/raid1/www/Hosts/bankrupt/TCR_Public/220920.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, September 20, 2022, Vol. 26, No. 262
Headlines
4E BRANDS: Walker & Patterson Updates on Green, 5 Others
8400 GROUP: Owner of NJ Commercial Building Files for Chapter 11
ABRAXAS PETROLEUM: Appoints David Roberts as Director
ADAMIS PHARMACEUTICALS: Stockholders Reject Stock Split Proposal
AKORN OPERATING: Moody's Cuts CFR to Caa2, Outlook Stable
ALTICE USA: S&P Lowers ICR to 'BB-' on Decline in Profitability
BITNILE HOLDINGS: Holds 7.7% Stake in SilverSun Technologies
BLUE RIBBON: S&P Downgrades ICR to 'CCC+', Outlook Negative
BORREGO COMMUNITY: Files for Chapter 11 Due to Dispute With DHCS
BOY SCOUTS: Chapter 11 Case Far From Over as Appeals Loom
BOY SCOUTS: Creditors' Committee Members Detail Claims
BRAZOS ELECTRIC: Disclosures, ERCOT Deal Have Interim Approval
BROWNIE'S MARINE: Grosses $205K From Sale of Units
CABLEVISION LIGHTPATH: S&P Affirms 'B+' Issuer Credit Rating
CARVER BANCORP: Robin Nunn Appointed as Director
CD&R SMOKEY: S&P Alters Outlook to Negative, Affirms 'B' ICR
CELSIUS NETWORK: FTC Set to Join Bankruptcy Case
CHG HEALTHCARE: Moody's Affirms B2 CFR & Alters Outlook to Stable
CHILLKING CHILLERS: Files Subchapter V Case
CHURCH OF THE DISCIPLES: Nov. 7 Hearing on Disclosure Statement
CITY BREWING: S&P Downgrades ICR to 'B-', Outlook Negative
CORRELATE INFRASTRUCTURE: Signs LOI to Acquire Aegis Renewable
DAVITA INC: Moody's Cuts CFR to Ba3 & Sr. Unsecured Notes to B1
DELTA AIR: S&P Affirms 'BB' Issuer Credit Rating, Outlook Stable
DESTINATION SOUTHERN: Voluntary Chapter 11 Case Summary
EAST RIDGE RETIREMENT: Fitch Downgrades LongTerm IDR to 'C'
ECHELON CONSTRUCTION: Commences Subchapter V Case
EVERGREEN CHARTER SCHOOL: S&P Assigns 'BB' Rating on 2022A-B Bonds
EVERYTHING BLOCKCHAIN: Incurs $2.7M Net Loss in Second Quarter
EXPRESS GRAIN: Seeks Court Approval to Hire Special Counsel
FIRST CHOICE: Court Approves Disclosure Statement
FRONT SIGHT: Needs to Confirm Plan by Dec. 1
FRONT SIGHT: Unsecureds Owed Up to $30M to Get $3M in Plan
FRONTLINE MEDICAL: Taps Coan, Payton & Payne as Bankruptcy Counsel
FUSION PROMOTIONS: Seeks to Hire Jones & Walden as Legal Counsel
GBT TECHNOLOGIES: Issues $116,200 Promissory Note to 1800 Diagonal
GIGA-TRONICS INC: Acquires Gresham Worldwide From BitNile
GLOBAL ALLIANCE: Wins Cash Collateral Access Thru Sept 30
HAZELTON TRUST: Seeks Chapter 11 Bankruptcy Protection
HOME POINT: Moody's Lowers CFR to 'B3' & Alters Outlook to Stable
HOVNANIAN ENTERPRISES: Moody's Raises CFR to B3, Outlook Stable
INSTANT BRANDS: S&P Downgrades ICR to 'B-', Outlook Negative
J. BOWERS: Wins Cash Collateral Access Thru Oct 29
JOYCARE THERAPY: Seeks to Hire Baker & Associates as Counsel
JUST BELIEVE: Wins Cash Collateral Access Thru Oct 31
KOHL'S CORP: S&P Downgrades ICR to 'BB+', Outlook Stable
LA COSTA LIVING ESTATES: Starts Subchapter V Case
LD HOLDINGS: Moody's Lowers CFR to 'B3' & Alters Outlook to Stable
LEVEL FOUR ORTHOTICS: Seeks to Hire Cross & Simon as Local Counsel
LEVEL FOUR ORTHOTICS: Taps Ruberto Israel & Weiner as Legal Counsel
LIFESCAN GLOBAL: S&P Downgrades ICR to 'B-', Outlook Stable
LINDBLAD EXPEDITIONS: Moody's Alters Outlook on 'B3' CFR to Stable
LIQUI-BOX HOLDINGS: Moody's Alters Outlook on 'B3' CFR to Stable
MAC'S KWIK: Wins Cash Collateral Access
MAGNOLIA OFFICE: Owner Patel Reorganization Plan
MAGNOLIA OFFICE: Taps Marcus & Millichap as Real Estate Broker
MARINER HEALTH: Case Summary & 30 Largest Unsecured Creditors
MAXUS ENERGY: 3rd Circuit Won't Disqualify White & Case From Case
MIRACLE CENTER: Wins Cash Collateral Access Thru Oct 11
MURPHY CREEK: Case Summary & One Unsecured Creditor
NATIONAL MENTOR: S&P Alters Outlook to Negative, Affirms 'B-' ICR
NB HOTELS: Files Supplement to Disclosure Statement
NEW SK HOLDCO: Moody's Assigns Caa2 CFR, Outlook Stable
NEWAGE INC: Seeks Shortened Notice Period for Assets Bid Procedures
NEWAGE INC: Sept. 20 Hearing on Bidding Procedures for All Assets
NEWELL BRANDS: Fitch Affirms 'BB+' LongTerm IDR, Outlook Stable
NINE ENERGY: Regains Compliance With NYSE Listing Standards
NORTONLIFELOCK INC: Fitch Rates 2027/2030 New Secured Notes 'BB+'
NOVABAY PHARMACEUTICALS: To Raise Up to $5.3M Under New Agreements
ORGANICELL REGENERATIVE: Incurs $2.7-Mil. Net Loss in Third Quarter
ORIGINCLEAR INC: Reports Unregistered Sales of Equity Securities
PACKABLE HOLDINGS: U.S. Trustee Appoints Creditors' Committee
PERATON HOLDING: Fitch Affirms 'B' IDR, Outlook Stable
PH BEAUTY: S&P Downgrades ICR to 'CCC' on Liquidity Shortfall Risk
PILATES AND YOGA: Gets Interim OK to Hire Legal Counsel
PLAYER'S POKER: Unsecured Creditors to Get 30% Under Plan
PROJECT RUBY: Moody's Affirms 'B3' CFR, Outlook Stable
PROMEDICA HEALTH: Moody's Lowers Revenue Bond Rating to Ba2
PUFF FACTORY: Taps Red Fort Capital as Financing Specialist
QUARTERNORTH ENERGY: S&P Affirms 'CCC+' ICR, Outlook Positive
REDSTONE BUYER: Moody's Lowers CFR to Caa1 & First Lien Debt to B3
REVLON INC: Taps Matthew Kvarda of A&M as Interim CFO
ROCKCLIFF ENERGY: S&P Affirms 'B' ICR, Outlook Stable
SCRIBEAMERICA INTERMEDIATE: S&P Downgrades ICR to 'B-'
SEMILEDS CORP: Two Proposals Passed at Annual Meeting
SK GLOBAL: Unsecureds Owed $800K to Get 5% of Claims
SM ENERGY: Fitch Hikes Long-Term IDR to 'BB-', Outlook Stable
SOMM INC: Gets OK to Hire Gallagher & Kennedy as Corporate Counsel
STONEBRIDGE VENTURES: Files for Chapter 11 Protection
SUPERMOOSE NEWCO: S&P Alters Outlook to Neg., Affirms 'CCC+' ICR
SYNEOS HEALTH: Moody's Raises CFR to 'Ba2,' Outlook Stable
TALEN ENERGY: Seeks OK of Disclosures for Equitization/Sale Plan
TAP ROCK: S&P Affirms 'B-' Issuer Credit Rating, Outlook Stable
TERRA MANAGEMENT: Seeks to Move Disclosures Hearing to Oct. 11
TRANSOCEAN LTD: S&P Lowers ICR to 'CC', Outlook Negative
TRANSOCEAN LTD: To Swap Existing Bonds for New Bonds Due 2029
TREASURE VALLEY: Moody's Assigns Ba3 Rating to Facilities Bonds
TRUSENTIAL LLC: Wins Interim Cash Collateral Access Thru Oct 30
UNLIKELY HEROES: Files Subchapter V Case
VERTEX ENERGY: Provides Update on Diesel Conversion Project
VILLAS OF COCOA VILLAGE: Starts Subchapter V Case
WATER MARBLE: Unsecureds to Get $100K in Plan
WESCO INT'L: Moody's Hikes CFR to Ba2 & Alters Outlook to Stable
ZOAK DEVELOPMENT: Taps Law Office of Marc Voisenat as Counsel
[^] Large Companies with Insolvent Balance Sheet
*********
4E BRANDS: Walker & Patterson Updates on Green, 5 Others
--------------------------------------------------------
In the Chapter 11 cases of 4E Brands Northamerica, LLC, the law
firm of Walker & Patterson, P.C. submitted an amended verified
statement under Rule 2019 of the Federal Rules of Bankruptcy
Procedure, to disclose an updated list of entities that it
representing.
Walker & Patterson has been hired to represent more than one
creditor/party-in-interest in this chapter 11 case;
Walker & Patterson has entered into a written fee agreement with
each entity it represents;
The terms of the fee agreements for each of the represented
entities are identical and provides for payment on an hourly
basis.
The represented entities and their respective economic interests in
the Debtor are as follows:
Barry Green, as Wrongful Death Representative of
Joshua Dominic Maestas
375 El Cerro Loop
Los Lunas, NM 87031
* Interest Asserted: Wrongful Death Claim
Carolina Maestas
375 El Cerro Loop
Los Lunas, NM 87031
* Interest Asserted: Wrongful Death Claim
John Cashman, as Personal Representative of
the Estate of Sean Cashman
15 Gill Rd.
Eastham, MA 02642
* Interest Asserted: Wrongful Death Claim
Erin Cashman, as Personal Representative of
the Estate of Sean Cashman
15 Gill Rd.
Eastham, MA 02642
* Interest Asserted: Wrongful Death Claim
Samantha Hooks
16 R St., N.E.
Washington, DC 20002
* Interest Asserted: Personal Injury Claim
Carolyn Collins
310 NW 14th Ave.
Boynton Beach, FL 33435
* Interest Asserted: Personal Injury Claim
Although each of the above entities have retained Walker &
Patterson to represent them collectively, each entity makes its own
decisions as to how it wishes to proceed and no individual entity
speaks for, or on behalf of, any other entity or the group as a
whole.
Walker & Patterson does not own any claims against, or equity
interest in, the Debtor.
Nothing contained herein should be construed as a limitation upon,
or waiver of, any entity's rights to assert, file and/or amend its
claims or interests in accordance with applicable law or any orders
entered in this chapter 11 case.
The Firm can be reached at:
Johnie Patterson, Esq.
WALKER & PATTERSON, P.C.
P.O. Box 61301
Houston, TX 77208-1301
Tel: (713)956-5577
Fax: (713)956-5570
A copy of the Rule 2019 filing is available at
https://bit.ly/3xvrAfe at no extra charge.
About 4E Brands North America
4E Brands North America manufactured personal care and hygiene
products. Its brand name products include Blumen Hand Sanitizer,
Assured Hand Sanitizer, and various other hand sanitizers and hand
soaps. It is no longer operating.
4E Brands North America sought Chapter 11 bankruptcy protection
(Bankr. S.D. Tex. Case No. 22-50009) on Feb. 22, 2022. In the
petition filed by David Dunn as chief restructuring officer, 4E
Brands North America estimated assets up to $50,000 and liabilities
between $10 million and $50 million. The case is handled by
Honorable Judge David R. Jones. Matthew D. Cavenaugh, Esq., of
JACKSON WALKER, is the Debtor's counsel, and STRETTO is the claims
agent.
8400 GROUP: Owner of NJ Commercial Building Files for Chapter 11
----------------------------------------------------------------
8400 Group LLC has sought Chapter 11 bankruptcy protection in New
Jersey.
The Debtor owns a one-story commercial building located at 41 James
Way, Eatontown, NJ 07724 consisting of 10,770 +/- square feet of
office space -- eight bullpen offices, eight private offices, two
conference rooms, two executive offices – and a 2,500 +/- square
foot warehouse. The Debtor currently has three paying members who
utilize space with the Property pursuant to month-to-month
licensing arrangements. A related entity, Milife Health, LLC,
occupies the warehouse and a portion of the office space.
Businessman Mervin A. Dayan and his spouse Vivian Dayan each owns
50% of 8400 Group.
In the summer months (June, July and August), the Debtor typically
has additional occupants, which generates more revenue during that
time revenues from the Debtor's occupants is projected to be
$15,550 per month until June 2023, when the revenue is projected to
increase to approximately $30,250 for the summer months.
On May 10, 2022, Republic Valuations of Brooklyn, New York issued
an appraisal, indicating a market value of the Property at
$3,100,000.
On May 6, 2020, Republic First filed an action in foreclosure
against 8400 Group, among others. A Final Judgment in Foreclosure
was entered on July 7, 2021. The Foreclosure Judgment fixes the
Republic First debt at $1,392,847. The Sheriff's Sale was
adjourned on various occasions.
8400 Group intends to continue operating its business in the
ordinary course and needs the breathing room provided by the
Bankruptcy Code in order to continue to operate effectively. The
goal is to maximize the value of 8400 Group's assets and ongoing
business operations.
According to court filings, 8400 Group LLC estimates between 1 and
49 creditors. The petition states that funds will be available to
unsecured creditors.
About 8400 Group LLC
8400 Group LLC is a Single Asset Real Estate (as defined in 11
U.S.C. Sec. 101(51B)). It owns a one-story commercial building
located at 41 James Way, Eatontown, NJ 07724.
8400 Group LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D.N.J. Case No. 22-17174) on Sept. 11,
2022. In the petition filed by Mervin A. Dayan, as managing
member, the Debtor reported assets and liabilities between $1
million and $10 million each.
The Debtor is represented by Richard D. Trenk of Trenk Isabel
Siddiqi & Shahdanian P.C.
ABRAXAS PETROLEUM: Appoints David Roberts as Director
-----------------------------------------------------
The Board of Directors of Abraxas Petroleum Corporation increased
the size of the Board from five to six and appointed David N.
Roberts to the Board as a Class II director. The Board will
determine which committees, if any, Mr. Roberts will be appointed
to at the first Board meeting following his election.
Mr. Roberts is a senior advisor and member of the Executive
Committee and Partnership Advisory Board of Angelo, Gordon & Co.
L.P., which is an affiliate of AG Energy Funding, LLC. The Company
and AGEF entered into an Exchange Agreement dated Jan. 3, 2022,
pursuant to which the Company issued shares of its Series A
Preferred Stock to AGEF, which entitled AGEF to approximately 85%
of the voting power of the Company's outstanding capital stock.
Through his Angelo Gordon roles, Mr. Roberts has an indirect
ownership interest in the Series A Preferred Stock owned by AGEF.
Mr. Roberts, age 60, also serves as the Chairman, chief executive
officer, and president of AG Mortgage Investment Trust, Inc., a
publicly traded residual-mortgage REIT that is managed and advised
by a subsidiary of Angelo Gordon, and as a member of the board of
directors of Arc Home LLC, a residential mortgage lender that is
managed by MITT.
As a non-employee director, Mr. Roberts will be compensated for his
Board membership in the same manner as the Company's other
non-employee directors (however, any such compensation will be
directed to Angelo Gordon or one of its affiliates on Mr. Roberts'
behalf). The Company previously disclosed the terms of non-employee
director compensation in its proxy statement on Schedule 14A, filed
with the SEC on March 31, 2022.
About Abraxas
San Antonio, TX-based Abraxas Petroleum Corporation --
www.abraxaspetroleum.com -- is an independent energy company
primarily engaged in the acquisition, exploration, development and
production of oil and gas.
Abraxas Petroleum reported a net loss of $44.57 million for the
year ended Dec. 31, 2021, a net loss of $184.52 million for the
year ended Dec. 31, 2020, and a net loss of $65 million for the
year ended Dec. 31, 2019. As of Dec. 31, 2021, the Company had
$130.48 million in total assets, $247.06 million in total
liabilities, and $116.59 million in total stockholders' deficit.
ADAMIS PHARMACEUTICALS: Stockholders Reject Stock Split Proposal
----------------------------------------------------------------
The 2022 annual meeting of stockholders of Adamis Pharmaceuticals
Corporation was reconvened virtually to consider and vote on a
proposal to adopt and approve an amendment to the Company's
Restated Certificate of Incorporation and authorize the Board of
Directors of the Company, in its sole discretion, to effect a
reverse stock split of the outstanding shares of Common Stock at
any time on or before Dec. 31, 2022, at a reverse stock split ratio
ranging from 1-for-2 to 1-for-15, as determined by the Board at a
later date. The proposal was not approved.
About Adamis Pharmaceuticals
Adamis Pharmaceuticals Corporation --
http://www.adamispharmaceuticals.com-- is a specialty
biopharmaceutical company primarily focused on developing and
commercializing products in various therapeutic areas, including
allergy, opioid overdose, respiratory and inflammatory disease.
Adamis reported a net loss applicable to common stock of $45.83
million for the year ended Dec. 31, 2021, compared to a net loss
applicable to common stock of $49.39 million for the year ended
Dec. 31, 2020. As of June 30, 2022, the Company had $17.69 million
in total assets, $10.65 million in total liabilities, and $7.04
million in total stockholders' equity.
San Diego, California-based BDO USA, LLP, the Company's auditor
since 2020, issued a "going concern" qualification in its report
dated March 31, 2022, citing that the Company has suffered
recurring losses from operations and has a net capital deficiency
that raise substantial doubt about its ability to continue as a
going concern.
AKORN OPERATING: Moody's Cuts CFR to Caa2, Outlook Stable
---------------------------------------------------------
Moody's Investors Service downgraded the ratings of Akorn Operating
Company LLC, including the Corporate Family rating to Caa2 from
Caa1, the Probability of Default Rating to Caa2-PD from Caa1-PD,
and the senior secured term loan to Caa3 from Caa2. The outlook was
revised to stable from positive.
The ratings downgrade reflects Akorn's significant reduction in
scale and diversity following the divestitures of the
over-the-counter consumer health segment and branded
pharmaceuticals segments, as well as the closure of Akorn's
Somerset, New Jersey manufacturing facility. The sale of the more
profitable business segments has materially reduced the company's
earnings, and ability to sustain stand-alone operations.
Additionally, the company is unlikely to remain compliant with the
term loan's total leverage covenant, following covenant relief
expiration, at the end of 2022. Moody's expects the company to seek
sale of the remaining specialty generic pharmaceutical business,
with the proceeds used to repay outstanding debt in its capital
structure. Moody's believes that there is an increasing likelihood
of a distressed exchange if the sale of remaining assets does not
materialize.
Downgrades:
Issuer: Akorn Operating Company LLC
Corporate Family Rating, Downgraded to Caa2 from Caa1
Probability of Default Rating, Downgraded to Caa2-PD
from Caa1-PD
Senior Secured Term Loan, Downgraded to Caa3 (LGD5)
from Caa2 (LGD4)
Outlook Actions:
Issuer: Akorn Operating Company LLC
Outlook, Changed To Stable From Positive
RATINGS RATIONALE
The Caa2 Corporate Family Rating reflects Akorn's modest size with
revenues declining to under $400 million and concentration in the
US generic drug market. The rating is further constrained by
Akorn's very high pro forma Moody's adjusted leverage above 10.0x
as of June 30, 2022, despite repayments on the term loan using
proceeds from the recent asset divestitures. The credit agreement
was amended to provide covenant relief from second quarter 2022 to
fourth quarter 2022, indicative of the expected near-term decline
in earnings.
