicare Refunds for Woes ------------------------------------------------------------------- Absolut Facilities Management, LLC, and its affiliates, operators of six skilled nursing facilities and one assisted living facility in the state of New York, have sought Chapter 11 protection. "The Debtors intend to use the Chapter 11 Cases to evaluated their leases and other obligations and, to the extent possible, restructure them in a way that will afford the Debtors an opportunity to emerge from bankruptcy, with all of their Senior Care Facilities intact, as a going concern. If that proves to be impossible, the Debtors will explore other strategic alternatives to ensure uninterrupted care for their patients and to maximize value for their stakeholders," Michael Wyse, a manager partner at Wyse Advisors, LLC, and presently the CRO of the Debtors, explains in court filings. The Debtors' facilities are: * a 37-bed skilled nursing facility in Allegany, New York, * a 320-bed skilled nursing facility in Aurora Park, New York, * an 83-bed skilled nursing facility in Gasport, New York, * an 80-bed sole adult asssiting living facility in Orchard Park, New York ("Orchard Brooke facility"), * a 202-bed skilled nursing facility in Orchard Park, New York ("Orchard Park facility"), and * a 120-bed skilled nursing facility in Painted Post, New York. AFM is the manager of the senior care facilities. The Debtors' principal, Israel Sherman, owns 100% of AFM. Employing approximately 975 people throughout New York state, the senior care facilities provide long-term care and rehabilitative services to many senior patients. In particular, the Senior Care Facilities provide hospice, dementia care, medical needs, as well as short- and long-term rehabilitation care. The facilities gross approximately $83 million of annual revenue. The facilities provide excellent services to their patients, obtaining a 97% satisfaction rate for their rehabilitation services. Prepetition Capital Structure The Debtors have no public debt. Rather, their obligations are broken down into three general categories: (i) Obligations to Capital Finance Group Inc., the Debtors' secured lender, under two revolving credit facilities. A total of $5 million is owed to CF under an HUD Prepetition Loan Agreement, and $700,000 is owed to CF under a non-HUD Prepetition Loan Agreement, secured by liens on substantially all of the personal property of the borrowers. Specialty Rx Inc. also asserts a claim of $2.570 million, which it alleges to be backed by a lien through recently filed UCC financing statements. (ii) Trade debt to the Debtors' landlord, vendors, employees, taxing authorities and others. The Debtors' landlords -- affiliates of the Arba Group -- assert that the Debtors owe prepetition indebtedness in respect of unpaid rent in the amount of approximately $2,979,000, plus certain fees, costs, expenses and other charges, but the Debtors dispute their obligation to pay these amounts. The Debtors also owe approximately $4.05 million in prepetition taxes. (iii) Potential tort litigation, including substantial obligations in respect of deductibles under the Debtors' liability insurance policies related thereto. Events Leading to Chapter 11 Filings According to Mr. Wyse, there were several events that led to the Debtors' commencing the Chapter 11 cases. First, the Debtors' pay an exceedingly high amount of rent for their seven Senior Care Facilities at rates that are well above market rates for such facilities. In total, the Debtors pay approximately $11 million per year to their landlords -- affiliates of the Arba Group -- well above the market rate for comparable facilities. That crushing rent burden has made the Debtors' business, in its current footprint, unsustainable. Not only has the high rent burden put a stranglehold on the Debtors' cash flow, it is impeding the Debtors' ability to invest in the improvement of their facilities. Facility improvements are critically important, however, to ensuring that the Senior Facilities remain competitive, in an increasingly competitive market, and to ensure that Medicare and Medicaid Reimbursement rates are maximized. The Debtors have been able only to make limited facility improvements, including a significant $4 million capital improvement to the Aurora Park Facility. The Debtors filed the Chapter 11 cases to restructure or eliminate these burdensome leasehold obligations. The high rent burden has caused increasing strain on the Debtors' cash flow rates as reimbursement rates have fallen in recent years, while the rents have not decreased. Second, the overwhelming majority of the Debtors' income derives from Medicare and Medicaid reimbursement payments, since the vast majority of the Debtors' patients rely on Medicare and Medicaid to pay the Debtors for their services. However, in recent years, there has been increasing lag in the amount of time it takes to process Medicare and Medicaid reimbursement payments and to receive payment of those amounts from Medicare and Medicaid. The Medicare and Medicaid payments are paid by the federal government to the state government, and the disbursements are handled on a county level. That process has slowed significantly, in a way that is highly prejudicial to the Debtors and their stakeholders. By way of example, certain of the Debtors' larger facilities are in Erie County. The Erie county agency that processes and approves Medicare and Medicaid claims previously employed fourteen people in that job. That agency now employs just three people to do the same work. While historically reimbursement payments would be received by the Debtors in just a matter of weeks, the Debtors now routinely wait many months, and sometimes years to for approval (and resulting payment) to be received. Until approval, the Debtors do not receive any payment, but the Debtors do have to incur substantial expenses associated with treating, feeding, and housing their patients, in addition to funding the Debtors' payroll and operating expenses. Worse yet, the Prepetition Lender restricts advances on aged accounts receivables. Because of the increasingly long lag time for collection from Medicare and Medicaid, the Debtors' availability on their financing facilities is restricted, placing a substantial burden on their cash flow and operations. Third, even if the Medicare and Medicaid payments were made timely, the amount of the reimbursements is not keeping up with the cost of living. The resulting effective decline in reimbursement rates places further pressure on the Debtors' cash flow, particularly since the leases for the Senior Care Facilities were entered into a time when reimbursement rates were higher. Fourth, the senior healthcare market is an extremely competitive market. The patients in the Senior Care Facilities were primarily born during the Great Depression, a period of time when the birth rate in this country was quite low. During the Baby Boom, just a few years later, the birth rate was approximately twice as high. The Debtors expect that there will be a significantly larger number of seniors in need of senior care facilities in the coming years, but for now, supply outpaces demand. The job market is extremely tight, which has resulted in a corresponding increase to labor costs. The Debtors' businesses require employees to work around the clock, 24-hours a day, 7-days a week, and simply cannot afford any gaps in coverage. The Debtors must pay significant overtime costs just to fill shifts. Finally, despite that the Department of Health has not raised concerns about the Debtors' patient care, dozens of tort litigation have been asserted against the Debtors by their patients and former patients. These actions are pending and are largely in their infancy, but the Debtors have substantial deductibles under their liability policies that have placed the burden for defense and payment of claims largely on the Debtors' backs. The Debtors seek the protections of the Bankruptcy Code, in part, to obtain a breathing spell from the litigation and to attempt to resolve them in an efficient manner. In light of all these developments, the Debtors determined that reorganizing under chapter 11 was the best alternative available to the Debtors to ensure uninterrupted top-flight care for their patients and to maximize their value for all stakeholders. First Day Motions The Debtors have filed a number of first day motions, seeking relief that the Debtors believe is necessary to enable them to efficiently administer their estates with minimal disruption and loss of value during these Chapter 11 cases. The first day motions include a request to pay $785,500 to pay off the prepetition claims of critical vendors. This number represents only approximately 7.7% of the amount due outstanding to the Debtors' creditors with outstanding accounts payable as of the Petition Date. The Debtors have also arranged a DIP facility, consisting of a $2.0 million revolving line of credit, to be provided by ABS DIP LLC to the Debtors. The DIP Facility will be junior in all respects to the Debtors' prepetition secured obligations. ABS DIP has not extended any prepetition indebtedness to the Debtors. About Absolut Facilities Absolut Facilities Management, LLC, through its subsidiaries, owns six skilled nursing facilities and one assisted living facility in the state of New York, have sought Chapter 11 protection. On Sept. 10, 2019, Absolut Facilities Management, LLC and seven related entities each filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 19-76260). Loeb & Loeb LLP is the Debtors' counsel. Prime Clerk LLC is the claims and noticing agent. ABSOLUT FACILITIES: To Close Orchard Park Facility -------------------------------------------------- Absolut Facilities Management, LLC, which operates Absolut Care facilities in New York, voluntarily filed for chapter 11 bankruptcy and said it will close one facility. The Debtors' facilities are: * a 37-bed skilled nursing facility in Allegany, New York, * a 320-bed skilled nursing facility in Aurora Park, New York, * an 83-bed skilled nursing facility in Gasport, New York, * an 80-bed sole adult asssiting living facility in Orchard Park, New York ("Orchard Brooke facility"), * a 202-bed skilled nursing facility in Orchard Park, New York ("Orchard Park facility"), and * a 120-bed skilled nursing facility in Painted Post, New York. The company said in a statement it plans to close the Absolut Care of Orchard Park facility once it receives regulatory approval. "As we have seen in recent days with the announcement of the closing of Newfane Hospital, health care generally, and specifically long-term care, faces significant challenges," said Israel Sherman, CEO of Absolut Care in a statement. "We are very confident that we will emerge a much stronger company after these legal proceedings are concluded. It is our expectation that during this process that Patient Care, our employees, and our commitment to excellence will remain our top priority." The company's other facilities, Allegany, Aurora Park, Gasport, Orchard Brooke, Three Rivers and Westfield, will remain open and operate as normal. About Absolut Facilities Absolut Facilities Management, LLC, through its subsidiaries, owns six skilled nursing facilities and one assisted living facility in the state of New York, have sought Chapter 11 protection. On Sept. 10, 2019, Absolut Facilities Management, LLC and seven related entities each filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 19-76260). Loeb & Loeb LLP is the Debtors' counsel. Prime Clerk LLC is the claims and noticing agent. AIR FORCE VILLAGE: Seeks to Amend Final Order on Financing Motion ----------------------------------------------------------------- Air Force Village West, Inc., d/b/a Altavita Village, asks the U.S. Bankruptcy Court for the Central District of California to amend the final order approving the Debtor's emergency motion to obtain postpetition financing and granting authority to use cash collateral. Pursuant to the proposed amendment, the Debtor seeks that Lender Parties -- Lapis Advisers, LP; and KBC Bank NV: (a) approve an amended budget, and that the Court authorize use of cash collateral under that budget; (b) consent to the Debtor's continued use of cash collateral past the maturity date of Sept. 9, 2019 subject to the terms of the Amended Budget and the provisions of the Final DIP Order, as amended by the proposed first amendment. The Debtor further seeks that upon the occurrence of a termination event, the Debtor may use cash collateral to pay all unpaid expenses, pursuant to the Amended Budget. In case of conflict between the Final DIP Order, as will be amended, and any motion, pleading, document or agreement, the Final DIP Order will govern and control. The permitted variances from the Budget will not apply to compliance by the Debtor, with the Amended Budget. The termination events include: * failure to file a motion to dismiss the Bankruptcy Case with this Court by Oct. 4, 2019; * the entry of an order dismissing the Bankruptcy Case, converting the Bankruptcy Case to a case under Chapter 7 of the Bankruptcy Code or appointing a trustee or similar agent for the Debtor, or if the Debtor files a motion or other pleading, other than Dismissal Motion, seeking entry of such order; * failure to comply with the terms of the amended budget consistent with the Final DIP Order and this amendment; * the filing of a motion, pleading or proceeding by the Debtor which could reasonably be expected to result in a material impairment of the rights or interest of the Lender Parties, or a determination by a court with respect to a motion, pleading or proceeding by another party which results in said material impairment; or * Nov. 8, 2019. A copy of the Motion, the Proposed Order and the Amended Budget can be accessed free of charge at: http://bankrupt.com/misc/AirForce_Village_444_Cash_M.pdf The Court will hear the motion on October 1, 2019 at 1:30 p.m., and a videoconference, also on Oct. 1, 2019 at 1:30 p.m., at 3420 Twelfth Street, Video Hearing Room 126, Riverside, California. About Air Force Village West Air Force Village West -- https://livealtavita.org/ -- owns and operates a continuing care retirement community with assisted living, independent living, skilled nursing and memory care services. Air Force Village is a not-for-profit entity opened in 1989. Air Force Village West, Inc., based in Riverside, CA, filed a Chapter 11 petition (Bankr. C.D. Cal. Case No. 19-11920) on March 10, 2019. The petition was signed by Mary Carruthers, chairman of the Board. In its petition, the Debtor estimated $50 million to $100 million in both assets and liabilities. The Hon. Scott C. Clarkson oversees the case. Samuel R. Maizel, Esq., at Dentons US LLP, is the Debtor's bankruptcy counsel. AMERICAN PARKING: Court Confirms Chapter 11 Plan ------------------------------------------------ The U.S. Bankruptcy Court for the District of Puerto Rico has confirmed American Parking System, Inc.'s plan of reorganization filed June 29, 2019, after determining after hearing on notice that the requirements for confirmation set forth in 11 U.S.C. Section 1129 have been satisfied. About American Parking System Headquartered in San Juan, Puerto Rico, American Parking System owns and manages parking lots. The Company previously sought bankruptcy protection (Bankr. D.P.R. Case No. 16-02761) on April 8, 2016. American Parking System, filed a Chapter 11 petition (Bankr. D.P.R. Case No. 19-02243) on April 24, 2019. In the petition signed by Miguel A. Cabral Veras, president, the Debtor estimated $10 million to $50 million in both assets and liabilities. Alexis Fuentes-Hernandez, Esq., at Fuentes Law Offices, LLC, serves as bankruptcy counsel to the Debtor. AMERICAN TIMBER: Wants Cash Access Til Final Hearing, or Oct. 31 ---------------------------------------------------------------- American Timber Marketing Group, LLC, seeks interim approval from the U.S. Bankruptcy Court for the Southern District of West Virginia to use cash collateral nunc pro tunc from the Petition Date through the date of final hearing, or the entry of a final order. The Debtor will use the cash collateral to pay prepetition and postpetition obligations, and general, administrative and operating expenses, pursuant to a budget. The Budget provides for $36,680 in total projected cost, of which $12,000 is allotted for purchased logs and $9,220 for payroll. The Debtor proposes to grant its cash collateral creditors a replacement and continuing lien on all of its cash, of the same priority and validity as the prepetition collateral on the Petition Date. A copy of the Budget can be accessed free of charge at: http://bankrupt.com/misc/American_Timber_21(1)_Cash_Budget.pdf About American Timber Marketing Group American Timber Marketing Group, LLC, doing business as Wilderness Wood Company -- https://www.wildernesswood.net/ -- is a family-owned company in the custom wood business. The Company manufactures log homes and siding profiles, custom railing, interior paneling, live edge siding, and live edge custom products such as bar tops, table tops, and mantels. It also creates various styles of exterior siding, timbers, beams, and logs. American Timber sought Chapter 11 protection (Bankr. S.D. W.V. Case No. 19-20359) on Aug. 21, 2019, in Charleston, West Virginia. In the petition filed by David Alan Rice, owner, the Debtor disclosed total assets amounting to $857,087 and total liabilities amounting to $1,269,479. Judge Frank W. Volk oversees the case. Paul W. Roop, II, Esq., is counsel to the Debtor. B&G FOODS: Moody's Alters Outlook on B1 CFR to Negative ------------------------------------------------------- Moody's Investors Service changed B&G Foods, Inc. rating outlook to negative from stable, and affirmed the B1 Corporate Family Rating, B1-PD Probability of Default Rating, and B2 senior unsecured note ratings. Moody's also downgraded the senior secured first lien revolving credit facility to Ba2 from Ba1. The Speculative Grade Liquidity Rating of SGL-1 is unchanged. At the same time Moody's assigned a Ba2 rating to B&G's proposed new $450 million senior secured term loan and a B2 rating to the company's proposed new $450 million senior unsecured notes due in 2027. Proceeds will be used to redeem $700 million of the 4.625% senior unsecured notes due 2021, repay approximately $187 million currently drawn on the company's revolving credit facility, and to pay transaction-related fees. The rating of the existing senior unsecured notes due 2021 will be withdrawn at transaction close. "The negative outlook reflects Moody's view that acquisitions to help achieve a long-term $3 billion revenue goal and a sizable dividend and share repurchases will hurt B&G's ability to deleverage, " said Vladimir Ronin, Moody's lead analyst for the company. "Additionally, while the planned refinancing will bolster liquidity by terming out company's current revolver borrowings and extending the maturity profile, Moody's expects B&G will utilize the revolver to fund future acquisitions and investments," added Ronin. Moody's took the following rating actions on B&G Foods, Inc.: Affirmations: Corporate Family Rating, at B1 Probability of Default Rating, at B1-PD Senior Unsecured Notes due 2021, at B2 to (LGD5) from (LGD4) Senior Unsecured Notes due 2025, at B2 to (LGD5) from (LGD4) Downgrades: Senior Secured First Lien Revolving Credit Facility, to Ba2 (LGD2) from Ba1 (LGD2) Assignments: Senior Secured First Lien Term Loan, assigned Ba2 (LGD2) Senior Unsecured Notes due 2027, assigned B2 (LGD5) Outlook Actions: Outlook, changed to Negative from Stable RATINGS RATIONALE B&G's B1 CFR largely reflects the company's high financial leverage and relatively aggressive financial policies, highlighted by large dividend payments and the periodic use of debt to fund potentially large acquisitions. B&G's rating is also a function of its small but improving scale relative to more highly rated industry peers, and its acquisitive growth strategy. The company's debt-to-EBITDA for the twelve months ended June 30, 2019, was approximately 6.1 times on a Moody's-adjusted basis. B&G's credit profile benefits from relatively high margins, consistent cash flow generation from a broad food product portfolio with low cyclical demand volatility, and a largely successful track record of integrating acquisitions. B&G's willingness to dividend a high portion (targeted at roughly 50% - 65%) of its cash from operations less capital spending is partially mitigated by the consistency of its cash flow generation. Margins have weakened in recent years because of cost increases for items such as labor, freight and commodities even though the company has had success in recouping commodity cost increases through timely pricing actions within its niche branded product offerings. B&G's SGL-1 rating reflects very good liquidity because of modest but stable projected free cash flow, the sizable undrawn $700 million revolver upon completion of the proposed refinancing, and lack of meaningful debt maturities over the next two years. The cash sources provide ample resources for the $4.5 million of required annual term loan amortization, reinvestment needs and potential acquisitions. B&G's ratings could be upgraded if the company is able to sustain debt-to-EBITDA below 5.0 times while pursuing its acquisition based growth strategy, improve retained cash flow (RCF)-to-net debt such that it approaches 10%, and maintaining very good liquidity. Alternatively, ratings could be downgraded if adjusted debt-to-EBITDA is sustained above 6.0 times, RCF-to-net debt is sustained below 5%, or if liquidity deteriorates. The principal methodology used in these ratings was Global Packaged Goods published in January 2017. B&G Foods, Inc. based in Parsippany, New Jersey, is a publicly traded manufacturer and distributor of a diverse portfolio of largely branded, shelf-stable food products, many of which have leading regional or national market shares in niche categories. The company also has a significant presence in frozen food following the 2015 acquisition of Green Giant and maintains a small presence in household products. B&G's brands include Cream of Wheat, Ortega, Maple Grove Farms of Vermont, Polaner, B&M, Las Palmas, Mrs. Dash, Green Giant, and Bloch & Guggenheimer among others. B&G sells to a diversified customer base including grocery stores, mass merchants, wholesalers, clubs, dollar stores, drug stores, the military and other food service providers. B&G generated net sales for the twelve months ended June 30, 2019 of approximately $1.7 billion. BARKATH PROPERTIES: Seeks to Use Byline Bank Cash Collateral ------------------------------------------------------------ Barkath Properties asks the U.S. Bankruptcy Court for the Northern District of Illinois to use cash collateral of Byline Bank in order to continue the Debtor's rental business and effectuate an effective reorganization. Byline asserts a mortgage lien on the Debtor's property in Libertyville, Illinois, including rent income therefrom. The Libertyville Property secures a senior mortgage loan of approximately $2,637,450 and a cross collateralized loan of $1,857,265. The budget submitted to the Court provides for $5,542 in total expenses, $4,422 of which is for monthly tax payment (out of the aggregate yearly tax amount of $53,066). A copy of the Budget is available for free at http://bankrupt.com/misc/Barkath_9_Cash_M.pdf As adequate protection, the Debtor proposes to grant Byline Bank a valid, perfected and enforceable security interests in the Debtor's postpetition assets to the extent of any diminution in the value of said assets. The Debtor seeks approval on an interim basis, pending final hearing on the motion. About Barkath Properties Barkath Properties is a privately held company engaged in activities related to real estate. The Company owns in fee simple a shopping mall unit in Libertyville, Illinois valued at $1.80 million and a commercial building in Waukegan, Illinois valued at $150,000. Barkath Properties sought Chapter 11 protection (Bankr. N.D. Ill. Case No. 19-23544) on Aug. 21, 2019. As of the Petition Date, Debtor recorded $2,097,271 in total assets and $5,177,277 in total liabilities. The LAW OFFICE OF O. ALLAN FRIDMAN is serving as the Debtor's counsel. BATH & KITCHEN: Hires S. Rozenberg & Associates as Accountant ------------------------------------------------------------- Bath & Kitchen Distributor's Corp. seeks authority from the U.S. Bankruptcy Court for the District of New Jersey to hire S. Rozenberg & Associates as its accountant. The accountant will be responsible for the preparation of monthly operating reports, tax returns, and other financial documents for Debtor's use in its Chapter 11 reorganization. S. Rozenberg will charge $175 per hour for its services. Serge Rosenberg, EA, member of S. Rozenberg & Associates, disclosed in court filings 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 Debtor and its estate. The accountant can be reached at: Serge Rosenberg, EA S. Rozenberg & Associates 2565 East 17th Street, 2nd Floor Brooklyn, NY 11235 Phone: 718-891-0500 About Bath & Kitchen Distributor's Corp. Bath & Kitchen Distributor's Corp. filed a voluntary petition under Chapter 11 of the US Bankruptcy Code (Bankr. D.N.J. Case No. 19-12212) on February 1, 2019, listing under $1 million in both assets and liabilities. Melinda D. Middlebrooks, Esq. at Middlebrooks Shapiro, P.C. represents the Debtor as counsel. BEAZER HOMES: Moody's Rates New $350MM Unsec. Notes Due 2029 'B3' ----------------------------------------------------------------- Moody's Investors Service assigned a B3 rating to Beazer Homes USA, Inc.'s proposed $350 million senior unsecured notes due 2029. The company's ratings including its B3 Corporate Family Rating, B3-PD Probability of Default Rating, B3 ratings on its senior unsecured notes and SGL-2 Speculative Grade Liquidity Rating remain unchanged. The stable outlook is also unchanged. In a refinancing transaction, Beazer is issuing $350 million of senior unsecured notes due 2029 and a new $150 million senior unsecured term loan due 2022 (unrated), the proceeds of which along with cash on hand will be used to retire $500 million of the company's 8.75% senior unsecured notes due 2022 and to fund the premium. Moody's estimates Beazer's homebuilding debt to capitalization ratio pro forma for the transaction at 72.5%, slightly above the leverage level at the end of third fiscal quarter. The company's debt maturity profile is enhanced with the nearest senior note maturity not occurring until 2025 following the transaction. Beazer's credit profile is also expected to benefit from the lower interest expense associated with the new debt. The following rating actions were taken: Issuer: Beazer Homes USA, Inc.: Proposed $350 million senior unsecured notes due 2029, assigned a B3 (LGD4) RATINGS RATIONALE Beazer's B3 CFR reflects Moody's consideration of: 1) financial strategies that result in high debt leverage, as measured by Moody's adjusted homebuilding debt to book capitalization; 2) GAAP gross margins of about 16%, which are below most B-rated homebuilding peers; 3) cost pressures faced by the homebuilding industry, including land, labor and materials costs, which together with the reduced pricing power of homebuilders will weigh on gross margin performance; 4) the recent reduction in the company's tangible net worth given the incurred land impairments in the second fiscal quarter of 2019; and 5) active share repurchase authorization. At the same time, Beazer's credit profile is supported by the company's: 1) large size and scale within its B3-rated homebuilding peer group; 2) focus on the first-time homebuyer segment for about half of total closings, which is expected to grow faster than other product categories given the supportive demographic trends; 3) debt reduction strategy and the repayment of nearly $300 million in debt since fiscal 2015 with further repayments expected; 4) increasing investment in shorter duration land. The stable rating outlook reflects Moody's expectation that homebuilding industry conditions will continue to be healthy and translate into a gradual improvement of the company's credit metrics. The Speculative Grade Liquidity Rating of SGL-2 reflects Beazer's good liquidity profile, supported by Moody's expectation of positive free cash flow and maintenance of ample availability under its revolving credit facility, and a $68 million cash balance at June 30, 2019. The ratings could be upgraded if the company's total adjusted homebuilding debt to book capitalization trends towards 60% and EBIT to interest coverage approaches 2.0x, while gross margins improve and good liquidity profile is maintained. The ratings could be downgraded if the company's total adjusted homebuilding debt to book capitalization is sustained above 70%, if EBIT interest coverage weakens below 1.0x, if the company experiences bottom line net losses on an annual basis or a deterioration in its liquidity profile. The principal methodology used in this rating was Homebuilding And Property Development Industry published in January 2018. Beazer Homes, USA, Inc., headquartered in Atlanta, Georgia, is a US homebuilder operating across three geographic regions: West, East and Southeast. The company has presence in 13 states, including Arizona, California, Nevada, Texas, Indiana, Maryland, Delaware, Tennessee, Virginia, Florida, Georgia, North Carolina and South Carolina. Beazer targets entry-level, move-up, and active adult homebuyers, and in fiscal 2018, the company delivered 5,767 homes. Total revenues and net income for the LTM period ended June 30, 2019 were approximately $2.1 billion and $(21) million, respectively. BROOKFIELD RESIDENTIAL: Moody's Rates New $400MM Unsec. Notes B1 ---------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Brookfield Residential Properties Inc.'s proposed $400 million senior unsecured notes due 2027. All other ratings for the company remain unchanged. The outlook is stable. The proceeds from the new notes coupled with $200 million from the company's revolving credit facility will be used to refinance the company's existing $600 million senior unsecured notes maturing in December 2020. The company issued a redemption notice for the 2020 notes on September 6, 2019. The transaction is debt neutral. This offering comes shortly after BRPI received approval from its existing debt holders to combine most of its US and Canadian real estate assets under one corporate structure. The new structure will enable better coordination and higher synergies among the different operating segments and their management teams. Pro forma for the new structure and the proposed offering BRPI's total debt to capitalization stands at approximately 43.0%. The following rating actions were taken: Proposed $400 million of senior unsecured notes due 2027, assigned B1 (LGD4); RATINGS RATIONALE BRPI's B1 Corporate Family Rating reflects the company's solid operating fundamentals, reasonable leverage and diversified line of business representing mixed-use properties, as well as land and home sales in several US and Canadian markets. In addition, Moody's credit rating takes into consideration the company's low-cost land supply, which should provide BRPI the flexibility required to maintain future growth in the event of an economic slowdown. Lastly, the credit rating also incorporates Moody's consideration of BRPI's corporate structure as a wholly-owned subsidiary of a private equity / asset management parent and the potential risk that cash could be distributed to the parent. The stable outlook reflects Moody's expectation that the company can maintain adjusted debt leverage of around 50% and that underlying fundamentals in the homebuilding industry will remain stable over the next 12 to 18 months. BRPI's Speculative Grade Liquidity Rating of SGL-2 reflects BRPI's good liquidity profile, which is expected to be maintained over the next 12 to 18 months. This liquidity profile is further supported by approximately $100 million in cash on hand as of June 30, 2019 and $475 million in availability (excluding $117 million in letters of credit) under the company's $675 million revolving credit facility that expires in March 2021. The rating could be upgraded if BRPI reduces its debt leverage to below 40% while maintaining solid profitability and liquidity. The rating could be downgraded if BRPI increases its debt leverage above 60% on a sustained basis or if interest coverage declines below 2.0x. The principal methodology used in these ratings was Homebuilding And Property Development Industry published in January 2018. BRPI, incorporated in Ontario, Canada, is a wholly-owned subsidiary of Brookfield Asset Management Inc. (Baa2, Rating Under Review) and has been developing land and building homes for over 60 years. The company conducts its business through three operating segments within the US and Canada. Each of the company's segments specializes in land entitlement and development for master-planned communities, mixed-use property development, and the construction of single family and multi-family homes. For the LTM period ended June 30, 2019, revenues and net income were US$2.1 billion and US$148 million, respectively. CALCEUS ACQUISITION: Moody's Hikes CFR to B1, Outlook Stable ------------------------------------------------------------ Moody's Investors Service upgraded its ratings for Calceus Acquisition, Inc., including the Corporate Family Rating to B1 from B2, Probability of Default Rating to B1-PD from B2-PD, and senior secured term loan rating to B1 from B2. The ratings outlook is stable. The upgrade reflects Cole Haan's improvement in credit metrics and liquidity, driven by the company's strong operating performance, including an over 50% increase in earnings over the past year. The upgrade also reflects Moody's expectation that these improvements will be sustained over the next 12-18 months, supported by growth in digital sales, investments in customer relationship management, continued good merchandising, marketing execution and new product roll-outs. Moody's took the following rating actions for Calceus Acquisition, Inc.: - Corporate Family Rating, upgraded to B1 from B2; - Probability of Default Rating, upgraded to B1-PD from B2-PD; - $290 million Senior Secured First Lien Term Loan due 2025 ($288 million outstanding), upgraded to B1 (LGD4) from B2 (LGD4); - Outlook, remains Stable RATINGS RATIONALE The B1 CFR reflects Cole Haan's relatively small scale and operations in the highly competitive footwear market. In addition, as a mono-brand premium retailer, the company is exposed to changes in discretionary spending, fashion trends and consumers' brand perception. Continued reinvestment in product design, marketing and infrastructure, as well as social factors including responsible sourcing and robust data protection, are necessary to sustain brand value. Further, the ratings incorporate financial policy risk associated with private equity ownership, including the potential for debt-financed dividend distributions; however, in Moody's view this risk is partly mitigated by the company's plans for a public equity offering. Nevertheless, the rating is supported by Cole Haan's strong product and digital execution, well-recognized brand and diverse distribution channels, including a sizeable digital business. While the ongoing 'athleisure' fashion trend has been a significant driver of the company's growth, Cole Haan offers a broad range of styles that can adapt to changing trends. Moody's anticipates that Cole Haan's credit metrics will improve over the next 12-18 months as a result of continued earnings growth, including a decline in debt/EBITDA to 3.2 times from 3.7 times (Moody's-adjusted, as of FYE June 1, 2019) and an increase in EBITA/interest expense to 2.7 from 2.4 times. In addition, the rating benefits from Moody's projections for very good liquidity over the next 12-18 months, including positive free cash flow, full revolver availability, a springing-covenant-only capital structure and a lack of near term maturities. The stable outlook reflects Moody's expectations for earnings growth and very good liquidity. The ratings could be upgraded if the company materially reduces private equity ownership and demonstrates a commitment to a more conservative financial policy. An upgrade would also require increased scale and diversification, while maintaining solid revenue and earnings growth and very good liquidity. Quantitatively, the ratings could be upgraded if Moody's-adjusted debt/EBITDA is maintained under 3 times and EBITA/interest expense approaches 3 times. The ratings could be downgraded if earnings or liquidity deteriorate, if product weakness or operational execution hurt revenue or the brand, or if leverage increases including as a result of debt-financed dividend distributions or acquisitions. Quantitatively, the ratings could be downgraded if debt/EBITDA is sustained above 4.0 times and EBITA/interest expense declines below 2.25 times. Headquartered in Greenland, NH, Cole Haan is a designer and retailer of men's and women's footwear, handbags, and accessories. Net revenues for twelve months ended June 1, 2019 were approximately $687 million. Apax Partners and the company's management team acquired the company from NIKE Inc. in early 2013. The principal methodology used in these ratings was Retail Industry published in May 2018. CAROLINA CARBONIC: Gets Court OK on Cash Collateral Motion ---------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of North Carolina approves, on an interim basis, the motion filed by Carolina Carbonic & Hydrotesting, Inc., to use cash collateral to pay operational needs, adequate protection payments and other expenses in the ordinary course of its business, pursuant to a budget. The budget provides for $9,751 in total expenses and $3,625 in total cost of goods sold for the second week of September 2019. A copy of the Budget can be accessed for free at: http://bankrupt.com/misc/Carolina_Carbonic_43_Cash_Ord.pdf The Court rules that the Debtor will provide adequate protection to Secured Parties as follows: (a) To the Internal Revenue Service (owed approximately $59,279): * The IRS will be granted a lien in the property which was held prepetition having the same priority and rights in the collateral as it had prepetition including postpetition accounts and accounts receivable. * The Debtor will also pay the IRS a monthly adequate protection of $1,125 beginning Sept. 3, 2019 and, subject to further Court order, on the 1st non-holiday business day of each month thereafter until the confirmation of a Plan of Reorganization. (b) To the North Carolina Department of Revenue (NCDOR) * The NCDOR will be adequately protected by continuing to allow it to maintain a security interest in the property which was held prepetition having the same priority and rights in the collateral as it had prepetition including postpetition accounts and accounts receivable. The Debtor may use the Cash Collateral through the earliest of: (i) the entry of a final order authorizing the use of Cash Collateral, or (ii) the entry of a further interim order authorizing the use of Cash Collateral, or (iii) Sept. 17, 2019, or (iv) the entry of an order denying or modifying the use of Cash Collateral, or (v) the occurrence of a termination event. The Debtor will have Workers Compensation insurance in place no later than Sept. 17, 2019. A further hearing on the Debtor's motion is set for September 17, 2019 at 9:30 a.m. About Carolina Carbonic Carolina Carbonic and Hydrotesting, Inc., sought protection under Chapter 11 of the Bankruptcy Code (Bankr. M.D.N.C. Case No. 19-10899) on Aug. 20, 2019. At the time of the filing, the Debtor estimated assets of less than $1 million and liabilities of less than $100,000. The Law Firm of Ivey, McClellan, Gatton & Siegmund is the Debtor's counsel. CARVER GARDENS: S&P Lowers 2013A Revenue Bond Rating to 'BB+' ------------------------------------------------------------- S&P Global Ratings lowered its rating two notches to 'BB+' from 'BBB' on Public Finance Authority, Wis.' series 2013A multifamily housing revenue bonds, issued for Carver Gardens LLC, Fla.'s Carver Gardens apartments. The outlook is stable. "The rating action reflects our opinion of the project's continued performance below pro forma expectations, coupled with our lower assessment of financial policies and practices," said S&P Global Ratings credit analyst Emily Avila. Despite high occupancy and steady increases in U.S Department of Housing & Urban Development (HUD) revenue, maximum annual debt service (MADS) coverage remains low due to volatile expenses and fell to 1.09x in fiscal 2018, leading to a cap on the indicative rating. "The stable outlook reflects our opinion that during the two-year outlook period, expenses will likely remain high, weakening financial performance and resulting in MADS coverage that remains below 1.1x," added Ms. Avila. CERENCE LLC: Moody's Assigns B2 Corp. Family Rating, Outlook Pos. ----------------------------------------------------------------- Moody's Investors Service assigned a B2 Corporate Family Rating and B2-PD Probability of Default Rating to Cerence in connection with the company's expected spin-off from, Nuance Communications, Inc. (Ba3, Stable), and Cerence's concurrent proposed debt financing. Cerence's proposed $425 million senior secured term loan B and $75 million revolving credit facility were assigned ratings of B2, in line with the CFR. Moody's also assigned to the company an SGL-1 Speculative Grade Liquidity Rating. The rating outlook is positive. Proceeds from the proposed senior secured term loan B will be used to fund a portion of the cash of $110 million to Cerence's balance sheet following the spin-off, distribute $310 million to Nuance, and fund estimated transaction fees and expenses. Assignments: Issuer: Cerence LLC Corporate Family Rating, Assigned B2 Probability of Default Rating, Assigned B2-PD Speculative Grade Liquidity Rating, Assigned SGL-1 Senior Secured Term Loan B, Assigned B2 (LGD4) Senior Secured Revolving Credit Facility, Assigned B2 (LGD4) Outlook Actions: Issuer: Cerence LLC Outlook, Assigned Positive The assignment of ratings remains subject to Moody's review of the final terms and conditions of the proposed financing that is expected to close during the 4th quarter of 2019. RATINGS RATIONALE The B2 CFR reflects Cerence's high initial leverage pro forma for the proposed financing and the risks associated with setting up the company as a standalone business. For the LTM period ended June 30, 2019, Moody's adjusted leverage was 6.0x but if adjusted for stock-based compensation, leverage could be viewed as 4.4x. Moody's forecasts adjusted leverage to be roughly 5.0x in 12 months. A substantial portion of separation efforts have already been completed however, Cerence management will have to ensure key personnel are appropriately staffed to replace transition services agreements with Nuance and comply with operational restrictions to complete a tax-free spin-off. The rating also considers both Cerence's limited end-market diversification given that its largest customer, Toyota Motor Corporation , represented 19% of revenue in 2018 as well as Cerence's highly focused product offerings that are tailored only to automotive applications, an end market which faces near-term headwinds. Moreover, Cerence is significantly smaller in scale relative to both its customers and certain of its competitors. For example, large technology companies with sizeable cash on hand such Google Inc., Baidu Inc., and Samsung America Inc currently co-exist with Cerence as third-party virtual assistants, but have the potential to pivot into Cerence's market. The rating is supported by Cerence's leading market position, customer relationships with nearly all major global automotive OEM's and/or their tier 1 suppliers, expanding market supported by secular tailwinds, and highly profitable software