The rating benefits from the company's meaningful cash balance with
$93 million of cash, of which approximately $34 million is
restricted cash only to be used for debt repayment or funding capex
or growth initiatives. The company also benefits from high barriers
to entry with its focus on niche alternate dosage form products.
The stable outlook reflects Moody's expectation that Akorn will
continue to operate with modest scale and very high financial
leverage.
Akorn's liquidity is adequate with a cash balance of $93 million as
of June 30, 2022, of which about $34 million is restricted cash.
Moody's expects Akorn will be free cash flow breakeven in 2022.
Akorn has a $160 million asset-based revolver due October 2025, of
which $58 million was drawn as of June 30, 2022. The size of the
facility is limited by a borrowing base that is based on accounts
receivables and inventory balances. Akorn's term loan has no
mandatory debt amortization. The company received a covenant
holiday from second quarter 2022 to fourth quarter 2022 on its
maximum total leverage ratio covenant. Moody's doesn't expect the
company to be compliant with its revolver covenant, should it be
tested starting in Q1 2023. Alternate sources of liquidity are
limited given substantially all Akorn's assets are pledged as
collateral to its secured term loan and revolver.
ESG considerations have a highly negative credit impact (CIS-4) on
Akorn. The company has neutral-to-low credit exposure to
environmental considerations (E-2). Akorn has very highly negative
credit exposures to social considerations that carry high credit
risks (S-5). These include industry-wide exposures related to
policy and regulatory risk, and high manufacturing compliance
standards. The company's track record of regulatory issues relating
to manufacturing violations at two sites resulted in remediation by
Akorn and reassessment by FDA. During the last quarter Akorn made a
strategic decision to close its Somerset, NJ facility. Akorn faces
highly negative exposures to governance risk (G-4). The score
reflects financial policies that are aggressive, given that Akorn
operates with high financial leverage. Akorn's weak track record of
risk management is partially reflected in the company's bankruptcy
filing in 2020.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade include improved earnings
growth and improving liquidity from cash flow generation.
Factors that could lead to a downgrade include weakening liquidity
primarily due to weaker cash flow. Failure to demonstrate
sustainable earnings growth or transactions that increase the
probability of default could also result in a downgrade.
Akorn Operating Company LLC, headquartered in Lake Forest, IL, is a
specialty generic pharmaceutical manufacturer. The company focuses
on generic drugs in alternate dosage forms such as ophthalmic
drugs, injectable drugs and others in liquid, semi-solid, topical
and nasal spray dosage forms. Revenues for the twelve months ended
June 30, 2022, were approximately $432 million.
The principal methodology used in these ratings was Pharmaceuticals
published in November 2021.
ALTICE USA: S&P Lowers ICR to 'BB-' on Decline in Profitability
---------------------------------------------------------------
S&P Global Ratings lowered all ratings on one notch, including the
issuer credit to 'BB-' from 'BB', on Altice USA Inc.
The negative outlook reflects that S&P could lower the rating if it
sustains debt to EBITDA above 5.5x and funds from operations (FFO)
to debt falls below 10%, which could be caused by continued EBITDA
declines in 2023.
S&P said, "We revised our base-case forecast to reflect a less
pronounced turnaround due to more intense competition. Heightened
fixed wireless and fiber-based services competition is affecting
the cable industry, compounded by mismanagement of Altice's
business during the COVID-19 pandemic. The company made deep cuts
to customer service, technicians, and retail stores. We believe
it's proving difficult to recover from these cuts in a more
competitive marketplace. The company lost 53,000 residential
high-speed data (HSD) subscribers through the first six months of
2022 (down 1.5% year over year). Furthermore, management recently
indicated Altice continues to lose share into the third quarter.
"We believe elevated competition will contribute to weaker growth
rates in the SuddenLink footprint, as churn has picked up recently.
We expect gradually increasing fiber-based competition could
continue customer churn while customer additions could remain under
pressure through 2023 as fewer copper wire-based customers are
converting to cable, instead opting for cheaper fixed-wireless
service. In the Optimum footprint, there are fewer opportunities
for growth and the company faces intense competition from
fiber-based Verizon FioS, which has been aggressive with its price.
Therefore, we now expect full-year subscriber declines of about
80,000 in 2022 versus our previous forecast of 5,000 additions. We
also lowered our forecast for subscriber growth to about 45,000 in
2023 (from over 100,000), coming mainly from new homes passed."
Altice has industry-leading HSD average revenue per user (ARPU),
which leaves less room to increase HSD revenue (and earnings)
absent subscriber gains. So far in 2022, Altice has increased ARPU
slightly as customers move up-market to faster speed tiers, which
we expect will continue. S&P said, "However, we believe the company
could become more promotional over the next year to gain
subscribers in a more competitive marketplace. It could also lower
its rack rate--the price after promotions end--to reduce customer
churn. Both strategies could pressure ARPU and limit overall HSD
revenue growth through 2023. We believe if Altice holds its pricing
model, subscriber growth may be more difficult to achieve,
particularly in the current macroeconomic environment where
consumers may be more price-sensitive."
S&P said, "Altice no longer has best in-class profitability, which
has caused us to tighten our rating triggers and revise our
business risk assessment downward. The profitability gap between
Altice USA and its closest rated peer, Charter Communications Inc.,
has evaporated because Altice is implementing a necessary
multipronged strategy that has increased operating expenses (opex)
by about $100 million in 2022, significantly reducing EBITDA. We
believe most of the opex are catch-up for overly aggressive cost
cuts made in prior years that finally led to deterioration in
subscriber trends that outpace the industry average." Therefore,
Altice no longer possesses this relative strength in profitability
to offset its more limited scale, geographic concentration, and
participation in the most competitive incumbent cable footprint,
which translates into below-average HSD penetration.
Management turnover comes during a turnaround plan. In September
2021, Chief Operating Officer Hakim Bombazine resigned, and CEO
Dexter Goei absorbed his role. Shortly thereafter, Altice disclosed
that it had lost broadband subscribers in the third quarter of 2021
and was embarking on a reinvestment plan that includes expansion of
door-to-door salespeople, reopening retail locations, increasing
marketing spending, rebranding the SuddenLink footprint, and
multiyear fiber investment. S&P said, "At the time, Mr. Goei
indicated that HSD subscribers would rise by at least triple-digits
by 2023, a goal we now view as difficult to attain. Dennis Mathew
will become CEO on Oct. 3, 2022, so Mr. Goei can return to Europe
with his family. Mr. Goei will then become executive chairman of
the board of directors and remain involved with strategic
initiatives. Mr. Mathew will focus mainly on operations. He spent
the last 17 years at Comcast Corp. in senior operational leadership
positions. While most of the spending to restore Altice to
pre-pandemic service has been complete, it has yet to stabilize
customer metrics and return to EBITDA growth. Furthermore, Altice
USA is still in the early stages of its fiber build. While we do
not expect a shift in strategic direction, Mr. Mathew could adopt
different tactics operationally."
S&P said, "We expect minimal deleveraging through 2023, absent an
asset sale. We expect debt to EBITDA to remain elevated in the
high-5x area over the next 18 months given limited EBITDA growth.
Therefore, the primary mechanism for leverage improvement will be
through free operating cash flow (FOCF) generation, which is under
pressure from elevated capital spending. We project FOCF of about
$700 million in 2022 and $500 million-$700 million in 2023, down
from $1.6 billion in 2021 and $1.8 billion in 2020. Longer term, we
believe there is an organic path toward management's target of
4.5x-5x once capital spending slows and FOCF improves."
Altice could accelerate credit metric improvement by selling
SuddenLink. Management has confirmed that it has received interest
from several potential buyers and that there is a sales process
occurring for the asset that Altice purchased in 2015 for $9
billion. S&P said, "We believe this provides a path to accelerating
debt repayment, such that management's target leverage range of
4.5x-5.0x could be achieved over the next year. However, our
current rating triggers are based on the combined company and may
need to be re-evaluated if the company sells its primary growth
engine."
Altice USA has limited near-term maturities and mostly fixed-rate
debt. Altice has prudently managed its debt portfolio over the past
several years, limiting its exposure to rising interest rates, as
roughly 80% of its debt is fixed-rate. Furthermore, Altice has
weighted-average maturity of about six years with limited need to
refinance upcoming maturities over the next two years. The company
raised capital while rates were low and before operational
disruptions, resulting in a weighted-average cost of debt of about
5%. This relatively low rate for a highly leveraged company
benefits operating cash flow, with FFO to debt strong for the
rating at about 10%-11%.
S&P said, "Our view of network investments is moderately favorable
despite a near-term reduction in FOCF. Altice has pivoted away from
share repurchases and opted to deploy a fiber-to-the-home (FTTH)
network overbuild. We view this as prudent given that Altice
overlaps with fiber-based Verizon Fios in more than half of its
Optimum footprint. We believe this strategy could allow the company
to compete more effectively, expand its subscriber base, reduce
churn, and lower network maintenance expenses over the long term.
It is targeting to pass 6.5 million homes by the end of 2025 (about
65% of its total footprint), from about 1.6 million. However, we
estimate capital expenditure (capex) will remain elevated at $1.8
billion-$2 billion per year through 2024 before moderating,
reducing FOCF to debt below 5% in the next few years.
"The negative outlook reflects uncertainty around earnings and
subscriber trends over the next 12-18 months, as there is limited
cushion in the rating for credit metric deterioration relative to
our base case."
S&P could lower the rating if:
-- Debt to EBITDA remains above 5.5x; and
-- FFO to debt falls below 10% on a sustained basis.
This could be caused by a lack of HSD revenue growth from continued
subscriber losses, pricing discounts that reduce earnings further
in 2023, or through a more aggressive financial policy, which could
include a take-private transaction.
S&P could revise the outlook back to stable in 2023 if:
-- The company's investments result in greater visibility into
earnings growth, including evidence of a return to growth in HSD
revenue and subscriber count; and
-- It utilizes FOCF for debt reduction, such that leverage
approaches 5.5x; or
-- The company sells assets that result in significant debt
reduction.
ESG credit indicators: E-2, S-2, G-3
BITNILE HOLDINGS: Holds 7.7% Stake in SilverSun Technologies
------------------------------------------------------------
BitNile Holdings, Inc., Digital Power Lending, LLC, and Milton C.
Ault, III disclosed in a Schedule 13D/A filed with the Securities
and Exchange Commission that as of Sept. 9, 2022, they beneficially
own 397,000 shares of common stock of SilverSun Technologies, Inc.,
representing 7.73 percent of the shares outstanding.
The percentage of Shares is based upon 5,136,177 Shares
outstanding, which is the total number of Shares outstanding as of
Aug. 11, 2022, as reported in the Issuer's Quarterly Report on Form
10-Q filed with the SEC on Aug. 12, 2022. A full-text copy of the
regulatory filing is available for free at:
https://www.sec.gov/Archives/edgar/data/896493/000121465922011068/d910221sc13da1.htm
About BitNile Holdings
BitNile Holdings, Inc. (formerly known as Ault Global Holdings,
Inc.) -- www.BitNile.com -- is a diversified holding company
pursuing growth by acquiring undervalued businesses and disruptive
technologies with a global impact. Through its wholly and
majority-owned subsidiaries and strategic investments, the Company
owns and operates a data center at which it mines Bitcoin and
provides mission-critical products that support a diverse range of
industries, including defense/aerospace, industrial, automotive,
telecommunications, medical/biopharma, and textiles. In addition,
the Company extends credit to select entrepreneurial businesses
through a licensed lending subsidiary. BitNile's headquarters are
located at 11411 Southern Highlands Parkway, Suite 240, Las Vegas,
NV.
BitNile reported a net loss of $23.97 million for the year ended
Dec. 31, 2021, a net loss of $32.73 million for the year ended Dec.
31, 2020, a net loss of $32.94 million for the year ended Dec. 31,
2019, and a net loss of $32.98 million for the year ended Dec. 31,
2018. As of June 30, 2022, the Company had $596.27 million in
total assets, $133.98 million in total liabilities, $116.89 million
in redeemable noncontrolling interests in equity of subsidiaries,
and $345.40 million in total stockholders' equity.
BLUE RIBBON: S&P Downgrades ICR to 'CCC+', Outlook Negative
-----------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S. beer
marketer Blue Ribbon LLC (Pabst) to 'CCC+' as a result of the lower
group credit profile (GCP). Pabst's rating previously benefited
from an uplift of one notch from its 'ccc+' standalone credit
profile (SACP) on the company, which is unchanged.
S&P lowered its issue-level ratings on Pabst's senior secured debt
to 'B-' from 'B'. Its recovery rating on the debt remains '2',
indicating creditors could expect substantial (70%-90%; rounded
estimate: 85%) recovery in the event of a payment default.
The negative outlook reflects the potential for a lower rating if
more imminent default risk increases over the next 12 months to the
extent that cash flows don't improve enough to meet high debt
amortization requirements.
S&P said, "We revised our assessment of the group credit profile
(GCP) of Blue Ribbon Holdings LLC (BRH) to 'b-' from 'b' due to
weaker than expected group performance. BRH is the parent to U.S.
beer marketer Blue Ribbon LLC (Pabst).
"The downgrade is the result of our reassessment of the GCP at BRH.
Pabst remains majority-owned by Blue Ribbon Partners, an investment
platform led by American beverage entrepreneur Eugene Kashper.
Through its immediate parent Blue Ribbon Intermediate Holdings LLC,
Pabst's ultimate parent company is BRH, which also owns a
controlling stake in City Brewing Co. LLC (B-/negative/-). We
lowered our GCP at BRH to 'b-' from 'b' following weaker than
expected performance from City Brewing and our expectation that
group credit measures will remain elevated over the next couple of
years.
"Our 'ccc+' SACP at Pabst is unchanged. As a moderately strategic
entity to the group, Pabst's issuer credit rating is subject to a
cap of one notch below the GCP unless the SACP is at least equal to
its GCP. As a result, Pabst's 'CCC+' issuer credit rating continues
to reflect a one-notch discount to our reassessed 'b-' GCP at BRH.
We continue to view Pabst's strategic status within the group as
moderately strategic, reflecting our view that Pabst is important
to the group's long-term strategy, is unlikely to be sold, and
would receive support from the group in most foreseeable
circumstances.
"We continue to view the capital structure as unsustainable absent
improved cash flow generation. Pabst is operating slightly behind
our expectations because of elevated input costs and some lost
market share, but we expect improvement in the second half as it
implements additional price increases. We expect Pabst to generate
roughly breakeven free operating cash flow (FOCF) in 2022,
improving to about $10 million in 2023 as the company benefits from
the price increases, fewer non-recurring charges, and slightly
lower capital expenditures (capex). However, this will still not be
enough to support its high annual debt amortization requirements,
which will exceed $16 million in 2022 and $18 million in 2023. We
do not believe the capital structure will be sustainable over the
long term unless Pabst demonstrates an ability to generate
consistently stronger cash flow or prepays debt with proceeds from
the sale of its property in Irwindale, Calif. We believe expanding
free cash flow significantly in the near term will be difficult
given Pabst's need to increase brand investment to defend its
market position in the below premium category and expand in the
ready to drink cocktail category with Jack Daniel's Country
Cocktails (JDCC), the key growth driver for the business."
Selling the Irwindale property remains a potential lever to enhance
Pabst's credit profile. Pabst acquired a property in Irwindale,
Calif., from Molson Coors Beverage Co. in November 2020 as part of
an agreement to settle outstanding litigation. There is a mortgage
secured by the property, which is owned by an unrestricted
subsidiary, IBY Property Owner LLC. S&P said, "We consolidate the
mortgage and financial results of IBY into our analysis of Pabst,
though management does not view the asset as core and has indicated
its intention to sell it. The property consists of 150 acres of
undeveloped land and a 75-acre brewery that IBY leases to City
Brewing. We believe Pabst can substantially improve credit metrics
by applying proceeds from sales of parcels of the property toward
repayment of the mortgage and term loan. However, the timing of any
sale is uncertain and could be prolonged by an unfavorable
macroeconomic environment. Our forecast does not incorporate any
property sales."
The negative outlook reflects the potential for a lower rating if
more imminent default risk increases over the next 12 months to the
extent that cash flows don't improve enough to meet high debt
amortization requirements.
S&P could lower the rating if FOCF does not improve to support debt
service levels. This could occur if:
-- Pabst's operating performance remains weak, resulting in EBITDA
interest coverage sustained below 1.5x and weak FOCF that cannot
support its debt amortization requirements, possibly leading to a
covenant default; and
-- S&P reassesses its view of the group's ability or willingness
to support Pabst based on continued credit profile deterioration at
the group level.
S&P could raise the rating if Pabst's EBITDA interest coverage
improves closer to 2x because of better operating performance or
debt repayment with sale proceeds from the Irwindale property. This
could occur if Pabst:
-- Applies proceeds from the property sale to pay down the IBY
mortgage and the Pabst term loan, reducing its leverage and debt
service requirements; and
-- Continues to expand JDCC volumes, while price increases offset
input cost headwinds and non-recurring charges moderate.
ESG credit indicators: E-2, S-2, G-3
BORREGO COMMUNITY: Files for Chapter 11 Due to Dispute With DHCS
----------------------------------------------------------------
The Borrego Community Health Foundation (Borrego Health) has filed
for Chapter 11 bankruptcy protection.
Officials announced that Borrego's legal filing is driven by the
August 19th notification from the State of California Health and
Human Services Agency – Department of Health Care Services (DHCS)
that the state intends to reimpose its 100% payment suspension on
all Borrego Health Medi-Cal services beginning Sept. 29, 2022.
The Chapter 11 process will prevent the DHCS action from taking
effect while also resolving ongoing state and federal
investigations. The action supports Borrego's mission to protect
local healthcare access and meet the unique needs of the
communities they serve.
During the Chapter 11 proceedings, Borrego Health will continue to
operate in the ordinary course of business, officials confirmed.
"Patients will have the same access to their health care provider
and services with no interruption of care. Borrego Health has also
taken the necessary steps to ensure employees do not miss a
paycheck and continue to receive a benefits package. Borrego Health
will continue to pay salaries and fees, purchase supplies and
equipment and ensure access to quality health care during this
process."
Borrego Health provides healthcare services all throughout the
Coachella Valley. The company has clinics in Cathedral City, Palm
Springs, Desert Hot Springs, Indio, Thermal, and just last month
opened its newest clinic in Coachella.
"Unfortunately, the misguided action by DHCS jeopardizes patients
and has led us to make a difficult decision to protect our patients
and their access to care," stated Chief Executive Officer of
Borrego Health, Rose MacIsaac. "Our mission to provide high-quality
local access to those most in need drives us forward and this
filing with the Court will allow us to continue to provide care as
we do today while we secure the future of healthcare for our
patients."
Borrego Health has clinics all throughout Southern California, from
San Bernardino County down to San Diego County. In 2021, Borrego
Health served more than 120,500 patients and had more than 463,000
visits.
About Borrego Community Health Foundation
Borrego Community Health Foundation --
https://www.borregohealth.org/ -- has clinics serving San Diego
County, Mountain Pass Region, Western Riverside Region, Eastern
Coachella Valley Region, and Inland Empire Region. Borrego, as of
the Petition Date, had 24 brick and mortar sites including
administrative sites, two pharmacies and six mobile units covering
a service area consisting of a 250-mile corridor on the eastern
side of San Diego and Riverside Counties, CA.
Borrego Community Health Foundation sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. S.D. Cal. Case No. 22-02384)
on Sept. 12, 2022. In the petition filed by Isaac Lee, as chief
restructuring officer, the Debtor reported assets and liabilities
between $50 million and $100 million.
The Debtor tapped Dentons US LLP as counsel; Ankura Consulting
Group LLC, as financial consultant; and Hooper, Lundy & Bookman PC
as healthcare regulatory counsel. Kurtzman Carson Consultants LLC
is the claims agent.
BOY SCOUTS: Chapter 11 Case Far From Over as Appeals Loom
---------------------------------------------------------
Vince Sullivan of Law360 reports that the 2.5-year-old Chapter 11
case of the Boy Scouts of America is far from over as its recently
issued plan confirmation order is sure to be soon appealed over the
permissibility of third-party releases and the good faith of the
debtor in proposing the plan, experts say.