offerings. With EBITDA margin of 30% as of FY2018, Cerence is expected to achieve free cash flow to debt of around 10% in the next 12-18 months. Such strong profitability drives a strong free cash flow profile which may be somewhat hampered in FY2020 by the ongoing stand-up costs. Cerence seeks to position itself as agnostic to the tech ecosystem for embedded and connected voice assistance technologies for automotive applications. In turn, Cerence also seeks to benefit from secular trends including vehicle intelligence, virtual assistants, distracted driving, and shared mobility by offering digital platform solutions that are compatible with third-party providers such as Google, Amazon.com, Inc., Samsung, and Baidu. Though leverage is considered high, Moody's expects that Cerence will maintain a moderate financial strategy over time. The company will be publicly traded and has a diverse and largely independent board of directors. The positive outlook reflects Moody's expectation that Cerence will generate high-single to low double-digit percent FCF / debt over the next 12-18 months. The positive outlook also anticipates continued organic revenue and EBITDA growth in the mid-to high single-digit percent range which is expected to drive leverage toward 4.5x on a Moody's adjusted basis over the next 12-18 months. Ratings could be upgraded if Cerence continues to grow organically and increase in scale as well as sustain leverage below 4.5x and FCF / debt above 15%. Ratings could be downgraded if leverage were sustained above 6x, if FCF/debt were to decline below 5% or if the company experienced material deterioration in liquidity. Cerence's liquidity is considered very good, as reflected by the assigned SGL-1 speculative grade liquidity rating. Liquidity is supported by an expected closing cash balance of $110 million, which is ample to support ongoing efforts to separate the business from Nuance, as well as a $75 million revolving credit facility which is expected to be undrawn at the close of the transaction. The B2 rating for Cerence's proposed bank credit facilities reflects a B2-PD Probability of Default Rating and the company's covenant-lite, single class debt structure. The principal methodology used in these ratings was Software Industry published in August 2018. Cerence is a provider of embedded and connected in-vehicle driver assistance technologies powered by the company's speech recognition and natural language understanding software capabilities. Pro forma revenue is expected to be about $305 million for the fiscal year ended September 30, 2019. Cerence is headquartered in Burlington, MA. CHATTANOOGA MOTORS: Court Allows Cash Use, Bad Inventory Sale ------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Tennessee authorizes, on a final basis, Chattanooga Motors, LLC and Debtor affiliate -- Loan Spot, LLC, to use cash collateral from Aug. 30, 2019 through Nov. 29, 2019 or a later date as may be mutually agreed upon in writing with the Debtor's lender. The Court authorizes the Debtors to pay carve-out for professional fees of $16,200 in the aggregate. As supplement to the adequate protection measures: (a) the Debtors will disclose promptly to the Lender a copy of all purchase offer proposals; (b) the Debtors may sell bad inventory, if the sale of the bad inventory is deemed outside the ordinary course of business, with all net proceeds turned over to Lender for application to the Secured Debt; (c) the Debtor will continue to make weekly payments of $5,000 for adequate protection. A copy of the Order and the Budget contained therein can be accessed for free at: http://bankrupt.com/misc/Chattanooga_Motors_112_Cash_Ord.pdf About Chattanooga Motors Chattanooga Motors, LLC -- http://chattanoogamotors.com/-- is a used car dealer in Chattanooga, Tenn. LoanSpot LLC -- http://www.loanspot.us/-- is a finance company for customers who purchase cars from Chattanooga Motors. Chattanooga Motors and LoanSpot sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Tenn. Case Nos. 19-11975 and 19-11976) on May 13, 2019. At the time of the filing, each Debtor disclosed assets of between $1 million and $10 million and liabilities of the same range. CHATTANOOGA MOTORS: Seeks to Hire Real Estate 9 as Broker --------------------------------------------------------- Chattanooga Motors, LLC and LoanSpot, LLC seek authority from the U.S. Bankruptcy Court for the Eastern District of Tennessee to hire Real Estate 9, LLC as broker to list, market and procure an acceptable buyer for their businesses. The Debtors have agreed to a 10 percent commission of the purchase price as compensation to Real Estate 9. Sue King of Real Estate 9, LLC disclosed in court filings that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors and their estates. The firm can be reached at: Sue King Real Estate 9, LLC 6111 Shallowford Road, Suite 105A Chattanooga, TN 37421 Phone: +1 423-805-4660 About Chattanooga Motors and LoanSpot Chattanooga Motors, LLC -- http://chattanoogamotors.com/-- is a used car dealer in Chattanooga, Tenn. LoanSpot LLC -- http://www.loanspot.us/-- is a finance company for customers who purchase cars from Chattanooga Motors. Chattanooga Motors and LoanSpot sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Tenn. Case Nos. 19-11975 and 19-11976) on May 13, 2019. At the time of the filing, each Debtor disclosed assets of between $1 million and $10 million and liabilities of the same range. The Debtors are represented by Chambliss, Bahner & Stophel, P.C. CHENIERE ENERGY: Moody's Rates $1BB Sr. Unsec. Notes 'Ba2' ---------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to Cheniere Energy Partners, L.P's $1.0 billion senior unsecured note offering. The outlook for CQP is stable. Proceeds from the offering will be used to refinance and retire CQP's $750 million senior secured term loan facility and for general corporate purposes including prefunding a portion of the costs associated with construction of Train 6 at Sabine Pass Liquefaction LLC (SPL: Baa3, stable). The unsecured notes will rank pari passu with CQP's two series of existing unsecured notes totaling $2.6 billion, also rated Ba2 stable. A $750 million senior secured revolving credit facility, currently undrawn, provides liquidity support for construction costs and general corporate purposes. RATING RATIONALE The Ba2 rating assigned to CQP's senior unsecured note reflects the predictability and recurring nature of anticipated long-dated cash flow from its wholly-owned operating subsidiaries: Cheniere Creole Trail Pipeline, L.P. (CTPL: not rated) and Sabine Pass LNG, L.P. (SPLNG: not rated) and distributions from SPL. Cash flow and distributions from these operating subsidiaries are CQP's primary source of cash flow and debt repayment. These positives are balanced by CQP's structurally subordinated position to SPL's highly leveraged capital structure (approximately $14 billion of funded debt), ongoing dividend requirements, and a highly leveraged capital structure that is forecasted to remain in excess of 6.0x on a consolidated Debt to Contracted EBITDA basis through at least 2025. The rating action further reflects SPL's announced Final Investment Decision on SPL Train 6 in June 2019 at a total levered cost for Train 6 of $3.3 billion. Funding for Train 6 is anticipated through a combination of the note offering, availability under the revolving credit facility, equity contributed by CQP and reinvested cash flow from SPL Trains 1-5. Train 6 is expected to achieve commercial operation by early 2023. Trains 1-5 have each achieved commercial operation and are producing positive cash flows under various long-term contractual arrangements with credit worthy global energy companies that collectively provide $3.3 billion in annual capacity revenue. RATING OUTLOOK CQP's stable outlook reflects the heavy reliance on distributions from SPL along with consistent cash flow from CTPL and SPLNG, which together will enable CQP meets its funding requirements including debt service, train 6 construction costs and ongoing distributions to its owners. What could change the rating up Given CQP's level of reliance on SPL cash flow, a rating change at SPL would likely trigger a similar change at CQP. SPL's rating could be upgraded if there is a significant and sustained reduction in outstanding debt or improvement in cash flow generation such that its ratio of project cash from operations to debt exceeds 15% on an ongoing basis. What could change the rating down Given CQP's level of reliance on SPL cash flow, a rating change at SPL would likely trigger a similar change at CQP. SPL's rating could be downgraded or the outlook revised to negative should it encounter major operating problems or not generate the expected level of cash flow to fund remaining construction costs or operating costs. CQP is a publicly traded master limited partnership owned by Cheniere Energy, Inc. (not rated), The Blackstone Group L.P. and public unitholders. CQP owns and operates, CTPL, a 94 mile long 42 inch diameter pipeline that provides natural gas supply transportation to SPL; SPLNG, a regasification terminal that has been operating since 2008; and SPL, a six liquefaction train development with trains in various stages of construction and operation. The principal methodology used in this rating was Midstream Energy published in December 2018. CHENIERE ENERGY: S&P Rates $1BB Senior Unsecured Notes 'BB' ----------------------------------------------------------- S&P Global Ratings said it assigned its 'BB' issue-level rating and '4' recovery rating to U.S.-based liquefied natural gas (LNG) developer Cheniere Energy Partners L.P.'s (CQP) $1 billion senior unsecured notes due 2029. The company plans to use the proceeds from the financing to repay its $750 million senior secured term loan due 2024; it will use the remainder to fund capital expenditures and for general corporate purposes. It is anticipated that the $750 million revolver that was put into place in May will remain in place. The notes are part of a broader initiative to de-lever the debt outstanding at Sabine Pass Liquefaction LLC through debt issuance at CQP. The 'BB' issue-level rating and the '4' recovery rating on the notes reflect S&P's expectation that lenders would receive average (30%-50%; rounded estimate: 45%) recovery if a payment default occurs. The 'BB' issuer credit rating and the 'BBB-' rating on the senior secured revolver are unchanged. ISSUE RATINGS—RECOVERY ANALYSIS S&P's simulated default scenario for CQP contemplates a default arising in 2024 due to a prolonged period of weakness in LNG prices, which could stress the company's commodity-sensitive cash flows, despite its cash flows being generated by a diverse portfolio of long-term take-or-pay style contracts with investment-grade counterparties. The default could also arise because CQP relies on its subsidiaries for cash flow, which it receives after the debt service at the subsidiary level. Simulated default assumptions -- All debt has six months' interest outstanding at default. -- S&P believes that in a default scenario, claims relating to the company's senior unsecured notes would be effectively subordinated to the claims relating to the senior secured credit facility, to the extent of the value of the collateral securing the facility. -- S&P is assuming a post-default run rate EBITDA of about $390 million. -- S&P use a 7x EBITDA multiple to arrive at the enterprise value. Simplified waterfall -- Net enterprise value after 5% administrative costs: $2.6 billion -- Secured first-lien debt: $766 million -- Recovery expectations: 90%-100% (rounded estimate: 95%) -- Total value available to unsecured claims: $1.84 billion -- Senior unsecured debt: $3.69 billion -- Recovery expectations: 30%-50% (rounded estimate: 45%) CIRCLE BAR T GRADING: CCG Seeks to Block Debtor’s Use of Cash --------------------------------------------------------------- Commercial Credit Group (CCG) asks the U.S. Bankruptcy Court for the District of South Carolina to prohibit Circle Bar T Grading and Demolition, Inc., from using cash collateral. CCG also seeks that the Debtor provide adequate protection on a collateralized equipment securing CCG's interest, by making monthly payments of $13,300. CCG notes that as of Sept. 4, 2019, the Debtor has not filed any motions in the case. Specifically, the Debtor has not filed any traditional "first day motions" with regard to issues such as employee wages, the continued use of utilities, and the continued use of cash collateral, as that terms is defined by 11 U.S.C. Sec. 363(a). As of June 4, 2019, the Debtor owes CCG, on account of prepetition promissory notes issued by the Debtor: (i) $11,709 on Note 1; (ii) $48,609 on Note 2; (iii) $152,671 on Note 3; (iv) $225,278 on Note 4; (v) $180,761 on Note 5. By virtue of certain Security Agreements, CCG asserts a security interest in all of the Debtor's personal property, including all accounts, accounts receivable, chattels to each Note or Security Agreement on at least 19 pieces of heavy equipment and related accessories. CCG asserts a first-priority, properly perfected security interest in the collateral and seeks that the Debtor sequester the cash collateral. A copy of the Objection is available for free at http://bankrupt.com/misc/Circle_Bar_14_Cash_M.pdf About Circle Bar T Demolition Circle Bar T Demolition and Grading, Inc., sought Chapter 11 protection (Bankr. D.S.C. Case No. 19-04350) on Aug. 16, 2019. EDDYE L. LANE, P.A., is serving as the Debtor's as counsel. COMMSCOPE HOLDING: Moody's Lowers CFR to B1, Outlook Stable ----------------------------------------------------------- Moody's Investors Service downgraded CommScope Holding Company, Inc.'s Corporate Family Rating to B1 from Ba3, Probability of Default Ratings to B1-PD from Ba3-PD, unsecured notes to B3 from B1, and secured term loan to Ba3 from Ba1. The outlook is stable. The downgrade is driven primarily by weaker than expected operating performance at newly acquired ARRIS (closed April 2019) which had 18% year over year revenue declines and 50% declines in EBITDA in the quarter ending June 30, 2019. Leverage as of June 30, 2019 was approximately 7x. Moody's expects continued pressure for the back half of 2019 for the ARRIS business with leverage increasing towards 7.5x. Declines at ARRIS were broad based but largely driven by the declines in the network and cloud segment which has been significantly affected by reduced capital spending from cable operators. Moody's expects industry spending levels will recover as cable operators update their networks though timing and levels remain uncertain. Further clouding the outlook, network architectures are shifting which could alter ARRIS's historical share of network spending. Nonetheless Moody's expects CommScope's overall results to improve in 2020 and leverage to trend toward the mid-6x's based on management's commitment to repay debt and the combined businesses' cash generating potential. RATINGS RATIONALE The B1 corporate family rating reflects high financial leverage stemming from the ARRIS acquisition, balanced by the combined companies' scale and leading market positions supplying numerous telecom, broadband and enterprise connectivity markets. The combined companies are expected to have modest organic growth over the next several years as 5G spending ramps up partially offset by long term declines in ARRIS's set-top box business. Performance can however vary significantly in any given period given the volatile spending patterns of the combined businesses' large cable and telco customers and evolving payTV architectures. Although the combined business will be one of the largest suppliers of wireless telco and cable industry equipment and connectivity solutions, it will be small relative to the size of their main customers and will have limited negotiating leverage. The Ba3 ratings on the secured debt reflect its relative priority in the capital structure. The B3 rating on the unsecured debt reflects its effective subordination to the secured debt in the capital structure. Moody's expects CommScope will continue to repay debt, prioritizing re-payment of the 2021 unsecured notes ($450 million remaining following $200 million re-payment in August 2019). The stable outlook reflects its expectation that CommScope will generate over $500 million of annual free cash flow, which will be used primarily to re-pay debt. The ratings could be downgraded if performance does not improve and leverage is not on track to get below 6.5x within the next 12-18 months. The ratings could be upgraded if leverage is on track to get to 5x and liquidity remains solid. The company has a good liquidity profile based on $348 million of cash on hand as of June 30, 2019 and an undrawn $1 billion ABL facility and its expectation of free cash flow generation of over $500 million next year. Downgrades: Issuer: CommScope Holding Company, Inc. Corporate Family Rating, Downgraded to B1 from Ba3 Probability of Default Rating, Downgraded to B1-PD from Ba3-PD Issuer: CommScope Technologies LLC Senior Unsecured Regular Bond/Debenture, Downgraded to B3 (LGD5) from B1 (LGD5) Issuer: Commscope, Inc. Senior Secured Bank Credit Facility, Downgraded to Ba3 (LGD3) from Ba1 (LGD2) Senior Secured Regular Bond/Debenture, Downgraded to Ba3 (LGD3) from Ba1 (LGD2) Senior Unsecured Regular Bond/Debenture, Downgraded to B3 (LGD5) from B1 (LGD5) Outlook Actions: Issuer: CommScope Holding Company, Inc. Outlook, Stable The principal methodology used in these ratings was Global Manufacturing Companies published in June 2017. CommScope Holding Company Inc. is the holding company for CommScope Inc., a supplier of connectivity and infrastructure solutions for the wireless industry, telecom service and cable service providers as well as the enterprise market. ARRIS, acquired April 2019, is one of the largest providers of equipment to the cable television and broadband industries. Pro forma combined revenues were approximately $10.7 billion for the twelve months ended June 2019. CommScope is headquartered in Hickory, NC. COMMUNITY HEALTH: Vanguard Group Has 5% Stake as of Aug. 30 ----------------------------------------------------------- The Vanguard Group disclosed in a Schedule 13G/A filed with the Securities and Exchange Commission that as of Aug. 30, 2019, it beneficially owns 5,963,152 shares of common stock of Community Health Systems Inc., representing 5.05 percent of the shares outstanding. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 82,100 shares or 0.06% of the Common Stock outstanding of the Company as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 15,356 shares or 0.01% of the Common Stock outstanding of the Company as a result of its serving as investment manager of collective trust accounts. A full-text copy of the regulatory filing is available for free at: https://is.gd/FY4UiJ About Community Health Community Health -- http://www.chs.net/-- is a publicly traded hospital company and an operator of general acute care hospitals in communities across the country. The Company, through its subsidiaries, owns, leases or operates 105 affiliated hospitals in 18 states with an aggregate of approximately 17,000 licensed beds. The Company's headquarters are located in Franklin, Tennessee, a suburb south of Nashville. Shares in Community Health Systems, Inc. are traded on the New York Stock Exchange under the symbol "CYH." Community Health reported a net loss attributable to the Company's stockholders of $788 million for the year ended Dec. 31, 2018, compared to a net loss attributable to the Company's stockholders of $2.45 billion for the year ended Dec. 31, 2017. As of June 30, 2019, the Company had $16.13 billion in total assets, $17.38 billion in total liabilities, $503 million in redeemable noncontrolling interests in equity of consolidated subsidiaries, and a total stockholders' deficit of $1.75 billion. * * * In July 2018, S&P Global Ratings raised its corporate credit rating on Franklin, Tenn.-based hospital operator Community Health Systems Inc. to 'CCC+' from 'SD' (selective default). The outlook is negative. "The upgrade of Community to 'CCC+' reflects the company's longer-dated debt maturity schedule, and our view that its efforts to rationalize its hospital portfolio as well as improve financial performance and cash flow should strengthen credit measures over the next 12 to 18 months." In June 2019, Fitch Ratings has affirmed Community Health System Inc.'s Long-Term Issuer Default Rating at 'CCC'. CHS's 'CCC' Issuer Default Rating reflects the company's weak financial flexibility with high gross debt leverage and stressed FCF generation (CFO less capex and dividends). CONCENTRA INC: Moody's Hikes CFR to B1, Outlook Stable ------------------------------------------------------ Moody's Investors Service upgraded Concentra Inc.'s Corporate Family Rating to B1 from B2 and Probability of Default Rating to B1-PD from B2-PD. Moody's also affirmed the B1 ratings on Concentra's senior secured revolver and upsized term loan. Proceeds from the incremental first lien debt, along with balance sheet cash, will be used to repay and terminate the second lien term loan. The rating outlook is stable. The upgrade of the CFR reflects the company's reduction in financial leverage, and improvement in interest coverage ratios and free cash flow. Concentra's successful integration of the 2018 acquisition of U.S. Healthworks has resulted in improved profitability, while also expanding Concentra's scale and market presence. The proposed refinancing transaction will drive further deleveraging and improvement in interest coverage metrics and cash flow. Pro forma for the proposed refinancing transaction, Concentra's adjusted debt/EBITDA will decline to around 4.5 times. The affirmation of the senior secured first lien ratings reflects the offsetting impact of the elimination of the loss absorption provided by the second lien debt and the upgrade of the CFR. Concentra Inc.: Ratings upgraded: Corporate Family Rating to B1 from B2 Probability of Default Rating to B1-PD from B2-PD Ratings affirmed: Senior secured first lien revolving credit facility expiring 2021 at B1 (LGD 3) Senior secured first lien term loan B (including upsized amount) due 2022 at B1 (LGD 3) Ratings for which there is no action that will be withdrawn at transaction close: Senior secured second lien term loan due 2023 at Caa1 (LGD 6) The rating outlook is stable. RATINGS RATIONALE Concentra's B1 Corporate Family Rating reflects Moody's expectation for moderately high financial leverage, and moderate long-term organic growth prospects. Moody's expects that the achievement of earnings growth, absent acquisitions, will become more difficult due to a reduction in labor intensive jobs in favor of more service and technology related industries across the United States. The rating is supported by the company's leading scale in the highly fragmented occupational health industry and strong customer, payor and geographic diversification. Further, the company maintains very good liquidity and generates strong free cash flow relative to debt. Concentra's environmental, social, and governance risks are relatively low. Concentra's governance profile is supported by its majority ownership by Select Medical Corporation (B1 stable), a publicly traded company. Further, Moody's believes the risk of dividends is low, given Moody's expectation that Select Medical will continue to increase its ownership in Concentra over the next three years. The stable outlook reflects Moody's view that leverage will remain moderately high, and that, over time, the credit profiles of Select Medical and Concentra will converge. The ratings could be upgraded if Concentra is able to meaningfully expand its scale. Additionally, Concentra would need to sustain improvements in free cash flow and reduce leverage, such that debt to EBITDA is expected to be sustained below 4.0 times. The ratings could be downgraded if the company materially increases leverage, either through a debt-financed acquisition or due to more challenging operating conditions. The ratings could also be downgraded if liquidity weakens or the company's free cash flow materially declines. Specifically, if debt to EBITDA is sustained above 5.0 times, the ratings could be downgraded. Concentra is a provider of occupational and consumer healthcare services, including workers' compensation injury care, physical exams, wellness, preventative care and drug testing for employers. Concentra has operations across the US through medical centers and onsite clinics at employer worksites. The company also provides outpatient services to veterans at 33 Department of Veterans Affairs community-based outpatient clinics. Concentra generates revenue of about $1.6 billion. The principal rating methodology used in these ratings was Business and Consumer Service Industry published in October 2016. CONCENTRA INC: S&P Affirms B+ Rating on Sec. First-Lien Term Loan ----------------------------------------------------------------- S&P Global Ratings affirmed its 'B+' issue-level rating on Concentra Inc.'s senior secured first-lien term loan B following the announced $100 million incremental increase to it. The '3' recovery rating remains unchanged, indicating S&P's expectation for meaningful (50%-70%; it has revised the rounded estimate to 50% from 55%) recovery in the event of a payment default. The company plans to use the proceeds, along with $145 million in cash, to repay all of its $240 million second-lien term loan debt due 2023. S&P expects this transaction will lower Concentra's leverage to 4.3x by year-end 2019 and to 4.1x in 2020. S&P's 'B+' issuer credit rating on Concentra is based on the company's narrow business focus in the highly fragmented occupational health market. The industry is vulnerable to economic cycles and has low barriers to entry. Concentra derives the vast majority of its revenue from providing medical services for workplace-related injuries, including pre-employment and drug tests, at its centers and onsite clinics. While workers' compensation reimbursement has been relatively stable, this segment is sensitive to economic trends, especially unemployment levels. The 'B+' issuer credit rating on Concentra is unaffected by this transaction. The stable outlook reflects S&P's view that Concentra's growth rate, inclusive of small tuck-in acquisitions and de novos, will be slightly better than the industry average, with improving EBITDA margins and discretionary cash flow generation of about $95 million. COUNTRY MORNING FARMS: Gets Final Nod on Cash Collateral Use ------------------------------------------------------------ The Hon. Frederick P. Corbit of the U.s. Bankruptcy Court for the Eastern District of Washington authorized County Morning Farms, Inc.'s interim use of cash collateral pursuant to the Final Cash Collateral Budget, which spans through the week of Oct. 27, 2019. The Debtor is allowed a variance of not more than 10% for each line item in the Interim Budget and in the aggregate monthly. However, the budgeted amounts for Professional Services are excluded from this line-item variance. The Debtor may prepay or make advance deposits to vendors towards expenditures in the Final Budget, however no such prepayment or advance deposit may exceed $5,000 monthly. Bank of the West and any other party holding a valid, perfected, unavoidable security interest or lien in the cash collateral are granted a valid, automatically perfected replacement lien against any post-petition accounts receivable (or proceeds thereof) of the Debtor. said replacement liens s have the same validity and priority as the security interests and liens existing against the cash collateral as of the Debtor's bankruptcy petition date. The Debtor will cooperate with Bank of the West's representatives and consultants in providing full and reasonable access, upon reasonable notice, to information respecting the Bank's collateral, the Debtor's business operations, financial and accounting information, production information and the Debtor's consultants. About Country Morning Farms Country Morning Farms, Inc., is a privately held company in the cattle ranching and farming business. Country Morning Farms grows its own feeds, milk its own cows, and delivers fresh dairy products to its customers. Country Morning Farms filed a Chapter 11 petition (Bankr. E.D. Wash. Case No. 19-00478) on March 1, 2019. The petition was signed by Robert Gilbert, vice president. The case is assigned to Judge Frederick P. Corbit. The Debtor is represented by siam L. Hames, Esq. at Hames, Anderson, Whitlow & O'Leary. At the time of filing, the Debtor disclosed $6,421,269 in assets and $10,586,970 in liabilities. Gregory Garvin, acting U.S. trustee for Region 18, on April 2, 2019, appointed two creditors to serve on an official committee of unsecured creditors. CPI INTERNATIONAL: Moody's Affirms B3 CFR, Outlook Stable --------------------------------------------------------- Moody's Investors Service affirmed the following ratings of CPI International Inc.: B3 Corporate Family, B3-PD Probability of Default and Caa2 second lien senior secured. Moody's also downgraded the first lien senior secured rating to B3 from B2 and assigned a B3 rating to the company's new $195 million first lien term loan. The company will arrange this new loan to fund its acquisition of General Dynamics Mission Systems' satellite communications business, expected to close in the fourth quarter of 2019. The rating outlook is stable. The acquisition will expand CPI's revenue base by about 50% and strengthen its business profile by broadening its offerings and customer base. According to Moody's Lead Analyst, Bruce Herskovics "While the transaction will be totally debt financed, the opportunity seems a transformational one for CPI and margin potential of the acquired business makes the purchase price seem rather attractive. Moreover, a favorable US defense spending environment should help operating results during the integration that could run for the next 18 to 24 months." Regarding the downgrade of the first lien senior secured rating, Herskovics added, "the downgrade to B3 reflects that the company's capital structure will become more heavily comprised of first lien debt, which will weaken the stress scenario recovery prospect of this debt class." The acquisition brings a range of medium and large size satellite communication antennae and related components that often present upgrade and maintenance orders. The technology should well complement CPI's small scale antennae product line and increase the bid and development opportunities of CPI's satellite communication related radio frequency, amplification, and signal/power conversion products. RATINGS RATIONALE CPI's CFR of B3 reflects high financial leverage, historically only modest free cash flow generation, limited but adequate liquidity and an acquisitive focus which could slow de-leveraging. The rating nonetheless also recognizes the company's large installed base of communications, radar and electronic warfare-related components and subsystems covering defense and commercial end markets. The portfolio features a significant degree of sole-source product positions that reduce revenue variability and help drive an about 15% EBITDA margin. The company's trailing leverage of mid-6x has largely continued unchanged since the leveraged buyout of 2017. Revenue and earnings growth that trailed Moody's expectations, in part driven by slower startup of in-flight passenger communication programs, and added costs from CPI's efforts to more fully integrate its operations, drove the underperformance. However, long-term demand trends remain compelling and continuation of recent efficiency initiatives and the upcoming integration of GD's satellite communications operations should improve the cost structure and potentially raise returns on R&D activity. Moody's views leverage proforma for the acquisition to be about 7x, declining to 6x in 2021. Moody's anticipates free cash flow of about $20 million, or 2% to 3% of debt, through 2020; not robust but suitable for the rating in light of positive change within the company. Free cash flow above $30 million in 2021 seems probable and these amounts factor in about $15 million of two-year integration spending planned for the business being acquired. The transaction will close with CPI holding about $25 million cash, the bulk of which will be ear marked for the scheduled integration costs. The rating outlook is stable and reflects the de-leveraging anticipated near term with at least low-single digit annual revenue growth supported by a favorable US defense spending trend. The modestly-sized, undrawn $35 million revolving credit facility with good covenant headroom gives financial flexibility as does the likelihood that free cash flow will exceed annual term loan amortization. Upward rating momentum would depend on Debt to EBITDA approaching 5.5x with free cash flow closer to $50 million and a good liquidity profile. Downward rating pressure would mount with Debt to EBITDA continuing above 7x, break even or worse free cash flow or a weakening liquidity profile. Downgrades: Issuer: CPI International, Inc. Senior Secured Bank Credit Facility, Downgraded to B3 (LGD3) from B2 (LGD3) Assignments: Issuer: CPI International, Inc. Senior Secured Bank Credit Facility, Assigned B3 (LGD3) Outlook Actions: Issuer: CPI International, Inc. Outlook, Remains Stable Affirmations: Issuer: CPI International, Inc. Probability of Default Rating, Affirmed B3-PD Corporate Family Rating, Affirmed B3 Senior Secured Bank Credit Facility, Affirmed Caa2 (LGD6) The principal methodology used in these ratings was Aerospace and Defense Industry published in March 2018. CPI International, Inc. is a subsidiary of CPI Intermediate Holdings, Inc.. CPI, through its operating subsidiaries, manufactures and distributes vacuum electron devices and related equipment for defense and commercial applications requiring high power and/or high frequency energy generation. CPI is indirectly owned by affiliates of Odyssey Investment Partners, LLC. Sales for 2019, pro forma for the acquisition of General Dynamics Mission Systems satellite communications business, are estimated at $760 million. CPI INTERNATIONAL: S&P Affirms 'B' ICR; Outlook Negative -------------------------------------------------------- S&P Global Ratings affirmed its 'B' issuer credit rating on CPI International Inc. (CPI). The outlook is negative. At the same time, S&P assigned a 'B' issue-level rating and a '4' recovery rating to the $195 million first-lien term loan proposed by the company, which is planning to acquire General Dynamic's SATCOM business using the proceeds from the new term loan. Meanwhile, S&P affirmed the 'B' issue-level rating on the company's existing $35 million revolving credit facility and $470 million first-lien term loan. The '4' recovery rating is unchanged, indicating the rating agency's expectation of average recovery (30%-45%; rounded estimate: 40%) in the event of a payment default. S&P also affirmed the 'CCC+' issue-level rating on the $100 million second-lien term loan. The '6' recovery rating is unchanged, indicating its expectation of negligible recovery (0%-5%; rounded estimate:0%) in the event of a payment default. The affirmation reflects that the modest improvement in the company's business risk will not offset the higher leverage from the acquisition. Although S&P expects leverage to improve, the pace and extent of the improvement could be affected by integration issues or unanticipated weakness in key end markets. S&P expects pro forma debt to EBITDA of 7.5x-8.0x in fiscal 2020, assuming the acquisition takes place at the beginning of the year (the company's fiscal year begins on Oct. 1, 2019). This ratio should improve to 5.0x-5.5x in fiscal 2021 due to synergies and the absence of transaction costs. The negative rating outlook on CPI reflects S&P's expectation that leverage will increase due to the proposed SATCOM transaction, and S&P believes there is a risk it won't improve due to integration costs or continued weak demand in the commercial satellite communications market. The rating agency expects pro forma debt to EBITDA of about 7.5x-8.0x in 2020, improving to 5.0x-5.5x in 2021, due to the absence of one-time costs and top line growth. "We could revise our outlook on CPI to stable within the next 12 months if its debt to EBITDA declined below 7x. This could occur if the company successfully integrated the acquired business, and CPI's earnings increased due to an improvement in the commercial satellite communications market and its costs continued to decline due to cost-saving initiatives," S&P said, adding that it would also expect the company's owners to commit to maintain debt to EBITDA below 7x going forward even with future dividends or acquisitions. "We could lower our ratings on CPI if the company's debt to EBITDA continued to exceed 7x 12 months after the acquisition closed and we did not expect it to improve. This could occur due to integration issues, continued program delays, weakness in key markets, or additional debt-financed acquisitions," the rating agency said. CRR INC: Seeks to Hire Norman Law Firm as Legal Counsel ------------------------------------------------------- CRR Inc. seeks authority from the U.S. Bankruptcy Court for the District of Maryland to employ The Norman Law Firm, PLLC as its legal counsel. CRR requires Norman Law to: (a) provide legal advice with respect to the powers, rights, and duties of the Debtor in the continued management and operation of its business; (b) provide legal advice and consultation related to the legal and administrative requirements of operating the Debtor's Chapter 11 bankruptcy case, including to assist the Debtor in complying with the procedural requirements of the Office of the United States Trustee; (c) take all necessary actions to protect and preserve the Debtor's estate, including prosecuting actions on the Debtor's behalf, defending any action commenced against the Debtor, and representing the Debtor's interests in any negotiations or litigation in which it may be involved; (d) prepare on behalf of the Debtor legal documents necessary or otherwise beneficial to the administration of its estate; (e) represent the Debtor's interests at the meeting of creditors, pursuant to Sec. 341 of the Bankruptcy Code, and at any other hearing scheduled before the court related to the Debtor; (f) assist and advise the Debtor in the formulation, negotiation, and implementation of a Chapter 11 plan and all documents related thereto; (g) assist and advise the Debtor with respect to negotiation, documentation, implementation, consummation, and closing of corporate transactions, including sales of assets; (h) assist and advise the Debtor with respect to the use of cash collateral and obtaining debtor-in-possession or exit financing; (i) review and analyze all claims filed against the Debtor's bankruptcy estate and to represent the Debtor in connection with the possible prosecution of objections to claims; (j) assist and advise the Debtor concerning any executory contract and unexpired leases, including assumptions, assignments, rejections and renegotiations; (k) coordinate with other professionals employed in the case to rehabilitate the Debtor's affairs; and (l) perform all other bankruptcy related legal services for the Debtor that may be or become necessary during the administration of the Debtor's case. The hourly rate to be charged by The Norman Law is $400 per hour. The firm received a retainer of $5,000 from Calvin Baltimore on behalf of Debtor. Elton Norman, Esq., a member of The Norman Law Firm, PLLC, disclosed in court filings 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 Debtor and its estate. The firm can be reached at: Elton F. Norman, Esq. The Norman Law Firm, PLLC 8720 Georgia Avenue, Suite 1000 Silver Spring, MD 20910 Phone: (301)-588-4888 Fax: (301) 576-3544 Email: enorman@normanlawfirm.net About CRR Inc. Headquartered in Silver Spring, Maryland, CRR, INC., a Maryland Corporation filed for Chapter 11 bankruptcy protection (Bankr. D. Md. Case No. 19-18480) on June 21, 2019, listing under $1 million in both assets and liabilities. The Debtor previously filed a Chapter 11 petition (Bankr. D. Md. Case No. 17-12433) on Feb. 23, 2017. Elton Norman, Esq., at Norman Law Firm PLLC, serves as the Debtor's bankruptcy counsel. CUMBERLAND BEHAVIOR: Seeks to Continue Cash Use, Modify Budget -------------------------------------------------------------- Cumberland Behavior Group LLC seeks permission from the U.S. Bankruptcy Court for the Eastern District of Kentucky to continue using cash collateral through October 31, 2019 and to modify the approved budget. The modified budget proposes to include: * a one-time premium payment of $2,799.62; * additional carve-out payments to ordinary course professionals of up to $2,500 monthly per professional; and * carve-out for professional fees of DelCotto Law Group PLLC for $5,000 monthly, and U.S. Trustee fees as they become due. Jamie L. Harris, Esq., the Debtor's counsel at Delcotto Law Group PLLC assures the Court that the Cash Collateral Creditors' interests in the cash collateral will be adequately protected because the Cash Collateral will be used to maintain, protect and preserve the collateral and make adequate protection payments to the Cash Collateral Creditors. The budget for September and October 2019 can be accessed for free at: http://bankrupt.com/misc/Cumberland_39(1)_Cash_Budget.pdf A hearing on the motion is set for September 18, 2019 at 10 a.m. (ET). About Cumberland Behavior Cumberland Behavior Group LLC is a provider of community living based services to persons with intellectual disabilities. Cumberland Behavior Group sought Chapter 11 protection (Bankr. E.D.Kay. Case No. 19-61027) on Aug. 12, 2019. In the petition signed by Ace R. Jones, II, member, the Debtor estimated assets of no more than $50,000, and liabilities at $1 million to $10 million. The Hon. Gregory R. Schaaf is the case judge. Delcotto Law Group PLLC is the Debtor's counsel. DANCEL LLC: Gets Approval to Hire Udall Law as Special Counsel -------------------------------------------------------------- Dancel, LLC received approval from the U.S. Bankruptcy Court for the District of Arizona to employ Udall Law Firm, L.L.P. as its special counsel. The firm will represent the Debtor in negotiations concerning the modifications of its commercial leases. It will charge an hourly fee of $275. Melissa Noshay-Petro, Esq., a partner at Udall Law, disclosed in court filings that her firm neither holds nor represents any interest materially adverse to the Debtor and its bankruptcy estate. The firm can be reached at: Melissa Noshay-Petro, Esq. Udall Law Firm (Tucson) 4801 E. Broadway Boulevard, Suite 400 Tucson, AZ 85711 Phone: 520-623-4353 About Dancel, L.L.C. Dancel, L.L.C. owns and operates restaurants with multiple locations in Bernalillo County, N.M. Dancel filed a voluntary Chapter 11 petition (Bankr. D. Ariz. Case No. 19-10446) on August 20, 2019. In the petition signed by Laura Olguin, manager, the Debtor estimated $500,000 to $1 million in assets and $1 million to $10 million in liabilities. Charles R. Hyde, Esq. at The Law Offices of C.R. Hyde, PLC, serves as the Debtor's counsel. The case is assigned to Judge Scott H. Gan. DETROIT COMMUNITY SCHOOLS: S&P Affirms B- Rating on 2005 Rev. Bond ------------------------------------------------------------------ S&P Global Ratings affirmed its 'B-' long-term rating on Detroit Community Schools (DCS), Mich.'s series 2005 public school academy revenue bonds. S&P also removed the rating from CreditWatch, where it was placed with negative implications on Aug. 1, 2019. resolved the CreditWatch action after receiving the required information. The outlook is negative. "The negative outlook reflects our view of DCS' pressured credit characteristics, with a significant drop in enrollment in fall 2018 and weakened financial performance expected for fiscal 2019, following improvement in financial metrics in fiscal 2018," said S&P credit analyst Will McIntyre. While S&P expects enrollment to stabilize in the near-term with a small increase for fall 2019, DCS' weak financial metrics amplify the school's already susceptible credit profile. In conjunction with the school's three-year charter renewal through June 2021, Bay Mills Community College, DCS' authorizer, carried out a complete overhaul of management and the governing board through the appointment of a conservator under its rights within the charter contract. Ultimately, the management and board transition took a little longer than expected, but in July 2019, the school appointed its conservator as permanent chief administrative officer, hired two new principals and appointed three new board members. Eventually, S&P expects these changes are likely to be positive, given DCS' previous issues with the state and authorizer; however, given the level of change, the rating agency would like to see a longer established track record under the new governance structure." During fiscal 2019, the school also reported flood damage due to a pipe bursting during the winter months, which led to approximately $2.3 million in damage and required the high school to operate from an alternative location for 60 days. Management indicated all costs, outside of a modest deductible, were covered under the school's insurance policy, though fiscal 2019 liquidity is likely to be temporarily affected due to the timing for reimbursement of certain costs incurred by the school. The school was not in compliance with its bonded debt financial covenant in fiscal 2018, but S&P understands bondholders have not exercised remedies to accelerate these bonds. S&P believes the bonds could be vulnerable to nonpayment, but believe DCS currently has the capacity to continue to meet its financial obligations given its charter contract is valid at least through June 30, 2021, its access to yearly short-term cash-flow borrowing, and management's expectation for stabilized operations and liquidity in fiscal 2020 as it continues spending reductions. The $1.3 million debt service reserve funds as of June 30, 2018, and bonds' full faith and credit pledge to appropriate funds annually in support of debt service through a state-aid pledge agreement also provide bondholder protection at this time. DONNELLEY FINANCIAL: Moody's Affirms B1 CFR, Outlook Stable ----------------------------------------------------------- Moody's Investors Service affirmed Donnelley Financial Solutions Inc.'s B1 corporate family rating, B1-PD probability of default rating, Ba2 ratings on its senior secured revolving credit facility and senior secured term loan B, and upgraded the company's senior unsecured notes rating to B2 from B3. Moody's also downgraded the company's speculative grade liquidity rating to SGL-3 from SGL-1. The outlook remains stable. "The ratings affirmation considers that DFS' deleveraging focus will allow it to sustain leverage (adjusted Debt/EBITDA) below 4x through the next 12 to 18 months despite continuing pressure on its top line," said Peter Adu, Moody's Vice President and Senior Analyst. "The upgrade of the senior unsecured notes reflects the sizeable decrease in secured debt ranking ahead of them in the capital structure", Adu added. "The downgrade of SGL rating reflects Moody's view of the company's reduced free cash flow generating capacity and restricted revolver availability", Adu further added. Ratings Affirmed: Corporate Family Rating, Affirmed B1 Probability of Default Rating, Affirmed B1-PD $200 million Senior Secured Term Loan B due 2023, Affirmed Ba2 (LGD2) $300 million Senior Secured Revolving Credit Facility due 2023, Affirmed Ba2 (LGD2) Rating Upgraded: $300 million Senior Unsecured Global Notes due 2024, to B2 (LGD5) from B3 (LGD5) Rating Downgraded: Speculative Grade Liquidity, to SGL-3 from SGL-1 Outlook Action: Outlook, Remains Stable RATINGS RATIONALE DFS' B1 CFR is constrained by (1) execution risks as it transitions to a fully digital platform from its commercial printing base; (2) ongoing pressure on profitability as replacement revenue from digital content has not expanded sufficiently to compensate for the decline in print; (3) potential for increased competition due to low entry barriers for digital platforms; and (4) small scale. However, the company benefits from: (1) continued focus on cost reduction and generation of annual positive free cash flow with which to deleverage; (2) expectations that leverage (adjusted Debt/EBITDA) will be sustained below 4x in the next 12 to 18 months (was 4.1x for LTM Q2/2019); and (3) good market positions supported by well recognized products. DFS is exposed to social risk. Technological advancement is impacting the way customers consume data. As a result, DFS has to adapt its business model to the new trend for digitalization while also exposed to competition from new small scale operators due to low entry barriers for digital platforms. Also, DFS' evolution as a provider of digital services exposes it to increasing data security and customer privacy risk. The shift to digital is expected to lead to ongoing pressure in the print industry that will lead to a continuing focus on cost reduction for DFS. Although DFS is exposed to governance risk, Moody's considers the company's financial policy to be conservative characterized by moderate leverage, which is supported by a publicly disclosed target. The company also generates positive free cash flow, which is applied to debt repayment. DFS does not make dividend payments and share repurchases are minimal. DFS has adequate liquidity (SGL-3). Sources approximate $90 million while it has no mandatory debt repayment in the next 12 months. Liquidity is supported by $10 million of cash at Q2/2019, about $80 million of availability under its $300 million revolving credit facility that matures in December 2023 (only $56 million drawn but availability is reduced from a covenant), and Moody's expected free cash flow around breakeven in the next 12 months. The company's revolver is subject to interest coverage and leverage covenants and Moody's expects cushion of at least 20% through the next four quarters. DFS has limited ability to generate liquidity from asset sales. The stable outlook is based on expectations that the company will manage its cost structure in line with its revenue decline and will generate positive free cash flow with which to deleverage and sustain leverage below 4x through the next 12 to 18 months. The rating could be upgraded if DFS is able to generate sustainable positive organic growth while maintaining leverage below 2.75x (was 4.1x for LTM Q2/2019). The rating could be downgraded if business fundamentals deteriorate, evidenced by accelerating revenue and EBITDA decline, if leverage is sustained above 4x (was 4.1x at LTM Q2/2019), or if liquidity weakens, possibly due to negative free cash flow generation on a consistent basis. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. Headquartered in Chicago, Illinois, DFS provides regulatory filing solutions, software-as-a-service, technology-enabled services, and print and distribution solutions to public and private companies, mutual funds and other regulated investment firms to serve their regulatory and compliance needs. Revenue for the last twelve months ended June 30, 2019 was $906 million. DOUGHERTY HOLDINGS: Wins Interim Nod to Use Cash Collateral ----------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas approves on an interim basis the motion filed by Dougherty's Holdings, Inc., and its four debtor affiliates to use cash collateral of secured creditors Cardinal Health and OSK in the ordinary course of business through Sept. 27, 2019, pursuant to a budget. As adequate protection, the Court grants Cardinal Health and OSK postpetition security interest in and replacement lien on the Debtors' assets, with the same priority as existed as of the Petition Date. Determination of the extent and priority of Cardinal Health's and OSK's replacement liens is reserved for the final hearing. The Secured Creditors will each have an administrative expense pursuant to Section 507(b) of the Bankruptcy Code. A copy of the Order can be accessed free of charge at: http://bankrupt.com/misc/Dougherty_Holdings_36_Cash_Ord.pdf About Dougherty's Holdings Established in 1929, Dougherty's Holdings, Inc., and its affiliates own and operate two retail pharmacy stores in Dallas, Texas and one in McAlester, Oklahoma. They are the area's oldest and largest full-service pharmacy serving customers across Texas. The retail stores offer health screenings, serves prescription needs, offers wellness and holistic care products, health & beauty products, home medical supplies and equipment, and gifts for sale. Dougherty's Holdings, and its subsidiaries, including Dougherty's Pharmacy Inc., sought Chapter 11 protection on Aug. 28, 2019 (Bankr. N.D. Tex. Lead Case No. 19-32841) in Dallas, Texas. Gerrit M. Pronske, Esq., and Brandon J. Tittle, Esq., of PRONSKE & KATHMAN, P.C., serve as the Debtors' counsel. DOUGHERTY'S HOLDINGS: Seeks to Hire Pronske & Kathman as Counsel ---------------------------------------------------------------- Dougherty's Holdings, Inc. seeks authority from the U.S. Bankruptcy Court for the Northern District of Texas to hire Pronske & Kathman, P.C. as its legal counsel. The firm will provide these services in connection with the Chapter 11 cases filed by Dougherty's Holdings and its affiliates: (a) advise the Debtors of their powers and duties in the continued operation of their business and the management of their property; (b) take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on behalf of the Debtors, the defense of any actions commenced against the Debtors, negotiations concerning litigation in which they are involved, and objections to claims filed against their estates; (c) prepare on behalf of the Debtors necessary motions, answers, orders, reports and other legal papers in connection with the administration of their estates; (d) assist the Debtors in preparing for and filing a disclosure statement and plan of reorganization; and (e) perform such legal services as the Debtors may request with respect to any matter, including, but not limited to, corporate finance and governance, contracts, antitrust, labor, and tax. The firm received a retainer in the total amount of $83,585. Brandon Tittle, Esq., at Pronske & Kathman, disclosed in court filings that the firm and its attorneys are "disinterested" within the meaning of Section 101(14) of the Bankruptcy Code. The counsel can be reached at: Gerrit M. Pronske, Esq. Brandon J. Tittle, Esq. Pronske & Kathman, P.C. 2701 Dallas Parkway, Suite 590 Plano, TX 75093 Tel: 214.658.6500 Fax: 214.658.6509 Email: gpronske@pronskepc.com btittle@pronskepc.com About Dougherty's Holdings, Inc. Dougherty's Holdings, Inc. was founded in 1993. The company's line of business includes providing health and allied services. Based in Dallas, Texas, Dougherty's Holdings, Inc. and its affiliates filed petitions for relief under chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Lead Case No. 19-32841) on August 28, 2019. The Debtors are represented by Gerrit M. Pronske at Pronske & Kathman, P.C. DOUGHERTY'S HOLDINGS: Sep. 17 Meeting Set to Form Creditors' Panel ------------------------------------------------------------------ William T. Neary, Acting United States Trustee for Region 6, will hold an organizational meeting on September 17, 2019, at 1:00 p.m. (Central Standard Time) in the bankruptcy case of Dougherty's Holdings, Inc., et al. The meeting will be held at: United States Trustee Meeting Room Earle Cabell Federal Building 1100 Commerce Street, Room 976 Dallas, Texas 75242 The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' case. The organizational meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. A representative of the Debtor, however, may attend the Organizational Meeting, and provide background information regarding the bankruptcy cases. To increase participation in the Chapter 11 proceeding, Section 1102 of the Bankruptcy Code requires that the United States Trustee appoint a committee of unsecured creditors as soon as practicable. The Committee ordinarily consists of the persons, willing to serve, that hold the seven largest unsecured claims against the debtor of the kinds represented on the committee. Section 1103 of the Bankruptcy Code provides that the Committee may consult with the debtor, investigate the debtor and its business operations and participate in the formulation of a plan of reorganization. The Committee may also perform other services as are in the interests of the unsecured creditors whom it represents. About Dougherty's Holdings Established in 1929, Dougherty's Holdings, Inc., and its affiliates own and operate two retail pharmacy stores in Dallas, Texas and one in McAlester, Oklahoma. They are the area's oldest and largest full-service pharmacy serving customers across Texas. The retail stores offer health screenings, serves prescription needs, offers wellness and holistic care products, health & beauty products, home medical supplies and equipment, and gifts for sale. Dougherty's Holdings, and its subsidiaries, including Dougherty's Pharmacy Inc., sought Chapter 11 protection on Aug. 28, 2019 (Bankr. N.D. Tex. Lead Case No. 19-32841) in Dallas, Texas. Gerrit M. Pronske, Esq., and Brandon J. Tittle, Esq., of Pronske & Kathman, P.C., serve as the Debtors' counsel. DYNAMIC PRECISION: S&P Alters Outlook to Positive, Affirms B- ICR ----------------------------------------------------------------- S&P Global Ratings revised its outlook on Dynamic Precision Group Inc. (DPG) to positive from stable and affirmed the ratings, including the 'B-' issuer credit rating. The positive outlook reflects S&P's expectation that DPG's credit metrics will continue to improve in 2019 and 2020, and will likely remain below the rating agency's 6.5x upgrade trigger of debt to EBITDA. However, any additional significant delays in the return to service for the Boeing 737 MAX, the company's largest program, could delay the likely improvement in the credit metrics. Furthermore, the maturity of the company's credit facility in December 2020 could hurt liquidity if not addressed later this year. DPG has been successful in improving margins through better pricing agreements, higher volumes, and increasing work in lower-cost locations. In S&P's view, revenue growth will persist because the company has been able to increase content on high-growth engine platforms. The rating agency expects this to result in improved debt to EBITDA to below 5x in 2019. S&P's positive outlook reflects its expectation that DPG's credit metrics will continue to improve over the next 12 months as revenue increases from increasing volume and content on popular engine platforms, and earnings grow from margin improvement. It expects debt to EBITDA to improve to below 5x in 2019 from 6.7x in 2018. "We could raise our ratings on DPG over the next 12 months if debt to EBITDA is likely to remain below 6.5x on a sustained basis. Also, MAX deliveries would have to resume and the company will have to successfully refinance or extend its credit facility for us to raise the rating," S&P said. "We could revise our rating on DPG back to stable over the next 12 months if debt to EBITDA increases above 6.5x and we do not expect it to improve. This could stem from a decrease in revenue and earnings due to a further delay in return to service for the 737 MAX, resulting in additional production cuts or a material increase in debt for shareholder dividend or an acquisition," S&P said, adding that it could revise the outlook back to stable or lower the rating if the company is unsuccessful in refinancing or extending the maturity on the credit facility before December 2019. EDGEWELL PERSONAL: Moody's Lowers CFR to B1, Outlook Stable ----------------------------------------------------------- Moody's Investors Service downgraded Edgewell Personal Care Co.'s Corporate Family Rating to B1 from Ba3 and Probability of Default Rating to B1-PD from Ba3-PD. Moody's also downgraded the ratings on Edgewell's unsecured notes to B3 (LGD 5) from Ba3 (LGD 4). Concurrently, Moody's assigned a Ba2 rating to the company's proposed $1.6 billion in new senior secured credit facilities. Proceeds from the new facilities and $285 million of equity will be used to acquire direct-to-consumer shaving company Harry's, Inc. and pay estimated fees and expenses. The Speculative Grade Liquidity Rating was upgraded to SGL-1 from SGL-2. The outlook is stable. This concludes the review that was initiated on May 10th, 2019 when Edgewell announced the Harry's acquisition. The downgrade of the CFR reflects the substantial increase in Edgewell's financial leverage with pro-forma debt to EBITDA increasing to 6.3x from about 3.7x following the company's debt funded acquisition of Harry's. Moody's also recognizes the heightened integration and execution risk given that this is the largest acquisition in Edgewell's history since its seperation from Energizer Holdings, Inc. in 2015. In addition, upon close of the acquisition, the company's US wet shave business will be run by Harry's founders. Moody's recognizes this as a risk and highlights the company's potential corporate governance challenges reflecting the inexperience of Harry's founders in running a significantly larger enterprise. Revenues generated from Edgewell's US wet shave business are roughly four times the size of revenues generated from Harry's standalone. The downgrade on the unsecured notes reflects not only the downgrade of the CFR, but also the creation of a significant amount of secured debt which now has a priority position in the capital structure. The Ba2 rating on Edgewell's proposed senior secured debt is two notches higher than the B1 CFR. This reflects the secured nature of the facilities, and meaningful amount of unsecured debt in Edgewell's capital structure, which would absorb losses before the secured debt. Ratings Downgraded Edgewell Personal Care Co.: Corporate Family Rating to B1 from Ba3; Probability of Default Rating to B1-PD from Ba3- PD; $500 million unsecured notes to B3 (LGD 5) from Ba3 (LDG 4); $600 million unsecured notes to B3 (LGD 5) from Ba3 (LDG 4) Ratings Assigned Edgewell Personal Care Co. $425 million senior Secured Revolving Credit Facility expiring 2024 at Ba2 (LDG 2); $565 million senior Secured First Lien Term loan A due 2024 at Ba2 (LDG 2); $610 million senior Secured First Lien Term loan B due 2026 at Ba2 (LDG 2); Ratings Upgraded Edgewell Personal Care Co. Speculative Grade Liquidity Rating to SGL-1 from SGL-2 The rating outlook is stable. RATINGS RATIONALE Edgewell's B1 CFR reflects the company's high pro forma financial leverage with debt to EBITDA estimated at about 6.3x. Moody's expects debt to EBITDA to improve to about 5.7x over the next 12 months through a combination of earnings growth boosted by cost and operational synergies that the company expects to realize through 2021 and debt repayment. The rating also reflects Edgewell's concentration in the mature and highly promotional wet shave category. Edgewell will continue to face intense competition from much larger, well diversified competitors in its wet shave, feminine care and infant care businesses. The rating is supported by the company's portfolio of well-known consumer product brands including Schick, Harry's, Flamingo, Playtex, and Banana Boat. Edgewell also generates good free cash flow. The SGL-1 Speculative Grade Liquidity Rating reflects Moody's view of Edgewell's very strong liquidity. Moody's projects that the company will be able to fund its obligations from internally generated cash. The stable outlook reflects Moody's expectation that Edgewell's financial leverage will remain high over the next year but will decline over time through a combination of earnings growth and debt repayment. The outlook also reflects the rating agency's expectation that Edgewell will continue to generate solid free cash flow and maintain very strong liquidity. The ratings could be downgraded if Edgewell experiences significant operating disruption due to the integration of Harry's. The ratings could also be downgraded if the company continues to experience deteriorating operating performance in its core wet shave business. Further, the ratings could be downgraded if the company's financial policies become increasingly aggressive, including additional debt funded acquisitions or shareholder returns. Additionally Moody's could downgrade the ratings if the company's liquidity deteriorates or if debt to EBITDA is sustained above 5.5x. Moody's could upgrade the ratings if Edgewell successfully integrates Harry's and improves its core operations and generates positive organic growth. Debt/EBITDA would need to be sustained below 4.5x before Moody's would consider an upgrade. The principal methodology used in these ratings was Global Packaged Goods published in January 2017. Edgewell Personal Care Co., based in Shelton, CT manufactures, markets and distributes branded personal care products in the wet shave, skin and sun care, feminine care, and infant care categories. The company has a portfolio of over 25 brands and a global footprint in over 50 countries. Edgewell will generate pro-forma annual revenue of about $2.5 billion. EDGEWELL PERSONAL: S&P Lowers ICR to 'BB-'; Outlook Negative ------------------------------------------------------------ S&P Global Ratings assigned its 'BB' issue-level rating to U.S.-based Edgewell Personal Care Co.'s proposed $1.6 billion senior secured credit facilities with a '2' recovery rating. These senior secured credit facilities will constitute the debt financing for the company's $1.37 billion acquisition of Harry's Inc. S&P lowered its issuer credit rating on the company by one notch to 'BB-' and its issue-level rating on the senior unsecured notes by two notches to 'B+' and removed them from CreditWatch, where they were placed with negative implications on May 10, 2019. Due to the sizable secured bank debt in the proposed capital structure, the recovery rating on the senior unsecured notes is revised to '5', indicating that creditors could expect modest (10%-30%; rounded estimate: 25%) recovery in the event of a payment default, from '3'. "Edgewell is shifting to a growth strategy, at a high price in our view, and significantly increasing leverage," S&P said. The proposed acquisition is intended to create a business with a mid-single-digit percentage top-line growth trajectory in personal care by combining Harry's marketing expertise with Edgewell's technological capabilities, realizing healthy cost synergies. The negative outlook reflects the potential for a lower rating over the next 12 months if Edgewell cannot strengthen credit measures in line with our forecast. "We could lower the rating if Edgewell cannot reduce adjusted leverage to below 5x within 12 months from the acquisition close. This could occur if Harry's growth trajectory stalls, resulting in an inability to reach economies of scale that prevent it from meaningfully increasing its presently break-even EBITDA, if expected synergies do not materialize, or if there is a loss of key customers or talent," S&P said. Profitability and cash flow of the combined entity could also suffer if competition escalates, especially with market leader Gillette, input costs escalate, or there is a protracted recession, according to the rating agency. "We could revise the outlook to stable if we project that adjusted leverage will improve on a sustained basis to the mid-4x area. This could result if Harry's expands profitably while the legacy Edgewell businesses' EBITDA stabilizes," S&P said. "We assume that Edgewell will not have difficulties addressing its upcoming note maturities. However, for an outlook revision to stable, the $600 million notes due in May 2021 need to be refinanced well before maturity," the rating agency said. EMERGE ENERGY: Pownall Objects to Disclosure Statement ------------------------------------------------------ Pownall Services, LLC, objects to the approval of the Disclosure Statement for the First Amended Joint Plan of Reorganization for Emerge Energy Services LP and its Affiliated Debtors and the motion to approve the Disclosure Statement, complaining that the Debtors' Plan is patently unconfirmable, and therefore the Solicitation Motion should be denied. According to the Debtors' schedules and other publicly available information, there could be as much as $25 million in mechanic's liens encumbering the Debtors' properties. Notwithstanding the magnitude of these obligations -- obligations that may be a gating issue to confirmation of any plan -- the Disclosure Statement does not even mention mechanic's liens, Pownall points out. Even more fundamental to the adequate information needs of all creditors, the Disclosure Statement fails to disclose information relating to the Debtors' valuation of the frac plants in Oklahoma and Texas, any liens or claims against the properties, how mechanic's liens will be treated under the Debtors' plan, and the adversary proceeding filed by Pownall seeking declaratory judgment regarding the priority of liens on the Debtors' Oklahoma plant. Additionally, the Motion should be denied because the Debtors' plan is patently unconfirmable. First, no distribution to junior claims (e.g., unsecured claims) may be made without payment of Pownall's allowed secured claim, and any other allowed "Other Secured Claims” under the Plan. Second, in order for Other Secured Claims to be validly treated as unimpaired, the Plan must be revised to specify that an allowed claim of a mechanic's lien claimant includes attorneys' fees and interest, to the extent provided under applicable nonbankruptcy law. Third, the Plan seeks to reverse the established burden of proof on allowance of claims, which, as to mechanic's lien claims, would apparently allow the Debtors to pay nothing and reserve nothing for mechanic's liens that the Debtors subjectively dispute, and at the same time receive a full release of liens. A disclosure statement should not leave creditors guessing as to their treatment. A disclosure statement should not be allowed to avoid discussing the Debtors' ability to reorganize around threshold issues, such as the mechanic's liens currently encumbering the Debtors' properties. Accordingly, Pownall asks the Court to deny the Solicitation Motion, and condition approval upon amendment of the Disclosure Statement and the Plan to address the objections raised herein dated 30th August 2019. Counsel to Pownall: Lucian Murley, Esq. SAUL EWING ARNSTEIN & LEHR LLP 1201 North Market Street, Suite 2300 P.O. Box 1266 Wilmington, DE 19899 Telephone: (302) 421-6898 Email: luke.murley@saul.com -- and -- Santos Vargas, Esq. Caroline Newman Small, Esq. DAVIS & SANTOS P.C. 719 S. Flores Street San Antonio, TX 78204 Telephone: (210) 853-5882 Email: svargas@dslawpc.com csmall@dslawpc.com About Emerge Energy Services Emerge Energy Services LP -- http://www.emergelp.com/-- is engaged in the mining, processing and distributing silica sand, a key input for the hydraulic fracturing of oil and gas wells. The Debtors conduct their mining and processing operations from facilities located in Wisconsin and Texas. In addition to mining and processing silica sand primarily for use in the oil and gas industry, the Debtors also, to a lesser degree, sell their sand for use in building products and foundry operations. Emerge Energy was formed in 2012 by management and affiliates of Insight Equity Management Company LLC and its affiliated investment funds. Emerge Energy Services and its affiliates protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 19-11563) on July 15, 2019. As of Sept. 30, 2018, the Debtors had total assets of $329,385,000 and total liabilities of $266,077,000. The Debtors tapped Richards, Layton & Finger, P.A. and Latham & Watkins LLP as bankruptcy counsel; Houlihan Lokey Capital Inc. as financial advisor; and Kurtzman Carson Consultants LLC as claims and noticing agent and administrative advisor. The Debtors also hired Ankura Consulting Group LLC to provide interim management services. Andrew R. Vara, Acting United States Trustee for Region 3, on July 31 appointed five creditors to serve on the official committee of unsecured creditors in the Chapter 11 cases of Emerge Energy Services LP, and its affiliates. ENCINO ACQUISITION: S&P Alters Outlook to Neg. & Affirms 'B+' ICR ----------------------------------------------------------------- S&P Global Ratings affirmed the 'B+' issuer credit rating and raised the rating on the second-lien term loan due 2025 to 'BB' from 'BB-' on Encino Acquisition Partners LLC. S&P revised the recovery rating to '1' from '2', reflecting its expectation of a very high (90%-100%, rounded estimate: 95%) recovery in the event of a payment default. S&P's change in outlook for Encino Acquisition Partners reflects weaker leverage metrics including FFO to debt below 30% and debt to EBITDA above 2.5x. The revisions incorporate weak natural gas and NGL pricing and downward adjustments in the rating agency's price deck. S&P also expects cash outflows to exceed $100 million per year in 2019 and 2020, partially due to larger-than-anticipated capital spend this year. However, S&P continues to assess liquidity as adequate given the absence of impending debt maturities and substantial availability of more than $680 million on the $1.05 billion RBL borrowing base at the end of the second quarter, although redetermination risk is something to consider. The negative outlook reflects S&P's expectation for weaker financial measures and increased cash burn over the next two years. "We could lower the rating if FFO/debt falls below 30% for a sustained period or if liquidity deteriorates. This would most likely occur due to lower commodity prices, wider natural gas differentials, or capital spending above our assumptions," S&P said. "We could raise our rating on Encino if the company develops its asset base and increases developed reserves and production to be commensurate with those of its higher-rated peers while reducing revolver borrowings and maintaining an FFO-to-debt ratio of at least 30%," S&P said, adding that this scenario could occur if commodity prices remain in line with its expectations while the company increases its production, develops its acreage, and spends within cash flow. ENCOMPASS HEALTH: Moody's Rates Notes Due 2028/2030 'B1' -------------------------------------------------------- Moody's Investors Service assigned B1 ratings to each of Encompass Health Corporation's new unsecured note issuances. There is no change to any of Encompass' existing ratings, including the Ba3 Corporate Family Rating, Ba3-PD Probability of Default Rating, Baa3 senior secured rating, and the B1 ratings on the existing unsecured notes. The outlook is stable. Proceeds from the new notes totaling approximately $800 million will be used to repay revolver borrowings, including those used to fund the July 2019 acquisition of Alacare, and retire roughly $200 million of the 2024 unsecured notes. Further, proceeds will be used to pay cash distributions totaling $219 million relating to Home Health Holdings rollover shares and stock appreciation rights. Encompass Health Corp. Ratings assigned: Unsecured notes due 2028 at B1 (LGD4) Unsecured notes due 2030 at B1 (LGD4) Ratings for which there is no change: Corporate Family Rating at Ba3 Probability of Default Rating at Ba3-PD Speculative Grade Liquidity Rating at SGL-1 Senior secured revolving credit facility expiring 2022 at Baa3 (LGD1) Senior secured term loan due 2022 at Baa3 (LGD1) Unsecured notes due 2023 at B1 (LGD4) Unsecured notes due 2024 at B1 (LGD4) Unsecured notes due 2025 at B1 (LGD4) The outlook is stable. RATINGS RATIONALE Encompass Health's Ba3 Corporate Family Rating reflects the company's high exposure to Medicare reimbursement and the potential for adverse changes to Medicare rates for the company's services. Moody's believes that reimbursement for post-acute services could evolve in a way that would pressure Encompass' margins. That said, Encompass has been making significant investments in IT and data analytics that Moody's believes will help it gain operating and cost efficiencies. This will better position Encompass to absorb potential pressures associated with an evolving post-acute reimbursement landscape. The Ba3 CFR also reflects the company's considerable scale in the inpatient rehabilitation sector and good geographic diversification. Moody's expects that Encompass will maintain moderate adjusted leverage with debt/EBITDA in the low-to-mid 3 times range during the next 12-18 months. The company generates stable, strong free cash flow and maintains very good liquidity. The stable outlook reflects Moody's expectation that Encompass will maintain solid credit metrics but will also remain highly reliant on Medicare and vulnerable to potential reimbursement changes. The ratings could be downgraded if operating performance weakens or if liquidity declines significantly, or if Moody's expects adverse developments in Medicare reimbursement for IRFs and home health/hospice to cause such changes. Specifically, a downgrade could occur if Encompass sustains debt/EBITDA above 4 times. The ratings could be upgraded if the company sustains debt/EBITDA below 3 times. Greater levels of business diversity or increased visibility into prolonged stability of Medicare reimbursement for key business lines could also support an upgrade. Headquartered in Birmingham, Alabama, Encompass Health Corporation is the largest operator of inpatient rehabilitation facilities. Encompass also provides home health and hospice services. Revenues are approximately $4.4 billion. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. ENCOMPASS HEALTH: S&P Rates $800MM Senior Unsecured Notes 'B+' -------------------------------------------------------------- S&P Global Ratings assigned its 'B+' issue-level rating and '5' recovery rating to Encompass Health Corp.'s $800 million new two-part senior unsecured notes, with 8-year and 10-year tenors. The '5' recovery rating indicates S&P's expectation for modest (10%-30%; rounded estimate: 25%) recovery in the event of a payment default. The company will use the proceeds from this issuance to repay revolver balance, purchase Home Health Holdings rollover shares and stock appreciation rights, and repay a portion of senior unsecured notes due 2024. All of S&P's other ratings on Encompass, including its 'BB-' issuer credit rating, 'BB+' secured debt rating, and 'B+' unsecured debt rating, remain unchanged. "Our issuer credit rating on Encompass reflects its significant reimbursement risk exposure, substantial revenue concentration within a narrow line of inpatient rehab services, and its leadership position in the inpatient rehab space with meaningful scale, good profitability, and strong cash flow generation," S&P said, adding that the rating also reflects its expectation that the company will maintain adjusted leverage between 3x and 4x. Recovery Analysis Key analytical factors -- Encompass Health Corp. has a $700 million secured revolver, a $300 million term loan, about $2.3 billion of unsecured debt, consisting of senior notes due 2023, 2024, 2025, and the recently launched 2027 and 2029 notes. The company also has capital leases of around $400 million. -- For the company to default, S&P estimates EBITDA would need to decline to about $288 million, representing a significant deterioration from the current levels. In the event of a default, S&P expects the company would reorganize. It valued the company applying a 5.5x multiple to its projected emergence EBITDA. -- S&P's hypothetical default scenario contemplates a default stemming primarily from an adverse change in Medicare/Medicaid reimbursement for inpatient rehab facilities and home health and hospice services. Simulated default assumptions -- Simulated year of default: 2023 -- EBITDA at emergence: $288 mil. -- EBITDA multiple: 5.5x Simplified waterfall -- Net EV (after 5% admin. costs): $1,506 mil. -- Valuation split in % (obligors/non-obligors): 67/33 -- Collateral value available to secured creditors: $1,332 mil. -- Secured first-lien debt: $835 mil. -- Recovery expectations: 1 (rounded estimate: 95%) -- Total value available to senior unsecured claims: $670 mil. -- Unsecured debt claims: $2,422 mil. -- Recovery expectations: 10% to 30% (rounded estimate: 25%) ESH HOSPITALITY: Moody's Rates Amended Secured Loans 'Ba2' ---------------------------------------------------------- Moody's Investors Service assigned a Ba2 senior secured rating to ESH Hospitality, Inc.'s amended and extended senior secured credit facility. Concurrently, Moody's assigned a Ba3 rating to ESH's unsecured private offering marketed. All other ratings for ESH remain unchanged. The outlook is stable. The following ratings were assigned: - Senior Unsecured Notes due 2027 at Ba3, - Senior Secured Term Loan due 2026 at Ba2, - Senior Secured Revolver due 2024 at Ba2. ESH's refinancing of its existing $1.3 billion term loan (which had $1.131 billion outstanding as of June 30, 2019) with an amended $631 million term loan and $500 million unsecured note is credit positive but has no impact on the company's ratings or outlook. The transaction is credit positive because while it is leverage-neutral it improves the REIT's liquidity by extending maturities of the existing credit facility by three years. The refinancing also enhances the REIT's financial flexibility by reducing the REIT's reliance on secured debt in its capital structure. Pro-forma for the transaction, ESH's secured debt/gross assets improves to 12.6% from 22.6% for LTM 2Q 2019 (including Moody's accounting adjustments) while Moody's-adjusted Net Debt/EBITDA remains moderate at 4.0x. The refinancing transaction demonstrate ESH's commitment to disciplined balance sheet management. The REIT has made significant progress in transitioning to a more flexible capital structure over the past five years, from full reliance on commercial mortgage backed securitization (CMBS) debt funding, to a mix of 25% secured and 75% unsecured debt proforma for the refinancing. The refinancing transaction, however, does not fully address the lumpy debt maturity profile. Even proforma for the transaction, all of ESH's funded debt comes due between 2025 and 2027, which remains a credit challenge. RATINGS RATIONALE The Ba3 corporate family rating reflects ESH Hospitality's moderate leverage with Net Debt/EBITDA at around 4x and strong market position in the mid-price extended stay lodging segment. The REIT benefits from the less operating-intensive nature of this lodging segment that results from longer average length of stay, lower levels of service, and resultant higher profitability. With 554 properties at June 30, 2019, ESH enjoys a wide geographic footprint across the United States. Counterbalancing these positive credit factors, all ESH's properties are managed under a single brand, creating a concentration risk. The REIT liquidity is sound but constrained by lumpy debt maturities, with 100% of funded debt coming due between 2025-2027, proforma for the refinancing. The rating is also tempered by the volatility inherent in the lodging economic cycle as well as intense competition from a number of lodging chains owned by well capitalized leading hotel operators with vast marketing expertise and resources. The rating also takes into account environmental, social and governance (ESG) considerations. From a corporate governance perspective, Moody's notes that there is substantial overlap between the ESH and the parent Extended Stay America, Inc. (ESA) officers and directors. This creates potential conflict of interest between ESH investors and ESH officers and directors sharing their responsibilities between ESH and ESA. The stable rating outlook reflects Moody's expectation that ESH will continue operating with moderate leverage of Net Debt/EBITDA of approximately 4x or lower as it continue to invest in improvements in portfolio quality through renovation and development initiatives. Moody's will likely upgrade ESH's ratings should the REIT decrease its brand concentration, improve its debt maturity ladder and reduce secured debt levels closer to 17% of gross assets while continuing to demonstrate sound operating performance. An upgrade will also require that liquidity remain strong throughout an industry and economic cycle. A downgrade would occur from liquidity challenges or an unexpected drop in demand that causes RevPAR to decline below $45 (below FY2015 levels), or deterioration in leverage such that Net Debt/EBITDA increases over 4.5x. A shift toward a more aggressive acquisition-oriented growth strategy would also be viewed negatively, as would an increase in debt-financed shareholder initiatives. The principal methodology used in these ratings was REITs and Ohter Commercial Real Estate Firms published in September 2018. ESH Hospitality, Inc., a REIT subsidiary of Extended Stay America, Inc. headquartered in Charlotte, N.C., owns its parent company's 554 hotels comprising approximately 61,500 rooms in the U.S. as of June 30, 2019. The company's brand, Extended Stay America, serves the mid-priced extended stay segment. FACEBANK INTERNATIONAL: DBRS Assigns BB LongTerm Issuer Rating -------------------------------------------------------------- DBRS, Inc. has assigned ratings to FACEBANK International Corporation (FACEBANK or the Company), including a Long-Term Issuer Rating of BB. The trend for all ratings is Stable. The Intrinsic Assessment (IA) for the Company is assigned at BB, and Support Assessment is assigned at SA3. KEY RATING CONSIDERATIONS Established in 2006, FACEBANK operates as an International Bank Entity (IBE) under the laws of the Commonwealth of Puerto Rico. The IBE charter offers a tax-efficient platform for the bank to provide U.S. dollar deposit and payment services to foreign customers. Through its Florida-based mortgage subsidiary, Florida Home Trust, the Company provides residential mortgage loans in select Florida counties largely to foreign nationals. DBRS notes that FACEBANK has no exposure to Puerto Rico, as all assets are entirely comprised of U.S.