The U.S. Trustee's Office opposed the nonconsensual third-party
releases of nondebtors during the plan trial earlier this year and
is likely to file an appeal over that aspect of the plan as part of
its years' long effort to curtail the use of this strategy. A group
of nonsettling insurers will also likely rejuvenate their plan
objections.
About Boy Scouts of America
The Boy Scouts of America -- https://www.scouting.org/ -- is a
federally chartered non-profit corporation under title 36 of the
United States Code. Founded in 1910 and chartered by an act of
Congress in 1916, the BSA's mission is to train youth in
responsible citizenship, character development, and self-reliance
through participation in a wide range of outdoor activities,
educational programs, and, at older age levels, career-oriented
programs in partnership with community organizations. Its national
headquarters is located in Irving, Texas.
The Boy Scouts of America and affiliate Delaware BSA, LLC, sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10343) on
Feb. 18, 2020, to deal with sexual abuse claims.
Boy Scouts of America was estimated to have $1 billion to $10
billion in assets and at least $500 million in liabilities as of
the bankruptcy filing.
The Debtors have tapped Sidley Austin LLP as their bankruptcy
counsel, Morris, Nichols, Arsht & Tunnell LLP as Delaware counsel,
and Alvarez & Marsal North America, LLC, as financial advisor.
Omni Agent Solutions is the claims agent.
The U.S. Trustee for Region 3 appointed a tort claimants' committee
and an unsecured creditors' committee on March 5, 2020. The tort
claimants' committee is represented by Pachulski Stang Ziehl &
Jones, LLP, while the unsecured creditors' committee is represented
by Kramer Levin Naftalis & Frankel, LLP.
BOY SCOUTS: Creditors' Committee Members Detail Claims
------------------------------------------------------
In the Chapter 11 cases of Boy Scouts of America and Delaware BSA,
LLC, the law firms of Reed Smith LLP and Kramer Levin Naftalis &
Frankel LLP submitted a first amended verified statement under Rule
2019 of the Federal Rules of Bankruptcy Procedure, to disclose an
updated list of the Official Committee of Unsecured Creditors that
they are representing.
On February 18, 2020, each of the Debtors filed a voluntary
petition for relief under chapter 11 of the Bankruptcy Code with
this Court.
On March 4, 2020, the Office of the United States Trustee for
Region 3 appointed the Committee pursuant to Sections 1102(a) and
(b) of Title II of the United States Code.
The Committee consisted of the following five members: (i) Pension
Benefit Guaranty Corporation, (ii) Girl Scouts of the United States
of America, (iii) Roger A. Ohmstede, (iv) Pearson Education, Inc.,
and (v) Lion Brothers Company, Inc. See Dkt. No. 141.
On August 19, 2022, the Girl Scouts of the United States of America
resigned from the Committee after reaching a settlement with the
Debtors. The United States Trustee has been informed of this
resignation.
On April 24, 2020, the Committee filed its Verified State of
Official Committee of Unsecured Creditors Pursuant to Bankruptcy
Rule 2019 [Dkt. No. 484]. This First Amended Statement amends and
replaces the 2019 Statement.
As of Sept. 14, 2022, the Creditors' Committee members and their
disclosable economic interests are:
Pension Benefit Guaranty Corporation
1200 K. Street, NW
Washington, D.C. 20005
* Contingent, unliquidated claims in an amount greater than
$1,102,000,000 arising from pension obligations of the Debtors.
Roger A. Ohmstede
Rog.sandy@mac.com
* Unsecured claim of at least $512,590.29 arising from the
Restoration Plan.
Pearson Education, Inc.
Attn: Karen Abraham
221 River Street
Hoboken, NJ 07030
* Claims consisting of (i) an unsecured claim of at least
$685,708.00 for unpaid prepetition services; and
(ii) a contract rejection damages claim of at least
$4,379,547.00.
Lion Brothers Company, Inc.
Attn: Susan J. Ganz
300 Red Brook Blvd
Owings Mills, Maryland, 21117
* Unsecured claim of at least $355,795.00 on account of
prepetition trade payables.
The Creditors' Committee reserves the right to amend or supplement
this Verified Statement in accordance with the requirements set
forth in Bankruptcy Rule 2019.
Counsel to the Official Committee of Unsecured Creditors
can be reached at:
REED SMITH LLP
Kurt F. Gwynne, Esq.
Mark Eckard, Esq.
1201 N. Market Street, Suite 1500
Wilmington, DE 19801
Telephone: (302) 778-7500
Facsimile: (302) 778-7575
E-mail: kgwynne@reedsmith.com
kmorales@reedsmith.com
- and -
KRAMER LEVIN NAFTALIS & FRANKEL LLP
Thomas Moers Mayer, Esq.
Rachael Ringer, Esq.
Jennifer Sharret, Esq.
Megan Wasson, Esq.
1177 Avenue of the Americas
New York, NY 10036
Telephone: (212) 715-9100
Facsimile: (212) 715-8000
E-mail: tmayer@kramerlevin.com
rringer@kramerlevin.com
jsharret@kramerlevin.com
mwasson@kramerlevin.com
A copy of the Rule 2019 filing is available at
https://bit.ly/3UbBk7Y at no extra charge.
About Boy Scouts of America
The Boy Scouts of America -- https://www.scouting.org/ -- is a
federally chartered non-profit corporation under title 36 of the
United States Code. Founded in 1910 and chartered by an act of
Congress in 1916, the BSA's mission is to train youth in
responsible citizenship, character development, and self-reliance
through participation in a wide range of outdoor activities,
educational programs, and, at older age levels, career-oriented
programs in partnership with community organizations. Its national
headquarters is located in Irving, Texas.
The Boy Scouts of America and affiliate Delaware BSA, LLC, sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10343) on
Feb. 18, 2020, to deal with sexual abuse claims.
Boy Scouts of America was estimated to have $1 billion to $10
billion in assets and at least $500 million in liabilities as of
the bankruptcy filing.
The Debtors have tapped Sidley Austin LLP as their bankruptcy
counsel, Morris, Nichols, Arsht & Tunnell LLP as Delaware counsel,
and Alvarez & Marsal North America, LLC, as financial advisor. Omni
Agent Solutions is the claims agent.
The U.S. Trustee for Region 3 appointed a tort claimants' committee
and an unsecured creditors' committee on March 5, 2020. The tort
claimants' committee is represented by Pachulski Stang Ziehl &
Jones, LLP, while the unsecured creditors' committee is represented
by Kramer Levin Naftalis & Frankel, LLP.
BRAZOS ELECTRIC: Disclosures, ERCOT Deal Have Interim Approval
--------------------------------------------------------------
Vince Sullivan of Law360 reports that bankrupt Texas electricity
supplier Brazos Electric Power Cooperative Inc. received
conditional approval Tuesday, September 13, 2022, for a Chapter 11
plan disclosure statement centered on a deal with the Electric
Reliability Council of Texas and a sale of the debtor's power
generation assets.
During a hybrid virtual and in-person hearing in Houston, U.S.
Bankruptcy Judge David R. Jones said he was comfortable with where
the case had progressed, and said he would grant conditional
approval of the plan disclosures and schedule a hearing to consider
its final approval alongside a confirmation of the plan itself.
About Brazos Electric Power Cooperative
Brazos Electric Power Cooperative Inc. is a 3,994-megawatt
transmission and generation cooperative which members' service
territory covers 68 counties from the Texas Panhandle to Houston.
It was organized in 1941 and the first cooperative formed in the
Lone Star state with the primary intent of generating and supplying
electrical power. At present, Brazos Electric is the largest
generation and transmission cooperative in the state and is the
wholesale power supplier for its 16 member-owner distribution
cooperatives and one municipal system.
Brazos Electric filed a voluntary petition for relief under Chapter
11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Case No. 21-30725)
on March 1, 2021. At the time of the filing, the Debtor disclosed
assets of between $1 billion and $10 billion and liabilities of the
same range.
Judge David R. Jones oversees the case.
The Debtor tapped Norton Rose Fulbright US, LLP as bankruptcy
counsel, Foley & Lardner LLP and Eversheds Sutherland US LLP as
special counsel, Collet & Associates LLC as investment banker, and
Berkeley Research Group, LLC as financial advisor. Ted B. Lyon &
Associates, The Gallagher Law Firm, West & Associates LLP, Butch
Boyd Law Firm and Boyd Smith Law Firm, PLLC serve as special
litigation counsel. Stretto is the claims and noticing agent.
The U.S. Trustee for Region 7 appointed an official committee of
unsecured creditors in the Debtor's case on March 15, 2021. The
committee is represented by the law firms of Porter Hedges, LLP and
Kramer, Levin, Naftalis & Frankel, LLP. FTI Consulting, Inc. and
Lazard Freres & Co. LLC serve as the committee's financial advisor
and investment banker, respectively.
BROWNIE'S MARINE: Grosses $205K From Sale of Units
--------------------------------------------------
On Sept. 6, 2021 and Sept. 7, 2021, Brownie's Marine Group, Inc.
sold 208,333 units and 8,333.333 units, respectively, for a
purchase price of $0.024 per unit in private offerings pursuant to
subscription agreements to certain "accredited investors," as
defined in Regulation D under the Securities Act of 1933, as
amended. Each unit consisted of one share of the Company's common
stock, par value $0.0001 per share and a two-year warrant to
purchase one share of Common Stock at an exercise price of $0.024
per share for aggregate gross proceeds to the Company of $205,000.
The Company intends to utilize the net proceeds from the sales of
the units for working capital and general corporate purposes.
The Warrants are exercisable for cash only. The number of Warrant
Shares to be issued upon exercise of the Warrants is subject to
adjustment for subdivision or consolidation of shares and certain
other corporate events.
About Brownie's Marine
Headquartered in Pompano Beach, Florida, Brownie's Marine Group,
Inc., is the parent company to a family of innovative brands with a
unique concentration in the industrial, and recreational diving
industry. The Company, together with its subsidiaries, designs,
tests, manufactures, and distributes recreational hookah diving,
yacht-based scuba air compressors and nitrox generation systems,
and scuba and water safety products in the United States and
internationally. The Company has three subsidiaries: Trebor
Industries, Inc., founded in 1981, dba as "Brownie's Third Lung";
BLU3, Inc.; and Brownie's High-Pressure Services, Inc., dba LW
Americas. The Company is headquartered in Pompano Beach, Florida.
Brownie's Marine reported a net loss of $1.59 million for the year
ended Dec. 31, 2021, compared to a net loss of $1.35 million for
the year ended Dec. 31, 2020. As of June 30, 2022, the Company had
$5.40 million in total assets, $2.56 million in total liabilities,
and $2.83 million in total stockholders' equity.
Boynton Beach, Florida-based Liggett & Webb, P.A., the Company's
auditor since 2018, issued a "going concern" qualification in its
report dated April 22, 2022, citing that the Company has
experienced net losses and has an accumulated deficit. These
factors raise substantial doubt about the Company's ability to
continue as a going concern.
CABLEVISION LIGHTPATH: S&P Affirms 'B+' Issuer Credit Rating
------------------------------------------------------------
S&P Global Ratings revised its outlook on Cablevision Lightpath LLC
to negative from stable and are affirmed all of its ratings on the
company, including its 'B+' issuer credit rating.
S&P's view of Lightpath's stand-alone credit profile (SACP)
remains'b'.
The negative outlook reflects the possibility that S&P could
eliminate the one-notch uplift that Lightpath receives from a
stronger parent, if it lowers Altice USA's rating any further.
Lightpath's parent, Alice USA's (Altice USA Inc.) issuer credit
rating (ICR) was lowered to 'BB-' with a negative outlook from 'BB'
with a stable outlook.
S&P said, "We could potentially lower Lightpath ICR ('B+') by
one-notch based on our view of the group credit profile (GCP). We
lowered the GCP, which is primarily driven by our ratings at Altice
given its considerable earnings contribution to the group, to 'bb-'
from 'bb', in line with our recent downgrade of Altice USA. The
negative outlook on Altice reflects uncertainty around earnings and
subscriber trends for the next 12-18 months that could potentially
result in a lower GCP, which would trigger a one-notch downgrade at
Lightpath given its status within the group.
"We consider Lightpath to be moderately strategic to Altice USA
Inc. and currently inpute a one-notch of rating uplift for
potential support. This is because we believe there are operational
incentives to induce support under financial stress. Altice's
residential network runs adjacent to Lightpath's enterprise
network, with considerable overlap that we believe would encourage
Altice to retain control to ensure proper levels of investment that
enable reliable network performance. However, we do not equalize
the rating with Altice because there are no contractual obligations
such as cross-default provisions or guarantees among the different
credit pools within Altice to create an incentive for support
during stress.
"The company's elevated capital spending for its fiber expansion
will likely cause its net leverage to remain in the low- to mid-6x
area through 2023, which is supportive of Lightpath's SACP. We
believe Cablevision Lightpath will need to use about $10
million-$20 million of balance sheet cash to partially finance its
remaining capital spending program for 2022. In 2023, we believe
the company will need about $40 million-$60 million of incremental
balance sheet cash, more than in 2022, as its capital expenditure
(capex)-to-revenue ratio increases to the to the 40% area (from
around 33% in 2022) on success-based spending to support projects
in Boston and Queens. Our base-case forecast assumes that
low-single digit percent area increases in the company's earnings
will be offset by modestly higher adjusted net debt on lower cash
balances such that its S&P Global Ratings-adjusted net leverage
remains around 6.3x area through 2023.
"The negative outlook reflects the potential for the elimination of
ratings uplift that Lightpath receives from its parent if Altice
USA's credit profile deteriorates further.
"We will lower our ratings at Lightpath one notch to the SACP if if
we lower our ratings at Altice USA.
"Although less likely, we could lower the SACP if debt to- EBITDA
were to rise above 7x from greater competition, higher churn or
pricing pressure, leading to lower-than-expected EBITDA.
"We will revise our ratings back to stable if we revise our ratings
outlook at Altice USA to stable."
ESG credit indicators: E-2, S-2, G-2
CARVER BANCORP: Robin Nunn Appointed as Director
------------------------------------------------
The Board of Directors of Carver Federal Savings Bank, the
wholly-owned subsidiary of Carver Bancorp, Inc., following receipt
of supervisory non-objection by the Office of the Comptroller of
the Currency, appointed Robin L. Nunn to the Board of Directors of
the Bank. Ms. Nunn's appointment or election to the Board of
Directors of the Company remains subject to the receipt of
supervisory non-objection by the Board of Governors of the Federal
Reserve.
Robin L. Nunn is partner and co-head of the Banking Group at
Morgan, Lewis & Bockius LLP since 2020. Prior to that, Ms. Nunn
was partner and Chair of the Consumer Financial Services Group at
Dechert LLP. From 2017 to 2019, Ms. Nunn was partner and co-chair
of the Supervision, Enforcement and Litigation Group at Davis
Wright Tremaine. Ms. Nunn has also held senior legal positions
with Capital One Financial Corporation and American Express. She
began her legal career as a Law Clerk for the Hon. Barrington
Parker of the U.S. Court of Appeals for the Second Circuit, and
then was a Senior Associate with Sullivan & Cromwell LLP. Ms. Nunn
received her BA from Dartmouth College and her JD from the
University of Chicago Law School. She is a graduate of the
Executive Development Leadership Program of the Harvard Business
School.
The Bank's Board of Directors has appointed Ms. Nunn to serve for a
three-year term.
About Carver Bancorp
Headquartered in New York, Carver Bancorp, Inc., is the holding
company for Carver Federal Savings Bank, a federally chartered
savings bank. The Company conducts business as a unitary savings
and loan holding company, and the principal business of the Company
consists of the operation of its wholly- owned subsidiary, Carver
Federal. Carver Federal was founded in 1948 to serve
African-American communities whose residents, businesses and
institutions had limited access to mainstream financial services.
The Bank remains headquartered in Harlem, and predominantly all of
its seven branches and four stand-alone 24/7 ATM centers are
located in low- to moderate-income neighborhoods.
Carver Bancorp reported a net loss of $847,000 for the year ended
March 31, 2022, a net loss of $3.90 million for the year ended
March 31, 2021, a net loss of $5.42 million for the year ended
March 31, 2020, and a net loss of $5.94 million for the year ended
March 31, 2019. As of March 31, 2022, the Company had $735.31
million in total assets, $680.23 million in total liabilities, and
$55.09 million in total equity.
CD&R SMOKEY: S&P Alters Outlook to Negative, Affirms 'B' ICR
------------------------------------------------------------
S&P Global Ratings revised the outlook to negative from stable and
affirmed its 'B' issuer credit rating on CD&R Smokey Buyer Inc.
(Radio Systems or RSC).
S&P said, "At the same time, we affirmed the company's 'B' senior
secured issue-level ratings with an unchanged recovery rating of
'3', indicating our expectation of meaningful recovery in the event
of a payment default (50% rounded estimated recovery).
"The negative outlook reflects the risk of leverage remaining above
7x through fiscal 2023 if sales volumes remain weak beyond the next
couple of quarters in a possible economic slowdown or if debt
balances remain elevated from ongoing dealer acquisitions."
The outlook revision to negative reflects higher-than-expected
leverage from a combination of input cost inflation and bolt-on
dealer acquisitions amid increasing economic uncertainty Sales for
the six months ended June 30, 2022, increased 4.2% year over year
from a combination of the company's ongoing dealer acquisitions in
its invisible fence segment and prices increases to offset input
cost inflation. Still, first-half EBIDA margin contracted 440 basis
points (bps) year over year to 17.8% as the company faces
significant input cost inflation; the most acute area being freight
costs for which rates more than doubled at their peak levels.
Higher labor costs because of increased personnel from its dealer
acquisitions also resulted in margin compression given that
business requires higher on-field service personnel and
installation crews. In addition to the margin compression, the
company's working capital borrowings remain elevated for higher
cost inventories, and it has borrowed an incremental $30 million
primarily to fund ongoing invisible dealer fence acquisitions. The
combination of the weaker margins and higher debt balances resulted
in debt to EBITDA of 7.1x for the 12-month ended June 30, 2021,
compared with a ratio of 5.2x a year earlier.
Although margins should sequentially rebound as four price
increases have been taken since May of last year and as freight
costs continue to decline closer to their historical levels, the
company's various pet accessory products are facing retailer
inventory resets as economic growth slows and consumer
discretionary pet purchases decline. If these headwinds persist
well into fiscal 2023, leverage may not decline below 7x next year
as we currently expect.
S&P said, "We expect free cash flow to be negligible this year
because of built-up inventories, but a continued unwinding of
working capital next year should restore positive free operating
cash flow (FOCF) After significant working capital increases
(primarily inventory) last year, the company used cash of about $20
million through the first half resulting in negative free operating
cash flow of about $14 million. Although we expect much of the
built-up inventories to reduce by fiscal year-end, we are still
projecting largely break even FOCF and therefore no material debt
reduction. Based on these expectations and our expectations for
only a modest sequential second half rebound in EBITDA from the
company's pricing actions, we believe leverage will approach 7.4x
at fiscal end 2022. Working capital needs should continue declining
in 2023 and allow the company to generate significant FOCF for debt
repayment next year if margin pressures ease with lower inflation
and if the sequential sales volume declines we expect in the coming
quarters don't persist into next year. Our base case forecast
includes debt leverage approaching 6.5x by fiscal year-end 2023,
albeit with a fair degree of risk.
Despite good profitability and product development capabilities,
RSC has a narrow focus and faces periodic supply chain risks
related to outsourcing business model with a narrow supplier base.
RSC focuses on higher-margin, technologically advanced, growing
categories such as wireless pet containment and sport electronics,
where innovation is important. The company's strong patent
portfolio enables it to maintain some pricing power leading to
above-average margins. RSC also benefits from increased scale and
improving product and brand diversity from tuck-in acquisitions and
the company has a track record of successfully integrating new
businesses and improving their scope substantially. While the
company also has modest customer concentration with the top five
customers contributing more than 50% of total sales, S&P believes
the channel shift to internet retailing has significantly expanded
the reach of Radio Systems' products to end users while enabling
better customer service and improving brand perception.