-based loans and securities. Importantly, the Company has established an online connection with the Federal Reserve Bank of New York, which allows it to efficiently clear deposits for its customers, saving both time and expense. DBRS views this as a competitive advantage for FACEBANK, as it is the only IBE with this connectivity, which is contingent on the Company maintaining strong BSA/AML practices. FACEBANK has shown improving profitability metrics driven by a strong net interest margin, supported by below-peer funding costs, which is a key strength of its franchise. While FACEBANK's primary mortgage customer is viewed as potentially riskier, the Company mitigates this risk with conservative underwriting. Additionally, the Company maintains about one-third of its balance sheet in liquid assets. The ratings are underpinned by FACEBANK's liquid balance sheet, profitable operating niche and conservative loan underwriting. Constraining the ratings are the Company's short operating history, heightened operational risk surrounding BSA/AML compliance given its foreign customer base, as well as limited scale and diversity. RATING DRIVERS Increased franchise scale and a greater diversity of earnings could have positive rating implications. Conversely, an increased risk appetite, BSA/AML compliance issues or an inability to attract and maintain deposits could have negative rating implications. RATING RATIONALE Over its limited operating history, FACEBANK has built a profitable international banking franchise, helping its customers transact business in the U.S. Instead of branches, the Company facilitates its deposit gathering through an arrangement with Business Development Facilitators (BDF). These BDFs, professionals located primarily in South America, will partner with the Company by referring customers with a need for a U.S. dollar account to FACEBANK, sharing in the profits from this customer relationship. This arrangement, using BDFs that are vetted and well known to FACEBANK's board of directors, helps keep operating costs low. Additionally, the Company gathers deposits from its lending business, requiring a deposit account for its loan customers, as well as the maintenance of escrow deposits. These sources result in a relatively stable and low-cost deposit base. The Company's cost of funds in 2018 was just 41 basis points. This, along with a higher than average yield on its residential mortgage portfolio, helps to support the Company's solid net interest margin (NIM) and overall earnings. Profitability is also aided by its IBE charter, which allows the Company to operate essentially tax-exempt. FACEBANK's primary loan product is residential mortgages in Florida to foreign nationals. While this can be a riskier mortgage customer, the Company mitigates this risk with full underwriting and conservative loan-to-value (LTV) ratios, including a maximum LTV of 75% dependent on the type of property and borrower. This portfolio has performed well during the Company's operating history, with low levels of non-accrual loans and charge-offs. However, the portfolio has grown during a period of improving real estate fundamentals and has not been tested in a downturn. The Company is not subject to regulatory capital requirements, although risk-based capital levels are calculated by management. DBRS views FACEBANK's capital level as adequate given its loan portfolio and risk management practices. As a privately-held institution, FACEBANK's sources of additional capital are limited, although management has indicated that the Company's ownership does have the wherewithal to inject additional capital if needed. Since 2012, the internal capital generation has been growing and is sufficient to fund balance sheet growth. Notes: All figures are in U.S. dollars unless otherwise noted. FIRST QUANTUM: S&P Cuts Long-Term ICR to B- After Zambia Downgrade ------------------------------------------------------------------ S&P Global Ratings lowered its long-term issuer credit rating on First Quantum Minerals (FQM) to 'B-' from 'B'. S&P lowered its rating on Canada-headquartered copper miner FQM to 'B-' from 'B', following its recent downgrade of Zambia to 'CCC+' from 'B-'. The country sees higher risks associated with rising external financing needs and low foreign currency reserves. At this stage, the majority of FQM's earnings and cash flows (70% of the EBITDA in 2018) come from Zambia, which creates high dependence on the country. This is reflected in a cap of one notch above the transfer and convertibility (T&C) assessment of Zambia, which is currently 'CCC+'. "We continue to rate FQM one notch above the sovereign rating and T&C assessment of Zambia, and we still see its stand-alone credit profile at 'b' despite the increased Zambian country risk. Our assessment factors in notably the benefits stemming from the recent completion of the company's greenfield copper mine, Cobre Panama, which should over time reduce dependence on Zambia and allow deleveraging," S&P said. Over the past few years, S&P has seen Zambia's country risk gradually increase, culminating in its recent revision of its country risk assessment to very high from high. S&P has seen the relationship between various mining companies and the Zambian government deteriorate, as the country has taken a stronger stand on mining industry-related issues such as taxes and employment. One example, although isolated so far, is the ongoing situation around one of Vedanta's mines in the country. Furthermore, there are plans to introduce a new sales-tax regime from January next year, aimed at corporates in the country. If implemented, this would translate into about $200 million less EBITDA for FQM, all else being equal. In addition, the recent drought could lead to power supply disruptions at FQM's mines and affect production over the second half of 2019 -- S&P understands that there has been no impact so far, and the recent Mopani shutdown and Vedanta developments are mitigating this risk. Overall, increasing country risk and the company's remaining dependence on Zambia until Cobre Panama is ramped up and generates stable and significant positive free operating cash flow (FOCF) lead S&P to revise its business risk profile assessment to weak from fair. This is despite FQM's generally good track record of operating in challenging conditions, as exemplified by the recent resolution of a customs duties-related assessment by the Zambia Revenue Authority (ZRA). FQM's flagship $6.7 billion greenfield project Cobre Panama is expected to move to commercial production by the end of this month. Once it is fully ramped up (currently expected in 2020), it will improve FQM's geographical diversification, reducing the exposure to Zambia to about 50%, with Panama contributing about a third in 2020. This may support a reassessment of the link between S&P's ratings on FQM and on Zambia in the coming six-12 months, depending on actual production, cash costs, and ultimately cash flows. The successful ramp-up of Cobre Panama will reduce materially the execution risk that S&P factors in the rating. The mine dispatched the first copper concentrate shipment in June 2019. As at end-July, FQM shipped 42,300 contained tonnes of copper. Upon completion, the group's copper output will increase by around 50% to 840,000 tonnes-870,000 tonnes in 2020. Cobre Panama will also support FQM's overall position on the cash-cost curve in the longer-run (C1 cost guidance of 120 cents/lb in 2022). Another important milestone would be resolving the pending legal issues around the enactment of the law that issued Cobre Panama's license. S&P understands that the legality of the license is not in question. So far, it has had no impact on FQM's operations. Cobre Panama's ramp-up is also key to reducing high leverage. S&P expects the slight increase in spending on the project (about $0.4 billion, equivalent to about 6% of the total capital expenditure [capex] budget) and the current low copper prices to result in weaker-than-expected credit metrics in 2019. The rating agency anticipates the company's S&P-adjusted debt to EBITDA to reach 5.0x-5.5x by the end of the year, compared with its previous assumption of less than 5.0x. S&P's base case continues to factor in an improvement in credit metrics in 2020, with adjusted debt to EBITDA below 4.0x." S&P understands that the company continues to aim for net debt to EBITDA of not more than 2x over the long-term (the 12 months to June 2019 was about 5.0x) before embarking on new projects. As of Dec. 31, 2018, the company's reported net debt was $6.5 billion. However, it is unlikely to decrease by more than a few billion by the end of 2021, based on S&P's projected free cash flow generation. The stable outlook remains linked in the short term to the outlook on Zambia. Over time, S&P expects the link to weaken, as the company's geographical diversification improves with the ramp-up of its greenfield copper mine, Cobre Panama. Under S&P's base-case scenario, it projects adjusted debt to EBITDA of 5.0x-5.5x in 2019, improving to less than 4.0x in 2020, compared with 5.0x -- the level it sees as commensurate with the current rating. "We do not factor in any negative impact from the pending issues around the enactment of the law that issued the Cobre Panama license," S&P said. "We could take a negative rating action on FQM if there is further deterioration in the sovereign credit quality of Zambia, and if we see increased risk of foreign-exchange controls affecting FQM's ability to repatriate cash. That said, with a higher contribution coming from Cobre Panama, the linkage between the ratings will weaken," S&P said. On a stand-alone basis, pressure on the rating could increase if liquidity deteriorates or ratios remain weak (adjusted debt to EBITDA above 5.0x) without a clear path of improvement. This could occur if S&P observes one or both of the following: -- A material drop in copper prices (spot is $5,700/t and S&P's expectation is a recovery to $6,500/t in 2020); and -- Slower ramp-up of Cobre Panama or much higher production costs. A positive rating action will be linked to a successful ramp-up of Cobre Panama over the coming quarters and no further deterioration of the situation in Zambia. Some of the important conditions include: -- The Cobre Panama mine becoming fully operational and generating an EBITDA/FOCF contribution in line with S&P's base case; -- Adjusted debt to EBITDA at 4.0x-5.0x, depending on copper prices through the cycle, together with a positive FOCF supporting a reduction in the company's absolute debt level; and -- Liquidity remaining at least adequate. FLORIDA MICROELECTRONICS: Unsecureds to Get Full Payment Over 5 Yrs ------------------------------------------------------------------- Florida Microelectronics, LLC, filed a plan of reorganization and accompanying disclosure statement. Class Two (General Unsecured Claims) include all other allowed claims of Unsecured Creditors of the Debtor, subject to any Objections that are filed and sustained by the Court. The undisputed general unsecured claims of the Debtor total the amount of $320,702.48, which will be paid in full over the five (5) year term of the Plan. The payments will commence on the Effective Date of the Plan. In lieu of a payout over five (5) years, creditors will have the option of accepting a lump sum payment of 25% of the allowed claim, which shall be paid on the Effective Date of the Plan. These claims are impaired. Any claim for a rejected contractor lease shall be paid as a General Unsecured Claim by agreement, or upon determination by the Court, to the extent that such claims are allowed. A full-text copy of the Disclosure Statement dated August 30, 2019, is available at https://tinyurl.com/y5snphcn from PacerMonitor.com at no charge. Attorneys for Debtor in Possession: Craig I. Kelley, Esq. KELLEY, FULTON & KAPLAN, P.L. 1665 Palm Beach Lakes Blvd. The Forum, Suite 1000 West Palm Beach, Florida 33401 Telephone: (561) 491-1200 Facsimile: (561) 684-3773 About Florida Microelectronics Florida Microelectronics, LLC, is a contract manufacturer that provides manufacturing services, which include electronic and mechanical design and fabrication for a wide range of industry applications, from basic components to complex, turnkey systems, including kiosk assemblies. On Nov. 5, 2018, Florida Microelectronics filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code (Bankr. S.D. Fla. Case No. 18-23807) on Nov. 5, 2018, listing less than $1 million in assets and liabilities. Craig I. Kelley, Esq., at Kelley & Fulton, PL, represents the Debtor. No official committee of unsecured creditors has been appointed in the Chapter 11 case of Florida Microelectronics, LLC as of Dec. 14, according to a court docket. FORD MOTOR: Moody's Cuts Rating on Sr. Unsecured Bank Loans to Ba1 ------------------------------------------------------------------ Moody's Investors Service downgraded the senior unsecured rating of Ford Motor Credit Company LLC (Ford Credit) to Ba1 from Baa3 and the company's short term rating to Not Prime from Prime-3. Moody's also downgraded the senior unsecured debt ratings of FCE Bank plc and Ford Credit Canada Company to Ba1 from Baa3. The rating outlook is stable. This follows Moody's downgrade of Ford Motor Company's (Ford) senior unsecured rating to Ba1 from Baa3 with a stable outlook (see separate press release dated September 9, 2019). Downgrades: Issuer: FCE Bank plc Senior Unsecured Bank Credit Facility, Downgraded to Ba1 from Baa3 Backed Senior Unsecured Deposit Program, Downgraded to NP from P-3 Senior Unsecured Commercial Paper, Downgraded to NP from P-3 Senior Unsecured Medium-Term Note Program, Downgraded to (P)NP from (P)P-3 Senior Unsecured Medium-Term Note Program, Downgraded to (P)Ba1 from (P)Baa3 Senior Unsecured Regular Bond/Debenture, Downgraded to Ba1 from Baa3 Issuer: Ford Credit Canada Company Backed Commercial Paper, Downgraded to NP from P-3 Backed Senior Unsecured Medium-Term Note Program, Downgraded to (P)Ba1 from (P)Baa3 Backed Senior Unsecured Regular Bond/Debenture, Downgraded to Ba1 from Baa3 Senior Unsecured Regular Bond/Debenture, Downgraded to Ba1 from Baa3 Backed Senior Unsecured Shelf, Downgraded to (P)Ba1 from (P)Baa3 Issuer: Ford Motor Credit Company LLC Subordinate Shelf, Downgraded to (P)Ba2 from (P)Ba1 Senior Unsecured Shelf, Downgraded to (P)Ba1 from (P)Baa3 Backed Senior Unsecured Commercial Paper, Downgraded to NP from P-3 Senior Unsecured Commercial Paper, Downgraded to NP from P-3 Senior Unsecured Medium-Term Note Program, Downgraded to (P)Ba1 from (P)Baa3 Backed Senior Unsecured Medium-Term Note Program, Downgraded to (P)Ba1 from (P)Baa3 Senior Unsecured Medium-Term Note Program, Downgraded to (P)NP from (P)P-3 Senior Unsecured Regular Bond/Debenture, Downgraded to Ba1 from Baa3 Outlook Actions: Issuer: FCE Bank plc Outlook, Changed To Stable From Negative Issuer: Ford Credit Canada Company Outlook, Changed To Stable From Negative Issuer: Ford Motor Credit Company LLC Outlook, Changed To Stable From Negative RATINGS RATIONALE The downgrade of Ford Credit's ratings is based upon the downgrade of Ford's ratings. Ford's weaker credit profile could have negative implications for Ford Credit's access to funding and its financing volumes. The downgrade also considers the implicit and explicit support Ford extends to Ford Credit, which provides a one-notch rating lift above Ford Credit's unchanged ba2 stand-alone credit profile. Ford's support is based on Ford Credit's strategic importance as a key provider of financing to Ford's dealers and customers. The support is signified by a support agreement under which Ford Credit can require Ford to inject capital to restore leverage below an 11.5x debt to equity threshold, should Ford Credit exceed the threshold. As further evidence of support, Ford guarantees any draws by Ford Credit as subsidiary borrower under Ford's revolving credit facility. Moody's downgraded Ford's ratings to reflect the considerable operating, competitive, and market challenges facing the company, and the resulting pressure on its earnings and cash generation measures. Ford Credit's ba2 stand-alone profile is unchanged after the downgrade of Ford's ratings. Ford Credit's strengths, including its relatively stable operating performance, its well-managed portfolio credit quality and its capital cushion are not likely to be materially affected. Moody's expects managed receivables will be maintained at or below $155 billion, which supports stability in the company's revenues, risk appetite and liquidity requirements. Additionally, Moody's expects that Ford Credit's managed debt to equity leverage will be managed to within its historical range of 8x to 9x, acting as a governor of distributions to Ford. The company's cost of debt funding could increase, resulting in narrower finance margins, but this would occur over time. Credit challenges include Ford Credit's exposure to the performance trends of its parent and the company's significant use of securitization, which constrains its financial flexibility. An upgrade of Ford would lead to an upgrade of Ford Credit's ratings, provided Ford Credit maintains a stable financial profile and Moody's assumptions regarding Ford's support of Ford Credit do not weaken. A downgrade of Ford's ratings would result in a downgrade of Ford Credit's ratings. An unexpected and material decline in asset quality measures and profitability, diminished liquidity, or leverage (TCE/TMA) that declines to less than 8% could lead to pressure on Ford Credit's stand-alone credit profile. The methodologies used in these ratings were Finance Companies published in December 2018, and Captive Finance Subsidiaries of Nonfinancial Corporations published in August 2019. FORD MOTOR: Moody's Cuts Sr. Unsec. Debt to Ba1, Outlook Stable --------------------------------------------------------------- Moody's Investors Service downgraded the senior unsecured debt rating of Ford Motor Company to Ba1 from Baa3, and concurrently assigned the company a Ba1 Corporate Family Rating and an SGL-1 Speculative Grade Liquidity rating. The outlook is stable. Downgrades: Issuer: Ford Holdings, Inc. Backed Senior Unsecured Regular Bond/Debenture, Downgraded to Ba1 (LGD4) from Baa3 Issuer: Ford Motor Company Senior Unsecured Bank Credit Facility, Downgraded to Ba1 (LGD4) from Baa3 Senior Unsecured Conv./Exch. Bond/Debenture, Downgraded to Ba1 (LGD4) from Baa3 Senior Unsecured Regular Bond/Debenture, Downgraded to Ba1 (LGD4) from Baa3 Assignments: Issuer: Ford Motor Company Corporate Family Rating, Assigned Ba1 Probability of Default Rating, Assigned Ba1-PD Speculative Grade Liquidity Rating, Assigned SGL-1 Outlook Actions: Issuer: Ford Holdings, Inc. Outlook, Changed To Stable From Negative Issuer: Ford Motor Company Outlook, Changed To Stable From Negative RATINGS RATIONALE The Ba1 ratings reflect the considerable operating and market challenges facing Ford, and the weak earnings and cash generation likely as the company pursues a lengthy and costly restructuring plan. The restructuring is expected to extend for several years with $11 billion in charges, and a cash cost of approximately $7 billion. Ford is undertaking this restructuring from a weak position as measures of cash flow and profit margins are below its expectations, and below the performance of investment-grade rated auto peers. Moreover, these measures are likely to remain weak through the 2020/2021 period including a lengthy period of negative cash flow from the restructuring programs. "The company does have a sound balance sheet and liquidity position from which to operate." said Bruce Clark, Senior Vice President with Moody's. Moreover, the erosion in Ford's performance has occurred during a period in which global automotive conditions have been fairly healthy. Ford now faces the challenge of addressing these operational problems as demand in major markets is softening, and as the auto industry is contending with an unprecedented pace of change relating to vehicle electrification, autonomous driving, ride sharing, and increasingly burdensome emission regulations. The weak performance was driven by two principal factors, which Ford is addressing, but implementation of the initiatives will take some time. First, varying degrees of operating inefficiencies developed in almost all of Ford's key regional markets including North America, China, Europe and South America. Second, earnings in China slid from an annual profit exceeding $1 billion in 2016 to a major loss as a result of an aged product lineup, poor dealer relations, and inattention to local market conditions. A critical element of Ford's plan for addressing operational inefficiencies and improving returns is the Global Redesign initiative. A major component will be the restructuring of South American and European operations. Ford has considerable expertise and a successful track record of undertaking such restructurings. Nevertheless, the scope of this restructuring plan is unprecedently large and challenging. It will extend at least into 2023. In addition to the restructuring initiatives, the Global Redesign plan will also include efforts to revitalize the China operations where Ford has already made notable progress in lowering costs. However, efforts to regain lost share, rebuild market presence, and restore meaningful profitability will be much more difficult to achieve because the Chinese auto market is becoming increasingly competitive, and near-term growth rates are likely to be much less robust than in the past. In North America, which remains one of the healthiest auto markets globally, Ford's EBIT margins have fallen from over 10% in 2016 to just under 8% in 2019, largely because of the product age of large portions of its domestic portfolio. However, Ford has begun an aggressive new product launch cycle. Moody's expects that this product renewal program, which will include the highly profitable F-Series of full-size trucks, will help Ford, over the next three years, strengthen North American margins to a level that should approach 10%. Ford has been active in addressing environmental risks, which will remain a top agenda item in its forward planning. Nevertheless, Moody's believes that the company's current product portfolio leaves it vulnerable to potentially large emission penalties in 2020 and 2021. Reflecting these vulnerabilities, the new product launch will include a number of battery electric and full hybrid vehicles as important contributors in Ford's ability to comply with increasingly challenging emission regulations in the US and Europe. However, customer acceptance of these vehicles and Ford's ability to earn an economic return on them remains uncertain. Additionally, the alliance with Volkswagen AG will provide important long-term benefits to Ford's position in electric vehicles, autonomous vehicles and commercial vehicles. Nonetheless, Moody's anticipates only minimal impact on Ford's earnings and cash generation before 2022. The stable rating outlook reflects Moody's expectation that the initiatives being undertaken, particularly the Global Redesign effort and the new product rollout, will contribute to gradual improvement in the company's earnings, margins and cash generation, albeit over a number of years. Ford's $23.2 billion of cash, which exceeds its debt, and its conservative balance sheet afford the company the ability to fund its product development and restructuring intiatives. Moody's notes that this level of financial flexibility is common across the auto industry because of the need to contend with severe downturns and sustain product investment. The stable outlook also anticipates that Ford will maintain a sound liquidity position as it funds the restructuring actions. Ford's ratings could be downgraded if the major initiatives (Global Redesign, new product rollout, and revitalization efforts in China) do not contribute to a steady improvement in key performance metrics. Metrics that would point toward downward pressure include: company-reported North American EBIT margin below 7%; the China operations unable to maintain a trajectory toward breakeven performance by 2021; automotive cash position falling below $20 billion; and free cash flow burn that exceeds $1 billion after restructuring expenditures but excluding dividends from Ford Credit. An upgrade of Ford during the near term is unlikely. However, factors that could contribute to an upgrade include a robust progress in the initiatives that it is undertaking as evidenced by: a North American automotive EBIT margin sustained above 9%; full compliance with US and European emission requirements based on the profitability and market acceptance of its electrified vehicles; and total automotive EBIT margin exceeding 7% (excluding special items). Another element important for a ratings upgrade is an operating structure that is robust enough to sustain the total automotive margin above 4% during an approximately 20% cyclical downturn in unit shipments, while controlling the cash burn to preserve automotive cash above $10 billion. The methodologies used in these ratings were Automobile Manufacturer Industry published in June 2017, and Captive Finance Subsidiaries of Nonfinancial Corporations published in August 2019. FRANKIE V'S KITCHEN: Files Chapter 11 Plan of Liquidation --------------------------------------------------------- Frankie V's Kitchen, LLC, filed a Chapter 11 Plan of Liquidation and accompanying Disclosure Statement pursuant to which the Debtor proposes to liquidate its assets and distribute the proceeds. The holders of Allowed General Unsecured Claims shall each receive from the Unsecured Creditor Trustee: (i) to the extent the holder of the Allowed General Unsecured Claim is not an Opt-Out Party or a Released Party, a Pro Rata share in the distribution of the Agneto Settlement Reserve after payment in full of (a) all expenses and obligations related to the administration of the Unsecured Creditor Trust, (b) Allowed Unsecured Priority Tax Claims and (c) Allowed Priority Non-Tax Claims (excluding any Allowed Claim under Section 503(b)(9) of the Bankruptcy Code); and (ii) as to all holders of Allowed General Unsecured Claims, regardless of whether or not they are an Opt-Out Party, a Pro Rata share in the net distributions of the Unsecured Creditor Trust Assets other than the Agneto Settlement Reserve. No Opt-Out Party or Released Party will receive any share, distribution or beneficial interest from the Agneto Settlement Reserve. Also, neither Agneto nor Franco will share in the distribution of the Unsecured Creditor Trust Assets until after all other Allowed General Unsecured Claims are paid in full. Unless otherwise stated in the Plan, the distributions to holders of an Allowed General Unsecured Claim shall be made pursuant to the terms of the Unsecured Creditor Trust Agreement. The Plan is implemented through the Settlement Agreement, which shall constitute a settlement under Bankruptcy Rule 9019 and section 1123 of the Bankruptcy Code between the Releasing Parties and the Third-Party Releasing Parties on the one hand and the Released Parties and the Third-Party Released Parties on the other hand in complete and final resolution of all claims the Releasing Parties and the Third-Party Releasing Parties may have against the Released Parties and the Third-Party Releasing. Alleged claims which are being settled include, without limitation, all claims and causes of action with respect to (i) Franco's service as a member of the Debtor's board, (ii) Franco's, Agneto's and Steven B. Solomon's involvement in the Debtor's management, funding and operations; (iii) Franco's and Agneto's investments in, lending of funds to, guarantee and purchase of the Pre-Petition Obligations, (iv) Franco's and Agneto's proposals to guarantee or provide debtor in possession financing, and (v) the Debtor, the Chapter 11 Case or any Claim or Interest. Franco, Agneto and Solomon dispute that any such claims are or would be valid or have any merit and would contest them. The Plan Settlement resolves such claims consistent with the Settlement Agreement. A full-text copy of the Disclosure Statement dated August 30, 2019, is available at https://tinyurl.com/y6k9zu2g from PacerMonitor.com at no charge. Counsel to the Debtor: Stephen A. McCartin, Esq. Mark C. Moore, Esq. Melina T. Bales, Esq. FOLEY GARDERE FOLEY &LARDNER LLP McKinney Ave., Suite 1600 Dallas, TX 75201 Telephone: (214) 999-3000 Facsimile: (214) 999-4667 Email: smccartin@foley.com mmoore@foley.com mbales@foley.com About Frankie V's Kitchen Frankie V's Kitchen, LLC -- http://www.frankievskitchen.com/-- produces and distributes hot sauces, salsas, dressings and condiments, gourmet soups, and spreads. Frankie V's Kitchen sought protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Texas Case No. 19-31717) on May 20, 2019. At the time of the filing, the Debtor estimated assets of between $1 million and $10 million and liabilities of between $10 million and $10 million. The case is assigned to Judge Stacey G. Jernigan. Foley & Lardner LLP is the Debtor's legal counsel. The Office of the U.S. Trustee on June 3 appointed three creditors to serve on the official committee of unsecured creditors in the Chapter 11 case of Frankie V's Kitchen LLC. GALA SERVICE: NYC Cab Operators, Lender Agree on Cash Collateral ---------------------------------------------------------------- Gala Service Corp., and Linden Cab Corp., in their jointly administered cases, ask the U.S. Bankruptcy Court for the Southern District of New York to use the cash collateral of Pentagon Federal Credit Union. The Debtors and Pentagon Federal stipulate that: * each Debtor will make a monthly adequate protection payment of $1,000 for the month of August 2019, and to increase adequate protection payments thereafter at $2,200 per month; * the Debtors must remain current on costs and fees proper to taxi operations in New York City; * the Debtors grant Pentagon Federal the right to automatic replacement liens for the diminution of its collateral. Each of the Debtors own and operate two New York City taxis with a New York City taxi medallion. At the time of filing, the Debtors owed a combined total of $2,743,563 on the four taxi medallions. Gary C. Fischoff, Esq., the Debtors' counsel at Berger, Fischoff, Shumer, Wexler, Goodman LLP, says the proposed stipulation will grant the Debtors the authority to use the cash collateral to the extent necessary to continue the operation of their businesses and to preserve the value of their estate. About Gala Service Corp. and Linden Cab Corp. Gala Service Corp., and Linden Cab Corp., are privately held companies in the taxi and limousine service industry. The Debtors, in separate filings, sought Chapter 11 protection on March 26, 2019. The Debtors' cases were jointly administered on July 18, 2019. In the petitions signed by Mitchell Cohen, president, Debtor Linden Cab disclosed $317,368 in assets and $1,403,699 in liabilities. Gala Service disclosed $310,468 in assets and $1,404,752 in liabilities. The Hon. James L. Garrity Jr. oversees the case. Gary C. Fischoff, Esq., at Berger Fischoff Shumer Wexler & Goodman, LLP, serves as bankruptcy counsel to the Debtor. GATE 3 LIQUIDATION: Seeks to Hire D. Lamar Hawkins as New Counsel ----------------------------------------------------------------- Gate 3 Liquidation, Inc. seeks authority from the U.S. Bankruptcy Court for the District of Arizona to employ D. Lamar Hawkins, PLLC as its new legal counsel. The firm will substitute for Allen Barnes & Jones, PLC, which was employed by the Debtor as counsel to file its bankruptcy petition. The Debtor has agreed to pay normal billing rates of the attorneys and support staff of the firm. D. Lamar Hawkins does not represent any interest adverse to the Debtor and its bankruptcy estate, according to the court filings. The firm can be reached at: D. Lamar Hawkins, Esq. D. Lamar Hawkins, PLLC 402 E. Southern Ave. Tempe, AZ 85282 Tel: (602) 888-9229 Fax: (480) 725-0087 Email: lamar@sskattorneys.com About Gate 3 Liquidation Gate 3 Liquidation, Inc. sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Ariz. Case No. 18-12041) on Oct 2, 2018. At the time of the filing, the Debtor disclosed assets of between $1,000,001 and $10 million and liabilities of the same range. The case has been assigned to Judge Brenda K. Martin. GATEWAY WIRELESS: Unsecureds to Get $300K in 60 Monthly Payments ---------------------------------------------------------------- Gateway Wireless, LLC, filed a Chapter 11 plan of reorganization and accompanying disclosure statement. Class 7 shall consist of all Allowed Unsecured Claims not otherwise classified. Each Class 7 Allowed Unsecured Claimant shall receive monthly Distributions that consist of their pro rata share of $300,000.00 to be distributed in the form of monthly payments for 60 months to commence 60 days after the Effective Date. Additionally, each Class 7 Allowed Unsecured Claimant shall receive a lump sum payment of their pro rata share of 100% of the proceeds of any causes of action brought by the Debtor or such lesser amount that will pay their Class 7 Allowed Unsecured Claim in full. Class 7 Distributions will not exceed $300,000.00, plus any recoveries from the Avoidance Actions. The Plan will be implemented through revesting of property of the Estate. On the Effective Date, all Estate Property, including Chapter 5 Claims, will revest in the Reorganized Debtor and shall be free and clear of all claims and interests of Creditors and Parties in Interest, except as expressly provided in this Plan or the Confirmation Order. The Plan will be funded with cash on hand, future operating revenue and potential new equity investors. The Debtor's obligations to its MCA Lenders will be restructured. The Plan payments to service the secured debt amounts are substantially less than those required prior to commencement of the Debtor's Chapter 11 case. The scheduled Plan payments are similar to the debt service maintained successfully by the Debtor during the Chapter 11 Case. The Plan will be further implemented through anticipated cost savings generated by the sale and replacement of underperforming locations over the next 12 to 18 months. Upon entry of the Confirmation Order, the existing Interests in the Debtor shall be cancelled. The current owners of the Debtor are Ryan Walker who holds 50% of the equity interest of the Debtor and Mechelle Mercille who holds 50% of the equity of the Debtor. On or before the Effective Date, Walker and Mercille shall contribute cash equivalents through forgiveness of debt owed by the Debtor and reaffirmation of guarantees and pledges of personal assets securing liabilities of the Debtor. In exchange for the foregoing, the Reorganized Debtor will issue new stock to Walker and Mercille shall each hold a 50% interest in the Reorganized Debtor. A full-text copy of the Disclosure Statement dated August 30, 2019, is available at https://tinyurl.com/y5uar75h from PacerMonitor.com at no charge. The hearing to consider approval of the disclosure statement will be held on October 22, 2019 at 09:00 AM. October 8 is fixed for filing and serving in accordance with Federal Rules of Bankruptcy Procedure 3017(a) written objections to the disclosure statement. Attorneys for the Debtor: Spencer P. Desai, Esq. Thomas H. Riske, Esq. Carmody MacDonald P.C 120 South Central, Suite 1800 St. Louis, Missouri 63105 Tel: (314) 854-8600 Email: spd@carmodymacdonald.com hr@carmodymacdonald.com About Gateway Wireless Gateway Wireless LLC is a privately-held company in Glen Carbon, Illinois, which operates in the telecommunications industry. Gateway Wireless sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Ill. Case No. 18-31491) on Oct. 12, 2018. In the petition signed by Ryan F. Walker, president, the Debtor estimated assets of $10 million to $50 million and liabilities of $10 million to $50 million. Judge Laura K. Grandy presides over the case. The Debtor tapped Carmody MacDonald P.C. as its legal counsel. No official committee of unsecured creditors has been appointed. GEORGE WASHINGTON BRIDGE: JLL to Hold Public Auction on Oct. 17 --------------------------------------------------------------- Jones Lang LaSalles Americas Inc., on behalf of George Washington Bridge Bus Station and Infrastructure Development Fund, Phase II, LLC, offers for sale at public auction to be held on Oct. 17, 2019, at 10:00 a.m. (Eastern Daylight Time), at the offices of Browne George Ross LLP, 5 Penn Plaza, 24th Floor, New York, New York 10001, in connection with a Uniform Commercial Code sale of: i) 9% of the issued and outstanding limited liability company interests in George Washington Bridge ("Borrower"), currently owned by Marketplace GWB LLC ("Pledgor") ; and ii) all of Pledgor's right, title, and interest in, to, and under and with respect to the borrower operating agreement, including, but not limited to, those rights of Pledgor as managing member of borrower. By collateral assignment of pledge and security agreement dated as of Jan. 31, 2019, by and between secured creditor and GWB Leverage Lender LLC ("Assignor"), assignor assigned to secured creditor all of its right, title and interest to that certain pledge and security agreement dated as of Jan. 31, 2019, by and between Assignor, Pledgor, and Borrower. The Borrower holds a leasehold interest in and controls commercial property at 4211 Broadway, New York, New York, which includes the George Washington Bridge Bus Station. Security Party made a loan in the principal amount of $19 million to Assignor pursuant to that certain amended and restated operating agreement of Assignor, dated as of April 7, 2014. Pursuant to Section 4.03(b) of the JV agreement, secured creditor permitted Assignor to lend $9 million of the member loan to borrower and, as security for repayment of the direct loan, Assignor assigned all right, title and interest in and to the pledge agreement to secured creditor. Secured creditor is offering the collateral for sale in connection with the foreclosure on the pledged of such collateral under the pledge agreement, in which Pledgor granted to Assignor a first priority security interest in the collateral. The direct loan is subordinate to a senior mortgage loan and other obligations and liabilities of the Borrower. The sale of the collateral will be subject to all applicable third party consents and regulatory approvals, if any. The firm can be reached at: Brett Rosenberg Jones Lang LaSalles Americas Inc. Tel: +1 212-812-5926 E-mail: brett.rosenberg@am.jll.com GOOD NOODLES: Seeks Court OK on $200K DIP Loan, Adequate Protection ------------------------------------------------------------------- Good Noodles Inc., d/b/a Sfoglini LLC, asks permission from the U.S. Bankruptcy Court for the Southern District of New York to: (1) obtain $200,000 of secured financing from Armando De Angelis, S.r.l, or its designee, in order to fund the Debtor's working capital, and for other general corporate purposes, pursuant to a budget; (2) use the cash collateral of its secured creditors and to provide Santander Bank, N.A., and Rudolf Steiner Foundation, Inc., adequate protection. Armando De Angelis S.r.l., or its designee, agrees to provide $200,000 in DIP loans to the Debtor at an interest of 6% per annum, plus costs and fees, pending closing of a sale of all or substantially all of the Debtor's assets. The DIP Loan maturity will be the earliest of: * stated maturity on Dec. 1, 2019; * the date of the closing of the sale of all or substantially all of the assets of the Debtor to a party other than the Lender; * 31 days after the Petition Date if the Final Order has not been entered by that date; * the date of entry of an order dismissing the Debtor’s case or conversion of the case; * the filing or support by the Debtor of a plan of reorganization that: (i) does not provide for indefeasible payment in full, in cash, of all obligations owing under the DIP Loan, and (ii) is not otherwise acceptable to the DIP Lender. * acceleration or termination of DIP loan as a result of the Debtor’s default. The DIP loan is payable only if Armando de Angelis, S.r.l. is not ultimately the buyer of the Debtor’s assets. Armando De Angelis S.r.l. has offered to purchase the Debtor through asset purchase for $500,000. The Debtor may make a single draw of $100,000 from the DIP Loan on the date after the Court entered an interim order with respect to the DIP Motion. The DIP Loan plus accrued interests will be secured by first priority lies and security interests in all of the Debtor’s inventory, accounts receivable and proceeds therefrom. In the event of sale of assets to a party other than the DIP Lender, the DIP Liens will extend to all of the Debtor’s assets such that the DIP Loan will be satisfied prior to payment of any pre-petition secured claims. The 13-week budget filed with the Court for the period from Sept. 2 through Dec. 1, 2019, provides for $49,248 in total expenses for the week from Sept. 9 to 15. A copy of the budget is available for free at http://bankrupt.com/misc/Good_Noodles_2(9)_Cash_Budget.pdf With respect to the interests of Santander Bank and RSF, as of the Petition Date, the Debtor owes Santander Bank approximately $278,114.52; and RSF approximately $360,825. The Debtor proposes to grant replacement liens in all of the Debtor’s assets as they existed on the Petition Date and the proceeds directly derived therefrom, to the extent that the Secured Creditors had valid security interest in such and in the continuing order of priority that existed as of the Petition Date. A copy of the Motion containing the DIP Loan Terms can be accessed for free at: http://bankrupt.com/misc/Good_Noodles_2_Cash_M.pdf About Good Noodles Inc. Good Noodles Inc., d/b/a Sfoglini LLC, is a producer of classic Italian style pasta made with organic grains. Good Noodles sought Chapter 11 protection (Bankr. S.D.N.Y. Case No. 19-36441) in Poughkeepsie, New York, on Sept. 4, 2019. Judge Cecelia G. Morris administers the Debtor's case. In the petition signed by Scott Ketchum, president, the Debtor estimated $500,000 to $1 million in assets, and $1 million to $10 million in liabilities. KIRBY AISNER & CURLEY LLP is the Debtor's counsel. HARLAN GROUP: S&P Assigns B- Issuer Credit Rating; Outlook Stable ----------------------------------------------------------------- S&P Global Ratings assigned its 'B-' issue-level rating and '3' recovery rating to a new senior secured credit facility, which includes a $425 million first-lien term loan that will be used to fund L. Catterton's $665 million acquisition of full service restaurant operator Del Frisco's Restaurant Group Inc. (DFRG) in a leveraged buyout. The financial sponsor plans to combine DFRG with an existing portfolio company, Uncle Julio's, funding the transaction with the term loan and combined equity of $606 million. At the same time, S&P assigned its 'B-' issuer credit rating to the newly formed group's parent company, Harlan Group Parent LLC. The rating agency expects consolidated financial statements will be filed at this entity going forward. Harlan is a multi-concept full service restaurant operator with significant financial and operational risk. S&P's rating on Harlan reflects the company's position as a small, multi-brand restaurant operator pursuing elevated new unit growth during the late stages of the current business cycle. S&P believes the financial sponsor's plan to restructure DFRG into separate organizations and integrate a new portfolio company while improving performance at underperforming concepts carries meaningful execution risk. Further, S&P forecasted adjusted leverage for fiscal 2019 in the 7x-7.5x range is high relative to restaurant operator peers and it expects EBITDA interest coverage levels to be modest over the next year. The stable outlook reflects S&P's expectation that a renewed focus on restaurant-level operations and rationalizing SG&A spending will contribute to better financial performance over the next 12 months. "We could lower our rating if performance gains fail to materialize, EBITDA shrinks, and interest coverage weakens below 1.5x. This could occur if consolidated same-store sales remain negative and margins compress approximately 300 bps because of elevated operating expenses and weaker than expected new unit volumes," S&P said, adding that under this scenario, it would view diminished credit protection metrics and constrained liquidity, including negative free operating cash flow absent growth capex, as indicative of an unsustainable capital structure. "We could raise our rating if adjusted debt to EBITDA approaches and remains in the mid-5x area. This could occur if the company's performance exceeds our expectations, including saving on general and administrative costs while driving positive same-store sales growth across its concepts, causing EBITDA to grow 15% higher than our current forecast," S&P said. HARLAN MERGER: Moody's Assigns B3 CFR, Outlook Stable ----------------------------------------------------- Moody's Investors Service assigned a B3 rating to Harlan Merger Sub, Inc.'s proposed $425 million senior secured term loan B and $50 million senior secured revolver. In addition, Moody's assigned Harlan a B3 Corporate Family Rating and B3-PD Probability of Default Rating (PDR). The outlook is stable. Proceeds from the proposed $425 million term loan along with about $433 million of contributed equity from equity sponsor, L Catterton, will be used to fund the acquisition of Del Frisco's Restaurant Group, Inc. for about $665 million, repay debt of approximately $120 million at Uncle Julio's, fund cash of $30 million to the balance sheet and pay about $47 million of fees and expenses. Ratings are subject to receipt and review of final documentation. After the consummation of the acquisition and proposed financing, Harlan will merge with and into Steak OpCo, which will be the surviving entity. Del Frisco's includes the restaurant concepts The Double Eagle Steakhouse, Del Frisco's Grille, Barcelona and bartaco. Uncle Julio's is currently owned by L Catterton. "The B3 CFR reflects Harlan's high leverage and weak interest coverage as well as its modest scale and geographic concentration." stated Bill Fahy, Moody's Senior Credit Officer. Pro forma leverage as of the twelve month period ended December 31, 2018 will be around 8.0 times, but is expected to improve as recently opened restaurants ramp-up to their full earnings potential and new units are added at a measured pace. "The ratings also recognize the challenges of successfully growing these concepts while at the same time stabilizing the Del Frisco Grille (Grille) concept " stated Fahy. Assignments: Issuer: Harlan Merger Sub, Inc. Probability of Default Rating, Assigned B3-PD Corporate Family Rating, Assigned B3 Gtd. Senior Secured 1st lien Term Loan B, Assigned B3 (LGD3) Gtd. Senior Secured 1st lien Revolving Credit Facility, Assigned B3 (LGD3) Outlook Actions: Issuer: Harlan Merger Sub, Inc. Outlook, Assigned Stable RATINGS RATIONALE Harlan is constrained by its high leverage and weak interest coverage, particularly considering its modest scale in terms of number of restaurants and geographic concentration in the northeast U.S. In addition, the company's ability to integrate and stabilize Del Frisco's concepts under new management while successfully growing all other brands will be challenging. The company benefits from a good level of brand awareness of The Double Eagle evidenced by their high average restaurant volumes, the positive same store sales performance of Barcelona and Bartaco and adequate liquidity. The stable outlook reflects Moody's view that debt protection metrics will improve over the intermediate term as recently opened restaurants ramp-up to their full earnings potential, new units are added at a measure pace and management continues to focus on reducing operating costs, particularly G&A. The outlook also anticipates the company will maintain at least adequate liquidity. Factors that could result in an upgrade include successfully ramping up restaurants to their full earnings potential while profitably adding new restaurants. An upgrade would require debt to EBITDA below 5.75 times and EBIT coverage of gross interest of over 1.5 on a sustained basis. An upgrade would also require good liquidity. A downgrade could occur if debt to EBITDA fails to migrate towards 6.5 times or EBIT to interest coverage is below 1.1 time over the next 12 to 18 months. A deterioration in liquidity could also result in a downgrade. The B3 rating on the guaranteed senior secured $50 million revolver and $425 million term loan, the same as the CFR, reflects the majority position within Harlan's capital structure that this debt represents as well as the limited amount of other debt and non-debt liabilities that are junior to the bank facility. Harlan Merger Sub, Inc. will own and operate about 120 restaurants in the U.S. under the brand names, Double Eagle, Del Frisco Grille, Barcelona, bartaco and Uncle Julio's. Annual pro forma net revenues will be approximately $770 million. The principal methodology used in these ratings was Restaurant Industry published in January 2018. HEATING & PLUMBING: Seeks Authority to Use Cash Collateral ---------------------------------------------------------- Heating and Plumbing Engineers, Inc., seeks authority from the U.S. Bankruptcy Court for the District of Colorado to use cash collateral to continue its business operations postpetition and maintain its inventory. As of the Petition Date, the Debtor's books and records reflect that ZB, N.A., d/b/a/ Vectra Bank Colorado, is owed approximately $4,875,911 pursuant to various loan accommodations. In accordance with the Commercial Security Agreement, the Debtor granted Vectra Bank a secured interest in substantially all of its assets, including its inventory, equipment, accounts, deposit accounts, investment property, accounts receivables. In addition to the secured claim of Vectra Bank and the trust fund claimants, the Debtor also owes approximately $1,500,000 to the Internal Revenue Service and $231,663.91 to the Colorado Department of Revenue for unpaid wage withholding taxes. The IRS and CDR may claim a statutory lien on the Debtor's accounts and receivables. The Debtor proposes adequate protection for the Secured Creditors or any other creditor with a lien on cash collateral as follows: (a) The Debtor will provide the Secured Creditors with a post-petition lien on all postpetition accounts receivable and contracts and income derived from the operation of the business and assets, to the extent that the use of the cash results in a decrease in the value of the Secured Creditors' interest in the collateral. All replacement liens will hold the same relative priority to assets as did the prepetition liens. (b) The Debtor will only use cash collateral in accordance with the Budget, subject to a deviation on line item expenses not to exceed 20% without the prior agreement of the Secured Creditors or an order of the Court. (c) The Debtor will keep all of the Secured Creditors' collateral fully insured. (d) The Debtor will provide the Secured Creditors with a complete accounting, on a monthly basis, of all revenue, expenditures, and collections through the filing of the Debtor's Monthly Operating Reports. (e) The Debtor will maintain in good repair all of the Secured Creditors' collateral. About Heating & Plumbing Engineers Founded in 1947, Heating & Plumbing Engineers, Inc., a mechanical contractor, provides HVAC sheet metal, plumbing, and piping systems services in Colorado. Heating & Plumbing Engineers filed a voluntary petition pursuant to Chapter 11 of the Bankruptcy Code (Bankr. D. Colo. Case No. 19-16183) on July 19, 2019. In the petition signed by CEO William T. Eustace, the Debtor disclosed $13,845,361 in assets and $14,934,602 in liabilities. Lee M. Kutner, Esq. at Kutner Brinen, P.C., is the Debtor's counsel. HERBALIFE NUTRITION: S&P Upgrades ICR to 'BB-'; Outlook Stable -------------------------------------------------------------- S&P Global Ratings raised its issuer credit rating on U.S-based Herbalife Nutrition Ltd. to 'BB-' from 'B+' and issue-level rating on the senior secured term loan B to 'BB+' from 'BB' and affirmed the 'BB-' rating on the $400 million senior unsecured notes. The recovery rating on the secured term loan B remains '1' (90% to 100%; rounded estimate: 95%), while it revised the recovery rating on the unsecured notes to '3' (50% to 70%, rounded estimate: 65%) from '2'. S&P took the rating actions after Herbalife paid off the remaining $675 million convertible notes due Aug. 15, 2019. It assumes the direct sales firm will manage adjusted leverage in the low- to mid-3x area (compared to the mid-2x area pro forma for the 2019 convertible note repayment). "Repayment of 2019 convertible debt maturity and historically moderate financial policies, which we assume will continue," S&P said, adding that Herbalife substantially reduced share repurchases to around $75 million over the last 12 months, which helped it accumulate more cash ahead of its $675 million convertible debt maturity that it repaid on Aug. 15, 2019. "We believe retiring this debt is positive because it reduces financial risk and demonstrates a degree of conservativism. We still expect the company will issue new debt over the coming quarters to resume share repurchases, but we anticipate Herbalife will manage adjusted leverage well below our 4x downgrade trigger," S&P said. The stable outlook reflects S&P's expectation that the company will manage adjusted leverage at or below 3.5x due to satisfactory performance in North America, EMEA, and Asia Pacific, which will more than offset potential shortfalls in other regions, including China and South and Central America. S&P assumes any negative developments in China regarding potential violations of the FCPA will be manageable, including fines. S&P said it could lower the rating over the next 12 months if it expects adjusted leverage will increase on a sustained basis to 4x, possibly because of unfavorable reputational, legal, or regulatory developments, a loss of distributors, escalating competition, or more aggressive financial policies. An inability to navigate shifting consumer purchasing behavior, including to online channels in China, a protracted downturn in non-U.S markets--which could be exacerbated by a strengthening U.S. dollar—along with large FCPA fines, could lead to a downgrade. Compared to S&P's forecast -- which assumes Herbalife issues $675 million new debt to replace the recently repaid 2019 convertible notes and conduct share buybacks -- adjusted EBITDA would need to decline by more than 20% or adjusted debt would need to increase by almost $800 million for adjusted leverage to reach 4x. "It is unlikely we will raise our rating over the next 12 months mainly because of the company's narrow focus in the weight management sector and a business model that subjects the company to reputational, regulatory, and legal risks," S&P said. "However, we could consider an upgrade if we believe these risks have lessened significantly potentially leading to a more favorable business risk assessment or if Herbalife publicly articulates more moderate financial policies such that we believe it will maintain adjusted leverage below 2.5x." HERTZ CORP: DBRS Confirms BB(low) Issuer Rating, Trend Stable ------------------------------------------------------------- DBRS, Inc. confirmed the ratings of The Hertz Corporation (Hertz or the Company), including the Company's Long-Term Issuer Rating of BB (low). At the same time, DBRS has revised the trend on these ratings to Stable from Negative. The Company's Intrinsic Assessment is BB (low), while its Support Assessment is SA3. KEY RATING CONSIDERATIONS The rating confirmation reflects Hertz's deeply entrenched global rental car franchise, underpinned by a strong presence in the U.S. on-airport and international markets, as well as a more moderately sized North American commercial fleet management and leasing business. Hertz's improved fleet management capabilities, including an enhanced operating platform and solid vehicle mix, have led to strengthening fleet utilization rates and provide for effective residual value risk management, all of which are supportive of the ratings. The ratings also consider the Company's weak earnings generation capacity, high leverage profile, and significant level of secured funding which deeply encumbers the Company's earning assets, limiting its financial flexibility. The change in trend to Stable from Negative reflects the Company's improving profitability trajectory. Moreover, DBRS views positively, the withdrawal of Hertz's Material Weakness designation from its audited financials, as the Company has established an effective framework for internal controls over financial reporting, benefitting operational risk. Finally, the Stable trend also considers the continuing traction gained by the overall transformation initiatives undertaken by the Company. RATING DRIVERS Sustained profitability, driven by solid revenue generation and sound fleet management, could result in positive rating implications. Conversely, a sustained negative trajectory in the Company's profitability, driven by lower revenues and/or higher expenses indicating a weakness in the Company's business fundamentals, or fleet mismanagement, could result in negative rating implications. RATING RATIONALE Hertz's ratings consider it's deeply rooted, highly recognized rental car franchise, and underpinned by its top-level positions in both the U.S. on-airport and international markets. Overall, the Company has approximately 10,200 global corporate and franchise locations. Hertz's brands are highly recognized, including its Hertz, Dollar, and Thrifty car rental businesses, as well as its Donlen commercial fleet management franchise. Overall, Hertz continues to make progress in its transformation initiatives to strengthen its operations and reestablish profitability. DBRS expects this transformation to continue over the medium term. Providing additional momentum, while slowing, the U.S. economy is still growing, and Hertz is benefitting from sound enplanement volumes, and healthy used vehicle values. The Company's transformation initiatives have benefited its bottom line. Indeed, Hertz's revenue generation has improved, reflecting eight consecutive quarters of year-on-year (YoY) increases, primarily driven by revenue growth in the U.S. markets, spurred by higher transaction days, and solid vehicle utilization. Meanwhile, the Company's expenses remain somewhat pressured by the additional costs associated with the ongoing transformation initiatives, including systems and technology-related expenses. For 1H19, the Company reported a net loss of $105 million, improved from a net loss of $263 million for the same period, YoY. The lower loss primarily reflected growth in revenues in the U.S. segment and a 9% decline in depreciation expenses. It should be noted that the YoY improvement would have been larger, as the prior-year period benefited from an income tax benefit of $51 million. DBRS views Hertz's fleet management and residual value risk as benefiting from its enhanced operating platform, solid vehicle mix, and favorably used vehicle values. The Company has modest exposure to automobile manufacturers, given the diversification by the manufacturer and lower usage of program vehicles. Despite the significant exposure to travel volumes, Hertz partially mitigates this risk through revenues generated through its international segment, as well as its off-airport and commercial fleet management businesses. Furthermore, DBRS views operational risk as improved, given the withdrawal of Hertz's Material Weakness designation, but somewhat elevated as the Company continues its transition to new operating platforms. The ratings consider the highly encumbered nature of the balance sheet owed to the preponderance of secured debt, which is factored in the one-notch differential between the Long-Term Issuer Rating and Long-Term Senior Debt ratings. DBRS views the highly encumbered balance sheet as potentially limiting Hertz's financial flexibility, especially in stressful periods. In DBRS's view, Hertz prudently manages the maturities of its corporate debt. The Company used the proceeds from the recent private issuance of senior unsecured debt due 2026, along with proceeds from a recent equity right offering to redeem its senior notes maturing in October 2020, and in January 2021. With these actions, Hertz will have no material corporate debt maturities until 2021, which removes any intermediate-term liquidity risks. As of June 30, 2019, the Company's liquidity profile was comprised of $415 million of unrestricted cash and $397 million of available capacity under Hertz's senior revolving credit facility. Furthermore, liquidity reflected $1.1 billion of net cash provided by operating activities for 1H19, which followed $2.6 billion for 2018. DBRS considers the Company's highly leveraged balance sheet as constraining its ratings. Leverage, as defined by total debt (including vehicle-backed debt)-to-last twelve months EBITDA, was a high 5.6x at 2Q19. That said, DBRS acknowledges that approximately 77% of debt outstanding is fleet-related debt and can be repaid as Hertz de-fleets following the seasonal peak in the spring and summer travel season. Notes: All figures are in U.S. dollars unless otherwise noted. INTERNATIONAL GAME: Moody's Rates New EUR500MM Secured Notes Ba2 ---------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to International Game Technology PLC's proposed EUR500 million senior secured notes due 2028. The company's existing ratings, including senior secured notes rated Ba2, Ba2 Corporate Family Rating, and Ba2-PD Probability of Default Rating and SGL-3 Speculative Grade Liquidity rating are unchanged. The outlook is unchanged at stable. Proceeds from the proposed EUR500 million senior secured notes, which will be pari passu with the company's existing debt, will be used to repay the outstanding amount on the company's revolving credit facility, and for general corporate purposes which includes pre-funding the scheduled Euro 320 million amortization payment on the company's senior secured term loan due on January 25, 2020, as well as pay related fees and expenses. The transaction continues to extend IGT's maturity profile and improves overall financial flexibility, providing funds to facilitate the refinancing of a significant part of its remaining 2020 maturities, while maintaining an adequate liquidity profile. Assignments: Issuer: International Game Technology PLC Senior Secured Regular Bond/Debenture, Assigned Ba2 (LGD3) RATINGS RATIONALE International Game Technology PLC's Ba2 Corporate Family Rating benefits from its large and relatively stable revenue base, with more than 80% achieved on a recurring basis, and high barriers to entry. Further support is provided by the company's vast gaming-related software library and multiple delivery platforms, as well as potential growth opportunities in their digital, mobile gaming, sports betting, and lottery products. IGT, through its joint venture with minority partners, is concessionaire of the world's largest instant lottery (Italy), and holds facility management contracts with some of the largest lotteries in the US. IGT is constrained by its material exposure to less than favorable slot replacement demand trends in the US as well as significant revenue concentration (about one-third) coming from its Italian operations, along with Italian gaming tax increases. The stable outlook includes the expectation the company will continue to maintain adequate liquidity and incorporates IGT's large recurring revenue base and high barriers to entry. The outlook also considers that 2019 free cash flow generation will be stronger as the company has already completed its upfront fees associated with its Italy contract renewal in 2018. A higher rating would require that IGT demonstrate sustainable earnings growth through a combination of revenue and expense improvements, as well as maintain a positive free cash flow profile and debt/EBITDA below 4.0 times. Ratings could be downgraded if it appears that debt/EBITDA will be maintained above 5.0 times. International Game Technology PLC is a global leader in gaming, from Gaming Machines and Lotteries to Interactive Gaming and Sports Betting. The company operates under four business segments: North America Gaming & Interactive, North America Lottery; International, and Italy. The company's consolidated revenue for the last twelve month period ended March 31, 2019 was approximately $4.8 billion. International Game Technology has corporate headquarters in London, and operating headquarters in Rome, Italy; Providence, Rhode Island; and Las Vegas, Nevada. The principal methodology used in this rating was Business and Consumer Service Industry published in October 2016. JAUREGUI TRUCKING: Seeks Cash Access to Pay Normal Operating Costs ------------------------------------------------------------------ Jauregui Trucking, Inc., asks the U.S. Bankruptcy Court for the Central District of California to use cash collateral pursuant to a budget, to pay normal ordinary course expenses. In a monthly budget filed with the Court, the Debtor anticipates total expenses at $806,251, of which $433,347 is for payroll; $160,000 for fuel; and $74,165 for truck insurance, among others. A copy of the Budget can be accessed for free at: http://bankrupt.com/misc/Jauregui_Trucking_9_Cash_M.pdf Andrew S. Bisom, Esq., counsel to the Debtor, discloses that the Debtor's payments have reduced the principal balance of the $3.6 million loan from Pacific Premier Bank by approximately $800,000 in just over a year. The Debtor's income also has increased significantly over the past several months. In effect, the collateral the Debtor seeks to use will be replaced by sufficient new cash collateral in which the lien holder will be granted a security interest. The Debtor is trying to negotiate a cash collateral stipulation with Pacific Premier Bank but need to seek Court authorization to use cash should negotiations take longer than anticipated or are not successful. The Debtor therefore asks the Court for leave to use the cash collateral to continue operations. About Jauregui Trucking Jauregui Trucking, Inc., is a trucking company in Ontario, California. It operates 44 trucks and at least 200 dry van trailers, and employs 75 drivers and other employees. Jauregui Trucking sought Chapter 11 protection (Bankr. C.D. Cal. Case No. 19-17537) on Aug. 27, 2019. In the petition signed by Frank Jauregui, president, the Debtor disclosed total assets of $3,004,195 and total liabilities of $6,469,273. Judge Mark D. Houle is the case judge. The Debtor's counsel is The Bisom Law Group. KEHE DISTRIBUTORS: Moody's Rates 2nd Lien Notes 'B3' ---------------------------------------------------- Moody's Investors Service assigned a B3 rating to KeHE Distributors, LLC's proposed senior secured notes. The proceeds will be used to refinance existing debt. All other ratings remain unchanged. Assignments: Issuer: KeHE Distributors, LLC Senior Secured 2nd Lien Notes, Assigned B3 (LGD5) RATINGS RATIONALE KeHE's B1 corporate family rating reflects the company's adequate liquidity and better than expected operating performance resulting in improved credit metrics. Moody's now estimates debt/EBITDA (with Moody's standard adjustments) will be below 4.0 times at fiscal year ending April 2020. Topline growth has come from increased sales to the company's top customers as demand for specialty food products continues to be strong. Moody's also anticipates that the company has taken some market share from UNFI as UNFI's acquisition of SUPERVALU Inc. has caused some disruption for UNFI customers. The company's operating expenses and capital expenditures have also normalized after being higher than normal due to the integration of the operations of Nature's Best and Monterrey Provision Co., optimization of the locations of the combined distribution centers and the increase in its distribution capacity through a new distribution center in Denver. Profit dollars have improved as the company has controlled expenses while growing the topline through increased volume from existing and new customers. The rating also reflects KeHE's customer concentration with three of the combined company's top customers accounting for over 50% of total revenues and the largest customer accounting for about 30% of the topline, its thin margins with a fixed cost structure and its limited pricing power in a highly competitive market. Ratings are supported by the company's good position in a growing and attractive market niche for specialty, organic and natural foods and its geographic diversification. However, it is a relatively small player in the overall food distribution business segment and could be vulnerable if larger broadline food distributors enter its niche market. The company is majority owned by the employees while Tower Brook Capital Partners, LP owns about 12% of the company's common stock. Although the company has been acquisitive in the past and has successfully integrated the acquired companies, Moody's does not expect any major acquisitions in the next 12 months. The stable outlook reflects its expectation that KeHE will continue to improve profitability and reduce leverage through EBITDA growth while maintaining adequate liquidity and balanced financial policies including but not limited to acquisitions. Ratings could be upgraded if the company demonstrates sustained growth in sales, and profitability and has good liquidity. Quantitatively, ratings could be upgraded if debt/EBITDA is sustained below 3.5times and EBITA/interest expense is sustained above 3.0 times. Ratings could be downgraded if operating performance deteriorates such that debt/EBITDA is sustained above 4.0x and EBITA/interest is sustained below 2.25 times. Ratings could also be downgraded if liquidity deteriorates or if acquisition activity causes deterioration in cash flow or credit metrics. KeHE Distributors, LLC is a majority employee owned specialty and natural & organic food distributor in the U.S. and Canada. The company's customers include large chain grocery stores, regional grocery chain stores, independent natural product retailers, mass and retail club stores and independent grocery stores. Total revenue is approximately $4.6 billion. The principal methodology used in this rating was Distribution & Supply Chain Services Industry published in June 2018. KEYSTONE FILLER: BB&T Seeks to Terminate Use of Cash Collateral --------------------------------------------------------------- Branch Banking and Trust Company asks the U.s. Bankruptcy Court for the Middle District of Pennsylvania to terminate Keystone Filler & Mfg. Co.'s authority to use its cash collateral. At the time of filing, BB&T had a priority first lien in Debtor's cash collateral consisting of inventory, receivables, cash, and the proceeds thereof, as well as priority liens on real and personal property of the Debtor. Sometime in the middle of May 2019, the Court entered an interim order, allowing, inter alia, the Debtor to use its cash collateral until July 19, 2019. The Interim Order also provided the for financial reporting requirements. However, BB&T has not received any internally prepared financial statements as required in the Interim Order. Also, BB&T has not received detailed request for any proposed continued use of the cash collateral after the termination date, or a comparison of actual projected use of cash collateral for the prior period as required in the Interim Order. Counsel for BB&T has contacted counsel for the Debtor on several occasions requesting the information but such has not been forthcoming. As a result of the forgoing, BB&T is not in a position to determine whether or not its cash collateral is being property applied and the results thereof, and cannot make a determination as to whether or not its cash collateral is being dissipated. Attorneys for Branch Banking and Trust: Iles Cooper, Esq. Williamson, Friedberg & Jones, LLC Ten Westwood Road Pottsville, PA 17901 Telephone: (570) 622-5933 Facsimile: (570) 622-5033 E-mail: icooper@wfjlaw.net About Keystone Filler & Mfg. Co. Keystone Filler and Mfg. Co. is a manufacturer of carbon-based products made from finely-ground coal. Keystone Filler and Mfg. Co. sought protection under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Pa. Case No. 19-02014) on May 9, 2019. At the time of the filing, the Debtor estimated assets of $1 million to $10 million and liabilities of $1 million to $10 million. The petition was signed by David W. Pfleegor, II, authorized representative. The case is assigned to Judge Robert N. Opel II. Cunningham, Chernicoff & Warshawsky, P.C., is the Debtor's counsel. LEGRACE CORP: Court Approves Stipulation with Providence Funding ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California approves the stipulation between debtor LeGrace Corp., and creditor Providence Funding Source allowing the Debtor to use equipment and cash collateral through Nov. 27, 2019, on an interim basis, in order to continue its restaurant business and pay operating expenses. Pursuant to the Court-approved stipulation: (a) Providence is granted, effective as of Petition Date, a replacement lien in all of the Debtor's assets to the same extent and priority as that held by Providence on the Petition Date to the extent of their diminution in value; (b) Providence is granted valid, perfected replacement liens; (c) Providence will be allowed super priority administrative claim pursuant to Section 503(b) and Section 507(b) of the Bankruptcy Code; (d) The Debtor will make monthly adequate protection payments, due on the first day of each month, in the amount of: * $3,000 for 12 months effective Sept. 1, 2019; and then * $4,000 per month for the next 6 months; * $5,000 for the 6 months after that; * $6,000 for the next 6 months; * $7,000 for the following 6 months; * $8,000 for the next 6 months; * $8,000 for the following 6 months; * $9,000 for the next 6 months; * $10,000 for the following 6 months; and then * A $100,000 final balloon payment at month 60. The monthly payment to Providence will be made via ACH payment. A copy of the Stipulation Order is available for free at http://bankrupt.com/misc/LeGrace_38_Cash_Ord.pdf About Legrace Corp. Based in Orange, California, Legrace Corp. filed its voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (Bankr. C.D. Cal. Case No. 19-12812) on July 22, 2019, estimating up to $100,000 in assets and up to $1 million in liabilities. Julie J. Villalobos at Oaktree Law is the Debtor's counsel. LIBERTYVILLE IMAGING: Diagnostic Center Seeks Cash Collateral Use ----------------------------------------------------------------- Libertyville Imaging Associates, Inc., asks the U.S. Bankruptcy Court for the Northern District of Illinois to use cash collateral through Oct. 4, 2019 in the ordinary course of the business. Based on the schedules submitted with the Court, the Debtor estimates assets at approximately $1,223,892 consisting of accounts receivable, an MRI machine and cash in bank deposit. The Debtor discloses that $745,571 of the $2,130,202 face value accounts receivable are collectable. As of the Petition Date, the Debtor owes Byline Bank approximately $4,420,773. Byline holds a valid and perfected security interest in all of the Debtor's assets. The Debtor says its efforts to reorganize cannot continue if it is unable to use cash collateral to meet monthly expenses during the pendency of its case. A hearing on the motion is set for Sept. 11, 2019 at 9:30 a.m. About Libertyville Imaging Libertyville Imaging Associates, Inc. -- http://libertyvilleimaging.com/-- owns and operates a medical diagnostic imaging center in Libertyville, Illinois. The Center offers arthogram, bone densitometry-DEXA scan, CT scan, diagnostic imaging-xray, MRI, and ultrasound procedures. Libertyville Imaging Associates sought Chapter 11 protection (Bankr. N.D. Ill. Case No. 19-24323) on Aug. 28, 2019. In the petition signed by Shoukath Ahmed, president, the Debtor listed total assets at $1,223,892, and total liabilities at $5,573,906. The Hon. Benjamin A. Goldgar is the case judge. FOSTER LEGAL SERVICES, PLLC, represents the Debtor. MAGNUM CONSTRUCTION: Court Ok's $23.3M DIP Loan, Related Cash Use ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida approves on a final basis the motion filed by Magnum Construction Management LLC to obtain up to $23,300,000 of DIP financing from Travelers Casualty and Surety Company of America. The Court confirms these security interests and liens of the DIP Lender: (a) a valid, binding and fully-perfected first priority senior lien on an unencumbered property; (b) a valid, binding and fully-perfected first priority senior lien on the collateral, subject to permitted liens under the Loan and Security Agreement; (c) a valid, binding and fully-perfected security interest on the collateral that is subject to permitted liens permitted under the DIP Documents that were fully perfected as of the Petition Date. Such junior lien includes a valid, binding and fully perfected second position security interest, pari passu with the second position security interest of BHSI, in the lien held in a deposit account at Bank of America. This Order will fully perfect Traveler's lien rights on the funds held in the BofA Account and Travelers Casualty and Surety Company of America will not be required to take further action to perfect that lien interest; (d) liens senior to certain other liens. The Court also authorizes the Debtor to use, subject to the Final Order and the Loan Security Agreement, all cash collateral based on the budget, which includes $200,000 for fees and expenses of the professionals of the Official Committee of Unsecured Creditors, as follows: (a) a total of $150,000 in financing from the DIP Lender and Berkshire Hathaway Specialty Insurance Company, and (b) $50,000 that will be reallocated by the Debtor's professionals to the Committee’s professionals. The DIP Lender is entitled to adequate protection of its interest in the prepetition collateral for the amount of the aggregate diminution in the value of its interests in that collateral. The Court rules that: * the DIP Lender will not assert a deficiency claim on its Claim 2 under the Plan of Reorganization proposed by the Debtor; * the DIP liens and DIP super priority claims will not attach the Debtor's director and officers insurance policy; the Debtor’s errors and omissions insurance policy, unless any portion of the existing insurance is applicable with respect to the Bridge Collapse, as defined in Plan; and * DIP Lender will carve-out for the benefit allowed general unsecured claims that are classified and treated as Class 6 of the Plan, 15 percent of the net proceeds of the Debtor's claims against the Florida Department of Transportation relating to the Hurricane Irma Emergency Recovery Project. The DIP Budget for the week-ending Sept. 20, 2019, provides for $349,677 in total operating disbursements, $343,147 of which is for payroll, benefits and related taxes. All the DIP obligations will constitute allowed claims against the Debtor, with priority over any and all administrative expenses and other claims against the Debtor. A full-text copy of the Order, including the Budget, is available for free at: http://bankrupt.com/misc/Magnum_Const_444_Cash_Ord.pdf About Magnum Construction Management Magnum Construction Management, LLC -- https://www.mcm-us.com/ -- formerly known as Munilla Construction Management, LLC, is a construction company specializing in heavy civil construction in the areas of transportation, airport infrastructure, roads, bridges, government buildings and schools. It is headquartered in South Miami, Florida, but also has offices in (i) Broward County, Florida, and (ii) Irving, Texas. As of the Petition Date, MCM employs a total of 292 people. Magnum Construction Management filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code (Bankr S.D. Fla. Case No. 19-12821) on March 1, 2019. In the petition signed by CFO Gilberto Ruizcalderon, the Debtor estimated $50 million to $100 million in assets and $10 million to $50 million in liabilities. The Debtor is represented by Paul A. Avron, Esq., at Berger Singerman LLP. The U.S. Trustee for Region 21 on March 14, 2019, appointed three creditors to serve on the official committee of unsecured creditors in the Chapter 11 case. The Committee tapped Wargo & French, LLP as its legal counsel. MAGNUM CONSTRUCTION: Court OK’s $3M Berkshire DIP Loan, Cash Use ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Florida authorizes Magnum Construction Management, LLC, to obtain $3,000,000 in postpetition financing from Berkshire Hathaway Specialty Insurance Company. The Court also authorizes the Debtor to use cash collateral of the DIP Lender pursuant to a budget. The budget includes $200,000 for the benefit of professionals of the Official Committee of Unsecured Creditors: $150,000 in financing from DIP Lender and Travelers Casualty and Surety Company of America, and (b) $50,000 that will be reallocated by the Debtor's professionals to the Committee's professionals. The Court allows the DIP Lender: * adequate protection of its interest in the prepetition collateral, for the aggregate amount of diminution in value of the prepretition collateral; and * the right to credit bid up to the full amount of the DIP Loan in any sale of the collateral without need of further Court order. The Court confirms to the DIP Lender liens which secure the DIP Obligations, as follows: (a) a fully-perfected first priority senior priming security interest on the collateral, subject only to the permitted liens in the Loan and Security Agreement; (b) a junior lien upon all funds held in a certain deposit account at the Bank of America, which lien will only be junior to BofA; and (c) liens senior to certain other liens. Subject to the carve-out, all the DIP obligations constitute allowed claims against the Debtor with the priority over any administrative expenses, and other claims. The authority to use cash Collateral will terminate: (i) if the Debtor fails to use the DIP Lender’s cash collateral according to the budget, as amended; (ii) on the confirmation of a plan of reorganization that is not reasonably acceptable to the DIP Lender; (iii) with the sale of all or substantially all of the Debtor's assets; and (iv) when the Debtor commences any action against the DIP Lender with respect to the debts owed or granted by the Indemnity Agreements, or the Berkshire Prepetition Obligations. All payments or proceeds remitted to the DIP Lender will be free and clear of any claim, charge, assessment or other liability. Unless otherwise agreed to in writing by DIP Lender, the Debtor will continue to prosecute the Work under the Berkshire Bonded Contracts and use its best good faith efforts to timely complete the remaining work. A full-text copy of the Final Order is accessible free of charge at: http://bankrupt.com/misc/Magnum_Const_439_Cash_Ord.pdf About Magnum Construction Management Magnum Construction Management, LLC -- https://www.mcm-us.com/ -- formerly known as Munilla Construction Management, LLC, is a construction company specializing in heavy civil construction in the areas of transportation, airport infrastructure, roads, bridges, government buildings and schools. It is headquartered in South Miami, Florida, but also has offices in (i) Broward County, Florida, and (ii) Irving, Texas. As of the Petition Date, MCM employs a total of 292 people. Magnum Construction Management filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code (Bankr S.D. Fla. Case No. 19-12821) on March 1, 2019. In the petition signed by CFO Gilberto Ruizcalderon, the Debtor estimated $50 million to $100 million in assets and $10 million to $50 million in liabilities. The Debtor is represented by Paul A. Avron, Esq., at Berger Singerman LLP. The U.S. Trustee for Region 21 on March 14, 2019, appointed three creditors to serve on the official committee of unsecured creditors in the Chapter 11 case. The Committee retained Wargo & French, LLP, as its legal counsel. MEDCOAST MEDSERVICE: Court OK’s Cash Collateral Pact with IRS --------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California authorizes Medcoast Medservice, Inc., to use cash collateral on an interim basis through and including 10 a.m. on Oct. 2, 2019, pursuant to the terms of the stipulation entered into between the Debtor and the United States of America, on behalf of the Internal Revenue Service. As adequate protection, the Debtor will pay IRS $6,500 monthly, on the 10th day of each month, beginning September 10, 2019 until the confirmation of a plan. As further adequate protection, the Debtor will grant IRS replacement liens parallel to and secured to the same extent and priority as the liens on the Petition Date. A further hearing on the Debtor's continued use of cash collateral is scheduled on Oct. 2, 2019 at 10 a.m. The Debtor must file and serve copies of an updated budget by Sept. 16. Objections must be filed by Sept. 26. About MedCoast Medservice MedCoast Medservice Inc. -- https://www.medcoastambulance.com/ -- provides emergency and non-emergency transportation to all of Los Angeles, Orange County and South Bay areas. MedCoast Medservice is a corporation whose primary business concerns the transport of individuals (patients) to and from their homes or places of need to hospitals, physicians, and/or health care providers. It operates from a rented facility located at 14325 Iseli Road, Santa Fe Springs, California. MedCoast Medservice filed for Chapter 11 protection (Bankr. C.D. Cal. Case No. 19-19334) on Aug. 9, 2019. In the petition signed by Artina Safarian, president, the Debtor disclosed assets at $952,016 and liabilities at $2,615,768, of which approximately $1,303,754 is owed for payroll taxes to the Internal Revenue Service. Judge Sheri Bluebond is the case judge. Henry D. Paloci III PA represents the Debtor. MERRICK COMPANY: May Continue Using Cash Collateral on Final Basis ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Western District of Kentucky authorized Merrick Company, LLC to continue to use cash collateral only in accordance with the terms and conditions of the Final Order. The Internal Revenue Service and Republic Bank are each granted a valid, binding, enforceable and perfected first priority liens, mortgages and security interests in and upon (i) all of the Pre-Petition Collateral and all proceeds thereof, and (ii) all of the Debtor's property and assets acquired by the Debtor on or after the Petition Date, of any kind or nature, whether real or personal, tangible or intangible, wherever located, and all proceeds of any and all of the foregoing, and all proceeds of the Collateral, to the same extent, validity and priority as its prepetition security interest. However, the Replacement Lien is subject to a carve for fees payable to the U.S. Trustee and counsel for Debtor in an amount not to exceed $50,000, such amount excluding any retainer paid by Debtor to counsel for the Debtor. The Debtor, at its expense, will (a) continue to at all times keep the Collateral fully insured against all loss, peril and hazard and make the IRS and Republic Bank co-insured and loss payee as its interests appear under such policies, and (b) pay any and all post-petition taxes, assessments and governmental charges with respect to the Collateral, whether or not the Debtor is obligated to do so under the Pre-Petition Senior Loan Documents, and will provide the IRS and Republic Bank with proof thereof upon written demand. The Debtor will also give the IRS and Republic Bank access to its records in this regard. About Merrick Company Merrick Company, LLC -- http://www.merrickco.com/-- is a mechanical contractor in Louisville, Ky., that repairs, upgrades, designs, and installs piping and HVAC systems. Merrick Company sought protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Ky. Case No. 19-31201) on April 15, 2019. The petition was signed by Michelle Merrick, member. At the time of the filing, the Debtor disclosed $824,992 in assets and $3,656,559 in liabilities. The case is assigned to Judge Thomas H. Fulton. MIDWEST PHYSICIAN: Moody's Alters Outlook on B2 CFR to Stable ------------------------------------------------------------- Moody's Investors Service affirmed Midwest Physician Admin Svcs, LLC's B2 Corporate Family Rating, B2-PD Probability of Default Rating and individual debt instrument ratings. At the same time, Moody's changed the outlook to stable from negative. The stabilization of the outlook reflects prudent cash management since the company's sale leaseback transaction in May 2018. Although a portion of the sale leaseback proceeds were used to pay a sponsor dividend, the company continues to maintain more than $100 million of cash. Moody's believes the company will continue to make acquisitions and investments in its infrastructure that will increase top line growth and profitability. Additionally, DuPage's investments in its new surgery centers and behavioral health capabilities should further improve credit metrics. The affirmation of the B2 CFR reflects Moody's expectation that the company's leverage will remain high and that cash flow will primarily be used to fund acquisitions and other growth investments. However, DuPage is making strides to build out its surgery centers and behavioral health capabilities that Moody's expects will improve future credit metrics. Following is a summary of Moody's rating actions: Midwest Physician Administrative Services, LLC Corporate Family Rating affirmed at B2 Probability of Default Rating affirmed at B2-PD Senior Secured First lien revolving credit facility due 2022 affirmed at B1 (LGD3) Senior Secured First lien term loan due 2024 affirmed at B1 (LGD3) Senior Secured Second lien term loan due 2025 affirmed at Caa1 (LGD5) Outlook changed to stable from negative RATINGS RATIONALE DuPage's B2 CFR reflects Moody's expectations that the company's leverage will remain high but should improve over the next 12 to 18 months. Moody's forecasts adjusted debt/EBITDA will decline to below 5.5x over this horizon. The ratings also reflect the risks associated with the company's high degree of geographic concentration given operations are primarily located in the greater Chicago, IL area. Positive consideration is given to the company's multi-specialty business model which provides patients with a broad range of primary and specialist care in an integrated setting. The company has meaningful scale in its markets and has successfully executed an organic and acquisition-led growth strategy. Moody's expects the company to remain acquisitive, with a focus on small-sized tuck-ins that will likely be funded primarily from internal cash flow. The ratings also reflect the company's good liquidity profile with positive free cash flow and access to a $60 million revolving credit facility which is not expected to be utilized. The stable outlook reflects its assumption DuPage will continue to pursue acquisitions but will maintain solid cash balances and that credit metrics will improve as their new surgery center is completed. Ratings could be downgraded if financial policies were to become more aggressive. Quantitatively, ratings could be downgraded if adjusted debt/EBITDA is sustained above 6.0 times. Ratings could be upgraded if the company substantially broadens its geographic presence, exhibits less aggressive financial policies, sustains improvement in free cash flow, and if adjusted debt/EBITDA is sustained below 5.0x. DuPage is a large, independent multi-specialty physician group with over 724 physicians based in 120 locations in/near the greater Chicago, IL area. The company handles over 2 million patient encounters annually. The company generates around $1 billion of revenue. The company is owned by affiliates of Ares Management L.P., management and physicians of the company. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. MS SUPPLY & HOME: Health Care Provider Seeks Authority to Use Cash ------------------------------------------------------------------ MS Supply & Home Health, Co., seeks interim and final authority from the U.S. Bankruptcy Court for the Middle District of Florida to use cash collateral, nunc pro tunc from Aug. 30, 2019. The budget for the first week (of a 4-week budget) provides for total expenses at $87,884, which includes $42,964 in payroll to non-insiders; and $21,075 for payroll to insiders. A copy of the Budget can be accessed free of charge at: http://bankrupt.com/misc/MS_Supply_14_Cash_M.pdf The Debtor is an approved Medicare provider and a substantial portion of its revenues are received from Medicare and related private insurance carriers. Payments from Medicare and the private insurance carriers are deposited into the Debtor's accounts at First Citrus Bank, Centennial Bank, and Wells Fargo. First Citrus Bank is a primary secured lender, asserting first priority liens against the Debtor's assets. As of the Petition Date, the Debtor owes First Citrus Bank $1,793,472. To provide adequate protection to its Secured Creditors, the Debtor proposes that: (i) all receivables and revenues generated from operations will be paid into the Debtor’s operating accounts at First Citrus Bank, Centennial Bank, and Wells Fargo Bank, N.A.; (ii) the Debtor will distribute funds from the said accounts to pay reasonable and customary expenses related to the management and operation of its business, pursuant to the Budget. About MS Supply & Home MS Supply & Home Health Co. is a provider of home health care services. The Company offers mobility aids, ambulation aids, sickroom setup, and disposable supplies. The Company filed a petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 19-08345) in Tampa, Florida, on Aug. 30, 2019. In the petition signed by Magdalena Santos, vice president, the Debtor estimated assets of no more than $50,000, and liabilities at $1 million to $10 million as of the bankruptcy filing. The Debtor's counsel is JENNIS LAW FIRM. ON SEMICONDUCTOR: S&P Rates New $1.635BB Term Loan 'BB' ------------------------------------------------------- S&P Global Ratings said that its ratings on ON Semiconductor Corp. (BB/Stable/--) are unaffected by the company's announcement that it would issue an incremental $500 million senior secured term loan and use the proceeds towards paying down a portion of its $1.9 billion revolving credit facility, in a leverage neutral transaction. Simultaneously, S&P assigned a 'BB' issue level rating to ON Semiconductor Corp.'s proposed $1.635 billion term loan due 2026, with a recovery rating of 3, reflecting its expectation of meaningful recovery (50%-70% rounded estimate: 55%) in the event of a payment default. S&P's ratings on the company's existing senior secured and unsecured facilities are unchanged by the proposed transaction, which will modestly increase interest expense, leave about $800 million outstanding on the revolving credit facility, and improve the company's liquidity. The company plans to extend maturity of the entire term loan to 2026 (seven years from closing date) following the transaction. The ratings reflect ON's exposure to a competitive and cyclical industry with high capital expenditure requirements, improving EBITDA margins (but still lower than semiconductor peers of similar scale), and the company's intention to use its free cash flow toward share buybacks and acquisitions. The company also has work to do integrating its recent Quantenna acquisition and simultaneously faces near-term demand weakness. Nonetheless, the company benefits from a leading position in the discrete power management segment of the semiconductor market, and exposure to diversified end markets and a large customer base. The ratings also reflect S&P's view of the company's trailing-12-month adjusted net leverage of about 2x, and free cash flow generation of about $560 million over the past 12 months, of which about $400 million was used towards share buybacks. Current S&P Global Ratings-adjusted leverage of about 2x provides ample cushion to the rating agency's 4x downside threshold, for the company to pursue acquisitions and share buybacks. ONEX TSG: Moody's Affirms B2 CFR, Outlook Stable ------------------------------------------------ Moody's Investors Service affirmed Onex TSG Intermediate Corp.'s (doing business as SCP Health) ratings including its B2 Corporate Family Rating, B2-PD Probability of Default Rating, B1 rating of first lien term loan and Caa1 rating of second lien term loan. At the same time, Moody's assigned a B1 rating to the company's refinanced revolving credit facility, for which the expiry date was recently extended from July 31, 2020 to April 30, 2022. The outlook is stable. The following ratings were affirmed: Onex TSG Intermediate Corp. Corporate Family Rating at B2 Probability of Default Rating at B2-PD $530 million first lien term loan due in 2022 at B1 (LGD3) $135 million second lien term loan due in 2023 at Caa1 (LGD6 from LGD5) The following rating was assigned: Onex TSG Intermediate Corp. $75 million revolving credit facility expiring in 2022 at B1 (LGD3) Outlook action: The outlook is stable RATINGS RATIONALE The B2 Corporate Family Rating reflects Onex TSG's market position as the third-largest emergency department physician staffing company, high financial leverage and the company's exposure to the evolving regulatory environment surrounding reimbursements. Onex TSG's debt to EBITDA was approximately 5.6 times at the end of the second quarter of 2019. The company's high concentration on a single line of business (emergency medicine) is a constraining factor for the rating. Onex TSG's rating is supported by good customer diversity, favorable healthcare services outsourcing market trend, very good liquidity and solid track record of integrating acquisitions. Onex TSG's financial policies are expected to remain aggressive reflecting its ownership by private-equity investors. As a provider of emergency room staffing to hospitals, Onex TSG faces high social risk. Changes in health insurance plan design and employer efforts to curb costs are resulting in patients bearing higher financial responsibility for their healthcare. A number of regulatory and legislative proposals aim to provide patients with financial relief from high medical costs. For example, several legislative proposals have been introduced in the US Congress that aim to eliminate or reduce the impact of surprise medical bills. Surprise medical bills are received by insured patients who inadvertently receive care from providers outside of their insurance networks, usually in emergency situations. Moody's believes emergency room staffing companies like Onex TSG would be adversely affected if these proposals are enacted. The stable outlook reflects Moody's expectation that Onex TSG will achieve modest earnings growth over the next 12-18 months although its leverage will remain high because excess cash flow will primarily be used for acquisitions. The rating could be upgraded if the company can grow its revenue base while expanding its product line. More specifically, if the company's debt to EBITDA approaches 4.5 times, along with consistent positive free cash flow, the rating could be upgraded. The ratings could be downgraded if the company experiences a negative change in the reimbursements such that the company's operating profits deteriorate or if credit metrics weaken for any reason. Quantitatively ratings could be downgraded if debt to EBITDA is sustained above 6 times. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. Headquartered in Lafayette, LA, Onex TSG Intermediate Corp., doing business as SCP Health (formerly Schumacher Clinical Partners), is a national provider of integrated emergency medicine, hospital medicine services and healthcare advisory services. Schumacher operates in 30 states with roughly 1,700 employees and 7,000 clinicians. For the LTM period ended June 30, 2019, Onex TSG's net revenue was approximately $1.4 billion. Onex TSG is owned by private equity sponsor Onex Partners Manager LP. OPTIMAS OE: S&P Cuts ICR to CCC+ on Weak Performance; Outlook Neg. ------------------------------------------------------------------ S&P Global Ratings lowered its issuer credit rating on U.S.-based engineered fastener distributor Optimas OE Solutions Holding LLC to 'CCC+' from 'B-'. At the same time S&P lowered its issue-level ratings on the company's senior secured notes to 'CCC' from 'CCC+'. The recovery rating remains '5', indicating its expectation for modest (10%-30%; rounded estimate: 20%) recovery in a payment default. The downgrade reflects S&P's view that Optimas' capital structure is unsustainable. The degradation of the company's profitability, amid difficult market conditions, increases the refinancing risk for its upcoming debt maturities, while additional asset-backed loan (ABL) draws that S&P expects to fund anticipated negative free operating cash flow could limit available liquidity. The company's capital structure includes the $180 million ABL due July 3, 2023 (with approximately $113 million drawn as of June 28, 2019) and $225 million senior secured notes due June 1, 2021. S&P had previously expected the company would modestly grow revenue and improve profit margins as a result of operational improvements and cost reduction initiatives. But in the second quarter of 2019, revenues declined over 5% year-over-year primarily due to automotive softness, and EBITDA margins declined 100 basis points primarily due to volume declines, mix changes, and supplier pricing pressures. Because of the company's operating weakness in the first half of 2019, along with S&P's expectation that weakness in end-market conditions will persist over the next few quarters, the rating agency has revised its base-case forecast downward and now views the capital structure as unstainable in the long term absent a favorable development in operating trends. The negative outlook reflects the potential for a lower rating due to the heightened refinancing risk as the June 2021 maturity date for the senior secured notes approaches. This coupled with a potential liquidity concern arising from its financial covenants and negative free operating cash flow could result in a default event occurring in the near term. "We could lower our rating on Optimas if it does not announce a definitive refinancing plan for its capital structure by the end of the year or if the company initiates a distressed exchange or restructuring that we deem to be tantamount to a default," S&P said, adding that it could lower its rating if the company's borrowing base declines due to weaker operating performance, and negative free cash flow continues due to working capital requirements, such that no availability under the ABL facility exists and the capital structure can no longer sustain the company. "We could revise our outlook to stable in the next 12 months if the company refinances its $225 million senior secured notes while maintaining adequate liquidity and preserving its capital structure. Additionally, an upgrade could occur if sales and EBITDA materially improve, generating positive free cash flow while preserving the capital structure, such that there are reduced borrowings under the ABL facility," S&P said. PATRICK INDUSTRIES: Moody's Assigns B1 CFR, Outlook Stable ---------------------------------------------------------- Moody's Investors Service assigned a B1 Corporate Family Rating and a B1-PD Probability of Default Rating to Patrick Industries, Inc. Concurrently, Moody's assigned a B3 rating to the company's proposed $300 million senior unsecured notes due 2027 and a Speculative Grade Liquidity rating of SGL-2. Proceeds from the notes and a new first lien credit facility consisting of a $550 million revolver and $100 million term loan (both unrated by Moody's) will be used to refinance existing debt and cover fees and expenses. The outlook is stable. This is the first time that Moody's has rated Patrick Industries. "We view Patrick Industries' acquisition growth strategy as aggressive given the size and pace of activity over the past two years. Nonetheless, the company has good credit metrics with debt-to-EBITDA leverage expected to remain near 3.0 times with good liquidity provisions that somewhat mitigate exposure to the highly cyclical and discretionary RV and marine segments," said Andrew MacDonald, Moody's Analyst for the company. "Additionally, the company has outperformed large OEMs despite the recent pull back in inventory levels at RV dealers and we expect weakness in wholesale shipments to subside by year end. Nonetheless, signs of weakening retail demand would point to a longer term decline and could pressure the rating." Assignments: Issuer: Patrick Industries, Inc. Corporate Family Rating, Assigned B1 Probability of Default Rating, Assigned B1-PD Speculative Grade Liquidity Rating, Assigned SGL-2 Senior Unsecured Regular Bond/Debenture, Assigned B3 (LGD5) Outlook Actions: Issuer: Patrick Industries, Inc. Outlook, Assigned Stable RATINGS RATIONALE Patrick Industries' B1 CFR is supported by its large operating size and scale in the recreational vehicle (RV), marine, manufactured housing (MH), and industrial markets with revenues of $2.3 billion for the twelve months ended June 30, 2019. Pro forma for the transaction, the company has robust credit metrics compared to similarly rated companies with Moody's adjusted debt-to-EBITDA and EBITA-to-interest approximating 2.7 times and 3.2 times at close, respectively. Moody's expects debt-to-EBITDA to increase towards 3.0 times during the next 12 months stemming from acquisitions expected to be funded mainly by revolver borrowings and additional RV market softness. Nonetheless, Moody's expects leverage to decline longer term as the company manages to its target debt-to-EBITDA range of 2.0 -- 2.5 times (based on the company's calculation). The financial policy is mixed with a reasonably conservative leverage target partially mitigated by share repurchases and debt-funded acquisitions that contribute to initial company-calculated leverage of approximately 2.5 times that is above the target range. Earnings growth and debt repayment that could be accelerated if the company slows its pace of acquisitions would be the primary driver of lower leverage. The rating also benefits from the company's relatively high margins, good liquidity underpinned by strong cash flow from operations and low capital spending requirements, a broad product portfolio, and a successful track record of integrating acquisitions. Constraining the ratings are the company's highly cyclical end markets that are susceptible to broad economic downturns as they rely heavily on discretionary spending and face high substitution risk from other leisure activities and products. The company's revenues are highly concentrated in the RV industry (56% of 2Q19 LTM sales) and are skewed towards OEMs with 46% of 2Q19 LTM revenues from three OEM customers. The industry in which the company operates also features low barriers to entry and is highly competitive. The company must also contend with volatility in labor and material cost inflation that are affected by tariffs, labor shortages, and other macroeconomic conditions. Beginning in mid-2018, the RV segment began to show signs of softening as dealers reduced inventory levels resulting in meaningful wholesale shipment declines. Moody's expects this will persist through at least the remainder of 2019 or until dealers can assess inventory needs for the next peak retail season in 2020 (generally March to September). The stable outlook is based on Moody's expectation that the company's core segment demand will be at least stable in 2020 if not improve and that the company's financial leverage will periodically increase for debt-funded acquisitions, but will not meaningfully deviate from current levels. Moody's expects that the company will generate solid free cash flow and maintain at least good liquidity. Patrick Industries' ratings could be upgraded if the company is expected to maintain debt-to-EBITDA below 2.5 times in combination with a more diversified product portfolio that is less susceptible to cyclical downturns. An upgrade would also require an expectation the company would maintain good liquidity with a prudent capital structure and financial policy that supports the aforementioned leverage level. The ratings could be pressured downward if debt-to-EBITDA leverage were expected to increase and remain above 3.5 times, free cash flow-to-debt is less than 10%, or if liquidity were to weaken. An expectation that end-market demand is weakening due to macroeconomic headwinds, market share losses, or a more aggressive financial policy could also result in a downgrade. The principal methodology used in these ratings was Global Manufacturing Companies published in June 2017. Patrick Industries, Inc., (NASDAQ: PATK) headquartered in Elkhart, Indiana is a leading manufacturer and distributor of components parts in the RV, marine, manufactured housing and adjacent industrial markets primarily serving large OEMs. Revenues for the twelve months ended June 30, 2019 totaled $2.3 billion. PLAIN LEASING: Court Confirms 2nd Amended Plan ---------------------------------------------- The U.S. Bankruptcy Court for the Central District of California has considered Plain Leasing, Inc.'s Motion to Confirm its Second Amended Chapter 11 Plan. It had no opposition to the Motion filed and had no opposition to the Motion raised at the hearing on the Motion. Based upon the record before the Court, the Motion is granted and it is further ordered that the Second Amended Chapter 11 Plan is confirmed. A post confirmation status conference will be held on December 11, 2019 at 11:00 a.m. in Courtroom 1675. A post confirmation status report is due December 4, 2019. Attorneys for Debtor: Joon M. Khang, Esq. Judy L. Khang, Esq. KHANG & KHANG LLP 4000 Barranca Parkway, Suite 250 Irvine, California 92604 Telephone: (949) 419-3834 Facsimile: (949) 385-5868 Email: joon@khanglaw.com About Plain Leasing Plain Leasing, Inc., f/k/a K Trans, Inc., which rents out trucks and chassis, filed a Chapter 11 bankruptcy petition (Bankr. C.D. Cal. Case No. 17-12539) on March 2, 2017. In the petition signed by Ji K. Lim, president, the Debtor estimated at least $50,000 in assets and $500,000 to $1 million in liabilities. The case is assigned to Judge Robert Kwan. The Debtor is represented by Joon M. Khang, Esq., at Khang & Khang LLP. The Office of the U.S. Trustee on July 5, 2017, appointed three creditors of to serve on the official committee of unsecured creditors. The committee members are: (1) Jae Seung Rho; (2) Sam Lee aka Yoon Lee; and (3) James Jae. The Committee retained Blakeley LLP as counsel, and the Law Firm of Kim & Min as special counsel. PLAINS ALL: Moody's Rates New Sr. Unsec. Notes 'Ba1' ---------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to Plains All American Pipeline L.P.'s proposed senior unsecured notes offering. Plains' other ratings and stable outlook remain unchanged. Plains' announced unsecured debt issuance will improve the company's maturity profile as the use of proceeds will primarily be used to partially refinance its December 2019 and January 2020 maturities totaling $1 billion, and therefore, the transaction will be debt neutral. Assignments: Issuer: Plains All American Pipeline L.P. Senior Unsecured Notes, Assigned Ba1 (LGD4) RATINGS RATIONALE The proposed and existing Plains senior notes and its $1.6 billion revolving credit facility due August 2024 are issued at the parent level and are unsecured. Most of the senior notes have no subsidiary guarantees. The senior notes are rated the same as Plains' Ba1 Corporate Family Rating (CFR) since Plains' unsecured debts are pari passu in its capital structure, and constitute the vast majority of the company's indebtedness. The $1.4 billion senior secured hedged inventory facility due August 2022 has a priority preference over the senior notes; however, because of the small size of the latter facility compared to the total amount of senior notes (roughly $9 billion), the notes are rated the same as the CFR. The preferred units are rated Ba3 reflecting their effective subordination to all of the proposed and existing senior unsecured debt and the senior secured hedged inventory facility. Plains' Ba1 CFR benefits from its large scale and geographic asset diversification across key North American oil producing regions and EBITDA growth in the transportation business supporting deleveraging. The credit challenges include volume risk that exposes cash flow to changing market dynamics arising from crude production levels, and the MLP model subject to a high distribution payout. The stable outlook reflects Moody's view that leverage will remain moderate while experiencing organic growth in its transportation segment and maintaining adequate liquidity. The ratings could be upgraded if there is predictable and sustainable growth in EBITDA without reliance on its optimization activities, if Moody's adjusted debt to EBITDA excluding S&L activity appears to be comfortably sustainable below 4.5x, and if distribution coverage is sustained above 1.25x. The ratings can be downgraded if leverage excluding S&L increases above 5.5x, or if distribution coverage falls below 1x. The principal methodology used in these ratings was Midstream Energy published in December 2018. Plains All-American Pipeline L.P., headquartered in Houston, Texas, is engaged in the transportation, terminalling and storage of crude oil, natural gas liquids and natural gas throughout North America. POSTMEDIA NETWORK: Moody's Hikes CFR to Caa1, Outlook Stable ------------------------------------------------------------ Moody's Investors Service upgraded Postmedia Network Inc.'s Corporate Family Rating to Caa1 from Caa2, Probability of Default Rating to Caa1-PD/LD from Caa2-PD, Speculative Grade Liquidity to SGL-3 from SGL-4 and assigned a B2 rating to the company's new first lien notes due July 2023. Moody's has also changed the outlook to stable from negative. The rating action follows Postmedia's announcement on September 9, 2019 that it has refinanced all of its remaining first lien notes due in July, 2021 with C$95.2 million in new first lien notes due July 2023. At the same time, the company announced it has extended the maturity on its existing second lien notes by six months, to January 2024. The transaction constituted a distressed exchange, which is an event of default under Moody's definition of default, and Moody's appended the /LD limited default indicator to Postmedia's PDR. This will remain for one business day. "The upgrade of Postmedia's CFR and PDR and the ratings outlook change to stable reflects the reduced refinancing risk facing the company now that it has pushed out it's maturities to 2023 and beyond" said Moody's analyst Jonathan Reid. "The extension of debt maturities also provides the company with additional runway to grow digital revenues and address the secular decline in its traditional newspaper business". Upgrades: Issuer: Postmedia Network Inc. Corporate Family Rating, Upgraded to Caa1 from Caa2 Probability of Default Rating, Upgraded to Caa1-PD/LD from Caa2-PD Speculative Grade Liquidity Rating, Upgraded to SGL-3 from SGL-4 Assignments: Issuer: Postmedia Network Inc. Senior Secured First Lien Notes, Assigned B2 (LGD2) Outlook Actions: Issuer: Postmedia Network Inc. Outlook, Changed To Stable From Negative RATINGS RATIONALE Postmedia (Caa1) is constrained by: 1) high business risk due to the continued steep revenue decline in its traditional newspaper business; 2) competitive pressure from formidable global players as digital media has low entry barriers and non-existent geographic boundaries; and 3) its expectation that Postmedia's leverage will remain high despite recent efforts to reduce first lien debt. The company benefits from: 1) its leading position in the Canadian newspaper market with well-known brands; 2) improving free cash flow generation which should enable modest debt repayment; and 3) improved liquidity and reduced refinancing risk following the refinancing of its first lien notes (now due July 2023). Postmedia has adequate liquidity (SGL-3). Sources total C$45 million while it has uses of a of C$5 million in first lien debt payments over the next 12 months. The company's sources consist of balance sheet cash of C$13 million at May 2019, full availability under its C$15 million asset backed revolving credit facility (due January 2021), and its expectation that the company will generate about C$15 million in free cash flow over the next four quarters. Postmedia has limited alternative liquidity generating potential as individual asset sale proceeds must be used to repay debt rather than to enhance liquidity. Governance risk is low for Postmedia, as Postmedia has clear and transparent reporting and has been focused on reducing debt for a number of years. The stable outlook reflects its expectation that Postmedia's revenue and EBITDA decline will moderate over next 12 to 18 months. The ratings could be downgraded if liquidity were to deteriorate or if the company's revenue and EBITDA decline was to worsen or if free cash flow were to turn negative. The ratings could be upgraded if the company is able to stabilize revenue and EBITDA, maintain adequate liquidity and positive free cash flow, and sustain Debt/EBITDA below 5x (LTM 4.9x at May 2019). The principal methodology used in these ratings was Media Industry published in June 2017. Postmedia Network Inc., headquartered in Toronto, is the largest publisher of daily newspapers in Canada. Publications include National Post, Toronto Sun, Vancouver Sun, Montreal Gazette, Ottawa Citizen, Calgary Herald, Edmonton Journal, and Windsor Star. PRIME SECURITY: Moody's Rates New $3.15BB 1st Lien Debt 'Ba3' ------------------------------------------------------------- Moody's Investors Service assigned Ba3 ratings to Prime Security Services Borrower, LLC's proposed $3.15 billion senior secured first-lien term loan due 2026. Moody's also affirmed the Ba3 rating on all of ADT's first lien, non-term loan debt, which after the proposed refinancing will consist of $5.575 billion of notes (including an approximately $325 million net upsizing) with varying maturities through 2042, as well as a $400 million revolving credit facility expiring 2023. In addition, Moody's affirmed ADT's B1 Corporate Family Rating, B1-PD Probability of Default Rating, and the B3 rating on ADT's existing second-lien notes due 2023, whose $1.25 billion balance is unchanged in this transaction. ADT's Speculative Grade Liquidity Rating remains SGL-2, and the company's outlook remains stable. The $3.775 billion of new first-lien debt proceeds will be used to pay off an existing $3.414 billion first lien term loan maturing 2022 and $300 million of first-lien 5.25% notes due in March 2020. The company plans to use revolver borrowings and/or balance sheet cash to meet transaction fees. Affirmations: Issuer: Prime Security Services Borrower, LLC Corporate Family Rating, Affirmed B1 Probability of Default Rating, Affirmed B1-PD Senior Secured Revolving Credit Facility, Affirmed Ba3 (LGD3) Gtd Senior Secured Regular Bond/Debenture, Affirmed Ba3 (LGD3) Senior Secured Regular Bond/Debenture, Affirmed B3 (LGD6) Issuer: The ADT Security Corporation Senior Secured Regular Bond/Debenture, Affirmed Ba3 (LGD3) Assignments: Issuer: Prime Security Services Borrower, LLC Senior Secured 1st lien Term Loan B due 2026, Assigned Ba3 (LGD3) Unchanged: Issuer: Prime Security Services Borrower, LLC Speculative Grade Liquidity Rating, SGL-2 Outlook Actions: Issuer: Prime Security Services Borrower, LLC Outlook, Remains Stable RATINGS RATIONALE The Ba3 ratings that are being assigned to ADT's new first-lien debt or being affirmed on its existing first-lien debt are weakly positioned given the increasing preponderance of first-lien debt ($9.13 billion) relative to debt subordinated to it ($1.25 billion) in the company's capital stack. Moody's has taken the step of overriding its Loss Given Default (LGD) model-indicated outcome, which suggests that first lien debt could otherwise be downgraded to B1. Since using IPO proceeds in 2018 and via subsequent refinancings, including one in April of this year, ADT has steadily and substantially reduced the amount of debt subordinated to first-lien debt, resulting in a large preponderance of debt now being first lien. As there is no longer a sufficient amount of subordinated debt that heretofore had been providing ratings support or "cushion" for the first-lien debt, the first-lien debt's credit riskiness has been aligning more closely with ADT's B1 CFR itself. However, Moody's continues to believe that ADT's ongoing improvements in operating metrics -- including one or two that fall within its CFR upgrade triggers -- suggests that a Ba3 rating continues to reflect the credit risk inherent in the first-lien debt, as the overall credit profile improves. Moody's continues to view ADT's commitment to maintaining conservative financial policies as an important credit consideration. Private-equity sponsor Apollo's ownership in the company, which still stands at 85%, will need to decline meaningfully before Moody's can be comfortable that ADT is likely to put creditors' concerns before those of shareholders. With the company having lost nearly 60% of its market valuation since the IPO, pressures on Apollo to monetize its investment (at the time the largest in its history) have only intensified. ADT has indicated that, in order to enhance shareholder returns, it is willing to make special dividends and buy back shares, among other options. To that end, the new term loan's credit agreement allows for a significantly larger free and clear basket for incremental first-lien debt than the existing credit agreement, a looser first-lien leverage incurrence covenant (for the benefit of revolver lenders only), and an enhanced ability to hold back excess cash flow that can be allocated to restricted payments. In Moody's view, these signals point to the possibility that first-lien debt, if not leverage per se, may grow (and grow relative to subordinated debt) in the near or intermediate term. ADT's B1 CFR reflects its leading position in the North American residential alarm-monitoring and home automation services market as well as continued improvements in performance metrics, including moderate anticipated revenue acceleration. With the late-2018 acquisition of Red Hawk, a leading provider of security and fire-safety services to commercial customers, ADT's commercial security unit will now represent close to a quarter of its $5.1 billion Moody's-estimated 2019 revenue base. The move not only improves ADT's revenue diversification but, given the attractive economics of commercial services, will also improve attrition rates, liquidity, and payback times. Ongoing efforts to delever combined with relatively robust operating growth will help the company to sustain debt-to-RMR (recurring monthly revenue) below 30 times, strong for the B1 CFR. The stable outlook reflects sponsor Apollo's continued elevated ownership interest in the company and the governance risks that that ownership stake implies. Through the first half of 2019, ADT's primary operating metrics -- revenue, attrition, creation multiples, steady-state-free-cash-flow to debt leverage, and debt/RMR leverage -- improved relative to mid-2018 and Moody's expects them to continue to do so through the balance of this year. ADT's SGL-2 Speculative Grade Liquidity rating reflects the company's good liquidity. As of June 30, 2019, the company had $99 million of drawings under its revolver. June 30th balance sheet cash was considerably lower than at year-end 2018, despite strong first-half cash from operating activities, due to net debt repayment, dividends, and stock repurchases. Moody's expects cash flow from operations, less capital expenditures and subscriber growth spending, of more than $500 million over the next twelve months, representing, as a percentage of Moody's adjusted debt, mid-single-digit levels. The company should be able to generate even higher free cash flow in subsequent years from improving creation multiples and industry-leading attrition rates. Interest expense will be a few million dollars higher as a result of the proposed transaction. The ratings could be upgraded if ADT can sustain recent operating momentum and maintain debt-to-RMR leverage below 30 times, and if Moody's anticipates that private-equity ownership in the company will approach 50% or less. The ratings could face downward pressure if additional dividend recapitalizations or large debt-funded acquisitions are made, if debt-to-RMR is sustained above 35 times, or if FCF-to-debt falls to the low-single-digit percentages. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. Headquartered in Boca Raton, FL, ADT, Inc. is the leading provider of security, interactive automation, and monitoring services for residential (primarily) and business customers, and for independent security-alarm dealers on a wholesale basis. The company was formed by the product of a May 2016, Apollo-backed combination of alarm monitors Protection One, Inc. and The ADT Security Corporation. Moody's expects the company's 2019 total monitoring, services, and equipment-installation revenue (pro-forma for acquisitions) to be approximately $5.1 billion. PROGRESSIVE SOLUTIONS: Oakland Proposes Sale to Ecker Capital ------------------------------------------------------------- The City of Oakland, a creditor, filed a Disclosure Statement and related Chapter 11 Plan. The City's Plan involves selling 100% ownership interest in Debtor to Ecker Capital, LLC. Class 3 consists of the Allowed General Unsecured Claims with claim amounts that are less than $5,000, otherwise known as an "administrative convenience class." Class 4 consists of the Allowed General Unsecured Claims with claim amounts that are equal to or greater than $5,001. Ecker Capital will fund an Escrow Payment Account with $100,000. Ecker Capital intends on continuing the operations of the Debtor on a more refined bases and also intends to keep most employees working with more opportunities to grow and with likely increased wages. Ecker Capital believes that this business will flourish once it is operated under new management. To the extent the Class 5 Claims (Insider Claims/Equity Claims) are Allowed Claims, Ecker Capital shall pay up to an additional $50,000 to the Escrow Payment Account to pay these Claims. Upon entry of the Confirmation Order, all property of the Estate of the Debtor shall be legally turned over to Ecker Capital, including but not limited to physical and intellectual property as well as contracts, receivables, customer lists, and renewals. In no event shall the Debtor or current management maintain possession, custody, or control of the assets of the Estate after entry of the Confirmation Order. Any damage caused by the delay in turnover of Estate assets will lead to potential damage claims against the former equity holders, officers, and Debtor-In-Possession. A full-text copy of the Plan dated August 30, 2019, is available at https://tinyurl.com/y2prpgx6 from PacerMonitor.com at no charge. A full-text copy of the Disclosure Statement dated August 30, 2019, is available at https://tinyurl.com/y28rkw48 from PacerMonitor.com at no charge. Attorneys of the Debtor: Christopher D. Hughes, Esq. NOSSAMAN LLP 621 Capitol Mall, Suite 2500 Sacramento, CA 95814 Telephone: 916.442.8888 Facsimile: 916.442.0382 Email: chughes@nossaman.com About Progressive Solutions Founded in 1979, Progressive Solutions, Inc. -- http://www.progressivesolutions.com/-- is a provider of software and support services to governmental entities. The Company is headquartered in Brea, California. Progressive Solutions commenced a Chapter 11 case (Bankr. C.D. Cal. Case No. 18-14277) on Nov. 21, 2018. In the petition signed by Glenn Vodhanel, president, the Debtor estimated $500,000 to $1 million in assets and $1 million to $10 million in liabilities. Lewis R. Landau, Attorney-at-Law, represents the Debtor. QUENTIN HIGHTOWER: Seeks Access to Comptroller Cash Collateral -------------------------------------------------------------- Quentin Hightower Electric, LLC seeks approval from the U.S. Bankruptcy Court for the Southern District of Texas to authorize its use of the cash collateral of existing secured creditor, Texas Comptroller of Public Accounts. Prepetition, the Comptroller filed a tax lien in Walker County, Texas, which lien attaches to all of the company's assets. The lien filed against the company was in the approximate original amount of $86,468. As a matter of law, however, the tax lien secures all taxes, penalty, and interest owed to the Comptroller which may have accrued before or after the filing of the notice. In March of 2019, QHE made two substantial payments to the Comptroller but could not get a payment plan that would work for the company. Eventually, in light of that, QHE decided to file this bankruptcy in the hopes of reaching a feasible payment agreement or plan of repayment with the Comptroller. Accordingly, the Debtor seeks to use such cash collateral as working capital in the operation of its business for the purposes. As adequate protection for the diminution in value of cash collateral, the Debtor will (i) maintain the value of their business as a going-concern, (ii) provide replacement liens upon now owned and after-acquired cash to the extent of any diminution in value of cash collateral, and (iii) provide superpriority administrative claims to the extent of any diminution in value of cash collateral. About Quentin Hightower Electric Quentin Hightower Electric, LLC, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Case No. 19-32320) on April 26, 2019. At the time of the filing, the Debtor estimated assets of less than $50,000 and liabilities of less than $500,000. The petition was signed by its owner, Quentin Hightower. The case is assigned to Judge David R. Jones. Troy J. Wilson, Esq., is the Debtor's legal counsel. No official committee of unsecured creditors has been appointed in the Chapter 11 case. RESTAURANT BRANDS: S&P Upgrades ICR to 'BB'; Outlook Stable ----------------------------------------------------------- S&P Global Ratings raised its issuer credit rating on Toronto-based quick-service restaurant (QSR) company Restaurant Brands International Inc. (RBI) to 'BB' from 'BB-'. The outlook is stable. At the same time, S&P raised its issue-level ratings on the company's first-lien debt to 'BB' from 'BB-' and second-lien notes to 'B+' from 'B'. The '3' and '6' recovery ratings, respectively, are unchanged. S&P also assigned a 'BB' issue-level rating to the company's proposed $750 million term loan due in 2024 and the proposed $500 million first lien senior secured notes due in 2028. S&P's assessment reflects its expectation for consistent EBITDA growth and RBI's increasing track record of operational success. Burger King, Tim Hortons, and Popeyes all have good growth prospects, name recognition, and combined system sales that rank highly among QSRs globally. S&P forecasts EBITDA growth in the low- to mid-single-digit percentage area, driven by about 4% revenue growth and relatively consistent margins. It expects RBI to continue implementing various initiatives, including product and menu development, restaurant renovations, and improved marketing campaigns over the next 12 months. It believes these initiatives have gained traction with consumers over the past several quarters, resulting in consistent same-store sales growth across the three brands. The stable outlook reflects S&P's expectation for generally positive same-store sales growth at all three brands as well as stable operating profitability over the next 12 months. The rating agency anticipates improved credit metrics driven by continued EBITDA growth and meaningful balance-sheet cash, resulting in debt to EBITDA declining to below 5x in fiscal 2020. "We could lower the rating if debt to EBITDA is forecast to be sustained above 5.5x. This could occur if RBI pursues a more aggressive financial policy, including issuing debt above our base-case forecast to fund an acquisition or fuel additional shareholder returns," S&P said, adding that sharply declining operating results due to heightened industry competition, changing taste preferences, or a food-safety issue could also lead it to lower the rating. "We could raise the rating over the next 12 months if we expect sustained adjusted leverage around 4x. We would also need to believe RBI's financial policy supports credit metrics at a higher rating. In addition, we would expect consistently positive same-store sales and stable or expanding margins," S&P said. REWARD SCIENCE: Chapter 15 Case Summary --------------------------------------- Chapter 15 Debtor: Reward Science and Technology Industry Group Co., Ltd 203 Second Section Lize Zhongyuan Wangjing Chaoyang District Beijing, People's Republic of China Chapter 15 Case No.: 19-12908 Business Description: Reward Science and Technology operates as a holding company. The Company conducts diversified operations. It provides daily chemical manufacturing, dairy production, tourism estate development, and mining services. Foreign Proceeding: Reorganization proceeding before People's Court of Chaoyang District, Beijing Chapter 15 Petition Date: September 9, 2019 