Nevertheless, the company's business risk assessment is constrained
by risks related to outsourcing substantially all of its
manufacturing and warehousing to third parties with more than 60%
of total supplies coming from top five suppliers, a large
proportion of which are based in China. Thus, possible earnings
weakness from supply chain disruptions is an ongoing risk to the
company's business. In addition, the company has a narrow product
focus in the highly competitive and discretionary pet supplies
industry and has limited bargaining power given its relatively
small scale.
The negative outlook reflects the risk of leverage remaining above
7x through fiscal 2023 if economic and operating headwinds are more
pronounced than anticipated or if debt balances remain elevated
from ongoing dealer acquisitions.
S&P could lower the ratings if any of the following reasons keep
debt to EBITDA above 7x by the second half of 2023:
-- A larger-than-expected economic slowdown results in material
revenue declines that persists well into next year;
-- Renewed supply chain disruptions keep margins from returning to
historical levels and prevent working capital from unwinding
thereby causing a second consecutive year without positive FOCF;
-- Acquisitions are much larger than our current expectations of
about $30 million per year.
S&P could revise the outlook to stable if the company reduces and
sustains leverage below 7x for several consecutive quarters. This
could occur if:
-- Annual acquisitions remain near or below $30 million;
-- Sales do not materially decline because of a significant
economic downturn; and
-- Positive FOCF is restored enabling the company to repay its
working capital borrowings built up over the past several
quarters.
ESG credit indicators: E2, S2, G-3(Governance Structure)
CELSIUS NETWORK: FTC Set to Join Bankruptcy Case
------------------------------------------------
Ali Raza of Inside Bitcoins reports that the U.S. Federal Trade
Commission (FTC) is set to join the ongoing bankruptcy case for the
Celsius crypto lending firm. The FTC has requested copies of the
relevant documents filed with the case.
On Sept. 13, 2022, two lawyers representing the FTC, Katherine
Johnson, and Katherine Aizpuru, requested the judge presiding over
the case to permit them to represent the FTC in the case. The
lawyers requested a copy of the relevant documents related to the
case, but this request is yet to be granted.
The FTC has yet to formally announce its intentions behind joining
the Celsius bankruptcy case, with the request being first reported
by CoinDesk. However, it is not the first time the regulator has
filed a request to join a bankruptcy proceeding.
In 2014, the agency got involved in a bankruptcy case for an
education technology firm. At the time, the FTC argued that
sensitive customer details could be exposed during the company's
process of winding up. The FTC, which mainly deals in consumer
protection, could make the Celsius bankruptcy case more complex.
Regulatory Attention
Celsius halted withdrawals in June 2022 and later filed for
bankruptcy in July. Since filing the bankruptcy case, several
regulatory bodies in the US have shown interest in the bankruptcy
case as they aim to control the process and outcome of the
proceedings.
State regulators in Texas, Vermont, and Wisconsin seek more
transparency in the Celsius bankruptcy proceedings. The state
regulators have argued that Celsius was not truthful to its
customers and had misled them for months before filing for
bankruptcy.
The Vermont filing provides an instance where the Celsius CEO, Alex
Mashinsky, assured customers that their funds were safe on May 11,
2022 while the company had made a loss of around $454M between May
2 and May 12, 2022.
The filing made by Texas is also similar, saying that Celsius froze
customer withdrawals five days after releasing a blog post saying
it would honor all withdrawal requests. Celsius operations are
currently being investigated by 40 state securities regulators over
various issues such as securities fraud, market manipulation,
unregistered securities, and mismanagement.
The regulators support the request by the US Department of Justice
to have an independent examiner who will ensure Celsius gives
creditors accurate information.
According to the DoJ, having a court-appointed examiner would
provide an independent review of the actions and finances of
Celsius. The DoJ also said the examiner would offer clarity on the
confusion and mistrust surrounding the lender's bankruptcy.
Last week, Celsius made a filing in the bankruptcy court saying
that it would comply with the request to have an independent
examiner. However, the independent review would have a limited
scope than the DoJ had initially requested.
According to the company, it welcomed an independent investigation
by the court but argued that the initial proposal made by the DoJ
would have prolonged the bankruptcy case for months. The proposal
made by the bankruptcy lender would support an independent review
of the firm's cryptocurrency holdings, compliance with tax
obligations, asset transfer to different accounts, and energy costs
of its Bitcoin mining operations.
About Celsius Network
Celsius Network LLC -- http://www.celsius.network/-- is a
financial services company that generates revenue through
cryptocurrency trading, lending, and borrowing, as well as by
engaging in proprietary trading.
Celsius helps over a million customers worldwide to find the path
towards financial independence through a compounding yield service
and instant low-cost loans accessible via a web and mobile app.
Celsius has a blockchain-based fee-free platform where membership
provides access to curated financial services that are not
available through traditional financial institutions.
The Celsius Wallet claims to be one of the only online crypto
wallets designed to allow members to use coins as collateral to get
a loan in dollars, and in the future, to lend their crypto to earn
interest on deposited coins (when they're lent out).
Crypto lenders such as Celsius boomed during the COVID-19 pandemic,
drawing depositors with high interest rates and easy access to
loans rarely offered by traditional banks. But the lenders'
business model came under scrutiny after a sharp sell-off in the
crypto market spurred by the collapse of major tokens terraUSD and
luna in May 2022.
New Jersey-based Celsius froze withdrawals in June 2022, citing
"extreme" market conditions, cutting off access to savings for
individual investors and sending tremors through the crypto
market.
The list of major crypto firms that have filed for bankruptcy
protection in 2022 now includes Celsius Network, Three Arrows
Capital and Voyager Digital.
Celsius Network LLC and its subsidiaries sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No.
22-10964) on July 14, 2022. In the petition filed by CEO Alex
Mashinsky, the Debtor estimated assets and liabilities between $1
billion and $10 billion.
Kirkland & Ellis LLP is serving as legal counsel, Centerview
Partners is serving as financial advisor, and Alvarez & Marsal is
serving as restructuring advisor to Celsius.
Stretto, the claims agent, maintain the page
https://cases.stretto.com/celsius
CHG HEALTHCARE: Moody's Affirms B2 CFR & Alters Outlook to Stable
-----------------------------------------------------------------
Moody's Investors Service affirmed the B2 Corporate Family Rating
and B2-PD Probability of Default Rating of CHG Healthcare Services,
Inc. Moody's also affirmed the B1 rating of the company's senior
secured first lien credit facility consisting of a term loan and a
revolver. At the same time, Moody's changed the outlook to stable
from negative.
The rating affirmation reflects the company's improving business
which experienced a temporary downturn in 2020 and early 2021. The
company has regained its capacity to generate consistent positive
free cash flow and it remains the leader in the locum tenens
industry subsector.
The outlook change to stable reflects CHG's moderating financial
leverage profile. The company's debt/EBITDA spiked above 8 times in
late 2021 when it paid a substantial one-time dividend, partially
funded by incremental debt. The company has brought down its
financial leverage to 5.6 times at the end of June 2022, thus
supporting a change in outlook.
Ratings affirmed:
Issuer: CHG Healthcare Services, Inc.
Corporate Family Rating, affirmed at B2
Probability of Default Rating affirmed at B2-PD
$150 million senior secured first lien revolving
credit facility expiring in 2026, affirmed at B1 (LGD3)
$1.58 billion senior secured first lien term loan
due 2028, affirmed at B1 (LGD3)
Outlook action:
Issuer: CHG Healthcare Services, Inc.
Outlook changed to stable from negative
RATINGS RATIONALE
CHG's B2 CFR reflects its high leverage and niche focus in the
locum tenens business. With improved business volumes, Moody's
expects that the company's debt/EBITDA will remain in 5.0-6.0 times
range. The company's CFR is constrained by its aggressive financial
policies reflected by its recent history of payment of shareholder
dividends. The company's ratings benefit from good scale and
leading market position in the fragmented locum tenens market,
positive long-term fundamental demand trends in locum tenens, and a
demonstrated track record of good cash flow and earnings growth.
CHG further benefits from diversification of physician specialty
and minimal concentration across customers.
CHG rating is constrained by the company's aggressive financial
policies. In the three years prior to the pandemic (i.e 2017-2019),
the company has paid out approximately $237 million in dividends.
The company did not pay any dividend in 2020, which was most
affected year by the pandemic. However, it resumed dividends with a
$560 million payout in September 2021, a portion of which was
funded by debt raised through the refinancing transaction. Moody's
expects the company to continue to pay dividends with cash on
hand.
Moody's views CHG's liquidity as very good. Liquidity is supported
by -$55 million of cash on hand and -$140 million availability
under the company's $150 million revolver. Moody's expects CHG to
generate $160-$180 million in cash flow from operations in the next
12 months, which will easily cover $55-$65 million in capex, and
approximately $16 million in mandatory debt amortization.
CHG's B1 rating on the senior secured first lien revolver and term
loan is one notch above its B2 CFR. This reflects the first loss
absorption provided by a material amount of junior debt in the form
of $430 million of junior second lien debt due 2029 (not rated).
Social and governance considerations are material to the rating,
given the substantial implications for public health and safety.
Although CHG does not face direct reimbursement risk, pricing
pressure placed on its clients as a result of regulatory changes
could partially flow through to the company as clients look to
reduce costs. This could also lead to weakened volume growth as
providers may become more prudent in their use of locum tenens.
Governance risks include CHG's aggressive financial policies
reflecting its private equity ownership and debt-funded dividend
payout.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating could be downgraded if CHG's financial policy becomes
more aggressive, liquidity deteriorates, and demand for CHG's
services/supply of locum tenens physicians declines on a sustained
basis. While the historical level of dividend payout is already
incorporated in Moody's analysis, any outsized dividend payout will
pressure the company's ratings. Quantitatively, if the company's
debt/EBITDA is sustained above 6.0 times, the rating could be
downgraded.
Moody's could upgrade the rating if CHG reduces its leverage on a
sustained basis such that total debt/EBITDA is maintained below 5.0
times. An upgrade would also require the company to maintain strong
organic earnings growth and a good liquidity profile with growing
levels of free cash flow.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
CHG is a provider of temporary healthcare staffing services to
hospitals, physician practices and other healthcare settings in the
United States. CHG derives the majority of its revenue from
temporary physician staffing but also provides travel nurse, allied
health, and permanent placement services. CHG reported $2.5 billion
in revenues for the twelve months ended June 30, 2022.
CHILLKING CHILLERS: Files Subchapter V Case
-------------------------------------------
Chillking Chillers Inc filed for chapter 11 protection in the
Western District of Texas. The Debtor elected on its voluntary
petition to proceed under Subchapter V of chapter 11 of the
Bankruptcy Code.
The Debtor manufactures water chillers and other related products.
It was formed in 2009. Its business is located in Bastrop, Texas.
The Debtor is a family-owned and operated business. Supply chain
disruptions caused by the Covid-19 pandemic have made it difficult
for Debtor to obtain the components necessary to fulfill its
orders. In order to cope with cash flow shortages brought on by
delays in completing orders and receiving payments, the Debtor
borrowed money from two merchant cash advance lenders. The terms
required by these lenders were very onerous and strangled the
Debtor's ability to continue operating.
According to court filings, Chillking Chillers estimates between 1
and 49 unsecured creditors. The petition states that funds will be
available to unsecured creditors.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
Oct. 11, 2022, at 10:00 a.m. via Telephone (866) 711-2282, Passcode
3544189#(Wright, Gary).
About Chillking Chillers
Chillking Chillers Inc. is a manufacturer of water chillers in
Texas.
Chillking Chillers filed a petition for relief under Subchapter V
of Chapter 11 of the Bankruptcy Code (Bankr. W.D. Tex. Case No.
22-10594) on Sept. 11, 2022. In the petition filed by Patrick
King, as president, the Debtor reported liabilities between
$500,000 and $1 million.
Eric Terry has been appointed as Subchapter V trustee.
The Debtor is represented by Stephen W. Sather of Barron &
Newburger, PC.
CHURCH OF THE DISCIPLES: Nov. 7 Hearing on Disclosure Statement
---------------------------------------------------------------
Judge Michelle M. Harner has entered an order that the hearing to
consider the approval of the Disclosure Statement of Church of the
Disciples will be held on Nov. 7, 2022, at 10:00 a.m., by
videoconference.
Oct. 17, 2022, is fixed as the last day for filing and serving
written objections to the Disclosure Statement.
About Church of the Disciples
Church of the Disciples, which owns a church at Harford Road,
Baltimore, Maryland, filed a petition for Chapter 11 protection
(Bankr. D. Md. Case No. 20-18368) on Sept. 11, 2020, listing up to
$50,000 in assets and up to $100,000 in liabilities. John B.
William, pastor, signed the petition.
Judge Michelle M. Harner oversees the case.
The Debtor tapped Meridian Law, LLC, as legal counsel.
CITY BREWING: S&P Downgrades ICR to 'B-', Outlook Negative
----------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on City Brewing
Co. LLC to 'B-' from 'B' and assigned a negative outlook. S&P also
lowered its issue level rating on its $850 million senior secured
term loan B to 'B-' from 'B'.
The negative outlook reflects the potential for a lower rating if
manufacturing volumes don't rebound and S&P believes City Brewing's
capital structure will no longer be sustainable.
Ongoing operating challenges will likely weigh on financial
performance into 2023. Labor and supply chain disruptions along
with softer than expected demand for hard seltzers continue to
pressure City Brewing's top and bottom line. Labor shortages have
weakened the company's capacity utilization rates and operating
efficiency. The supply chain also remains challenged, primarily due
to difficulties accessing packaging materials and some key
ingredients that are shortening line runs. Supply chain disruptions
also delayed the delivery of equipment to the company's Irwindale
facility, postponing the ramp up of some new product lines by
several months and causing City Brewing to miss key summer selling
volumes.
Separately, hard seltzer sales continue to lag expectations despite
lapping the category's inventory reset earlier this year. S&P
believes the softness is mostly due to the rise of other ready to
drink (RTD) spirits beverages, as well as some shift in volumes to
premium light beers. City Brewing is onboarding new customers in
higher growth categories to offset softness in hard seltzers, but
this has also contributed to some operating inefficiencies given
initial onboarding costs, less predictable orders, and shorter lead
times while still experiencing a shortage in materials.
While City Brewing is generally able to pass on all materials- and
packaging-related costs to customers, it absorbs conversion costs
(labor, energy, utilities, etc.) and factors those costs into its
fees, which reset once annually. Its absorption of higher labor and
energy costs significantly pressure its gross profit margins. S&P
said, "As a result of these higher conversion costs and other
supply chain disruptions, S&P Global Ratings' adjusted leverage was
close to 14x for the trailing 12-month period ended June 30, 2022,
and we forecast it will remain high--around 10x--at the end of
fiscal 2022, well below our prior expectations. We expect
significant profit improvement in 2023 as customer fees reset and
capture the higher labor and energy costs, City Brewing ramps up
new customers particularly at its Irwindale facility, and it laps
the initial severe effect of the hard seltzer inventory reset. We
expect this will result in leverage improving to below 7x, which
also lags our prior expectations. Moreover, our 2023 forecast
assumes several operating headwinds will be resolved when they may
not, while a weakening economic outlook further adds risks to our
forecast."
Liquidity could be constrained in the near term. S&P expects
negative free cash flow generation through 2023 as City Brewing
continues to focus on building out the Irwindale facility and
invest in growth. It pulled several levers to manage its liquidity
position, including executing a sale leaseback of a property,
entering into several equipment lease agreements, and tapering back
its capital expenditures (capex) at Irwindale to better align
production with demand. These actions allowed City Brewing to
reduce its reliance on its $122 million revolver to fund its growth
investments. However, the company had about $14 million outstanding
under the revolver as of June 30, 2022, and absent additional
outside equipment financing, S&P expects it will require additional
borrowings over the next several quarters due to weaker than
expected operating cash flow that will not cover the growth capex.
At the same time, the company's springing first-lien net leverage
covenant will likely constrain revolver borrowings. Our base-case
forecast assumes very limited cushion to the 7.15x covenant, and
the covenant triggers when borrowings exceed 30% aggregate
revolving commitments ($36.6 million). Without additional equipment
lease financing transactions to minimize revolver borrowing needs,
it could spring and breach the covenant until operating performance
improves and FOCF rebounds, which is unlikely until 2023.
While City Brewing's long-term growth prospects remain favorable,
near-term risks could cause its capital structure to become
unsustainable. S&P said, "We continue to have a favorable long-term
outlook for the business given the company's broad set of
capabilities and ability to pivot to growth categories such as RTD
spirits and functional energy drinks. We believe City Brewing's
healthy revenue growth over the next several years will be
underpinned by sustained consumer demand for flavored malt
beverages (FMB) and the full ramp-up of its Irwindale facility,
including the gradual onboard of Pabst Blue Ribbon products, which
should provide a predictable revenue stream."
Despite the favorable long-term industry fundamentals, City
Brewing's narrow focus as a contract manufacturer of FMB and RTD
products demonstrated its vulnerability to current market
conditions. Existing supply chain constraints and labor shortages
caused a significant decline in capacity utilization rates and
profit margins that are unsustainable in the long term. In
addition, City Brewing continues to have a significant, albeit
moderating, customer concentration; its top two customers account
for over 57% of sales. The company's profitability could further
weaken if its large customers underperform or decide to take
brewing in-house. This risk was reflected in the company's
performance in late 2021 and early 2022, when its top customers
pulled back on hard seltzer orders due to weaker-than-expected
demand.
The negative outlook reflects potential for a lower rating if City
Brewing's operating performance does not improve and we believe its
capital structure will become sustainable.
S&P could lower the ratings if it believes City Brewing will
sustain EBITDA interest coverage below 1.5x, violate its springing
leverage covenant, or fail to maintain a path to deleveraging. This
could occur if:
-- Supply chain constraints and labor shortages persist well into
2023, causing continued disruptions and weakened capacity
utilization rates;
-- City Brewing cannot onboard new customers at a sufficient pace
to offset hard seltzer sales declines;
-- Key customers decide to bring production in-house; or
-- Costs to ramp up production at its Irwindale facility are
higher than expected.
S&P could revise the outlook to stable if City Brewing stabilizes
performance, resulting in sequential deleveraging, positive FOCF,
and EBITDA interest coverage closer to 2x. This could occur if the
company:
-- Successfully staffs, trains, and retains talent, resulting in
improved throughput at its plants.
-- Recovers lost production volume through new customer
relationships; and
-- Completes the ramp up of its Irwindale facility without
additional unforeseen costs or start-up delays.
ESG credit indicators: E-2, S-2, G-2
CORRELATE INFRASTRUCTURE: Signs LOI to Acquire Aegis Renewable
--------------------------------------------------------------
Correlate Infrastructure Partners Inc. has entered into a
nonbinding letter of intent to acquire Vermont-based Aegis
Renewable Energy Inc. Aegis is a commercial, industrial and
community solar company focused on solar project development and
EPC (engineering, procurement, construction) services in the
eastern United States and is a member of the Amicus Solar
Cooperative Network.
Upon completion, Correlate's acquisition of Aegis Renewable Energy
will provide the company strategic abilities to capitalize on the
burgeoning Northeast renewable energy market. With expertise in
simplifying energy optimization and sustainability, Correlate
intends to utilize Aegis' deep regulatory knowledge, project
fulfillment, and operations and maintenance capabilities to deliver
on and expand its project backlog in the region.
Todd Michaels, Correlate's CEO and president, stated, "Upon
completion of this key acquisition, Correlate will add to its
highly experienced team and will bring proven success to the
Northeast market as a leading renewable energy project developer
while creating a compelling fit for expanding Correlate's energy
optimization platform."
The acquisition will also conclude an exhaustive year-long search
by Aegis.
"Our search was focused on finding the best strategic fit to match
our growth, culture, diversification, and strength of leadership
goals," shared Nils Behn, CEO of Aegis. "After rejecting several
offers from other companies we were approached by Correlate and it
became apparent very quickly that they hit the mark on all fronts.
We couldn't be happier with our decision to join their team."
Strategic Deal Highlights:
The proposed acquisition is expected to provide numerous strategic
and financial benefits, furthering Correlate's goal of being the
leading provider of clean energy and grid optimization services
across all North America. The Company believes the Aegis
acquisition will enhance its sales, development and construction
capabilities via:
* Expanded national leadership in key Northeast markets via a
highly experienced construction and engineering team with proven
track records in profitable scale.