Court: United States Bankruptcy Court Southern District of New York (Manhattan) Judge: Hon. Michael E. Wiles Foreign Representative: Yin Zhengyou 16th Floor, Tower A, China Technology Trading Bldg, No 66 North Fourth Ring Rd Haidian District, Beijing People's Republic of China Foreign Representative's Counsel: Madlyn Gleich Primoff, Esq. FRESHFIELDS BRUCKHAUS DERINGER US LLP 601 Lexington Avenue, 31st Floor New York, NY 10019-9710 Tel: 212-277-4000 Fax: 212-277-4001 E-mail: madlyn.primoff@freshfields.com Estimated Assets: Unknown Estimated Debts: Unknown A full-text copy of the petition is available for free at: http://bankrupt.com/misc/nysb19-12908.pdf REWARD SCIENCE: Seeks U.S. Recognition of Restructuring in China ---------------------------------------------------------------- Reward Science and Technology Industry Group Co., Ltd., filed a Chapter 15 bankruptcy petition in New York to seek U.S. recognition of its restructuring in Beijing, China. Reward is registered in the Beijing Municipal Administration of Industry and Commerce, Chaoyang Branch, as a limited liability company. Reward is engaged primarily in the business of producing chemical materials and daily chemical products, importing and exporting goods, providing import and export agency services, importing and exporting technology, real estate development and property management. Reward employs approximately 91 people in Beijing. At the end of 2018, Reward found that it was suffering from a severe liquidity crisis. Because of its liquidity crisis, Reward held an interim shareholders' meeting on Dec. 27, 2018, and resolved with unanimous consent by all shareholders to apply for bankruptcy and reorganization. In April 2019, Reward submitted its bankruptcy and reorganization application to the People's Court of Chaoyang District, Beijing, China pursuant to the Enterprise Bankruptcy Law of the People's Republic of China, on the grounds that it is unable to pay off its debts due and is obviously insolvent. In connection with that application, Reward demonstrated to the Beijing Court that although it has been plunged into operational difficulties due to its current liquidity crisis, it is still meaningful for Reward to be reorganized based on its operational conditions, brand quality and industry outlook. For these reasons, the Beijing Court issued an award ((2019) Jing 0105 Po Shen No. 20), dated May 13, 2019, granting Reward's application for bankruptcy and reorganization. Pursuant to the Award, the Beijing Court held as follows: * In accordance with the provisions under Article 2 of the Enterprise Bankruptcy Law, if a company is unable to pay off its debts due and its assets are insufficient to pay off all its debts or such company is obviously insolvent, or is obviously likely to become insolvent, it may undergo reorganization according to the provisions of the Enterprise Bankruptcy Law. * Reward is registered with Beijing Municipal Administration of Industry and Commerce, Chaoyang Branch and its domicile is in Chaoyang District, Beijing; thus, the Beijing Court will have jurisdiction over this case. * As to bankruptcy eligibility, Reward is a duly established limited liability company and thus is eligible for reorganization under the relevant provisions of the Enterprise Bankruptcy Law. * Although Reward is unable to pay off its debts due and is obviously insolvent, it has been plunged into crisis due to short-term capital chain break and has submitted relevant materials demonstrating the feasibility of its reorganization. * In summary, this case meets the conditions for applying for bankruptcy and reorganization, and Reward's application is accepted. Dr. Yin Zhengyou, in his capacity as the foreign representative and the "person in charge" at Beijing Wei Heng Law Firm, the Beijing court appointed bankruptcy administrator of Reward, asserts that based on the issuance of the Award by the Beijing Court, it is clear that there is a foreign proceeding pending in the Beijing Court. On June 24, 2019, the Beijing Court entered a decision ((2019) Jing 0105 Po No. 26) appointing Beijing Wei Heng Law Firm as the Administrator for Reward with Dr. Yin Zhengyou specifically designated as the "person in charge". The aim of the Beijing Proceeding is to facilitate the reorganization of Reward and its assets by formulating and gaining the approval of a reorganization plan in accordance with the Enterprise Bankruptcy Law. The Enterprise Bankruptcy Law was enacted with a view to regulating the procedures for company bankruptcy cases, fairly settling claims and debts, safeguarding the lawful rights and interests of creditors and debtors, and maintaining the order of the socialist market economy. U.S. Lawsuits Consistent with the aims of the Beijing Proceeding, the Debtor requires the protections afforded to foreign debtors generally under Chapter 15 of the Bankruptcy Code and, more specifically, recognition and relief under Sections 1519, 1520 and 1521 of the Bankruptcy Code. On July 19, 2019, Pinpoint Multi-Strategy Fund, Value Partners Greater China High Yield Income Fund and Value Partners Credit Opportunities Fund SP (collectively, the "Pinpoint State Court Plaintiffs") commenced an action (the "Pinpoint State Court Action") against Reward and two of its affiliates in the Supreme Court of the State of New York, County of New York (the "New York State Court"). The Pinpoint State Court Plaintiffs allege that they have suffered damages amounting to not less than $76,777,000. On Aug. 17, 2019, the Foreign Representative requested an extension from the Pinpoint State Court Plaintiffs of the time to answer the complaint. On Aug. 23, 2019, the Pinpoint State Court Plaintiffs, through counsel, denied the Foreign Representative's request for an extension and issued a list of demands. On Aug. 21, 2019, BFAM Asian Opportunities Master Fund, LP commenced an action against Reward and the same two subsidiaries in the New York State Court pursuant to a Motion for Summary Judgment in Lieu of Complaint and accompanying Memorandum of Law. BFAM alleges that is has suffered damages amounting to not less than $83,220,627. The Summary Judgment Motion is returnable in the New York State Court on Oct. 14, 2019, with response papers due on Oct. 4, 2019. The Foreign Representative has commenced the Chapter 15 case, among other reasons, in order to stay the State Court Actions, as contemplated by sections 362(a), 1519, 1520(a)(1), 1521(a)(1) and 1521(a)(7) of the Bankruptcy Code. Such stay will help facilitate the Beijing Proceeding and the bankruptcy and restructuring of the Debtor pursuant to and in connection with the Beijing Proceeding. The claims advanced against Reward by the State Court Plaintiffs of the State Court Actions can and will be addressed in connection with the Beijing Proceeding. About Reward Science and Technology Beijing, China-based Reward Science and Technology Industry Group Co., Ltd, provides daily chemical manufacturing, dairy production, tourism estate development, and mining services. In April 2019, Reward submitted its bankruptcy and reorganization application to the People's Court of Chaoyang District, Beijing, China pursuant to the Enterprise Bankruptcy Law of the People's Republic of China. The Beijing Court issued an award ((2019) Jing 0105 Po Shen No. 20), dated May 13, 2019, granting Reward's application for bankruptcy and reorganization. Reward filed a Chapter 15 bankruptcy petition (Bankr. S.D.N.Y. Case No. 19-12908) on Sept. 9, 2019, to seek U.S. recognition of the Beijing proceedings. The Hon. Michael E. Wiles is the case judge. Madlyn Gleich Primoff, Esq., at FRESHFIELDS BRUCKHAUS DERINGER US LLP, in New York, is counsel in the U.S. case. The Chapter 15 petition was signed by Dr. Yin Zhengyou, in his capacity as the foreign representative and the "person in charge" at Beijing Wei Heng Law Firm, the Beijing court appointed bankruptcy administrator of Reward. RON'S EXCAVATING: Allowed to Use Cash Collateral on Interim Basis ----------------------------------------------------------------- Judge Christopher J. Panos of the U.S. Bankruptcy Court for the District of Massachusetts authorized Ron's Excavating, Inc. to use the cash and other collateral in the ordinary course of its business on an interim basis. The Debtor is authorized to collect and use those prepetition assets in which the Secured Creditors -- The Cooperative Bank of Cape Cod and CHTD Company/PayPal -- claim a security interest. As adequate protection to the Secured Creditors for the Debtor's use of assets in which Cape Cod claims a security interest: (a) the Debtor will make regular monthly adequate protection payments to Cape Cod Coop in the amount of $5,475.19, which is the regular monthly payment of principal and interest payable to Cape Cod; (b) the Debtor will pay PayPal $291.67 each month, which is equal to an interest payment at the rate of 7% per annum, which is the reasonable commercial rate to assure that PayPal is adequately protected; (c) the Debtor will grant Cape Cod Coop and PayPal continuing replacement liens and security interests in the Debtor's post-petition receivables, to the extent of their existing liens; (d) the application of the adequate protection payments to principal or interest will be reserved until further order of the Court; (e) the Debtor will remain within the Budget, within an overall margin of 10%; and, (f) the Debtor will provide Cape Cod Coop with (i) updated accounts receivable agings within three business days of the first and fifteenth of each month; and (ii) Monthly Operating Reports as and when filed with the U.S. Trustee. About Ron's Excavating Ron's Excavating Inc., filed a Chapter 11 bankruptcy petition (Bankr. D. Mass. Case No. 19-12008) on June 12, 2019, disclosing under $1 million in both assets and liabilities. The petition was signed by its president, Manuel Cabral III. The Debtor is represented by David B. Madoff, a partner at Madoff & Khoury, LLP. RON’S EXCAVATING: May Use Cash, Final Hearing Set for Nov. 21 --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Massachusetts approves on an interim basis the motion filed by Ron's Excavating, Inc., to use cash collateral to operate its business through Nov. 30, 2019. As adequate protection to the Secured Lenders: (a) the Debtor will make regular monthly payment of (i) $5,475.19 to The Cooperative Bank of Cape Cod; and (ii) $291.67 each month to PayPal; (b) the Debtor will grant Cape Cod Coop and PayPal continuing replacement liens and security interests in the Debtor's postpetition receivables to the extent of their existing liens. A hearing on final approval of the Debtor's motion is set for Nov. 21, 2019 at 10:30 a.m. Objections must be filed by Nov. 19, 2019 at 4:30 p.m. About Ron's Excavating Ron's Excavating Inc., filed a Chapter 11 bankruptcy petition (Bankr. D. Mass. Case No. 19-12008) on June 12, 2019, disclosing under $1 million in both assets and liabilities. The Debtor is represented by David B. Madoff, a partner at Madoff & Khoury, LLP. SHANNON STALEY: Use of Cash Collateral Has Final Approval --------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Pennsylvania authorizes Shannon Staley & Sons, LLC, to use cash collateral on a final basis and to provide adequate protection to Dollar Bank, Federal Savings Bank. The Court ruled that the interim order entered Aug. 9, 2019, is made final. About Shannon Staley Shannon Staley & Sons LLC -- https://shannonstaleyandsons.com/ -- is a full-service construction services firm offering on demand construction services, turn key real estate, contract construction services, and property management services. Shannon Staley sought Chapter 11 protection (Bankr. W.D. Pa. Case No. 19-23101) on Aug. 6, 2019, in Pittsburgh, Pennsylvania. As of the Petition Date, Debtor estimated total assets between $500,000 and $1 million, and liabilities between $1 million and $10 million. The Hon. Carlota M. Bohm oversees the Debtor's case. Robert O. Lampl Law Office is the Debtor's counsel. SHOPFACTORYDIRECT INC: Cash Collateral Motion Abated ---------------------------------------------------- This case come on for a continued hearing on August 15, 2019, to consider debtor ShopFactoryDirect, Inc.'s motion for authority to cash collateral nunc pro tunc to April 8, 2019. After reviewing the pleadings and having considered the position of the parties, Hon Cynthia C. Jackson of the U.S. Bankruptcy Court for the Middle District of Florida on Aug. 29, 2019, entered an order providing that the Motion is "abated". About ShopFactoryDirect ShopFactoryDirect Inc. operates an e-commerce site https://shopfactorydirect.com/ that sells home furniture, including bedroom, living room, dining room, office, bar and bar stools, entertainment, bathroom, outdoor and patio, pool and spa, decor and accessories, wall art and mirrors, and area rugs. All of its products are delivered direct from the manufacturer. The Company offers free delivery on all its merchandise within the 48 contiguous United States. ShopFactoryDirect Inc., based in Winter Park, FL, filed a Chapter 11 petition (Bankr. M.D. Fla. Case No. 19-02257) on April 8, 2019. In the petition signed by William A. Bayse, president, the Debtor estimated $0 to $50,000 in assets and $1 million to $10 million in liabilities. Aldo G. Bartolone, Jr., Esq., at Bartolone Law, PLLC, serves as bankruptcy counsel. SIGNET JEWELERS: S&P Downgrades ICR to 'BB-'; Outlook Negative -------------------------------------------------------------- S&P Global Ratings lowered its ratings on diamond and specialty jewelry retailer Signet Jewelers Ltd., including the issuer credit rating to 'BB-' from 'BB'. The downgrade on Signet Jewelers Ltd. reflects S&P's expectation of heightened competitive pressures and store closures, leading to lower sales and adjusted EBIDTA over the next 12 months. The company's considerable exposure to mall locations makes it vulnerable to waning customer traffic, increasing the likelihood for several store closures, along with weaker economic prospects. S&P views Signet's announced refinancing as credit neutral since the proposed transaction would extend its maturity profile and provide some financial flexibility as it executes business initiatives. As part of the refinancing plan, the company plans to increase the revolving credit facility to $1.6 billion (up from the existing $700 million). Signet also plans to use borrowings from the expanded revolver to pay down its unsecured term loan and tender for a majority of its $400 million unsecured notes. The negative outlook on Signet reflects S&P's expectation that operating performance will remain pressured over the next 12 months because of heightened competition and lower mall traffic. The rating agency expects Signet's adjusted debt to EBITDA to remain in the mid- to high-3x area and adjusted FFO to debt in the 19%-20% area over the next 12 months. "We could lower the rating if leverage increases to around 4x. This could manifest from an economic weakness that further erodes Signet's competitive position or if the company underperforms our base-case expectations," S&P said, adding that in this instance, it would see same-store sales consistently weak in the low- to mid- percent decline area and EBITDA margins declining by more than 150 basis points relative to its forecast. "We could revise the outlook to stable if the company effectively addresses competitive pressures and succeeds in its strategic initiatives. Under such a scenario, the company would demonstrate stabilization in comparable sales at flat to slightly positive levels across all its banners and EBITDA margins in the mid- to high-14% range or better," S&P said. This scenario would likely also result in adjusted leverage remaining in the low-3x area, according to the rating agency. SOUTH COAST BEHAVIORAL: Judge Approves Cash Collateral Stipulation ------------------------------------------------------------------ Judge Mark S. Wallace of the U.S. Bankruptcy Court for the Central District of California inked his approval to the stipulation between debtor South Coast Behavioral Health, Inc., and creditor United States of America for the Debtor's use of cash collateral and adequate protection. About South Coast Behavioral Health South Coast Behavioral Health, Inc. -- https://www.scbh.com/ -- is a healthcare company that specializes in the in-patient and outpatient treatment of addicts, alcoholics, and persons dealing with mental health issues. It offers a clinically supervised residential sub acute detox services, therapeutic and residential treatment centers, intensive outpatient treatment services, and partial hospitalization programs. South Coast Behavioral Health sought protection under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No. 19-12375) on June 20, 2019. At the time of the filing, the Debtor disclosed assets of between $1 million and $10 million and liabilities of the same range. The case is assigned to Judge Mark S. Wallace. Nicastro & Associates, P.C., is the Debtor's legal counsel. SPECTRUM BRANDS: Fitch Rates New $300MM Sr. Unsec. Notes 'BB' ------------------------------------------------------------- Fitch Ratings assigned a 'BB'/'RR4' rating to Spectrum Brands Inc.'s proposed $300 million senior unsecured notes due 2029. Proceeds will be used for general corporate purposes, but the company plans to simultaneously redeem its $285 million of 6.625% notes due 2022 using asset sale proceeds. Spectrum's 'BB' Long-Term Issuer Default Rating reflects the company's diversified portfolio across products and categories, strong brand portfolio, and renewed financial discipline as evidenced by its public commitment to maintain net leverage (net debt/EBITDA) at or below 3.5x over the long term, which equates to adjusted debt/EBITDAR (capitalizing leases at 8x) below mid-4x. The IDR also reflects expectations for stable to low-single-digit organic revenue growth, reasonable profitability with an EBITDA margin near 15% pro forma for the divestitures of the Global Batteries and Lighting (GBL) and Global Auto Care (GAC) divisions, and historically consistent FCF. These positive factors are offset by strong competition, profit margin pressures across three of its four core segments, the company's acquisitive nature historically and potentially greater overall business cyclicality due to the increased contribution of Hardware and Home Improvement (HHI) to total EBITDA post divestitures. KEY RATING DRIVERS Profitability Pressures: Spectrum's adjusted EBITDA margin pro forma for divestitures declined approximately 100bp to 14.8% in the LTM ended June 30, 2019 compared with the corresponding year-ago period, with three of Spectrum's segments, consisting of Home & Garden (H&G), Global Pet Supplies (PET) and Home and Personal Care (HPC), each declining by more 150bp and collectively representing nearly 65% of total pro forma revenue. The margin declines primarily reflect lower sales volumes partially attributable to unfavorable product mix, higher raw material prices manufacturing and distribution costs, and increased marketing and advertising spend, particularly in the HPC segment in 2019. Fitch forecasts EBITDA margin in the mid-14% range in fiscal 2019 ending Sept. 30 compared with a pro forma margin of 15.3% in fiscal 2018. Divestitures Lessens Diversification: Spectrum's product diversity lessened subsequent to the sales of its GBL division for $2 billion and GAC division for $1.25 billion to Energizer on Jan. 2, 2018 and Jan. 28, 2019, respectively. Spectrum initially intended to sell its small appliances business rather than GAC, but bids were lower than anticipated due to the division's deteriorating financial performance. Spectrum subsequently sold the GAC division after receiving a favorable, unsolicited bid from Energizer. The GBL division consisted of consumer batteries products and battery-powered portable lighting products under the Rayovac and VARTA brand, and other licensed brands. GBL generated revenue of $866 million, 17% of Spectrum's total revenue and adjusted EBITDA of approximately $170 million (19.6% margin) in fiscal 2017 ended Sept. 30. The GAC division consisted of appearance, A/C recharge and performance products for automobiles primarily sold under the Armor All and STP brand names. GAC generated revenue of $447 million, 8.9% of Spectrum's total revenue and adjusted EBITDA of approximately $148 million (33.2% margin) in fiscal 2017. Spectrum announced on Jan. 3, 2018 that it was exploring strategic alternatives for both its global batteries and appliances businesses (GBA), which generated $2 billion in revenue (40% of total) and $317 million in EBITDA (approximately one-third of total) in fiscal 2017. Revenue in the GBA division declined by mid-single digits in fiscal 2015 and 2016, trailing the overall company's modestly positive organic growth. Batteries in particular have been in secular decline given increased reliance on chargeable devices and diminishing use of battery powered devices. Divestiture Proceeds Maintain Financial Structure: The divestitures reduced EBITDA by over $300 million or 33% from the fiscal 2017 level of approximately $970 million. Post divestitures, adjusted debt/EBITDAR (capitalizing leases at 8x) is expected to return to approximately 4.4x by year-end fiscal 2019, similar to the 4x in fiscal 2017 given Spectrum repaid over $2 billion of debt funded with nearly $3 billion of cash proceeds from asset sales. Spectrum also reduced the penetration of secured debt in its debt structure to $222 million, or 9.9% of total debt, as of June 30, 2019 from nearly $1.5 billion, or 33.9%, of total debt as of Sept. 30, 2018 following the prepayment in full of nearly $1.3 billion of senior secured term loans. The remaining $222 million of secured debt consists of $54 million of revolver borrowings and $168 million of capital leases. Renewed Financial Discipline: Spectrum publicly committed to a net leverage target (net debt/EBITDA) at or below 3.5x on a long-term basis and has made considerable progress toward achieving this objective through debt reduction funded by asset sales. Fitch believes the company will likely meet its net leverage target by YE fiscal 2019. The company is evaluating small tuck-in acquisitions, but these are not expected to materially affect the company's credit metrics. Greater HHI Contribution Increases Cyclicality: Spectrum's financial performance will be more cyclical than historically given the greater contribution of HHI to the company's overall financial results due to divestitures of the GBL and GAC divisions, profitability pressures in the HPC and PET divisions and the vulnerability of the HHI business to shifts in housing demand. HHI represented 36.2% and 43.7% of pro forma revenue and adjusted EBITDA, respectively, in fiscal 2018 compared with 25.5% and 26.6%, respectively, as reported in fiscal 2017. HHI is vulnerable to the U.S. housing market because 25%-30% of its revenue is derived from new housing starts. The remainder of the business is in the replacement area, which is less affected by swings in the housing market. Renewed Tariff Risk: Deteriorating U.S. and China trade negotiations reintroduced significant uncertainty regarding tariffs, which would adversely affect demand for a broad range of consumer products, including those from Spectrum, given the significant volume of consumer products manufactured in China that would be subject to a U.S. tariff. Spectrum intends to pass on tariff-related cost increases to customers, but rising prices may adversely affect demand. DERIVATION SUMMARY Spectrum's ratings reflect the company's diversified portfolio across products and categories, strong brand portfolio, renewed financial discipline as evidenced by its public commitment to maintain net leverage (net debt/EBITDA) at or below 3.5x over the long term, expectations for stable to low-single-digit organic revenue growth, reasonable profitability with EBITDA margin around 15% pro forma for the divestitures of the GBL and GAC divisions and historically consistent FCF. These positive factors are offset by strong competition, profit margin pressures across three of its four core segments, the company's acquisitive nature historically and potentially greater overall business cyclicality due to the increased contribution of HHI to total EBITDA pro forma for divestitures. Spectrum is similarly rated to ACCO Brands Corporation (BB/Stable) and Levi Strauss & Co. (BB+/Stable). ACCO's IDR of 'BB' reflects the company's consistent FCF and reasonable adjusted debt/EBITDAR around mid-3x. The ratings are constrained by secular challenges in the office products industry, channel shifts within the company's customer mix and risk of further debt-financed acquisitions. Levi's 'BB+'/Stable rating reflect the company's stable performance, with accelerating growth in revenue and EBITDA in recent years, meaningful cash flow generation and reasonable adjusted debt/EBITDAR expected to trend in the low-3.0x range. The ratings reflect Levi's strong brand, market share and operating initiatives, which should collectively drive low to mid-single digit annual EBITDA growth over the next 24-36 months. The ratings also recognize the secular challenges in the mid-tier apparel industry, mitigated somewhat by Levi's geographic diversity, minimal fashion exposure and presence across a wide spectrum of distribution channels. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer - Revenues pro forma for divestitures are forecast to be flat at $3.8 billion in fiscal 2019 from the prior year and grow in the low single-digit range annually beginning fiscal 2020. - Pro forma EBITDA is forecast to decline modestly to around $550 million in fiscal 2019 from around $560 million in fiscal 2018 due to profitability pressures and increased selling investments. Fitch expects EBITDA margin will improve modestly beginning fiscal 2020 largely due to revenue growth and ongoing cost reduction efforts; EBITDA could approach $600 million over the next two to three years. - FCF from ongoing operations is forecast to be modestly positive in fiscal 2019/fiscal 2020, reflecting some working capital movements and a $200 million payment related to the battery business sale to Energizer expected in fiscal 2020. FCF could improve to over $200 million beginning fiscal 2021, given EBITDA improvement, lower interest expense following debt reduction, and assuming neutral working capital. FCF is expected to be used for share buybacks by Spectrum's parent Spectrum Brands Holdings, Inc. On May 29, 2019, Energizer sold the Varta consumer battery business, including manufacturing and distribution facilities in Germany, which was a prerequisite to obtaining regulatory approval for the GBL transaction. Spectrum will pay $200 million to Energizer in connection with the sale of the Varta business since the company agreed to share in any decline in value on the divestiture of the Varta Business below the targeted sale price, up to a maximum of $200 million. Fitch assumes this cash payment occurs in the December 2019 quarter and is funded with existing cash on hand. However, a portion of the cash payment may be funded with incremental revolver borrowings. - Adjusted debt/EBITDAR is forecast to remain at or modestly below the 4.4x projected at September 2019, absent a leveraging transaction. Fitch would expect Spectrum to focus FCF toward debt reduction following a leveraging transaction, in line with its historical track record. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action A positive rating action could result if Spectrum commits to sustain adjusted debt/EBITDAR (capitalizing leases at 8x) in the low-4x range. Developments That May, Individually or Collectively, Lead to Negative Rating Action A negative rating action could result in the event of a material debt-financed transaction or a low single-digit sales decline, resulting in EBITDA erosion and sustained adjusted debt/EBITDAR in the high-4x range. LIQUIDITY AND DEBT STRUCTURE Ample Liquidity: Liquidity was approximately $880 million as of June 30, 2019, consisting of $156 million of cash and equivalents and $724 million of availability on an $800 million revolving credit facility due March 2022. Revolver borrowing availability is net of $54 million of outstanding borrowings and $20 million in letters of credit. Debt Structure: As of June 30, 2019, the debt capital structure primarily consisted of an $800 million secured revolver due March 2022 with $54 million of outstanding borrowings, approximately $1.5 billion of senior unsecured notes, $483 million of senior unsecured EUR notes and $168 million of capital leases. Spectrum has minimal near-term maturities, with its earliest maturities consisting of the revolver in March 2022, $285 million of notes due November 2022 and $250 million of notes due December 2024. Spectrum's current tender offer is for the $285 million of notes due November 2022. Recovery Considerations Fitch assigned Recovery Ratings (RRs) to the various debt tranches in accordance with Fitch criteria, which allows for the assignment of RRs for issuers with IDRs in the 'BB' category. Given the distance to default, RRs in the 'BB' category are not computed by bespoke analysis. Instead, they serve as a label to reflect an estimate of the risk of these instruments relative to other instruments in the entity's capital structure. Fitch assigns the first-lien secured debt an 'RR1', notched up two from the IDR and indicating outstanding recovery prospects given default. Unsecured debt will typically achieve average recovery and thus is assigned an 'RR4'. SUMMARY OF FINANCIAL ADJUSTMENTS Financial statement adjustments that depart materially from those contained in the published financial statements of the relevant rated entity or obligor are disclosed below: -- Historical and projected EBITDA is adjusted to exclude non-cash stock-based compensation, restructuring and integration charges and other non-recurring items. In 2018, Fitch's derivation of EBITDA pro forma for divestitures excludes non-cash stock-based compensation of approximately $9 million and approximately $35 million of one-time expenses related to divestiture activity and a pet safety recall. SPECTRUM BRANDS: Moody's Rates New $300MM Unsec. Notes 'B2' ----------------------------------------------------------- Moody's Investors Service assigned a B2 rating to $300 million proposed unsecured notes being issued by Spectrum Brands, Inc. a direct operating subsidiary of Spectrum Brands Holdings Inc. The rating outlook is stable. Net proceeds will be used for working capital and other general corporate purposes. Spectrum is also simultaneously tendering for 6.625% notes due 2022 of which $285 million is currently outstanding; the company intends to use proceeds it received from the divestiture of its Global Auto Care business to fund the Tender Offer and related potential redemption. Rating assigned: Spectrum Brands Inc. $300 million unsecured notes due 2029 at B2 (LGD 4) RATINGS RATIONALE Spectrum's B1 Corporate Family Rating reflects its moderately high leverage at around 5 times debt to EBITDA, deteriorating EBIT margins and competition with bigger and better capitalized companies. The CFR also reflects Spectrum's aggressive financial policies. Having a portfolio of recognizable value-oriented brands with leading market positions benefits Spectrums' ratings as it helps during periods of economic weakness, including tariff uncertainty. Acquisitions are part of Spectrum's strategy and are core to its long-term growth, especially now that its transformation plan is complete. The stable outlook reflects Moody's view that Spectrum's operating performance will remain adequate and that the company will sustain debt to EBITDA between 4 and 5 times. Moody's expects Spectrum's acquisitive nature and shareholder return focus to continue. Ratings could be downgraded if Spectrum's operating performance deteriorates. Specifically, ratings could be downgraded if debt to EBITDA is sustained above 5.0 times. An upgrade would require a significant improvement in operating performance. Debt to EBITDA would also need to be sustained below 4.0 times before Moody's would consider an upgrade. Headquartered in Middleton, Wisconsin, Spectrum Brands, Inc. is a global consumer product company with a diverse portfolio including small appliances, lawn and garden, electric shaving and grooming, pet supplies, household insect control and residential locksets. Revenue approximates $3.1 billion. SUNNY SHORE: Sept. 14 Public Auction of Sunny Shore, TI Interests ----------------------------------------------------------------- In accordance with the applicable provisions of the Uniform Commercial Code as enacted in Florida, Acres Loan Origination LLC ("Secured Party") will offer for sale, at public auction: i) all member and other equity interests in and to Sunny Shore Project Limited Partnership and TI Project Limited Partnership ("Debtors"), which owns the real property located at 2025, 2026, 2030, 2036, 2037 & 2041 South Atlantic Avenue and 135 Armstrong Street, Daytona Beach Shores, Florida 32118-5028; and ii) the Debtors' personal property and general intangible interests ("collateral"). The public auction will be held on Sept. 20, 2019, at 12:00 noon (EST) at the offices of Dean, Mean, Egerton, Bloodworth, Capouano & Bozarth, P.A., 420 South Orange Avenue, Suite 700, Orlando, Florida 32801. The auctioneer conducting the sale will be Mannion Auctions, LLC, William Mannion and Matthew D. Mannion, professional auctioneers. Mannion Auctions can be reached at: Mannion Auctions LLC 305 Broadway, Suite 200 New York, NY 10007 Tel: (212) 267-6698 Fax: (212) 608-2147 Security Party retained as counsel: Jack Doherty, Esq. Thompson & Knight LLP 900 Third Avenue, 20th Floor New York, New York 10022 Tel: (212) 751-3003 Fax: (214) 999-1510 E-mail: Jack.Doherty@tklaw.com T CAT ENTERPRISE: Court Approves Cash Motion Thru Oct. 10 --------------------------------------------------------- Judge Jack B. Schmetterer of the U.S. Bankruptcy Court for the Northern District of Illinois approves on an interim basis the request filed by T Cat Enterprise, Inc., to use cash collateral through Oct. 10, 2019. Judge Schmetterer grants replacement liens to Associated Bank, N.A., or its assignee, and any other secured creditor in the Debtor's postpetition cash and accounts receivable in the same priority as their existing prepetition lien. The Debtor will pay $6,000 to Associated Bank for monthly adequate protection by Oct. 3, 2019. The Court will continue hearing on the Debtor's motion on Oct. 3, 2019 at 10:30 a.m. Central Time. About T CAT Enterprise T Cat Enterprise, Inc. -- http://www.tcatinc.com/-- is a family-owned and operated construction company specializing in excavation, railroad clean up, and snow plowing services in the tri-state area. In addition, the Company also offers hauling services, demolition services, and pavers and asphalt repairs. T Cat Enterprise, Inc., based in Franklin Park, IL, filed a Chapter 11 petition (Bankr. N.D. Ill. Case No. 18-22736) on Aug. 13, 2018. In the petition signed by James R. Trumbull, president, the Debtor estimated $0 to $50,000 in assets and $1 million to $10 million in liabilities. The Hon. Jack B. Schmetterer oversees the case. Joseph E. Cohen, Esq., and Gina B. Krol, Esq., at Cohen & Krol, serve as bankruptcy counsel to the Debtor. TEGNA INC: Moody's Lowers CFR to Ba3, Outlook Stable ---------------------------------------------------- Moody's Investors Service downgraded TEGNA Inc.'s corporate family rating to Ba3 from Ba2 and probability of default rating to Ba2-PD from Ba1-PD. Concurrently, Moody's downgraded the rating on the company's senior unsecured bank credit facility and existing senior unsecured notes to Ba3 from Ba2. These rating actions conclude the review for downgrade initiated on 11 June 2019. Moody's also assigned the newly announced $900 million senior unsecured notes (due 2029) a Ba3 rating. The SGL-2 speculative grade liquidity rating remains unchanged. The ratings outlook is stable. TEGNA will use proceeds of the new notes to repay $320 million of senior notes maturing in October 2019 as well as a portion of its July 2020 maturities and repay some of the borrowings under its $1.5 billion revolving credit facility, including borrowings associated with the acquisition of certain stations from the Dispatch Broadcast Group and other completed acquisitions. Downgrades: Issuer: TEGNA Inc. Corporate Family Rating, Downgraded to Ba3 from Ba2 Probability of Default Rating, Downgraded to Ba2-PD from Ba1-PD Senior Unsecured Bank Credit Facility, Downgraded to Ba3 (LGD4) from Ba2 (LGD4) Senior Unsecured Regular Bond/Debenture, Downgraded to Ba3 (LGD4) from Ba2 (LGD4) Issuer: Belo Corp. Senior Unsecured Regular Bond/Debenture, Downgraded to Ba3 (LGD4) from Ba2 (LGD4) Assignments: Issuer: TEGNA Inc. Gtd Senior Unsecured Notes, Assigned Ba3 (LGD4) Outlook Actions: Issuer: TEGNA Inc. Outlook, Changed To Stable From Rating Under Review RATINGS RATIONALE The downgrade of the CFR reflects Moody's expectations that following the additional debt raised for the Nexstar Broadcasting, Inc. ("Nexstar") (B1 stable) and Dispatch transactions, TEGNA's leverage (Moody's-adjusted and pro-forma for all acquisitions) will be around 5.3x at year-end 2019 (on a two year average) and decrease to around 4.5x in 2020. TEGNA's Ba3 CFR reflects the strength of the company's operations, its material scale in the local broadcast sector, and its growth prospects given the strong market areas it operates in. With revenue of about $2.6 billion pro forma for the Dispatch and Nexstar/Tribune Media Company transactions, national reach and a diverse affiliate mix, the company is well positioned to capture advertising spend in its markets, allowing it to partially weather the overall decline in TV advertising budgets. In addition, about 45% of TEGNA's total revenue is derived from non-advertising related and high-margin retransmission fees. The Ba3 CFR also reflects the elevated leverage of the company which Moody's expects to remain above 4.5x through 2020 and is constrained by the company's exposure to core TV advertising which is cyclical by nature and under structural pressures as well as to political advertising which is seasonal and prone to unpredictable swings. The company's financial policy is one that allows for leverage to temporarily increase to fund M&A activity. Given the current consolidation trends in the broadcast market, Moody's believes TEGNA is likely to engage in more strategic acquisitions. This said, given the current increase in leverage, material M&A is unlikely in the next twelve months. The company has also publicly committed to focus cash flow generation towards deleveraging and suspended its share buyback program until its leverage ratio (as reported) falls to below 4x. The SGl-2 speculative grade liquidity rating reflects a good liquidity profile supported by sizeable positive free cash flow (FCF) generation -- in the last twelve months ending June 2019, the company generated Moody's adjusted FCF of around $370 million. Following partial repayment of the $1.5 billion RCF with the new notes' proceeds, the company should have around $400 million of availability under that facility. TEGNA has recently renegotiated its covenant levels and Moody's expects the company to be in compliance with these covenants with adequate headroom over the next year. The stable outlook reflects Moody's expectation that pro forma for the company's acquisitions, TEGNA's leverage will decline to around 4.5x (Moody's adjusted Debt / 2 year average EBITDA) by the end of 2020. Ratings could be upgraded should the company return to operating at a leverage well below 4.0x (Debt/2 year average EBITDA, Moody's Adjusted) on a sustained basis. Ratings could be downgraded should the company's leverage not return to levels below 5.0x (Debt/2 year average EBITDA, Moody's Adjusted) in the next 12 months. The Ba3 CFR reflects Moody's expectation for the probability of default of the family, reflected in the Ba2-PD probability of default rating, and its assumption of a mean 35% recovery rate in a default scenario, as is customary for fully unsecured capital structures. The Ba3 ratings on the senior unsecured debt instruments, in line with the CFR, reflects the fact there are no material amounts of different ranking debt. The principal methodology used in these ratings was Media Industry published in June 2017. TEGNA Inc. is a leading U.S. broadcaster with operations consisting of 62 stations in 51 markets (including the pending Nexstar and closed Dispatch stations) reaching about 32% (with UHF discount) of US television households. The company, headquartered in McLean, VA, is publicly traded and reported net revenue of $2.2 billion and EBITDA (management's adjusted) of approximately $775 million in the twelve months ending on June 30, 2019. TOLL BROTHERS: Moody's Rates Proposed $350MM Sr. Unsec. Notes Ba1 ----------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to Toll Brothers Finance Corp.'s proposed $350 million of senior unsecured notes due 2029. All other ratings of Toll Brothers, Inc. (Ba1 Corporate Family Rating, Ba1-PD Probability of Default Rating, SGL-2 Speculative Grade Liquidity Rating), and of Toll Brothers Finance Corp. (Ba1 rating on existing senior unsecured notes) remain unchanged. The stable outlook is also unchanged. The proceeds of the proposed note offering will be used to retire the company's $250 million senior unsecured notes that mature on November 1, 2019 with the remainder designated for general corporate purposes. The transaction results in $100 million higher debt level and in a slight increase in Toll's homebuilding debt to capitalization ratio to 43% (from 42.4% at July 31, 2019). However, the transaction also improves the company's liquidity by extending its debt maturity profile and increasing available cash. Toll Brothers Finance Corp. is the issuing entity for the senior unsecured notes that are guaranteed by Toll Brothers, Inc. and its principal operating subsidiaries. The following rating actions were taken: Issuer: Toll Brothers Finance Corp.: Proposed $350 million senior unsecured notes due 2029, assigned a Ba1 (LGD4) RATINGS RATIONALE The Ba1 CFR reflects Moody's consideration of: 1) management's ability to stay ahead of evolving demographics and adapt to changing markets; 2) the company's position as the sole national homebuilder with a meaningful focus on the upper-end homebuilding segment; 3) significant financial flexibility stemming from the company's ability to greatly restrict its land spend for relatively long periods of time; and 4) a widely recognized brand name in the industry and a low cost land base. However, the rating also includes Moody's view of: 1) risks associated with the more volatile and capital intensive high-rise and high-density mid-rise business and with its investments in the apartment construction and development business; 2) the risk that a slowdown in the New York City area's economy -- whether from a Wall Street pause, foreign buyers retrenching, or a general economic decline -- could leave the company with large investments generating little return and requiring sizable write-downs; 3) a financial strategy that incorporates a share repurchase program that limits the company's ability to delever. The stable rating outlook reflects Moody's expectation that Toll will maintain good liquidity and preserve tight fiscal discipline with regard to its high-rise and high-density mid-rise business, to its Gibraltar Capital business, and to its investments in the apartment construction and development business. Toll's Speculative Grade Liquidity Rating of SGL-2 indicates that its liquidity position for the next 12-15 months will be good. Liquidity is supported by the company's $836 million cash balance as of July 31, 2019, availability under its $1.295 billion unsecured revolver due May 19, 2021, which had zero drawn and $190 million of outstanding letters of credit, substantial