* Expertise in regional permitting and interconnection for
commercial and community solar markets.
* Development of the Correlate National Center of Excellence
centered around rapid project design and best-in-class project
management processes and systems.
"This proposed Aegis Renewable Energy acquisition will bolster
Correlate's Northeast presence with a top-notch team that has been
successfully executing commercial and community-scale solar energy
systems for the past 11 years," noted Channing Chen, CFO of
Correlate. "In addition to a strong regional presence, the team's
capabilities and expertise can be leveraged more broadly to help
execute opportunities nationally and align with Correlate's core
values and objectives."
Chen added, "We intend to move toward the execution of a definitive
acquisition agreement and the closing of the Aegis transaction as
soon as due diligence has concluded and closing conditions have
been achieved by all parties."
The proposed acquisition was previously announced on the Form 8-K
filing on Aug. 25, 2022, and is currently anticipated to close in
Q4 2022. The proposed acquisition is expected to further
accelerate Correlate's already impressive quarter-over-quarter
results while bringing Correlate's commitment to excellence and
sustainability to the entire Northeastern United States.
About Correlate
Correlate Infrastructure Partners Inc. (OTCQB: CIPI), formerly
Triccar Inc., through its two subsidiaries, Correlate and Solar
Site Design, offers a complete suite of proprietary clean energy
assessment and fulfilment solutions for the commercial real estate
industry. The Company believes scaling distributed clean energy
solutions is critical in mitigating the effects of climate change.
Correlate reported a net loss of $90,249 for the year ended Dec.
31, 2021, compared to a net loss of $184,388 for the year ended
Dec. 31, 2020. As of June 30, 2022, the Company had $2.74 million
in total assets, $3.21 million in total liabilities, and a total
stockholders' deficit of $463,504.
Dallas, Texas-based Turner, Stone & Company, L.L.P., the Company's
auditor since 2006, issued a "going concern" qualification in its
report dated April 14, 2022, citing that the Company has suffered
recurring losses since inception and has no generated positive cash
flows from operations both of which raise substantial doubt about
its ability to continue as a going concern.
DAVITA INC: Moody's Cuts CFR to Ba3 & Sr. Unsecured Notes to B1
---------------------------------------------------------------
Moody's Investors Service downgraded DaVita, Inc.'s Corporate
Family Rating to Ba3 from Ba2 and the Probability of Default Rating
to Ba3-PD from Ba2-PD. Moody's also downgraded the senior unsecured
rating to B1 from Ba3 and affirmed the senior secured rating at
Ba1. At the same time, Moody's downgraded the Speculative Grade
Liquidity to SGL-2 from SGL-1, signifying good liquidity. The
outlook is stable.
The ratings downgrade reflects DaVita's aggressive financial
policies and deterioration in liquidity - as evidenced by the
recent revolver draw to fund the share buyback – at a time when
the US dialysis business is facing multiple headwinds. These
include challenges to grow earnings caused by lower treatment
volumes due to the pandemic, operating costs inflation, and
on-going investment in value-based care Integrated Kidney Care
("IKC"). As a result, Moody's expects leverage to remain high,
between 4.5-5.0x over the next 12-18 months.
Governance considerations are material to the rating action.
DaVita's active share buyback strategy is aggressive and favors
shareholders at the expense of creditors. Furthermore, Moody's
expects that the company may continue to use debt to finance its
share repurchases, which will contribute to elevated leverage and
erode liquidity.
Affirmations:
Issuer: DaVita Inc.
Senior Secured Bank Credit Facilities, Affirmed Ba1 (LGD2)
Downgrades:
Issuer: DaVita Inc.
Corporate Family Rating, Downgraded to Ba3 from Ba2
Probability of Default Rating, Downgraded to Ba3-PD from Ba2-PD
Speculative Grade Liquidity Rating, Downgraded to SGL-2 from
SGL-1
Senior Unsecured Global Notes, Downgraded to B1 (LGD5) from Ba3
(LGD5)
Outlook Actions:
Issuer: DaVita Inc.
Outlook, Remains Stable
RATINGS RATIONALE
DaVita Inc.'s Ba3 CFR is constrained by the company's moderately
high financial leverage – with debt/EBITDA at 4.7x as of June 30,
2022 -- and its heavy reliance on commercially insured dialysis
patients for the vast majority of profits and free cash flow.
DaVita will continue to be challenged to maintain a sufficiently
large commercially insured end stage renal disease (ESRD) patient
population to sustain its profitability. ESRD patients
automatically convert to Medicare after a maximum of 33 months on
dialysis. DaVita is reimbursed by Medicare at a fraction of what it
earns from commercial payors. The CFR also reflects the company's
near total reliance on the ESRD market which makes the company
vulnerable to potential unfavorable market developments. These
include further slowing in the growth of ESRD patient volumes and
uncertainties regarding the availability of charitable premium
assistance for dialysis patients. DaVita also faces uncertainties
around the potential implementation of new payment models designed
to accelerate penetration into the home dialysis setting and
increase the supply of healthy kidneys for transplant.
The Ba3 CFR is supported by the company's considerable scale and
extensive network of dialysis outpatient clinics across 46 US
states. It is also supported by the recurring revenue stream
attributed to dialysis, as the treatment is critically important to
patients who require treatment three times per week indefinitely.
The CFR also reflects DaVita's robust free cash flow and good
liquidity.
The stable outlook reflects the underlying stability of DaVita's
cash flows, supported by continued growth in the population of
people needing dialysis, of about 1% to 2% per year.
ESG considerations are material to DaVita's credit rating. DaVita
has highly negative credit exposure to social considerations (S-4)
driven by customer relations and responsible production, which
consider the company's potential liability related to patient care,
as well as highly negative exposure to human capital, as the
company relies on specialized labor to provide its services.
Dialysis companies also face credit risk exposures around the
significant disparity between the reimbursement they receive for
treating commercially insured patients and the amount they receive
for treating patients insured by Medicare. Various states have
pursued legislation, that if passed, could reduce DaVita's and
other dialysis companies' profits. Furthermore, efforts to increase
the supply of kidneys available for transplant, if successful,
would slow ESRD patient volume growth.
DaVita has moderately negative credit exposure to governance
considerations (G-3) reflecting moderately aggressive financial
policies as evidenced by significant, and sometimes debt-funded,
share buybacks.
The SGL-2 Speculative Grade Liquidity Rating reflects Moody's
expectation that DaVita will maintain good liquidity over the next
12 to 18 months through its combination of cash, marketable
securities and partial revolver availability.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if DaVita sustains debt to EBITDA
below 4 times while demonstrating discipline with respect to
acquisitions and shareholder returns.
The ratings could be downgraded if material rate reimbursement cuts
are implemented by either commercial insurers or Medicare, if
operating performance deteriorates, and/or if liquidity erodes. A
downgrade could also result if debt to EBITDA is sustained above 5
times or demand for outpatient dialysis services slows.
DaVita, Inc., headquartered in Denver, CO, is an independent
provider of dialysis services primarily in the US for patients
suffering from end-stage renal disease (chronic kidney failure).
The company also provides home dialysis services, inpatient
dialysis services through contractual arrangements with hospitals,
laboratory services and other ancillary services. DaVita reported
$11.6 billion of revenues from continuing operations for the LTM
period ended June 30, 2022.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
DELTA AIR: S&P Affirms 'BB' Issuer Credit Rating, Outlook Stable
----------------------------------------------------------------
S&P Global Ratings affirmed its 'BB' issuer credit rating and
maintained its stable outlook on Delta Air Lines Inc.
Delta has dedicated cash flow to reducing its debt, including $1.5
billion of prepayments in July and August, continuing balance sheet
improvement. S&P said, "As a result, we raised our issue-level
rating on Delta's various senior unsecured notes to 'BB' (recovery
rating: '4'; rounded estimate: 45%) from 'B+' (recovery rating:
'6'; rounded estimate: 0%). We affirmed our 'BBB-' issue-level
rating (recovery rating '1', rounded estimate 95%) on senior
secured debt, and affirmed our ratings on various enhanced
equipment trust certificates."
The stable outlook is based on S&P's expectation of continued
improvement in credit measures, but at a more gradual pace than
over the past year, as revenue gains slow but fuel prices moderate
next year.
Though planes are full and fares are high, the outlook for the rest
of 2022 is uncertain. Pent-up demand and the easing of COVID
restrictions, combined with staff shortages and new aircraft
delivery delays that have limited the U.S. airline industry's
capacity, have allowed big fare increases by Delta and other
airlines this summer. That and the very full planes generated
revenue to offset much higher jet fuel prices, though also causing
operational problems. Slowing U.S. and global economies are likely
to cool demand the remainder of this year and into 2023, though the
extent of that deceleration is uncertain. The ongoing recovery of
business traffic, more gradual than that of domestic leisure travel
(management said on its second quarter earnings call that domestic
corporate sales were at 80% of 2019 levels and international
corporate sales 65%), could stall if corporate cost-cutting offsets
the positive effect of widespread returns to the office and
diminished COVID concerns. This and potential similar dynamics for
international travel are particularly important to Delta and its
large network airline peers.
Labor costs are rising, along with spending to address operational
and service problems. Delta and practically all other U.S. airlines
face labor cost pressures and are spending to address service and
operational problems. Only Delta's pilots are unionized among major
labor groups, unusual for a U.S. airline, but the company has long
offered compensation comparable to that at peers American and
United. United Airlines Inc. is currently in advanced negotiations
with its pilots and American Airlines Inc. has offered proposed
pilot pay increases. Delta's pilot union is also in negotiations
for a new contract. These cost pressures, plus staff and aircraft
limits to adding capacity have pushed up nonfuel operating cost per
available seat mile, an industry measure of cost per unit of
capacity. On its second quarter earnings call, management said that
its original expectation for that measure was 7%-10% above 2021
levels, but that it now forecasts an additional 8% increase,
bringing the total to the mid- to high-teens percent, a substantial
jump. Management suggests that when it can restore capacity from
85% of 2019 levels to 100%, that will drive down this measure by 12
percentage points (Delta is already carrying most of the costs it
would need to fly that much), and sees various other opportunities
to improve. Delta has been somewhat more cautious than American or
United on rebuilding flying from pandemic lows, which has supported
its ability to charge higher fares but also exacerbated cost
pressures.
Delta continues to rebuild its balance sheet. Delta's earnings and
cash flow generation have led peers American Airlines Group Inc.
and United Airlines Holdings Inc. (the parent companies of American
Airlines and United Airlines), continuing a pre-pandemic pattern.
Delta has now repaid $9.7 billion of debt and finance leases (about
one third, slightly over one quarter if one includes capitalized
operating leases in the denominator) since the start of 2021,
including the $1.5 billion July and August tender for various
secured and unsecured securities (of the total since the start of
2021, $6.1 billion was repaid ahead of maturity). It continues to
publicly target restoring "investment-grade [credit] metrics," and
forecasts reducing net debt by another $5 billion by 2024 to
achieve that. Delta's pace of debt paydown is likely to slow as
capital spending, forecast at about $6 billion this year, ramps up.
Delta's aircraft capital expenditures were lower and more level
that those of American or United pre-pandemic, but it has since
placed plane orders to bring down its relatively high average fleet
age and add more of the fuel-efficient, latest-technology aircraft.
United's capital spending is currently expected to be the highest
among the three large airlines and American's the least (after
heavy spending the previous decade).
S&P said, "We expect Delta to remain solidly profitable during the
second half of 2022, resulting in credit ratios supportive of the
rating, including funds from operations (FFO) to debt in the low-
to mid-teens percent area. Our current expectation is for some
improvement on that in 2023, but that is subject to macroeconomic
trends and oil prices.
"We could lower ratings if we expect credit ratios to deteriorate
materially, with FFO/debt returning to less than 12% and we expect
that condition to persist. This could occur if there is a
materially worse economic downturn than we expect, possibly
combined with continued high oil prices, or a major resurgence of
the pandemic, prompting renewed lockdowns and deterioration in
consumer confidence.
"We could raise ratings if we expect FFO to debt to move
consistently above 20%. This would require continued earnings
recovery and debt reductions by the company."
ESG credit indicators E-3, S-4, G-1
All airlines face long-term risk from potentially increasing
environmental regulation of greenhouse gases. Delta's average fleet
age of about 14 years is older than the global average, but should
decline as new deliveries replace older models. S&P said, "We do
not see this as a material disadvantage given Delta's financial
resources. Delta was hard hit by the pandemic, a health and safety
social risk, and we lowered its rating by two notches. It is now
seeing a significant recovery in domestic leisure traffic but
business and most international flying will take longer to return.
We view Delta's management and governance as strong, with
consistently effective planning, risk management, and operational
execution."
DESTINATION SOUTHERN: Voluntary Chapter 11 Case Summary
-------------------------------------------------------
Debtor: Destination Southern Africa, Inc.
d/b/a DSA Vacations
41 S Shannon Rd, Atp #22103
Tucson, AZ 85745
Chapter 11 Petition Date: September 19, 2022
Court: United States Bankruptcy Court
District of Arizona
Case No.: 22-06235
Debtor's Counsel: Charles Richards Hyde, Esq.
THE LAW OFFICES OF C.R. HYDE, PLC
2810 N Swan Rd. #150
Tucson, AZ 85712
Tel: 520-270-1110
Estimated Assets: $100,000 to $500,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Wilhelm Von Guilleaume as president.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/E5KPPQA/DESTINATION_SOUTHERN_AFRICA_INC__azbke-22-06235__0001.0.pdf?mcid=tGE4TAMA
EAST RIDGE RETIREMENT: Fitch Downgrades LongTerm IDR to 'C'
-----------------------------------------------------------
Fitch Ratings has downgraded the Issuer Default Rating (IDR) of
East Ridge Retirement Village, FL (ERRV) and the series 2014 health
facilities revenue bonds issued by the Alachua County Health
Facilities Authority, FL on behalf of ERRV to 'C' from 'CC'.
SECURITY
The bonds are secured by a pledge of gross revenues and receivables
of the obligated group (OG; ERRV is the only member), a first
mortgage lien on all current and future property of the OG and a
fully-funded debt service reserve.
ANALYTICAL CONCLUSION
The downgrade of ERRV's bond rating and IDR to 'C' from 'CC'
reflects Fitch's view that default appears imminent. ERRV recently
entered into a forbearance agreement with the trustee at the
direction of the owners of a majority in aggregate principal amount
of the series 2014 bonds outstanding (the directing holders). Under
the forbearance agreement, the trustee and the directing holders
have agreed to forbear from exercising remedies against ERRV under
the bond documents arising from the triggering of events of default
under the master indenture, including the acceleration of principal
for the outstanding bonds.
The forbearance agreement includes a deferral of the $990,000
principal payment due on the series 2014 bonds on Nov. 15, 2022.
Though the principal payment is deferred, in the event that ERRV
holds greater than 90 days cash on hand (DCOH) on the last business
day of a calendar month, the funds in excess of 90 DCOH will be
transferred to the bond fund within five days to be applied to the
payment of the deferred Nov. 15, 2022 principal payment.
As of June 30, 2022, ERRV's DCOH was 82.5 according to the MTI
calculation (above the minimum DCOH in the forbearance agreement of
55 days). Given ERRV's weak cash flow and liquidity, the
organization is not expected to transfer adequate cash to the
trustee to make a full and timely payment of the November principal
amount that is due. It is Fitch's view that a principal payment
deferral, even a deferral that is in accordance with the
forbearance agreement, is a material reduction in terms compared
with the original contractual terms of the bonds.
ERRV's IDR would be downgraded to 'RD' (restricted default) and the
series 2014 bonds to 'D' following a failure to make full and
timely principal payment in November under the original contractual
terms, which Fitch views as likely.
KEY RATING DRIVERS
Revenue Defensibility: 'b'
Single-Site LPC With Weak Demand
ERRV's independent living unit (ILU) occupancy remains weak as
evidenced by occupancy that has averaged 77% in 2021 and through
the interim period (six months ended June 30, 2022) and occupancy
of only 79.8% as of June 30, 2022, which is slightly above the bond
covenant of 78%. ERRV has not been able to consistently update its
ILUs to market standards (the units are smaller than market
expectations) and the community has a low proportion of two-bedroom
units compared to one-bedroom units, resulting in meager sales.
ERRV will be conducting a market study, which will help management
to analyze its competition, market demand for services and pricing.
While the commissioning of a market study is a prudent business
decision, Fitch believes the implementation of the findings of the
study will prove to be a challenge given ERRV's precarious
financial situation and currently limited demand profile.
Overall healthcare occupancy has been inconsistent, but skilled
nursing facility (SNF) occupancy has produced the strongest
occupancy, averaging 84% in 2021 and through the interim period and
at 97.3% as of June 30, 2022. Assisted living unit (ALU) occupancy,
which had been improving prior to the coronavirus pandemic, remains
weak as combined ALU and memory support unit (MSU) occupancy
averaged 75% in 2021 and through the interim period and was only
72.7% at June 30, 2022 -- below the MTI's 88% quarterly occupancy
target.
ERRV's entrance fees are affordable compared with local home values
as the weighted average entrance fee for all residences is
$234,000, while the average home value of homes in Cutler Bay is
around $525,000. Fees have not been increased consistently in order
to maintain favorable pricing. Management has contracted with an
actuarial firm to ensure that incoming residents are charged an
appropriate market rate for entrance and monthly service fees to
cover resident costs, while producing adequate cash flows for
financing/regulatory requirements. ERRV will have to balance any
suggested pricing increases from its actuarial study against an
immediate need to rebuild occupancy to generate cash flow to cover
debt service, refurbish units for potential residents and grow
liquidity.
Operating Risk: 'bb'
Weak Profitability; Limited Capital Investment in Recent Years
ERRV's operating risk is weak given its predominantly Type-A
contract mix and weak profitability metrics. The community's net
operating margin (NOM), NOM-adjusted and operating ratio have
averaged 2.1%, 13% and 115.1%, respectively, over the past five
years. Through the 2021 six-month interim period, operating revenue
is behind budget by 8.3% while operating expenses are 3% favorable
to budget. Weak core operating profitability has been offset by
$2.9 and $2.1 million of net entrance fees received in 2021 and the
interim period, respectively, but $416 thousand in unrealized
investment losses and $835 thousand in capex through the interim
period contributed to the deterioration in cash by approximately $1
million from Dec. 30, 2021 to June 30, 2022. Fitch expects
operating profitability to remain challenged over the outlook
period due to macro headwinds of inflation and labor pressures.
Though the average age of plant of 10.5 years at Dec. 31, 2019 is
good, ERRV's capital has only averaged 62.1% of depreciation over
the past five years due to management's efforts to preserve
liquidity and align spending with occupancy and margin
improvements. Given the deterioration in cash, ERRV has very
limited ability to renovate units -- a significant risk as units
must be renovated to increase the inventory of updated units
available for potential residents.
Capital-related metrics have been weak in recent years given the
community's significant debt burden against its current financial
profile. ERRV's debt issuance in 2015 was issued to finance a
campus expansion project that included 90 new ALUs, 31 new MSUs and
74 new skilled nursing beds that replaced the existing AL and
skilled nursing buildings. The increase in debt has resulted in an
inflated maximum annual debt service (MADS) as a percent of revenue
and debt to net available that has averaged 19.1% and 18x over the
past five years. Unaudited debt service coverage was only 0.88x at
fiscal year-end 2021 and 0.98x as of June 30, 2022. Failure to
achieve 1x coverage is an event of default under the bond
documents.
Financial Profile: 'b'
Weak and Deteriorating Financial Profile
The 'b' financial profile is driven by ERRV's weak liquidity
profile that Fitch believes is an asymmetric additive risk factor
given the organization's very weak capacity to absorb changes in
its net revenues resulting from declining demand or increased
costs. As of June 30, 2022, ERRV had 82.5 days cash on hand (DCOH)
according to the MTI calculation, which is well below the 200 DCOH
mark that would be considered neutral to the financial profile
assessment. In addition, ERRV's $8.2 million in balance sheet
resources available to pay debt service, is very low relative to
its $64.8 million in total debt as of June 30, 2022. This amount
includes $1.5 million in unrestricted cash and investments and $5.5
million in the debt service reserve fund, $495 thousand in the
principal fund and $733 thousand in the interest fund maintained by
the trustee.