headroom in complying with the requirement of its covenant compliance package, and good sources of alternate liquidity as the company has a number of businesses that could be sold. Factors that could lead to an upgrade include: -- Maintenance of adjusted homebuilding debt book capitalization below 35% together with EBIT coverage of interest sustained in the high single digits, and GAAP gross margins approaching the mid-20% level -- Demonstration of a commitment to attaining and maintaining an investment grade rating, both to Moody's and to the debt capital markets -- An ability to withstand a serious financial shock without having its key credit metrics sinking to low speculative grade levels Factors that could lead to a downgrade include: -- Debt leverage rising and remaining above 50% -- Cash flow from operations becoming increasingly negative and liquidity weakening -- An economic downturn in which revenues and net income decline The principal methodology used in this rating was Homebuilding And Property Development Industry published in January 2018. Toll Brothers, Inc. is a national builder of luxury homes. Toll serves move-up, empty-nester, active-adult, and second-home buyers and operates in 22 states. The company builds an array of luxury residential single-family detached, attached home, master planned resort-style golf, and urban low-, mid-, and high-rise communities, principally on land it develops and improves. Toll also operates its own architectural, engineering, mortgage, title, land development and land sale, golf course development and management, home security, and landscape subsidiaries. The company also operates its own lumber distribution, house component assembly, and manufacturing operations. Through its Gibraltar Capital and Asset Management joint venture, Toll provides builders and developers with land banking and joint venture capital. The company acquires and develops commercial and apartment properties through Toll Brothers Apartment Living, Toll Brothers Campus Living, and the affiliated Toll Brothers Realty Trust, and develops urban low-, mid-, and high-rise for-sale condominiums through Toll Brothers City Living. Revenues and net income for the trailing 12 months ended July 31, 2019 were $7.3 billion and $699 million, respectively. TRIUMPH GROUP: Moody's Affirms Caa1 CFR, Outlook Stable ------------------------------------------------------- Moody's Investors Service assigned a B3 rating to Triumph Group, Inc's., new second lien notes due 2024 and affirmed its other ratings including the Caa1 Corporate Family, the Caa1-PD Probability of Default, and the Caa2 senior unsecured. Proceeds from the second lien notes will be used to pay off Triumph's senior unsecured notes due 2021 and to reduce borrowings on the revolving credit facility. Ratings on the senior unsecured notes due 2021 will be withdrawn following their pay-off. The outlook is stable. RATINGS RATIONALE The Caa1 Corporate Family Rating balances Triumph's high financial leverage and expectations of weak cash generation against its considerable scale and well-established presence as an aerospace supplier. Moody's expects Triumph's credit metrics and cash flow to remain weak during fiscal 2020 and fiscal 2021 as the company liquidates previously-advanced customer payments, incurs elevated costs on exiting platforms such as the Gulfstream G280 and Boeing 747-8, and makes pension contributions. These weak cash flows will be against a backdrop of a highly-leveraged balance sheet (Moody's adjusted debt-to-EBITDA expected to remain above 7.5x) and a weak quality of earnings that involves a history of multiple large add-backs to earnings that reduce visibility into sustainable margin levels. Triumph's on-going strategic review of its Structures segment (excluding its interiors business) for which - the terms, timing, and structure are unknown, further complicates visibility and creates uncertainty as to how the resolution of the review will affect the company's operations and financial position. The rating also considers near-term execution risk relating to the simultaneous transfer of structural work on the G280 and Embraer's E2-Jet to external third parties. Furthermore, following several years of pronounced earnings declines, Triumph's ability to sustainably grow the bottom line while improving the quality of its earnings remains to be proven. Moody's recognizes the benefits to earnings and cash flows that will result from Triumph's divestiture of several non-core businesses as well as on-going efforts to de-risk the Structures portfolio though the transfer of loss-making programs such as the G280 and the Bombardier Global 7500. Moody's expects these actions to enhance Triumph's credit profile and to provide a path to improved cash generation. Recent business wins in the Integrated Systems (IS) and Product Support (PS) segments along with the likelihood of improving profitability over time in these businesses (IS margins were off meaningfully in fiscal 2019) help mitigate further negative ratings pressure at this time. The stable outlook reflects Moody's expectations that Triumph's efforts to transition loss-making legacy programs out of its Structures business will create a path to improved earnings in the upcoming 12 to 24 months. Sustained growth in earnings and expectations of improved credit metrics and cash generation would support a ratings upgrade. A favorable outcome from the strategic review of the Structures business that enhanced Triumph's credit profile could also drive an upgrade. The ratings could be upgraded if Triumph were to sufficiently lower leverage such that debt-to-EBITDA on a Moody's adjusted basis was expected to be sustained below 7.5x. The ratings could be downgraded if Triumph's liquidity profile was to weaken such that it becomes more reliant on external sources of financing or if a breach of financial covenants appeared likely or if cash generation materially trails Moody's current expectations. Downward rating pressure could arise if there are unanticipated delays or costs relating to the transfer of work on the G280 or E-Jet or if the strategic review of the Structures business were to result in near-term liquidity pressures. Weaker operating performance in Triumph's Integrated Systems or Product Support businesses could also result in downward rating pressure. The following summarizes the rating actions: Issuer: Triumph Group, Inc. Assignments: Issuer: Triumph Group, Inc. Senior Secured Regular Bond/Debenture, Assigned B3 (LGD3) Outlook Actions: Issuer: Triumph Group, Inc. Outlook, Remains Stable Affirmations: Issuer: Triumph Group, Inc. Corporate Family Rating, Affirmed Caa1 Probability of Default Rating, Affirmed Caa1-PD Senior Unsecured Regular Bond/Debenture, Affirmed Caa2 (LGD5, from LGD4) Triumph Group, Inc., headquartered in Berwyn, PA., designs, engineers, manufactures, repairs, overhauls and distributes a broad portfolio of aero-structures, aircraft components, accessories, subassemblies and systems. The company serves commercial aerospace (53% of sales), military (20%), business jet (23%) and regional and other markets (4%). Pro forma revenues (after completed divestitures) for the twelve months ended June 30, 2019 were approximately $2.8 billion. The principal methodology used in these ratings was Aerospace and Defense Industry published in March 2018. WEATHERFORD INT'L: Texas Judge Confirms Prepackaged Plan -------------------------------------------------------- Judge David R. Jones of the U.S. Bankruptcy Court for the Southern District of Texas approved the disclosure statement and confirmed the second amended joint prepackaged plan of reorganization for Weatherford International PLC and its debtor affiliates. "The plan allows Weatherford to emerge from bankruptcy a more competitive company," Weatherford attorney Lisa Lansio, Esq., told the judge, Tom Corrigan of The Wall Street Journal related. Courts in Ireland and Bermuda also must approve the debt-cutting plan before it can take effect, according to Ms. Lansio, the Journal further related. "We obviously don't expect to have any issues with those proceedings," the Journal cited Ms. Lansio as saying in court. As a result of the Prepetition Solicitation, the Debtors have received votes in favor of the Plan from 99.79% in amount of the Class 7 Prepetition Notes Claims that voted and 97.53% in number of Holders of Prepetition Notes Claims that voted. As a result of the Postpetition Solicitation, the Debtors have received votes in favor of the Plan from 79.38% in amount of the Class 10 Existing Common Stock Claims that voted. The Debtors modified their Plan before the Confirmation Hearing and the Court approved the modifications finding that the Plan Modifications satisfy the requirements of Section 1127 of the Bankruptcy Code and Bankruptcy Rule 3019. The Debtors also filed Plan Supplement, including their First Amended Plan of Reorganization; Redline of First Amended Plan of Reorganization to Original Plan of Reorganization; Restructuring Support Agreement; First Amendment to the Restructuring Support Agreement; and Second Amendment to the Restructuring Support Agreement. Full-text copies of the Plan Supplement are available at https://tinyurl.com/y5lsmy5j from PrimeClerk.com at no charge. GAMCO Asset Management, Inc. and its affiliates, on behalf of itself and all similarly situated common shareholders of Weatherford, said it is investigating filing a class action against certain of Weatherford's directors and officers for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of themselves and all other persons or entities that purchased or otherwise acquired the publicly traded securities of Weatherford during the period November 1, 2017 through May 10, 2019, inclusive, and were damaged thereby. GAMCO said its Potential Securities Action does not intend to name Weatherford or any other Debtor subject to the automatic stay as a defendant. GAMCO, however, pointed out that the Plan contains a broad-definition of "Released Parties" for purposes of the general release and related injunction that could impact the Potential Securities Action. Specifically, the Plan's definition of Released Parties, which includes "Related Person" comprised of "current and former officers, directors" and other corporate personnel, could potentially be invoked by some or all of the directors and officers who GAMCO is investigating for its Potential Securities Action to claim they are released under the Plan. GAMCO objects to the Plan to the extent that it does not contain the terms of the Equity Settlement and thus does not provide an adequate description of the recovery to existing shareholders. GAMCO further objects to the Plan to the extent the third-party release and injunction purport to bar claims against the directors and officers GAMCO is investigating for its Potential Securities Action. Weatherford, struggling with steep debt for years, has spent much of the past year selling off assets to right its balance sheet, the Journal noted. The company hasn't reported an annual profit since 2011, the Journal said. "I know what Weatherford is, and I know the issues Weatherford faces in the business it's in," Judge Jones said at the conclusion of the hearing, the Journal related. The judge said Weatherford now has a responsibility to be a good corporate citizen in exchange for the second chance it is getting, the Journal added. "I expect you to remember this," the Journal cited Judge Jones as saying. A full-text copy of the Confirmation Order is available at https://tinyurl.com/y253vwza from PrimeClerk.com at no charge. Counsel for GAMCO: Andrew J. Entwistle, Esq. ENTWISTLE & CAPPUCCI LLP 500 W. 2nd Street, Suite 1900-16 Austin, Texas 78701 Telephone: (512) 710-5960 About Weatherford Weatherford (NYSE: WFT) (OTC-PINK:WFTIQ), an Irish public limited company and Swiss tax resident -- http://www.weatherford.com/-- is a multinational oilfield service company providing innovative solutions, technology and services to the oil and gas industry. The Company operates in over 80 countries and has a network of approximately 650 locations, including manufacturing, service, research and development and training facilities and employs approximately 26,000 people. Weatherford reported a net loss attributable to the company of $2.81 billion for the year ended Dec. 31, 2018, compared to a net loss attributable to the company of $2.81 billion for the year ended Dec. 31, 2017. As of March 31, 2019, Weatherford had $6.51 billion in total assets, $10.62 billion in total liabilities, and a total shareholders' deficiency of $4.10 billion. On July 1, 2019, Weatherford International plc, Weatherford International, LLC, and Weatherford International Ltd. sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 19-33694). The Hon. David R. Jones is the case judge. The Debtors tapped Hunton Andrews Kurth LLP and Latham & Watkins LLP as counsel; Alvarez & Marsal North America LLC as financial advisor; Lazard Freres & Co. LLC as investment banker; and Prime Clerk LLC as claims agent. Henry Hobbs Jr., acting U.S. trustee for Region 7, on July 17, 2019, appointed three creditors to serve on an official committee of unsecured creditors in the Chapter 11 cases. The law firms of Ropes & Gray LLP and Norton Rose Fulbright US LLP have been retained as counsel to the Committee. WEI SALES: Moody's Affirms Ba3 CFR, Outlook Negative ---------------------------------------------------- Moody's Investors Service ffirmed WEI Sales LLC's Corporate Family Rating at Ba3 and its Probability of Default Rating at Ba3-PD. At the same time Moody's affirmed the company's first lien term loan due 2025 at B1. The outlook remains negative. Moody's took the following rating actions on WEI Sales LLC: - Corporate Family Rating affirmed at Ba3 - Probability of Default Rating affirmed at Ba3-PD - Senior Secured 1st Lien Term Loan affirmed at B1 (LGD4 from LGD5) The ratings outlook is negative. On September 9, 2019, Wells Enterprises, Inc. ("Wells", parent of WEI) announced plans to acquire the Halo Top ice cream brand from Eden Creamery LLC for an undisclosed amount. Additionally, on September 3, 2019 Wells announced the acquisition of an ice cream manufacturing facility in Henderson, Nevada from Unilever Group for an undisclosed amount that is expected to close in the thrid quarter of 2019. Moody's expects that the company will finance these acquisitions with debt. Moody's expects WEI's pro-forma financial leverage (debt to EBITDA) to increasing to approximately 4.9 times at the close of these transactions. The rating affirmation reflects Moody's view that WEI will be able to restore its credit metrics to more appropriate levels within the next 12-18 months. The negative outlook, however, reflects pressure and reduced financial flexibility resulting from financial leverage that will be high for the rating category until that time. Moody's believes that there is material execution risk related to the integration of the acquisitions that come so soon after the acquisition of Fieldbrook Food Inc in April 2019. WEI's ability to repay debt is constrained by modest cash flows after the payment of dividends. Moody's further expects that earnings growth will be constrained by increasing competition and questionable ability to improve the Halo Top brand which has been losing market share over the past few years. Moody's nevertheless expects the acquisition of the Halo Top brand to expand Wells' share in the better-for-you ice cream category and improve profitability by folding the manufacturing of Halo's products into Wells' own manufacturing sites. The Halo Top brand will also provide access to retailers in Canada. Further, the purchase of the Henderson, Nevada plant will expand Wells' manufacturing footprint in the United States' West Coast and reduce freight costs for shipment of these products. RATINGS RATIONALE WEI's Ba3 CFR reflects its participation in the low growth ice cream industry and small scale relative to the two global ice cream market leaders, Nestlé and Unilever. The CFR also reflects the company's high financial leverage with pro-forma debt to EBITDA of 4.9 times following several acquisitions including Halo Top, the Nevada manufacturing facility and the April 2019 acquisition of the Fieldbrook Food Company. Execution risk is material as management integrates these back-to-back acquisitions. Additionally, WEI's preference to distribute the bulk of operating cash flow less capex to shareholders is also aggressive. The company's CFR benefits from solid positions in both private label and branded ice cream. Ratings could be upgraded if the company improves profitability, customer and product diversification, and sustains good liquidity including strong discretionary pre-dividend free cash flow. Ratings could be downgraded if WEI's market position erodes, operating performance deteriorates, or the company stumbles during the integration of acquisitions. Ratings could also be downgraded if liquidity deteriorates, pre-dividend free cash flow does not improve, or if the company is unable to reduce debt to EBITDA to under 3.0 times over the next 12 to 18 months. The principal methodology used in these ratings was Global Packaged Goods published in January 2017. Headquartered in Le Mars, Iowa, family-owned Wells Enterprises, Inc. manufactures ice cream for sale to customers throughout the United States. The company sells both branded products and private label products. The Company manufactures its products in four facilities located in Iowa, New York and New jersey, and recently purchased a fifth facility in Nevada, providing it with national manufacturing capabilities. Pro forma annual sales are estimated around $1.5 billion. WPX ENERGY: Fitch Assigns BB LongTerm IDR, Outlook Stable --------------------------------------------------------- Fitch Ratings assigned a 'BB' Long-Term Issuer Default Rating to WPX Energy, Inc. Fitch has also assigned a 'BBB-'/'RR1' rating to the senior secured revolving credit facility and a 'BB'/'RR4' rating to the senior unsecured notes. The Rating Outlook is Stable. WPX's ratings are supported by forecast FCF generation, double-digit production growth, improving maturity profile, undrawn revolver, strong leverage metrics, and operational and financial flexibility provided by its midstream agreements. Offsetting factors include the company's non-Stateline Delaware acreage, which is less developed and contiguous introducing operational, production and margin uncertainties. KEY RATING DRIVERS Mid-Sized, Competitive Asset Base: WPX has 130,000 net acres in the Delaware basin with production of 97 mboe/d (79% liquids) and 85,000 net acres in the Williston basin with production of 62.9 mboe/d (91% liquids) for the second quarter. The company's second-quarter unit economics (Fitch calculated unhedged netback of $21.5/boe [56% margin]) are competitive and Fitch expects continued efficiencies (scale-linked and drilling techniques). Learnings from WPX's Pecos State Pad in the third-quarter 2018 (3Q18) led to a 22% and 5% reduction in two-mile well costs from 2018 averages to 2Q19 for the Delaware and Williston, respectively. Similarly, the number of days from spud to rig release is down 14% and 31% yoy in the Delaware and Williston, respectively. Bakken Drives FCF; Permian Neutral: Fitch expects WPX to generate $140 million of FCF in 2019 with further improvements thereafter, under base case assumptions. Fitch expects WPX's three-rig Bakken program to support near-term modest production growth and substantial FCF as the assets are largely developed and in harvest mode. Fitch estimates WPX has four to five years of tier-1 Bakken drilling inventory, before production is expected to decline. Forecast FCF can be largely attributed to the Bakken assets as the Delaware is expected to operate cash flow neutrally during its development stage. Operational & Financial Linkage: WPX's conservative operational strategy - capital program developed to meet net leverage target of 1.0x-1.5x - has enabled the company to optimize operational and financial flexibility. With the divestiture of non-core San Juan assets in 2018 ($700 million proceeds), WPX simplified its portfolio and subsequent capital allocation decision making as the Bakken assets are FCF generating and the Delaware development is funding itself. Even with the conservative financial policy, Fitch is still projecting double-digit production growth due to improved capital efficiency. Fitch's rating case forecasts robust credit metrics due to management's conservative approach. Under base case assumptions, debt/EBITDA will be 1.5x in 2019 and 1.3x in 2020 with potential for further improvement as production continues to grow and FCF is allocated toward gross debt reduction (2022 and 2023 notes). Debt/flowing barrel metrics are also projected to remain strong at $13,592/bbl in 2019 and dropping below $10,000/bbl in 2021. Permian Growth; Midstream Alignment: WPX strategically aligned its midstream portfolio ahead of its Delaware basin development program. WPX has guaranteed access, without firm transportation commitments, to midstream takeaway capacity for the next four to five years under current planning. Fitch believes the strategic midstream portfolio will allow WPX to maximize the return profile of the Delaware assets as it accelerates its drilling program and grows into its midstream commitments. Unused pipeline capacity in 2018 and first-half 2019 (1H19) was used to create additional uplift by buying natural gas at Waha and selling it at Katy. WPX's midstream portfolio creates additional financial flexibility in the form of international oil pricing, access to premium natural gas prices (200,000 mmbtu/d of capacity from Waha to Katy) and additional liquidity optionality. Once the Gray Oak pipeline is completed, WPX will be able to ship 80% of its crude barrels from Stateline to the gulf, subject to international pricing. In 2019, WPX monetized equity ownership interests in two takeaway agreements for $490 million while the company's wholly owned midstream assets could provide contingent liquidity, via asset sales, which Fitch believes could fetch $800 million-$1,200 million in total proceeds. DERIVATION SUMMARY WPX is a liquids-oriented independent E&P company with second-quarter 2019 net production of 159,600 barrels of oil equivalent per day (mboe/d; 78% liquids). Production size, as of June 30, 2019, is greater than Endeavor Energy Resources, L.P. (BB/Positive) and Vermilion Energy Inc. (BB-/Stable; 103 mboe/d [55% liquids]) but smaller than Murphy Oil Corporation (BB+/Stable; 171 mboe/d [69% liquids]) and all publicly rated investment-grade E&Ps. WPX's unhedged cash netback of $21.5/boe (56% margin) is lower than 'BB' peers Murphy at $31.6/boe (69% margin), Endeavor, and Vermilion at $29.8/boe (63% margin) driven by lower realized pricing, excluding commodity management uplift, and better cost positions (Endeavor and Murphy). The main contributors for better realized pricing are Endeavor's higher liquids cut while Murphy and Vermilion have offshore production profiles exposed to international pricing. WPX's leverage profile, specifically total debt/EBITDA, which was 1.8x at YE18 and is forecast to be 1.5x at YE 2019 is in line with the 'BB' category peer group. Endeavor lead the peer group with debt/EBITDA of 1.4x for YE 2018 while Vermilion and Murphy had debt/EBITDA ratios of 1.9x. From a debt/flowing barrel perspective, at $13,656/bbl, WPX lead the 'BB' category and even some 'BBB-' except for Endeavor at June 30, 2019. KEY ASSUMPTIONS Fitch's Key Assumptions Within the Rating Case for the Issuer - Brent oil price of $65.00/bbl in 2019, $62.50/bbl in 2020, $60.00/bbl in 2021 and $57.50/bbl in 2022; - WTI oil prices of $57.50/bbl in 2019 and 2020, and $55.00/bbl thereafter; - Henry Hub natural gas prices of $2.75/mcf in 2019 and thereafter; - NGLs price at 25% of WTI; - Robust double digit production growth, annually; - Capex of $1,185 million in 2019, $1,250 million in 2020, $1,425 million in 2021 and $1,575 million in 2022; - $400 million share repurchase program in the next 24 months; - 2022 maturity paid with FCF. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action - Continued Bakken execution and demonstrated ability to de-risk its non-Stateline Delaware development plans that lead to favorable unit economics and increased size, scale and diversification; - Mid-cycle Debt/EBITDA maintained below 2.0x (FFO-adjusted leverage below 2.0x) on a sustained basis; - Debt/flowing barrel sustained below $20,000/bbl. Leverage sensitivities are consistent with higher-rated peers and are unlikely to change upon future rating upgrades. Developments That May, Individually or Collectively, Lead to Negative Rating Action - Mid-cycle Debt/EBITDA above 3.0x (FFO-adjusted leverage below 3.0x) on a sustained basis; - Debt/flowing barrel above $25,000/bbl; - Production trending below 120 mboe/d; - Change in capital allocation strategy resulting in neutral-to-negative FCF profile. LIQUIDITY AND DEBT STRUCTURE Undrawn $1.5 billion Revolver: As of June 30, 2019, WPX had total liquidity of $1.6 billion, including an undrawn $1.5 billion revolving credit facility (borrowing base of $2.1 billion) due April 17, 2023. The revolver is subject to a springing maturity on Oct. 15, 2021 if available liquidity minus outstanding 2022 notes is less than $500 million. Fitch believes the springing maturity risk is negligible given the company's FCF profile, which should limit revolver borrowings, and principal amount of 2022 notes outstanding, pro-forma for the waterfall tender. Manageable, Improving Maturity Profile: WPX's maturity profile continues to improve and should permit optimal financial flexibility for a prolonged period in a $55/bbl oil price environment. Pro-Forma for the new notes issuance and associated tender offer, WPX's 2022 and 2023 maturities will be increasingly manageable. Fitch believes that the 2022 maturities will be largely paid with FCF and the difference, if any, will be funded with revolver borrowings or a new notes offering that would likely use proceeds to further tender the 2023 notes and begin to tender the 2024 notes. WPX ENERGY: Moody's Rates New Sr. Unsec. Notes 'B1' --------------------------------------------------- Moody's Investors Service assigned a B1 rating to WPX Energy, Inc.'s proposed senior unsecured notes due 2027. The net proceeds from the new notes offering will be used to fund tender offers for part of its outstanding notes due 2022 and 2023. WPX's existing ratings, including its Ba3 Corporate Family Rating (CFR), Ba3-PD Probability of Default Rating, B1 ratings on the senior unsecured notes and SGL-2 Speculative Grade Liquidity (SGL) rating are unchanged. The rating outlook is stable. "WPX's proposed notes issuance and tender for existing notes will increase the weighted average life of its debt by over one year, while leaving leverage neutral," commented James Wilkins, Moody's Vice President -- Senior Analyst. Assignments: Issuer: WPX Energy, Inc. Senior Unsecured Notes, Assigned B1 (LGD5) RATINGS RATIONALE The proposed notes are rated B1, one notch below the Ba3 CFR, reflecting the subordination of the notes to the secured borrowing base revolving credit facility. The new senior unsecured notes rank pari passu with WPX's existing senior unsecured notes. WPX's Ba3 CFR reflects its asset profile, improving leverage due to growing production volumes, and high future development costs associated with the ongoing development of its Permian Basin assets. With anticipated production growth and a relatively consistent level of capital spending beyond 2019, Moody's expects the company to begin generating consistent positive free cash flow. WPX benefits from operations in the Permian and Williston basins, sizeable reserves (proved developed reserves totaling 266 mmboe at year-end 2018), ample drilling inventory, good liquidity and a high percentage of liquids production -- almost 80% of its production. It also has built midstream assets and established contractual relationships with midstream providers to support marketing its oil and gas production, allowing it to realize attractive prices on its oil and gas sales. The company targets hedging 50% of production for the next twelve months, which smooths volatility in cash flow. The stable outlook reflects Moody's expectation that WPX will grow its production as well as improve its capital efficiency and leverage metrics. The ratings could be upgraded if WPX grows its production by executing on its drilling programs in a capital efficient manner, while maintaining a retained cash flow to debt ratio above 40% and a leveraged full-cycle ratio above 1.5x. The ratings could be downgraded if retained cash flow to debt is not expected to be above 30% for a sustained period, or if WPX does not continue to develop its Permian and Williston assets such that production volumes decline. The principal methodology used in this rating was Independent Exploration and Production Industry published in May 2017. WPX Energy, Inc., headquartered in Tulsa, Oklahoma, is an independent exploration and production company. YCO TULSA: Has Authorization to Use Cash Collateral on Final Basis ------------------------------------------------------------------ Judge Dana L. Rasure of the U.S. Bankruptcy Court for the Northern District of Oklahoma signed a final order authorizing YCO Tulsa, Inc., to use cash collateral to continue present operations and to maintain and preserve the bankruptcy estate. YCO will be allowed a variance of 10% on each item in the Budget. Furthermore, to the extent an expense is not fully used during a particular month, that unused portion will carry forward to the next month. YCO will provide the Internal Revenue Service and Strategic Funding Source, Inc. with a budget reconciliation which reflects its actual receipts and expenditures for the prior month. The Internal Revenue Service has filed tax liens in the offices of the Oklahoma County Clerk against YCO with total balances in excess of $700,000. Strategic Funding Source, Inc. has also filed a Proof of Claim asserting a claim in the amount of $58,024, secured by, among other things, YCO's cash, receivables, personal property, and proceeds thereof. YCO will pay to the IRS the sum of $13,224.93 on the 22nd day of each month. The IRS is also granted a valid, perfected lien upon, and security interest in all cash or other proceeds generated post-petition, but only to the extent and in the order of priority of any valid lien pre-petition. Additionally, subject to the Carve Out, the IRS is entitled to an administrative expense claim pursuant to 11 U.S.C. Section 507(b) to the extent the above adequate protection proves insufficient and/or does not offset any diminution of value in the Cash Collateral. The replacement lien, however, will not extend to any avoidance actions that may be brought under Chapter 5 of the Bankruptcy Code. YCO will also make monthly adequate protection payments to Strategic Funding in the amount of $2,175.00, due on the 1st day of each month, which payments will be applied to YCO's debt to Strategic Funding in accordance with the Loan Agreement and consistent with applicable law. In addition, Strategic Funding is granted a valid, perfected lien upon, and security interest in all cash or other proceeds generated postpetition by the Pre-Petition Collateral, to the extent and in the order of priority of any valid perfected prepetition lien. Said replacement lien, however, will not extend to any avoidance actions that may be brought under Chapter 5 of the Bankruptcy Code. Finally, Strategic Funding may be entitled to a super priority administrative expense claim pursuant to 11 U.S.C. Section 507(b), subject only to the Carve Out provided in the Final Order and to the extent the above adequate protection proves insufficient and/or does not offset any diminution of value in the Cash Collateral. The Adequate Protection Liens and the adequate protection super priority claims will be subordinate solely to the following: (a) fees under 28 U.S.C Section 1930 and 31 U.S.C. Section 3717, (b) approved fees pursuant to 11 U.S.C. Sections 327 and 328 as provided in the Budget and as agreed to by the parties, including any fees of a committee of unsecured creditors that may be appointed in this case and the fees of the patient care ombudsman directed to be appointed by the Court, and (c) the costs of administrative expenses not to exceed $5,000 in the aggregate incurred by any Chapter 7 trustee in the event of a conversion of YCO's Chapter 11 case to a Chapter 7 case. YCO will maintain insurance coverage for the Pre-Petition Collateral, and will designate Strategic Funding as loss payee and certificate holder consistent with the Loan Agreement. YCO will also provide evidence of the same to the parties hereto upon request. Upon reasonable notice, YCO will grant the IRS and/or Strategic Funding access to YCO's business records and premises for inspection. About YCO Tulsa Inc. YCO Tulsa, Inc., sought protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Okla. Case No. 19-11235) on June 14, 2019. In the petition signed by Robert Lobato, president, the Debtor estimated assets of less than $50,000 and liabilities of less than $50,000. The case is assigned to Judge Dana L. Rasure. Brown Law Firm, P.C., and Riggs, Abney, Neal, Turpen, Orbison & Lewis serve as the Debtor's legal counsel. [^] Recent Small-Dollar & Individual Chapter 11 Filings ------------------------------------------------------- In re Cheryl Placencia Bankr. C.D. Cal. Case No. 19-12216 Chapter 11 Petition filed September 4, 2019 represented by: Dana M. Douglas, Esq. E-mail: dmddouglas@hotmail.com In re Tycorp Land and Home, LLC Bankr. S.D. Cal. Case No. 19-05363 Chapter 11 Petition filed September 4, 2019 See http://bankrupt.com/misc/casb19-05363.pdf represented by: Bruce R. Babcock, Esq. LAW OFFICE OF BRUCE R. BABCOCK E-mail: brbab@hotmail.com In re Grandpa's Place Inc. Bankr. D. Mass. Case No. 19-13025 Chapter 11 Petition filed September 4, 2019 See http://bankrupt.com/misc/mab19-13025.pdf represented by: Brian R. Lewis, Esq. LAW OFFICE OF BRIAN R. LEWIS E-mail: brian@brianrlewis.com In re Steven Uzhansky Bankr. D.N.J. Case No. 19-27012 Chapter 11 Petition filed September 4, 2019 represented by: Alla Kachan, Esq. LAW OFFICES OF ALLA KACHAN P.C. E-mail: alla@kachanlaw.com In re Smpiro LLC Bankr. D. Nev. Case No. 19-15723 Chapter 11 Petition filed September 4, 2019 See http://bankrupt.com/misc/nvb19-15723.pdf represented by: David A. Riggi, Esq. E-mail: darnvbk@gmail.com In re Jason Dorset Bankr. E.D.N.Y. Case No. 19-45310 Chapter 11 Petition filed September 4, 2019 represented by: Narissa A. Joseph, Esq. E-mail: njosephlaw@aol.com In re 488 East 98 LLC Bankr. E.D.N.Y. Case No. 19-45316 Chapter 11 Petition filed September 4, 2019 See http://bankrupt.com/misc/nyeb19-45316.pdf represented by: Vivian Sobers, Esq. SOBERS LAW, PLLC E-mail: vsobers@soberslaw.com In re Regional Medical Transportation, Inc. Bankr. E.D. Pa. Case No. 19-15513 Chapter 11 Petition filed September 4, 2019 See http://bankrupt.com/misc/paeb19-15513.pdf represented by: John A. Gagliardi, Esq. WETZEL GAGLIARDI FETTER & LAVIN LLC E-mail: jgagliardi@wgflaw.com In re Margaret Mike MD, PLLC Bankr. E.D. Tex. Case No. 19-42428 Chapter 11 Petition filed September 4, 2019 See http://bankrupt.com/misc/txeb19-42428.pdf represented by: Eric A. Liepins, Esq. ERIC A. LIEPINS E-mail: eric@ealpc.com In re Jeffrey Howard Stokes and Christina Stokes Bankr. W.D. Wash. Case No. 19-13287 Chapter 11 Petition filed September 4, 2019 represented by: Larry B. Feinstein, Esq. E-mail: feinstein1947@gmail.com - and - Kathryn Scordato, Esq. VORTMAN & FEINSTEIN E-mail: kpscordato@gmail.com In re 2736 Champa, LLC Bankr. D. Colo. Case No. 19-17678 Chapter 11 Petition filed September 5, 2019 See http://bankrupt.com/misc/cob19-17678.pdf represented by: Jane M. Roberson, Esq. ROBERSON LAW LLC E-mail: Roberson@JustAskJane.info In re Mule Camp Rocks, LLC Bankr. N.D. Ga. Case No. 19-21782 Chapter 11 Petition filed September 5, 2019 See http://bankrupt.com/misc/ganb19-21782.pdf represented by: Jonathan D. Clements, Esq. KELLEY & CLEMENTS LLP E-mail: jclements@kelleyclements.com In re James M. Restucci & Family, LLC Bankr. D. Md. Case No. 19-21830 Chapter 11 Petition filed September 4, 2019 Filed Pro Se In re Yi Properties, LLC Bankr. D.N.J. Case No. 19-27075 Chapter 11 Petition filed September 5, 2019 See http://bankrupt.com/misc/njb19-27075.pdf represented by: Steven D. Pertuz, Esq. THE LAW OFFICES OF STEVEN D. PERTUZ, LLC E-mail: pertuzlaw@verizon.net In re Jose Luis Pereyra Bankr. D. Nev. Case No. 19-15725 Chapter 11 Petition filed September 5, 2019 represented by: Michael J. Harker, Esq. E-mail: notices@harkerlawfirm.com In re Dyce-Marks Realty LLC Bankr. E.D.N.Y. Case No. 19-45320 Chapter 11 Petition filed September 5, 2019 See http://bankrupt.com/misc/nyeb19-45320.pdf represented by: Julio E. Portilla, Esq. LAW OFFICE OF JULIO E. PORTILLA, P.C. E-mail: jp@julioportillalaw.com In re Diamonds On J LLC Bankr. E.D.N.Y. Case No. 19-45330 Chapter 11 Petition filed September 5, 2019 See http://bankrupt.com/misc/nyeb19-45330.pdf represented by: Avi Rosengarten, Esq. Solomon Rosengarten, Esq. E-mail: rosengartenlaw@gmail.com VOKMA@aol.com In re 6944 Hillmeyer Equity Inc. Bankr. E.D.N.Y. Case No. 19-45346 Chapter 11 Petition filed September 5, 2019 Filed Pro Se In re Ezra Schwartz and Stephanie Schwartz Bankr. S.D.N.Y. Case No. 19-23583 Chapter 11 Petition filed September 5, 2019 represented by: Todd S. Cushner, Esq. CUSHNER & ASSOCIATES, P.C. E-mail: todd@cushnerlegal.com In re Wanda Diaferia Bankr. S.D.N.Y. Case No. 19-23587 Chapter 11 Petition filed September 5, 2019 represented by: Linda M. Tirelli, Esq. TIRELLI LAW GROUP, LLC E-mail: ltirelli@tw-lawgroup.com In re Aaron Brown Bankr. S.D.N.Y. Case No. 19-23581 Chapter 11 Petition filed September 5, 2019 represented by: Allen A. Kolber, Esq. LAW OFFICES OF ALLEN A. KOLBER, ESQ. E-mail: akolber@kolberlegal.com In re Abimael Rosario Marrero Bankr. D.P.R. Case No. 19-05106 Chapter 11 Petition filed September 5, 2019 represented by: Miriam A. Murphy, Esq. MIRIAM A MURPHY & ASSOCIATES E-mail: mamurphyli82@gmail.com In re Theodore Lamont Hansen Bankr. D. Utah Case No. 19-26528 Chapter 11 Petition filed September 5, 2019 represented by: Mark H. Tanner, Esq. E-mail: mhtattorney@gmail.com In re Keyvan Yousefian Bankr. W.D. Wash. Case No. 19-13311 Chapter 11 Petition filed September 5, 2019 Filed Pro Se In re Enguity Technology Corp. Bankr. N.D. Fla. Case No. 19-40473 Chapter 11 Petition filed September 6, 2019 See http://bankrupt.com/misc/flnb19-40473.pdf represented by: Byron Wright, III, Esq. BRUNER WRIGHT, P.A. E-mail: twright@brunerwright.com In re Elsinore III, LLC Bankr. D. Nev. Case No. 19-15790 Chapter 11 Petition filed September 6, 2019 See http://bankrupt.com/misc/nvb19-15790.pdf represented by: Matthew C. Zirzow, Esq. LARSON ZIRZOW & KAPLAN, LLC E-mail: mzirzow@lzklegal.com In re True Faith Independent Holiness Church, Inc. Bankr. E.D. Pa. Case No. 19-15541 Chapter 11 Petition filed September 6, 2019 See http://bankrupt.com/misc/paeb19-15541.pdf represented by: George M. Lutz, Esq. HARTMAN, VALERIANO, MAGOVERN & LUTZ, P.C. E-mail: glutz@hvmllaw.com In re Robert A. Ryals Bankr. N.D. Ala. Case No. 19-41509 Chapter 11 Petition filed September 8, 2019 represented by: Harry P. Long, Esq. THE LAW OFFICES OF HARRY P. LONG, LLC E-mail: hlonglegal8@gmail.com In re Wave Wood Products, LLC Bankr. N.D. Ill. Case No. 19-25360 Chapter 11 Petition filed September 8, 2019 See http://bankrupt.com/misc/ilnb19-25360.pdf represented by: Penelope N. Bach, Esq. BACH LAW OFFICES, INC. E-mail: pnbach@bachoffices.com In re Batoul Darwiche Bankr. S.D. Fla. Case No. 19-22041 Chapter 11 Petition filed September 9, 2019 represented by: David W. Langley, Esq. E-mail: dave@flalawyer.com In re Bridge Street Equities, LLC Bankr. D. Mass. Case No. 19-30718 Chapter 11 Petition filed September 9, 2019 See http://bankrupt.com/misc/mab19-30718.pdf represented by: Louis S. Robin, Esq. LAW OFFICES OF LOUIS S. ROBIN E-mail: louis.robin.bankruptcyECF@gmail.com louis.robin@prodigy.net In re Joynture 417 South Street, Inc. Bankr. E.D. Pa. Case No. 19-15587 Chapter 11 Petition filed September 9, 2019 See http://bankrupt.com/misc/paeb19-15587.pdf represented by: Carol B. McCullogh, Esq. MCCULLOUGH EISENBERG, LLC E-mail: mccullougheisenberg@gmail.com In re Serente Spa, LLC Bankr. S.D. Tex. Case No. 19-35078 Chapter 11 Petition filed September 9, 2019 See http://bankrupt.com/misc/txsb19-35078.pdf represented by: Margaret Maxwell McClure, Esq. LAW OFFICE OF MARGARET M. MCCLURE E-mail: margaret@mmmcclurelaw.com In re Saad Marketing, Inc. Bankr. S.D. Ala. Case No. 19-13159 Chapter 11 Petition filed September 10, 2019 See http://bankrupt.com/misc/alsb19-13159.pdf represented by: Robert M. Galloway, Esq. GALLOWAY WETTERMARK EVEREST & RUTENS, LLP E-mail: bgalloway@gallowayllp.com In re Linda Jean Phillips Bankr. C.D. Cal. Case No. 19-12259 Chapter 11 Petition filed September 9, 2019 represented by: Roksana D. Moradi-Brovia, Esq. Matthew D. Resnik, Esq. RESNIK HAYES MORADI LLP E-mail: matt@rhmfirm.com roksana@rhmfirm.com In re Ilda Eduwiges Alvarez Bankr. C.D. Cal. Case No. 19-12261 Chapter 11 Petition filed September 9, 2019 represented by: Lionel E. Giron, Esq. LAW OFFICES OF LIONEL E GIRON E-mail: ecf@lglawoffices.com In re RDford Properties, Inc. Bankr. C.D. Cal. Case No. 19-12274 Chapter 11 Petition filed September 10, 2019 See http://bankrupt.com/misc/cacb19-12274.pdf represented by: Matthew Abbasi, Esq. ABBASI LAW CORPORATION E-mail: matthew@malawgroup.com In re Andrew L. Youngquist and Linda K. Youngquist Bankr. C.D. Cal. Case No. 19-13480 Chapter 11 Petition filed September 9, 2019 represented by: Julie J. Villalobos, Esq. OAKTREE LAW E-mail: julie@oaktreelaw.com In re Ralph Maxwell Burnett, III and Shelley Lynn Burnett Bankr. C.D. Cal. Case No. 19-13493 Chapter 11 Petition filed September 9, 2019 represented by: Michael Jones, Esq. M JONES & ASSOCIATES, PC E-mail: mike@mjthelawyer.com In re Matthew Lee Kooyman and Becky Jean Kooyman Bankr. D. Id. Case No. 19-01037 Chapter 11 Petition filed September 9, 2019 represented by: Jeffrey Philip Kaufman, Esq. LAW OFFICE OF D. BLAIR CLARK, PC E-mail: jeffrey@dbclarklaw.com In re Andrew Joseph Blanchard and Christine Laurent Blanchard Bankr. E.D. La. Case No. 19-12440 Chapter 11 Petition filed September 10, 2019 represented by: Robin R. DeLeo, Esq. E-mail: deleolawfirm@northshoreattorney.com In re Inku Holdings, LLC Bankr. D.N.J. Case No. 19-27288 Chapter 11 Petition filed September 9, 2019 Filed Pro Se In re Finn Realty, LLC Bankr. D.N.J. Case No. 19-27397 Chapter 11 Petition filed September 10, 2019 See http://bankrupt.com/misc/njb19-27397.pdf represented by: Timothy P. Neumann, Esq. BROEGE, NEUMANN, FISCHER & SHAVER LLP E-mail: timothy.neumann25@gmail.com tneumann@bnfsbankruptcy.com In re Gogi Grill Chelsea LLC Bankr. S.D.N.Y. Case No. 19-12932 Chapter 11 Petition filed September 10, 2019 Filed Pro Se In re Denise Hamblin Bankr. E.D.N.Y. Case No. 19-45401 Chapter 11 Petition filed September 10, 2019 represented by: Vivian M. Williams, Esq. THE WILLIAMS FIRM E-mail: vwilliams@vmwassociates.com In re Petasos Restaurant Corp. Bankr. E.D.N.Y. Case No. 19-45410 Chapter 11 Petition filed September 10, 2019 See http://bankrupt.com/misc/nyeb19-45410.pdf represented by: Lawrence Morrison, Esq. MORRISON TENENBAUM, PLLC E-mail: lmorrison@m-t-law.com info@m-t-law.com In re Myrna Property Corp. Bankr. E.D.N.Y. Case No. 19-76232 Chapter 11 Petition filed September 10, 2019 Filed Pro Se In re Michael Adam Penso and Lori Lattari Penso Bankr. E.D.N.Y. Case No. 19-76243 Chapter 11 Petition filed September 10, 2019 represented by: Laura A. Ellis, Esq. LAW OFFICE OF LAURA A. ELLIS E-mail: LauraEllis@Amityville-Law.com ********* 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. 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