Through the base case of Fitch's five-year scenario, a reasonable
forward look of financial performance over the next five years
given current economic expectations, Fitch expects that ERRV will
see liquidity steadily decrease to a level that indicates a high
probability of bankruptcy/payment default. Fitch's stress case
assumes both a significant economic stress (to reflect investment
performance volatility) and the maintenance of weak operations. In
both the base and stress case, ERRV is not able to achieve both its
liquidity covenant (180 days cash on hand) and its 1.2x debt
service coverage ratio.
Asymmetric Additional Risk Considerations
Fitch views the deferral of principal as contemplated under the
forbearance agreement to be an asymmetric additional risk
consideration. Fitch expects the allowance of the principal payment
deferral to lead to a default on the November 2022 principal
payment and materially distort near-term financial metrics by
allowing ERRV to retain additional unrestricted cash and
investments on its balance sheet.
In December 2021, SantaFe Senior Living announced the retirement of
Troy Hart, who served as President of SantaFe Senior Living (the
operator of ERRV) since 2009. Ron Jennette began as the new
President of SantaFe Senior Living in January 2022. Mr. Jennette
most recently served as the President and CEO of Methodist
Retirement Communities, a multi-site senior living and affordable
housing provider, for 12 years.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Inability to make a full and timely payment of principal
and/or interest under the original contractual terms;
-- Any agreement that impairs the economic interests of the
bondholders would be considered a restricted default under
Fitch criteria;
-- ERRV ceases business or enters into bankruptcy filings,
administration, receivership, liquidation or other formal
winding-up procedure.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Material improvement in core operations resulting in strong
cash flow and an improved balance sheet.
CREDIT PROFILE
ERRV is a Type-A life plan community located on 76 acres in the
town of Cutler Bay, FL, approximately 20 miles south of Miami. The
community currently includes 221 ILUs, 90 ALUs, 31 memory care
units and 74 SNF units. ILU residents are mostly in lifecare
contracts with nonrefundable entrance fees. ERRV reported total
operating revenues of approximately $27.7 million in fiscal 2021
(unaudited).
ERRV is currently the only OG member. Since March 27, 2008, ERRV
has been controlled by Santa Fe Senior Living (SFSL) via an
affiliation agreement between ERRV and SFSL's corporate parent,
Santa Fe HealthCare (SFHC). Neither SFSL nor SFHC are obligated on
the series 2014 bonds. SFSL opened the Terraces at Bonita Springs
in July 2013 and also operates North Florida Retirement Village, a
rental community in Gainesville, FL.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
Debt Rating Prior
---- ------ -----
East Ridge Retirement
Village (FL) LT IDR C Downgrade CC
East Ridge Retirement
Village (FL) /General
Revenues/1 LT LT C Downgrade CC
ECHELON CONSTRUCTION: Commences Subchapter V Case
-------------------------------------------------
Echelon Construction and Maintenance LLC filed for chapter 11
protection in the Northern District of Texas. The Debtor elected
on its voluntary petition to proceed under Subchapter V of chapter
11 of the Bankruptcy Code.
According to court filings, Echelon Construction estimates between
1 and 49 creditors. The petition states that funds will be
available to unsecured creditors.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
Oct. 19, 2022, at 09:30 AM by TELEPHONE. Proofs of claim are due
by Nov. 21, 2022.
About Echelon Construction and Maintenance
Echelon Construction and Maintenance LLC --
https://www.echeloncm.com/ -- provides high-quality national
construction and maintenance services to various clients in office,
retail, hospitality, industrial flex and healthcare.
Echelon Construction and Maintenance filed a petition for relief
under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr.
N.D. Tex. Case No. 22-31669) on Sept. 12, 2022. In the petition
filed by Aaron Kyle Wyatt, as managing member, the Debtor reported
assets between $50,000 and $100,000 and liabilities between $1
million and $10 million.
Katharine B. Clark has been appointed as Subchapter V trustee.
The Debtor is represented by Robert Lane of The Lane Law Firm.
EVERGREEN CHARTER SCHOOL: S&P Assigns 'BB' Rating on 2022A-B Bonds
------------------------------------------------------------------
S&P Global Ratings assigned its 'BB' long-term rating to the Town
of Hempstead Local Development Corp., N.Y.'s $69.6 million series
2022A tax-exempt and $160,000 series 2022B taxable education
revenue bonds, to be issued for Evergreen Charter School (ECS),
N.Y. The outlook is stable.
Friends of Evergreen CS LLC is a single purpose LLC serving as the
borrower on the series 2022 bonds; it exists solely to support ECS'
facility and financing plans and will be the facility owner once
the related building project is completed. Under the series 2022
financing documents, the bonds are secured by an absolute
assignment of lease payments from the ECS to the LLC to cover debt
service, supported by a pledge of school revenues. Additional
security is provided by a custody agreement such that state aid
will be intercepted by the trustee, a mortgage on the financed
facility, and a debt service reserve fund (DSRF). Under the loan
agreement, the LLC's obligation to make loan payments is an
absolute and unconditional obligation, without abatement,
diminution, or set offs. Because of the details of the lease
structure and security features associated with the series 2022
bonds, which are ultimately dependent on payments from the school,
S&P views the bond security as equivalent to a general obligation
of ECS and therefore base our analysis on the credit fundamentals
of the school.
The series 2022 bonds will be used to finance the construction and
furnishing of a new 85,000 square foot, state of the art,
multi-level school building to house ECS' middle and high school
program. In addition, the proceeds will fund a debt service reserve
and capitalized interest, cover costs of issuance, and refinance an
existing $2.4 million loan from the Local Initiatives Support
Coalition, which the school accessed in fiscal 2022 to acquire one
of the parcels of land on which the school facility will be built.
The other parcels were acquired by the school in previous years
utilizing reserves. Pro forma debt consists solely of the series
2022 bonds. ECS also maintains operating leases for its current
four facilities, which total about $1.9 million in annual lease
payments in fiscal 2021 and rise to $2.3 million in fiscal 2023
before declining thereafter to about $1.7 million once the new
building is constructed, as that will eliminate two facility
leases. The continuing leases are long-term in nature and do not
currently present lease renewal risk.
"The rating reflects our view of ECS's healthy demand and growing
enrollment trends, above-average academic outcomes, long operating
history, and good working relationship with the charter authorizer,
though the school did receive a recent three-year charter renewal
compared to a five-year maximum term," said S&P Global Ratings
credit analyst Avani Parikh. "The school's financial profile is
also a constraining factor with weak, but improving, pro forma
lease-adjusted maximum annual debt service coverage as confirmed
fall 2022 enrollment and projected operations in fiscal 2023 should
surpass 1x coverage, history of modest liquidity, and significant
pro forma debt on a nominal and per student basis."
S&P said, "The stable outlook reflects our opinion that over the
one-year outlook period ECS will sustain steady demand supporting
continued enrollment growth in line with targeted expectations,
while maintaining positive operating trends, continuing to grow
reserves, and improving lease-adjusted MADS coverage to closer to
1x in fiscal 2023 as the school grows into its debt issuance plans.
We also expect the school will manage its building project
successfully relative to budget and schedule, given the cushion
provided by the 21-month construction timeline and contingency
planning."
EVERYTHING BLOCKCHAIN: Incurs $2.7M Net Loss in Second Quarter
--------------------------------------------------------------
Everything Blockchain, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $2.67 million on $383,000 of revenue for the three months ended
July 31, 2022, compared to net income of $2.54 million on $259,000
of revenue for the three months ended July 31, 2021.
For the six months ended July 31, 2022, the Company reported a net
loss of $4.12 million on $638,000 of revenue compared to net income
of $3.31 million on $1.38 million of revenue for the six months
ended July 31, 2021.
As of July 31, 2022, the Company had $27.81 million in total
assets, $1.68 million in total liabilities, and $26.13 million in
total stockkholders' equity.
Everything Blockchain said, "The Company has had historically
negative cash flow and net losses. Though the year ended January
31, 2022 resulted in positive cash flow and net income, there are
no assurances the Company will generate a profit or obtain positive
cash flow in the future. The Company has sustained its solvency
through the support of its shareholder Overwatch Partners, Inc.
("Overwatch"), which raise substantial doubt about its ability to
continue as a going concern."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1730869/000147793222006887/ebi_10q.htm
About Everything Blockchain
Headquartered in Fleming Island, Florida, Everything Blockchain,
Inc. (fka OBITX, Inc.) is a developer, engineer, and consultant in
the industry of blockchain technologies.
Mitzpe Netofa, Israel-based Elkana Amitai CPA, the Company's
auditor since 2022, issued a "going concern" qualification in its
report dated May 10, 2022, citing that the Company suffered losses
from operations in all years since inception, except for the year
ended Jan. 31, 2022. These and other factors raise substantial
doubt about the Company's ability to continue as a going concern.
EXPRESS GRAIN: Seeks Court Approval to Hire Special Counsel
-----------------------------------------------------------
Express Grain Terminals, LLC seeks approval from the U.S.
Bankruptcy Court for the Northern District of Mississippi to employ
Dallas, Anthony & Jeffords, PLLC and Rawlings & MacInnis, P.A. as
its special counsels.
The Debtor needs the firms' assistance to gather application
information and conduct the analysis necessary to calculate
employee retention tax credit.
The firms will receive a 20 percent contingency fee based on the
actual amount received for tax credits.
As disclosed in court filings, Dallas Anthony & Jeffords and
Rawlings & MacInnis are "disinterested persons" within the meaning
of Section 101(14) of the Bankruptcy Code.
The firms can be reached through:
Dustin T. Jeffords, Esq.
Dallas Anthony & Jeffords PLLC
213 Katherine Drive
Flowood, MS 39232
Phone: +1 601-944-4290
Email: djeffords@dajtaxlaw.com
-- and --
Jeff Rawlings, Esq.
Rawlings & MacInnis, P.A.
P.O. Box 1789
Madison, MS 39130-1789
Phone:(601) 898-1180
Fax:(601) 605-8522
Email: jeff@rawlingsmacinnis.net
About Express Grain Terminals
Greenwood, Mississippi-based Express Grain Terminals, LLC produces
soy products such as oil and biodiesel.
Express Grains Terminals and its affiliates, Express Biodiesel, LLC
and Express Processing, LLC, sought Chapter 11 protection (Bankr.
N.D. Miss. Lead Case No. 21-11832) on Sept. 29, 2021. At the time
of the filing, Express Grains Terminals listed up to $50 million in
assets and up to $100 million in liabilities.
Judge Selene D. Maddox oversees the cases.
The Debtors tapped the Law Offices of Craig M. Geno, PLLC as
bankruptcy counsel; and Dallas, Anthony & Jeffords, PLLC and
Rawlings & MacInnis, P.A. as special counsels.
UMB Bank, N.A., the Debtors' lender, is represented by Spencer Fane
LLP.
FIRST CHOICE: Court Approves Disclosure Statement
-------------------------------------------------
Judge Kathryn C. Ferguson has entered an order approving the
Disclosure Statement of First Choice Trucking, LLC filed by Stephen
B. McNally.
Written acceptances, rejections or objections to the Plan must be
filed not less than 7 days before the hearing on confirmation of
the Plan.
Oct. 13, 2022 at 2:00 PM is fixed as the date and time for the
hearing on confirmation of the Plan.
About First Choice Trucking
First Choice Trucking is a Single Asset Real Estate debtor (as
defined in 11 U.S.C. Section 101(51B)). The Debtor's sole asset is
a six-acre warehouse and office located in Freehold, NJ, having a
current value of $1 million.
First Choice Trucking previously sought Chapter 11 bankruptcy
(Bankr. D.N.J. Case No. 21-18098) on Oct. 18, 2021. The case was
dismissed on April 22, 2022.
First Choice Trucking sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D.N.J. Case No. 22-15189) on June 27, 2022.
In the petition filed by Robert Shlumpf, as president, the Debtor
estimated assets between $500,000 and $1 million and liabilities
between $1 million and $10 million. Stephen B. McNally, of McNally
& Busche, L.L.C., is the Debtor's counsel.
FRONT SIGHT: Needs to Confirm Plan by Dec. 1
--------------------------------------------
Front Sight Management LLC, recently reached an agreement with
Nevada PF, LLC ("Nevada PF"), an affiliate of the Debtor's
post-petition lender FS DIP, LLC ("FS DIP"), pursuant to which
Nevada PF will contribute $19 million in cash to fund the Debtor's
chapter 11 plan ("Plan") and will satisfy FS DIP's secured claim of
approximately $5.2 million (collectively, the "New Value
Contribution") in exchange for 100% equity in the reorganized
Debtor.
The parties finalized this agreement on September 1, 2022, and one
of the terms is that the Debtor must obtain entry of a final
confirmation order on or before December 1, 2022. The Debtor's
professionals and Nevada PF's professionals have worked overtime
the last week in an effort to get an amended Plan [ECF No. 337] on
file and an amended disclosure statement [ECF No. 338] (the
"Disclosure Statement") on file today (September 9, 2022) that both
parties agree on. The Debtor has also filed a related motion to
approve the Disclosure Statement and related procedures relating to
service and voting [ECF No.339] (the "Procedure Motion").
The Debtor seeks entry of an order shortening time ("OST") for a
hearing on the adequacy of the Disclosure Statement and a hearing
on the Procedure Motion to be scheduled for September 30, 2022 at
9:30 a.m., which is the next omnibus hearing date scheduled in this
case. There is another omnibus hearing date approximately 45 days
later (on November 18, 2022 at 9:30 a.m.) that the Debtor and
Nevada PF hope to use a Plan confirmation hearing.
In the proposed order shortening time, the Debtor proposes that
objections to the Province Employment App may be filed by September
23, 2022 (or 7 days before the proposed hearing date of September
30, 2022). This gives parties in interest at least enough time to
object as if the Debtor had timely filed the Province Employment
App. If the Court thinks that a later objection deadline is
appropriate, then the Debtor consents to a later date. The Debtor
also proposes that replies to any objections may be filed by
September 27, 2022 (or three days before the proposed hearing date
if that date is acceptable to the Court). The Debtor submits that
the proposed deadlines give sufficient time to parties in interest
to review the Disclosure Statement and the Procedure Motion prior
to the proposed September 23, 2022 opposition deadline. The
Disclosure Statement and Procedure Motion were filed on September
9, 2022 and served via ECF notice and via email on September 9,
2022 on the aforementioned counsel (and on the Debtor's
creditor/core/2002 list of approximately 3,000 parties).
In order to meet the Debtor's plan confirmation deadlines of
November 29, 2022 and December 1, 2022, the only available omnibus
hearing date for the Debtor to use is November 18, 2022.
Approximately 45 days before that hearing date is the September 30,
2022 hearing date that the Debtor is requesting herein. It is
imperative that the Court hear the Debtor's Procedure Motion and
approval of the adequacy of the Disclosure Statement on September
30, 2022 in order for the Debtor to ensure that it is able to meet
its plan confirmation deadlines (which will have significantly
better results for the Debtor's creditors and parties in interest).
The Debtor filed and served its Disclosure Statement and Procedure
Motion on September 9, 2022, and all parties will have 14 days to
object. The Debtor submits that parties in interest will still have
sufficient time to review and respond as warranted.
About Front Sight Management
Front Sight Management LLC specializes in providing courses in gun
training, self-defense martial arts training, and personal safety
-- with firearms or without.
Front Sight filed a voluntary petition for under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. D. Nev. Case No. 22-11824) on May 24,
2022. In the petition signed by Ignatius Piazza, manager, the
Debtor disclosed up to $50 million in both assets and liabilities.
Judge August B. Landis oversees the case.
The Debtor tapped Steven T. Gubner, Esq., at BG Law LLP as
bankruptcy counsel; Greenberg Traurig, LLP as special counsel;
Province, LLC as financial advisor; and Lucas Horsfall as
accountant. Stretto, Inc. is the claims, noticing and solicitation
agent.
FS DIP, LLC, as DIP agent, is represented by Samuel A. Schwartz,
Esq., and Bryan A. Lindsey, Esq., at Schwartz Law, PLLC.
FRONT SIGHT: Unsecureds Owed Up to $30M to Get $3M in Plan
----------------------------------------------------------
Front Sight Management LLC submitted a First Amended Disclosure
Statement.
The Plan described in this Disclosure Statement is a reorganizing
plan. The Plan described in this Disclosure Statement provides for
the Debtor's emergence from its chapter 11 case, which the Debtor
anticipates will occur in November 2022. Under the Plan, the Debtor
will satisfy its debt and other claims and implement a
recapitalization with $24 million of new capital.
The Plan provides for a recapitalization as follow: in exchange for
100% of the new equity interests to be issued on the Effective
Date, Nevada PF, LLC (the "New Equity Investor"), an affiliate of
the Debtor's post-petition lender FS DIP, LLC ("FS DIP"), will (a)
contribute $19 million in cash to fund the Plan, and (b) cause FS
DIP's approximately $5.2 million secured claim to be contributed to
the estate as partial consideration for the new equity interests,
for total consideration of at least $24 million (the "New Value
Contribution"). Under the Plan, the Debtor will satisfy its debt
and other claims as set forth in Article IV below. The $19 million
cash contribution ("Cash Contribution") will be used to, among
other things, fund certain Plan payments on or around the Effective
Date, provide reserves for certain disputed claims and provide the
Reorganized Debtor with sufficient working capital.
Under the Plan, Class 6 General Unsecured Claims estimated at
approximately $10 million to $30 million. (This number is subject
to change as follows: (a) the resolution of objections to Disputed
Claims; and (b) the amount of rejection damages claims asserted by
members.) [This estimation does not include any insider claims as
the Debtor's insiders have agreed to subordinate all of their
claims to those of General Unsecured Creditors and have agreed that
their claims will not be paid.] Prior to the Effective Date, $3
million of the Cash Contribution shall be placed into a reserve
account for allowed general unsecured claims. Any fees relating to
objections to Class 6 claims after the Effective Date will be paid
from this reserve. Upon resolution of all objections to claims,
holders of Class 6 allowed claims shall receive their pro rata
share of the reserve amount. Class 6 is impaired.
The Plan will be funded by the Exit Financing in the aggregate
amount of the $19 million Cash Contribution and the waiver or
payment of FS DIP's secured claim of approximately $5.2 million by
the New Equity Investor. Of this amount, the Reorganized Debtor
anticipates that it will require at least $500,000 for working
capital to meet the Debtor's operating needs. Such proceeds will be
utilized as follows:
Administrative (Professional) $500,000
FS DIP Secured Claim $5,200,000
LVDF Secured Claim $11,655,706.01 (reserve
account)
Meacher Secured Claim $3,300,000 (reserve account)
Lease/Contract Cures $0
Nevada Dept. of Taxation $100,000 (estimated)
Unsecured Claims $3,000,000 (reserve account)
Total $23,755,706.01
Attorneys for the Chapter 11 Debtor and Plan Proponent:
Steven T. Gubner, Esq.
Susan K. Seflin, Esq.
Jessica S. Wellington, Esq.
BG LAW LLP
300 S. 4th Street, Suite 1550
Las Vegas, NV 89101
Telephone: (702) 835-0800
Facsimile: (866) 995-0215
E-mail: sgubner@bg.law
sseflin@bg.law
jwellington@bg.law
A copy of the First Amended Disclosure Statement dated September 9,
2022, is available at https://bit.ly/3QAMNeq from Stretto, the
claims agent.
About Front Sight Management
Front Sight Management LLC specializes in providing courses in gun
training, self-defense martial arts training, and personal safety
-- with firearms or without.
Front Sight filed a voluntary petition for under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. D. Nev. Case No. 22-11824) on May 24,
2022. In the petition signed by Ignatius Piazza, manager, the
Debtor disclosed up to $50 million in both assets and liabilities.
Judge August B. Landis oversees the case.
The Debtor tapped Steven T. Gubner, Esq., at BG Law LLP as
bankruptcy counsel; Greenberg Traurig, LLP as special counsel;
Province, LLC as financial advisor; and Lucas Horsfall as
accountant. Stretto, Inc. is the claims, noticing and solicitation
agent.
FS DIP, LLC, as DIP agent, is represented by Samuel A. Schwartz,
Esq., and Bryan A. Lindsey, Esq., at Schwartz Law, PLLC.
FRONTLINE MEDICAL: Taps Coan, Payton & Payne as Bankruptcy Counsel
------------------------------------------------------------------
Frontline Medical Services, LLC seeks approval from the U.S.
Bankruptcy Court for the District of Colorado to hire Coan, Payton
& Payne, LLC as its bankruptcy counsel.
The firm's services include:
a. providing the Debtor with legal advice with respect to its
powers and duties under the Bankruptcy Code;
b. assisting the Debtor in the development of a plan of
reorganization under Subchapter V;
c. file the necessary schedules, pleadings, reports, and
actions, which may be required in the continued administration of
the Debtor's property under Chapter 11 and in the course of its
Chapter 11 proceedings;
d. performing other necessary legal services for the Debtor.
Coan, Payton & Payne will charge its regular hourly rates as
follows:
Steven T. Mulligan, Esq. $350
Jean Campbell, Paralegal $150
Paralegals $100 to $195
The firm received a retainer in the amount of $10,000.
As disclosed in court filings, Coan, Payton & Payne does not
represent interests adverse to the Debtor's estate.
Coan, Payton & Payne can be reached through:
Steven T. Mulligan, Esq.
Coan, Payton & Payne, LLC
999 18th Street
South Tower, Suite S1500
Denver, CO 80202
Tel: (303) 861-8888
Email: smulligan@cp2law.com
About Frontline Medical Services
Frontline Medical Services, LLC filed a petition under Chapter 11,
Subchapter V of the Bankruptcy Code (Bankr. D. Colo. Case No.
22-13411) on Sept. 6, 2022, with between $100,001 and $500,000 in
both assets and liabilities. Joli A. Lofstedt serves as Subchapter
V trustee.
Judge Kimberley H. Tyson oversees the case.
Steven T. Mulligan, Esq., at Coan, Payton & Payne, LLC represents
the Debtor as counsel.
FUSION PROMOTIONS: Seeks to Hire Jones & Walden as Legal Counsel
----------------------------------------------------------------
Fusion Promotions & Marketing, LLC seeks approval from the U.S.
Bankruptcy Court for the Northern District of Georgia to hire Jones
& Walden, LLC as its legal counsel.
The firm's services include:
(a) preparing pleadings and applications;
(b) conducting examination;
(c) advising the Debtor of its rights, duties and
obligations;
(d) consulting with and representing the Debtor with respect
to a Chapter 11 plan;
(e) performing legal services incidental and necessary to the
day-to-day operations of the Debtor's business; and
(f) taking all other actions incident to the proper
preservation and administration of the Debtor's estate and
business.
The hourly rates of the firm's counsel and staff are as follows:
Attorneys $225 - $425
Paralegals $125 - $200
Cameron McCord, Esq., a partner at Jones & Walden, disclosed in a
court filing that the firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Cameron M. McCord, Esq.
Jones & Walden LLC
699 Piedmont Ave. NE
Atlanta, GA 30308
Telephone: (404) 564-9300
Email: cmccord@joneswalden.com
About Fusion Promotions & Marketing
Fusion Promotions & Marketing, LLC is a provider of brand
representation talents. The company is based in Alpharetta, Ga.
Fusion Promotions & Marketing sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. N.D. Ga. Case No. 22-56872) on
Aug. 31, 2022, with up to $50,000 in assets and up to $10 million
in liabilities. Matthew Burns, chief executive officer, signed the
petition.
Judge Paul Baisier oversees the case.
Cameron M. McCord, Esq., at Jones & Walden, LLC is the Debtor's
counsel.
GBT TECHNOLOGIES: Issues $116,200 Promissory Note to 1800 Diagonal
------------------------------------------------------------------
GBT Technologies Inc. entered into a Securities Purchase Agreement
(dated Sept. 9, 2022) with 1800 Diagonal Lending LLC, an accredited
investor pursuant to which the Company issued to DL a Promissory
Note in the aggregate principal amount of $116,200 with an original
issue discount of $12,450 resulting in net proceeds of the Company
of $103,750.
The DL Note has a maturity date of Sept. 9, 2023 and the Company
has agreed to pay interest on the unpaid principal balance of the
DL Note at the rate of 12.0% per annum from the date on which the
DL Note is issued. A one-time interest charge of 12% or $13,944
was applied on the Issue Date to the principal amount owed under
the DL Note. Accrued, unpaid interest and outstanding principal,
subject to adjustment, shall be paid in ten payments each in the
amount of $13,014.40 resulting in a total payback to DL of
$130,144. The first payment is due Oct. 30, 2022 with nine
subsequent payments each month thereafter. The Company shall have
a five day grace period with respect to each payment. The Company
has right to accelerate payments or prepay in full at any time with
no prepayment penalty. This DL Note will not be secured by any
collateral or any assets of the Company.
The outstanding principal amount of the DL Note may not be
converted into the Company common shares except in the event of
default. In the event of default on the DL Note, DL may convert
the DL Note into shares of the Company's common stock at a
conversion price equal to 75% of the lowest trading price with a
10-day look back immediately preceding the date of conversion. In
addition, upon the occurrence and during the continuation of an
event of default (as defined in the DL Note), the DL Note shall
become immediately due and payable and the Company shall pay to DL,
in full satisfaction of its obligations hereunder, additional
amounts as set forth in the DL Note. In no event shall DL be
allowed to effect a conversion if such conversion, along with all
other shares of Company common stock beneficially owned by DL and
its affiliates would exceed 4.99% of the outstanding shares of the
common stock of the Company.
The issuances of the DL Note was made in reliance upon the
exemption from the registration requirements of the Securities Act
of 1933, as amended, pursuant to Section 4(a)(2) of the Act.
About GBT
Headquartered in Santa Monica, CA, GBT Technologies, Inc. is
targeting growing markets such as development of Internet of Things
(IoT) and Artificial Intelligence (AI) enabled networking and
tracking technologies, including wireless mesh network technology
platform and fixed solutions, development of an intelligent human
body vitals device, asset-tracking IoT, and wireless mesh networks.
The Company derived revenues from the provision of IT services.
The Company is seeking to generate revenue from the licensing of
its technology.
GBT Technologies reported a net loss of $33.93 million for the year
ended Dec. 31, 2021, a net loss of $17.99 for the year ended Dec.
31, 2020, and a net loss of $186.51 for the year ended Dec. 31,
2019. As of June 30, 2022, the Company had $714,689 in total
assets, $25.44 million in total liabilities, and a total
stockholders' deficit of $24.72 million.
Lakewood, Colo.-based BF Borgers CPA PC, the Company's auditor
since 2017, issued a "going concern" qualification in its report
dated March 25, 2022, citing that the Company's significant
operating losses raise substantial doubt about its ability to
continue as a going concern.
GIGA-TRONICS INC: Acquires Gresham Worldwide From BitNile
---------------------------------------------------------
Giga-tronics Incorporated acquired 100% of the capital stock of
Gresham Worldwide, Inc. from BitNile Holdings, Inc. in exchange for
2,920,085 shares of the Company's common stock and 514.8 shares of
Series F Convertible Preferred Stock that are convertible into an
aggregate of 3,960,043 shares of the Company's common stock.
The parties had previously entered into a Share Exchange Agreement
dated Dec. 27, 2021 but as a California corporation the Company
required shareholder approval which occurred on Sept. 8, 2022. The
Company also assumed Gresham's outstanding equity awards
representing the right to receive up to 749,626 shares of the
Company's common stock, on an as-converted basis. The transaction
resulted in a change of control of the Company. Assuming BitNile
were to convert all of the Series F, the common stock issuable to
BitNile would be approximately 71.2% of outstanding shares.
On Sept. 8, 2022, BitNile loaned the Company $4,250,000 by issuing
a convertible note pursuant to a securities purchase agreement upon
the closing of the consummation of the transactions contemplated by
the Agreement. The Convertible Note carries an interest rate of
10% per annum and matures on Feb. 14, 2023.
The holder may at any time elect to convert in whole or in part,
the outstanding principal and interest under the Convertible Note
into shares of the Company's common stock at a conversion price of
$3.20 per share. In addition, all principal and outstanding
interest under the Convertible Note will automatically convert to
the Company's common stock upon the closing of an underwritten
public offering of common stock with net proceeds (net of
underwriters' discounts and selling commissions) of at least $25
million. The Convertible Note may not be converted to the extent
the holder would, as a result of such conversion, beneficially own
in excess of 4.99% of the Company's common stock. The holder may
increase this limit to 9.99% on 61 days' notice to the Company.
The Convertible Note is secured by all of the Company's assets and
the assets of the Company's subsidiaries pursuant to a security
agreement. The Convertible Note contains customary events of
default. If an Event of Default occurs, interest under the
Convertible Note will accrue at a rate of 18% per annum and the
outstanding principal amount of the Convertible Note, plus accrued
but unpaid interest, liquidated damages and other amounts owing
with respect to the Convertible Note will become, at the
Convertible Note holder's election, immediately due and payable in
cash.
The Company may prepay all or a portion of the outstanding
principal amount of the Convertible Note at a premium that
increases over the term, ranging from 5% to 25%. If the Company
completes a public or private offering of $5.0 million or more of
its common stock (net of underwriting discounts and commission)
prior to the maturity date, the Company must prepay all or part of
the principal amount of the Convertible Note outstanding at a
premium that increases over the term, ranging from 5% to 25% using
up to 50% of the proceeds from the Proposed Offering. However, if
the Company closes the Proposed Offering, the principal of the
Convertible Note will be applied toward BitNile's $10 million
purchase of the Company's common stock. In addition, the Company
agreed to indemnify BitNile against losses from its breach of its
covenants, representations and warranties under the Securities
Purchase Agreement pursuant to which the Company issued the
Convertible Note.
The Company also entered into a registration rights agreement with
BitNile requiring the Company to file a registration statement with
the SEC within 15 days of the voluntary conversion of the
Convertible Note by BitNile or in connection with a non-qualified
public offering. The Registration Rights Agreement contains
customary terms and conditions, certain liquidated damages
provisions for failing to comply with the timing obligations for
the filing and effectiveness of the registration statement, and
certain customary indemnification obligations.
Of the $4,250,000 loaned to the Company, it is using $3,794,120 to
redeem all of its outstanding preferred stock that was outstanding
prior to the Closing Date. The Company previously entered into
repurchase agreements with the holders of the outstanding shares of
its then outstanding preferred stock. The preferred stock holders
include Lutz Henckels the Company Chief Financial Officer who is
receiving $246,000 and Thomas Vickers, a member of the Company's
Board of Directors who is receiving $115,646.95.
Under the Agreement, BitNile received the right to appoint four
members of a seven member Board. Their designees are Jeffrey
Bentz, William Horne, Jonathan Read and Robert Smith. Mr. Henckels
resigned as a director leaving the remaining current directors,
John Regazzi, William Thompson and Thomas Vickers, as the Company's
designees. On the Closing Date, pursuant to the Agreement, John
Regazzi, the Company's chief executive officer, and Lutz Henckels,
as chief operating officer of the Company, resigned such positions
and Mr. Henckels remains as the Company's chief financial officer.
The Board appointed Jonathan Read who is Gresham's chief executive
officer as the Company's chief executive officer and Timothy Long
who is Gresham's chief operating officer as the Company's chief
operating officer.
Effective Sept. 8, 2022, the Company entered into indemnification
agreements with all new executive officers and directors of the
Company.
Jonathan Read, 66, has been the chief executive officer of Gresham
since March 2019. Mr. Read was the chief executive officer and a
director of Timefire VR, Inc. from Nov. 1, 2015 to Jan. 31, 2017
and again from Oct. 20, 2017 and May 15, 2019 resigning as chief
executive officer when it was acquired by Red Cat Holdings, Inc.
[now Nasdaq: RCAT], now a drone company. From July 14, 2017
through July 20, 2018, Mr. Read served as a director of BTCS,
Inc.[now Nasdaq: BTCS], a digital asset-related company. From 2005
through 2012, Mr. Read was the chief executive officer of ECOtality
Inc., a San Francisco based company that Mr. Read founded and was
formed to create a network of charging stations for electric cars.
In 2013, ECOtality filed for Chapter 11 bankruptcy protection. In
2014, Mr. Read filed for bankruptcy.
Timothy Long, 65, has been the chief operating officer of Gresham
since December 2019 and its executive vice President since April
2019. He also has served as the chief executive officer and
Chairman of the Board of Directors of Microphase, a subsidiary of
Gresham, since December 2019 and as an executive director of
Gresham's UK operations since June 2019. Before joining Gresham,
Mr. Long worked as a consultant to businesses, municipalities, and
institutions of higher learning on government contracting, clean
energy, sustainability, and government affairs for 15 years. From
September 2018 to April 2019, Mr. Long worked as a consultant to
Power Grow, Inc., Spark Fund and Secure Systems through his sole
proprietorship, Long View Consulting. Mr. Long has served on the
board of directors of Power Grow.
William B. Horne, has served as a member of BitNile since October
2016. On Jan. 19, 2021, Mr. Horne resigned as president and was
appointed as the chief executive officer of BitNile. On Aug. 19,
2020, Mr. Horne resigned as BitNile's chief financial officer and
was appointed as BitNile's president. Mr. Horne was appointed as
BitNile's chief financial officer on Jan. 25, 2018. Prior to his
appointment as BitNile's chief financial officer, Mr. Horne served
as one of their independent directors. Mr. Horne served as the
chief financial officer of Targeted Medical Pharma, Inc. (OTCBB:
TRGM) from August 2013 to May 2019. Mr. Horne has served as the
Chief Executive Officer and on the board of directors of ADTC, an
NYSE listed SPAC, since its incorporation in February 2021. Mr.
Horne is a director and chief financial officer of Avalanche
International, Corp., a "voluntary filer" under the Exchange Act.
Mr. Horne has served on the board of directors of Alzamend Neuro,
Inc., a biotechnology firm dedicated to finding the treatment,
prevention and cure for Alzheimer's Disease, since June 1, 2016 and
became its Chairman of the board upon consummation of its initial
public offering. Mr. Horne previously held the position of Chief
Financial Officer in various public and private companies in the
healthcare and high-tech field.
Jeffrey Bentz, serves as one of BitNile's independent directors.
Mr. Bentz is an experienced businessman who has served since 1994
as President of North Star Terminal & Stevedore Company, a
full-service stevedoring company located in Alaska and whose major
areas of business include terminal operations and management,
stevedore services, and heavy equipment operations. Mr. Bentz has
served on the board of directors of ADTC, an NYSE listed SPAC,
since its initial public offering in December 2021. He also has
served as a director and advisor to several private companies and
agencies.
Robert Smith, serves as BitNile's lead independent director.
Previously, he served as a member of BitNile's board of directors
from November 2010 until May 2015, and served as a member of
BitNile's Advisory Board from 2002 until 2015. Mr. Smith is
currently a C-level executive consultant working with Bay Area
high-tech firms on various strategic initiatives in all aspects of
their business. Mr. Smith has served on the board of directors of
ADTC, an NYSE listed SPAC, since its initial public offering in
December 2021.
On Sept. 8, 2022, the Company entered into Restricted Stock Unit
Agreements with Jonathan Read and Timothy Long under which the
Company assumed restricted stock units that had been granted by
Gresham to Messrs. Read and Long for 149,925 and 99,950 RSUs,
respectively. The RSUs were issued under the Company's 2018 Equity
Incentive Plan. Of the RSUs, 99,951 and 66,633 granted to Messrs.
Read and Long are fully vested. The remaining 49,974 and 33,317
RSUs shall vest in four semi-annual installments with the first
increments vesting on Nov. 25, 2022 and ending May 25, 2024,
subject to continued service as an employee of the Company as of
each applicable vesting date.
In addition to the Restricted Stock Units, the Company entered into
Non-Qualified Stock Option Agreements under which the Company
assumed 299,851 and 199,900 stock options that Gresham had granted
to Messrs. Read and Long, respectively. Such options were granted
under the Company's 2018 Equity Incentive Plan. 212,401 stock
options granted to Mr. Read and 141,605 stock options granted to
Mr. Long are fully vested. The remaining 87,450 and 58,295 stock
options granted to Messrs. Read and Long, respectively, shall vest
in monthly increments over a period of 21 months beginning on the
25th day of each month starting September 2022 and ending May 25,
2024, subject to continued service as an employee of the Company as
of each applicable vesting date. The exercise price for the stock
options is $2.93 per share.
About Giga-tronics Inc.
Headquartered in Dublin, California, Giga-Tronics Inc. is a
publicly held company, traded on the OTCQB Capital Market under the
symbol "GIGA". Giga-tronics -- http://www.gigatronics.com--
produces RADAR filters and Microwave Integrated Components for use
in military defense applications as well as sophisticated RADAR and
Electronic Warfare (RADAR/EW) test products primarily used in
electronic warfare test & emulation applications.
Giga-Tronics reported a net loss of $2.72 million for the year
ended March 26, 2022, compared to a net loss of $393,000 for the
year ended March 27, 2021. As of March 26, 2022, the Company had
$8.06 million in total assets, $4.33 million in total liabilities,
and $3.73 million in total shareholders' equity.
San Ramon, California-based Armanino LLP, the Company's auditor
since 2018, issued a "going concern" qualification in its report
dated June 24, 2022, citing that the Company's significant
recurring losses and accumulated deficit raise substantial doubt
about its ability to continue as a going concern.
GLOBAL ALLIANCE: Wins Cash Collateral Access Thru Sept 30
---------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California
authorized Global Alliance Distributors, Inc. to use cash
collateral on an interim basis in accordance with its stipulation
with Kapitus LLC.
The Debtor is authorized to use receivables and cash collateral to
pay ordinary and necessary operating expenses in accordance with
the terms of the Kapitus Stipulation and the budget, which amends
the budget attached to the Stipulation, on an interim basis through
September 30, 2022.
During the Interim Period, the Debtor must maintain a combined
balance of all bank accounts of not less than $45,000 and is
prohibited from withdrawing funds from its accounts if the
withdrawal would result in a combined balance of less than
$45,000.
During the Interim Period, the Debtor must transfer $500 a week to
Susan K. Seflin, the Subchapter V trustee. The funds must be held
in the trust account of the Subchapter V Trustee pending court
approval of a fee application and authorization to apply the funds
held in trust to any approved fees and costs of the Sub V Trustee.
Kapitus has agreed to subordinate its ownership and security
interests in the funds held in trust by the Subchapter V Trustee to
the Subchapter V Trustee's right to seek authorization to apply the
funds to any court approved fees and costs. Any excess funds held
by the Subchapter V Trustee following final approval of all fees
and costs must be returned to the Debtor and Kapitus' ownership and
security interests in any returned funds will remain intact.
During the Interim Period and upon Court approval of the employment
of Menchaca & Company LLP, the Debtor will transfer $1,000 a month
to Menchaca. The funds will be held in Menchaca's trust account
pending Court approval of a fee application and authorization to
apply the funds held in trust to any approved fees and costs of the
firm. Kapitus also has agreed to subordinate its ownership and
security interests in the funds held in trust by Menchaca to the
firm's right to seek authorization to apply such funds to any
Court-approved fees and costs.
As additional adequate protection to other secured parties with an
interest in cash collateral, the parties are granted replacement
liens upon all post-petition assets of the bankruptcy estate, to
the same extent, validity and priority of such parties'
pre-petition liens and security interests in the Debtor's assets.
The replacement liens are deemed duly perfected and recorded under
all applicable laws without the need for any notice or filings. The
grant of replacement liens does not limit the right of parties to
seek additional adequate protection of their interests and will not
be deemed a determination by the Court of the sufficiency of
adequate protection provided to such parties.
A further continued hearing on the matter is scheduled for
September 29 at 11:30 a.m.
A copy of the order is available at https://bit.ly/3Ug9R5j from
PacerMonitor.com.
The budget provides for total disbursement, on a weekly basis, as
follows:
$106,868 for the week ending September 23, 2022; and
$100,369 for the week ending September 30, 2022.
About Global Alliance Distributors
Founded in 2010, Global Alliance Distributors Inc. operates a
distribution center that distributes primarily Latino books and
magazines to approximately 250 supermarkets throughout California,
Nevada, Arizona and Florida. It also distributes seasonal items,
including, but not limited to, school supplies, sporting goods and
equipment, snacks and candies. The Company also operates a logistic
business that provides cargo deliveries using independent
contractors. Its logistical clients are two major distribution
companies, A&C, which is currently the largest international
magazine distributor in the world, and Sally Beauty Supplies, a
national cosmetics manufacturer.
Global Alliance Distributors Inc. sought Chapter 11 bankruptcy
protection (Bankr. C.D. Cal. Case No. 22-12552) on May 5, 2022. In
the petition filed by Alberto Fabara, as CEO, Global Alliance
estimated assets between $500,000 and $1 million and estimated
liabilities between $1 million and $10 million.
The case is handled by Honorable Bankruptcy Judge Deborah J.
Saltzman.
The Law Offices of Sheila Esmaili serves as the Debtor's counsel.
Menchaca & Company LLP serves as the Debtor's financial advisors
and consultants.
HAZELTON TRUST: Seeks Chapter 11 Bankruptcy Protection
------------------------------------------------------
Hazelton Trust, a business trust, filed for chapter 11 protection
in the Southern District of Florida.
The petition states that funds will be available to unsecured
creditors.
About Hazelton Trust
Hazelton Trust sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Fla. Case No. 22-17022) on Sept. 12,
2022. In the petition filed by Hanna Development, as substitute
trustee, the Debtor reported assets between $500,000 and $1 million
and estimated liabilities between $100,000 and $500,000. The
Debtor is represented by Jeffrey M Siskind at Siskind Legal, PLLC.
HOME POINT: Moody's Lowers CFR to 'B3' & Alters Outlook to Stable
-----------------------------------------------------------------
Moody's Investors Service has downgraded Home Point Capital Inc.'s
corporate family rating to B3 from B2 and its senior unsecured bond
rating to Caa1 from B3. Home Point's outlook was changed to stable
from negative.
Downgrades:
Issuer: Home Point Capital Inc.
LT Corporate Family Rating, Downgraded to B3 from B2
Senior Unsecured Regular Bond/Debenture, Downgraded
to Caa1 from B3
Outlook Actions:
Outlook, Changed to Stable from Negative
RATINGS RATIONALE
The downgrade of Home Point's ratings reflects Moody's expectation
that the company's prospects for profitability in 2022-23 have
diminished, reflecting heightened competition due to industry
excess capacity. This excess capacity has resulted from lower
origination volumes due to higher interest rates.
The company reported a loss of $44 million in the second quarter
following a profit of $12 million in the first quarter. This loss
was driven by lower origination volumes, lower gain on sale margins
and still-elevated expenses.
As a result of its weak operating performance, Home Point recently
announced a series of initiatives to aggressively right-size its
cost structure as well as focus its business activities on its
wholesale lending channel. While the focus on improving
profitability is credit positive, even though it will result in
reduced market share, the ability of the company to successfully
execute this strategy is uncertain, particularly in a challenging
market environment, said Moody's.
Home Point's capitalization improved to 15.1% as of June 30, 2022
from 12.6% at March 31, 2022, as measured by adjusted tangible
common equity (TCE) to adjusted tangible managed assets (TMA)
(which excludes deferred tax assets, goodwill and intangible assets
from the numerator and Ginnie Mae loans eligible for repurchase,
deferred tax assets, home equity conversion mortgages (HECMs),
goodwill and intangible assets from the denominator). This increase
was primarily driven by a material decline in total assets and
loans held for sale, caused by the drop in origination volumes.
As of June 30, 2022, the company had $136 million in unrestricted
cash, down from $161 million as of March 31, 2022. The company had
$500 million of unsecured debt outstanding as of June 30, 2022,
maturing on February 1, 2026, leaving it with a reasonable debt
maturity runway at its rating level.
The stable outlook reflects Moody's expectation that the company's
current ratings reflect the challenging operating conditions in the
mortgage sector that will continue to pressure Home Point's
profitability, making it challenging for it to reduce financial
leverage over the next 12-18 months. The stable outlook also
incorporates Moody's expectation of generally stable capitalization
coupled with a reasonable runway until the company's long-term
senior unsecured debt matures on February 1, 2026.
Home Point's Caa1 long-term senior unsecured bond rating is one
notch below its B3 CFR, reflecting its ranking in Home Point's
capital structure, which is subordinate to the company's MSR credit
facility. The MSR facility has first lien priority on the assets of
Home Point and is senior in payment priority to the company's rated
senior unsecured notes. The one notch lower unsecured bond rating
incorporates Moody's expectation that the company will over time
modestly reduce its reliance on secured corporate debt, whereby the
ratio of secured debt associated with MSRs and secured corporate
debt to total corporate debt will remain around 50%.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The CFR and unsecured bond rating could be upgraded if the
company's financial performance improves materially. This could be
evidenced by improved profitability with pre-tax income (excluding
MSR fair value marks) reaching and expected to remain above 1.5%
along with TCE to TMA remaining above 14%.
The CFR and unsecured bond rating could be downgraded if leverage
deteriorates, for example if TCE to TMA declines and is expected to
remain below 11%, if the company continues to report sizeable
losses over multiple quarters, or if the company's liquidity
profile deteriorates. In addition, Home Point's unsecured bond
rating could be downgraded if the ratio of unsecured debt to total
corporate debt decreases and is expected to remain below 50%.
The principal methodology used in these ratings was Finance
Companies Methodology published in November 2019.
HOVNANIAN ENTERPRISES: Moody's Raises CFR to B3, Outlook Stable
---------------------------------------------------------------
Moody's Investors Service upgraded Hovnanian Enterprises, Inc.'s
(Hovnanian) Corporate Family Rating to B3 from Caa1 and Probability
of Default Rating to B3-PD from Caa1-PD. The ratings on K.
Hovnanian Enterprises, Inc.'s 1.125 lien and 1.25 lien senior
secured notes due 2026 were upgraded to B3 from Caa1, the ratings
on its senior unsecured notes and senior unsecured term loans were
upgraded to Caa2 from Caa3. The rating on Hovnanian's preferred
stock was upgraded to Caa3 from Ca. The SGL-3 Speculative Grade
Liquidity Rating is maintained. The outlook was changed to stable
from positive.
The upgrade of Corporate Family Rating reflects strengthening of
Hovnanian's credit profile through improved profitability, growth
in scale, a series of completed and planned debt reductions, and
the resulting deleveraging. The company's focus on deleveraging, a
governance consideration, including the establishment of a long
term public leverage target, supports its credit profile. Moody's
expects Hovnanian's total debt to capitalization leverage to
approach low 70% in the next 12 months. A recent extension of the
company's revolving credit facility's maturity also enhanced its
liquidity profile. The reduced risk of restructuring activity
stemming from improved operating performance is reflected in the
upgrade of the company's probability of default rating.
The following rating actions were taken:
Upgrades:
Issuer: Hovnanian Enterprises, Inc.
Corporate Family Rating, Upgraded to B3 from Caa1
Probability of Default Rating, Upgraded to B3-PD from
Caa1-PD
Pref. Stock Preferred Stock, Upgraded to Caa3 (LGD6)
from Ca (LGD6)
Issuer: K. Hovnanian Enterprises, Inc.
Gtd. Senior Secured Notes, Upgraded to B3 (LGD3) from
Caa1 (LGD3)
Gtd. Term Loan, Upgraded to Caa2 (LGD6) from Caa3 (LGD6)
Gtd. Senior Notes, Upgraded to Caa2 (LGD6) from Caa3 (LGD6)
Outlook Actions:
Issuer: Hovnanian Enterprises, Inc.
Outlook, Changed To Stable From Positive
Issuer: K. Hovnanian Enterprises, Inc.
Outlook, Changed To Stable From Positive
RATINGS RATIONALE
Hovnanian Enterprises, Inc.'s B3 Corporate Family Rating reflects:
1) governance considerations including focus on deleveraging, and
the achieved progress in reducing debt to capitalization with
further improvement expected in the next 12 to 18 months; 2) a
robust backlog position of about $1.8 billion at July 31, 2022; 3)
geographic diversification across 14 states and 26 homebuilding
markets and $2.8 billion in revenue scale; 4) Moody's expectation
of adequate liquidity with lack of debt maturities in the next four
years and access to a revolving credit facility; and 5) an
option-focused land strategy with about 68% of total lots optioned
at July 31, 2022 and good inventory turns.
However, the credit profile is constrained by: 1) the company's
highly leveraged and complex capital structure with homebuilding
debt to capitalization ratio of about 80% at July 31, 2022; 2)
recent share repurchase authorization and the potential for
shareholder friendly actions, although they are expected to be
modest; 3) a history of aggressive financial policies that resulted
in high leverage and debt restructuring activity and distressed
exchange transactions; 4) exposure to litigation and regulatory
risks; and 5) the cyclicality of the homebuilding sector and
exposure to volatility in demand and operating statistics.
The B3 rating on the company's 1.125 lien and 1.25 lien senior
secured notes reflects these notes' priority position in the
capital structure compared to notes secured by further liens and
unsecured debt. The Caa2 rating on unsecured notes and term loans
reflects the loss absorption provided by these instruments in a
default scenario.
The SGL-3 Speculative Grade Liquidity Rating reflects Moody's
expectation that Hovnanian will maintain adequate liquidity over
the next 12 to 15 months. Liquidity is supported by the lack of
senior secured and senior unsecured note maturities until 2026,
access to $125 million revolving credit facility which expires in
June 2024, absence of financial maintenance covenants, and $225
million of cash balance at July 31, 2022. Liquidity, however, is
constrained by periodically negative cash flow due to land
investments.
ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
Moody's changed the governance risk score for Hovnanian to G-4
(highly negative) from G-5 (very highly negative). The CIS score
was also changed to CIS-4 from CIS-5. The change in the governance
risk score reflects the company's focus on deleveraging, the
improvement in its debt to capitalization through a series of
completed and planned repayments of outstanding debt instruments
with cash, and Moody's assessment of reduced probability for
restructuring activity. At the same time, the governance score
reflects the company's highly leveraged and complex capital
structure.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if the company continues to improve
its credit statistics, simplifies its capital structure, and
maintains good liquidity profile. Homebuilding debt to book
capitalization trending toward 60% and EBIT to interest coverage
sustained above 2.0x would be important considerations for an
upgrade.
The rating could be downgraded if the company's leverage does not
decline toward 70%, the risk of debt restructuring increases,
interest coverage weakens below 1.0x, or liquidity profile
deteriorates.
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in January 2018.
Hovnanian Enterprises, Inc., established in 1959 and headquartered
in Matawan, New Jersey, designs, constructs and markets single
family detached homes and attached condominium apartments and
townhouses, and operates in 26 markets in 14 states. In the last
twelve months ended July 31, 2022, Hovnanian generated $2.8 billion
in homebuilding revenue and $214 million in net income.
INSTANT BRANDS: S&P Downgrades ICR to 'B-', Outlook Negative
------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S.-based
Instant Brands Holdings Inc. to 'B-' from 'B'. Concurrently, S&P
lowered its rating on the company's first-lien term loan to 'B-'
from 'B'. The recovery rating is '3', indicating its expectation
for meaningful (50%-70%; rounded estimate: 55%) recovery in the
event of a payment default.
The negative outlook reflects the possibility that S&P could lower
its rating on the company after its key selling season if S&P
Global Ratings-adjusted leverage did not improve or EBITDA interest
coverage were sustained below 1.5x.
The downgrade reflects Instant Brands' weak operating performance
and higher-than-expected leverage through the second quarter of
fiscal 2022. The company's revenue declined 28.6% and 16.6%
year-over-year during the second and first quarters of fiscal 2022,
respectively. Despite progress on some of Instant Brands' strategic
diversification goals, including international and new category
expansion, revenue was down across all the company's regions. In
North America, large retailers slowed or delayed inventory
replenishment because they have built up large positions due to
shipments received late in the selling season, which has led them
to focus on selling down existing inventory. The company's sales in
Asia suffered from COVID-19-related lockdowns and disruptions and
in Europe from macroeconomic challenges stemming from the
Russia-Ukraine war. As a result, sales for the company's main
product segments, IHS and Houseware, declined 47.8% and 10.7%,
respectively, in the second quarter.
Profitability also declined because of high freight and labor costs
and investments to support international and new category
expansion. As a result, S&P Global Ratings-adjusted EBITDA fell
about 50% to $64 million for the 12 months ended June 30, 2022. S&P
said, "We estimate S&P Global Ratings-adjusted leverage increased
to over 10x for the 12 months ended June 30, 2022. We expect
Instant Brands will sustain adjusted leverage above 10x through
fiscal 2023. We had previously expected the company to deleverage
closer to 6x by the end of 2022."
The company's operating cash flow weakened; its liquidity may be
inadequate if profitability does not improve. In the first half of
2021, the company began to build up inventory due to inflation,
supply chain disruption leading to longer lead times, international
growth, and new category expansion. Despite Instant Brands'
strategic decision to cancel orders on delayed shipments in the
second half of 2021 to prevent an overstock of inventory that would
have missed promotional periods, its operating cash use increased
to about $80 million over the past 12 months, compared with
operating cash flow of $130 million for the same period the
previous year. To improve cash flow, the company needs to sell down
inventory in the midst of declining consumer spending on home
categories and elevated retailer inventory levels.
In May 2022, Instant Brands obtained an amendment to its revolving
asset-based lending (ABL) credit facility to increase its advance
rates, which increased borrowing availability by $17 million
through the inventory buildup periods. The company had just $33
million in ABL borrowing availability as of June 30, 2022. S&P
believes the company should be able to fund its seasonal working
capital needs next year and remain in compliance with its
fixed-charge covenant, but liquidity is tight and cushion under the
covenant would be thin, if tested, should working capital
investment not sufficiently decline.
A significant improvement in profitability and leverage may be
difficult amid declining consumer spending. S&P Global
Ratings-adjusted EBITDA margins contracted about 540 basis points
to 7.8% over the 12 months ended June 30, 2022, due to input cost
inflation, extraordinary freight costs, adverse product mix, and
lower volume. S&P said, "We expect sequential profitability
improvement in the remainder of fiscal 2022 from price increases,
cost-cutting measures, and lower freight and tariff costs. However,
a sustainable and substantial improvement in profitability may be
difficult amid weakening macroeconomic conditions and an
increasingly promotional environment. We believe consumer
discretionary spending on home categories will be soft through the
remainder of 2022, as retailers and manufacturers seek to reduce
high inventory levels amid declining demand. As a result, we do not
expect significant profitability and cash flow improvements until
2023."
The company entered a high inflationary and uncertain macroeconomic
environment with significantly more debt. In April 2021, Instant
Brands issued a new $450 million first-lien term loan in large part
to fund about $245 million of dividend distributions to
shareholders. As a result, the company's pro forma leverage
increased to about 8x following the transaction, from 4.5x for the
12 months ended March 30, 2021. Since then, its financial sponsors
have reinvested about $100 million into the business due to the
weaker macroeconomic environment. Although S&P acknowledges
financial sponsors have reinvested in the company, it does not
believe it was their original intention. S&P believes debt-financed
shareholder distributions demonstrate financial sponsor appetite
for aggressive financial policies. Instant Brands entered a high
inflationary and uncertain macroeconomic environment with
substantially more debt, which left it with a smaller cushion to
absorb adverse external events.
The negative outlook reflects the possibility that S&P could lower
its rating on the company after its key selling season if its S&P
Global Ratings-adjusted leverage did not improve or EBITDA interest
coverage were sustained below 1.5x."
S&P could lower Instant Brands' rating if:
-- Revenue and EBITDA did not sequentially improve due to lower
category demand from retailers or consumers, leading to lower
liquidity; or
-- Competition intensifies such that the company lost market
share.
S&P could revise the outlook to stable if Instant Brands' EBITDA
interest coverage improved closer to 2x, if the company restored
FOCF to positive and if it maintained adequate liquidity. S&P
believes this could occur if the company:
-- Unwound its inventory buildup; and
-- Maintained market share.
ESG credit indicators: E-2, S-2, G-3
J. BOWERS: Wins Cash Collateral Access Thru Oct 29
--------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Ohio,
Eastern Division, authorized J. Bowers Construction, Inc. to use
cash collateral on a final basis in accordance with the budget,
nunc pro tunc from the Petition Date and through the end of the day
on October 29, 2022.
The Debtors were jointly and severally indebted to Peoples Bank in
the amount of $136,519 for loans taken in 2015. The Debtors also
owe the U.S. Small Business Administration for EIDL loans taken in
2020. Debtor J. Bowers Construction Inc. also was indebted to
Global Merchant Cash, Inc. in the amount of $374,659 for
transactions in 2021 and 2022.
The Prepetition Indebtedness owed to Peoples Bank, the SBA and
Global Merchant Cash is secured by substantially all of the
Debtors' cash, accounts, accounts receivables, inventory,
furniture, fixtures and equipment. As adequate protection for the
use of cash collateral, the Secured Creditors are granted security
interests in property acquired by the Debtors that is of the same
type as the cash collateral against which a lender asserted a lien
prior to the filing of the Debtors' bankruptcy petitions to the
extent of the diminution of the value of the Secured Creditors'
collateral securing the indebtedness. The Replacement Liens will
have the same validity, priority, and extent (if any) as the liens
on cash collateral that existed at the time of the commencement of
the bankruptcy cases. The Replacement Liens granted are deemed
perfected without the necessity for filing or execution of
documents which might otherwise be required under nonbankruptcy
laws for the perfection of security interests. The Replacement
Liens will be subordinate to the payment of the fees of the United
States Trustee, fees of the Subchapter V Trustee, if applicable, as
well as those professional fees of any professionals retained
pursuant to an Order of the Court and fees of any unsecured
creditors committee, if such committee will be formed.
To provide additional adequate protection for Global Merchant Cash,
J. Bowers Construction, Inc. will pay Global Merchant Cash an
amount equal to the sum of 30% of gross revenue received from the
collection of account receivables on a monthly basis payable on the
10th day of each month for accounts receivables collected during
the preceding calendar month. The first adequate protection payment
will be due on October 10, 2022, for the collection of accounts
receivables received during the month of September 2022.
The Debtors will open and maintain their Debtor in Possession
accounts at Peoples Bank and deposit all cash collateral in the
General Account.
A copy of the order is available at https://bit.ly/3QVvFQK from
PacerMonitor.com.
About J. Bowers Construction Inc.
J. Bowers Construction, Inc. sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. N.D. Ohio. Case No. 22-50878) on
July 29, 2022. In the petition filed by Kyle Bowers, authorized
representative, the Debtor disclosed up to $10 million in both
assets and liabilities.
Restoration Services of Akron, Inc. sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. N.D. Ohio. Case No.
22-50879) on July 29, 2022.
The Hon. Alan M. Koschik serves as bankruptcy judge.
Peter G. Tsarnas, Esq., at Gertz & Rosen, Ltd. is the Debtors'
counsel.
JOYCARE THERAPY: Seeks to Hire Baker & Associates as Counsel
------------------------------------------------------------
Joycare Therapy, LLC seeks approval from the U.S. Bankruptcy Court
for the Southern District of Texas to hire Baker & Associates as
its legal counsel.
The firm's services include:
a. analyzing the financial situation and rendering assistance
to the Debtor;
b. advising the Debtor with respect to its duties;
c. preparing and filing schedules of assets and liabilities,
statements of affairs, answers, motions and other legal papers;
d. representing the Debtor at the first meeting of creditors;
e. representing the Debtor in all proceedings before the
bankruptcy court and in any other judicial or administrative
proceeding where the rights of the Debtor may be litigated or
otherwise affected;
f. preparing and filing disclosure statement (if necessary)
and Chapter 11 plan of reorganization; and
g. assisting the Debtor in any matters relating to its Chapter
11 case.
The hourly rates charged by the firm's attorneys and paralegals are
as follows:
Attorneys $400 - $500 per hour
Paralegals $125 - $150 per hour
In addition, the firm will seek reimbursement for work-related
expenses.
Prior to the filing of its case, the Debtor provided the firm with
a deposit in the amount of $13,500, of which $1,738 was used to pay
the filing fees.
Reese Baker, Esq., the firm's attorney who will be providing the
services, disclosed in a court filing that he is a "disinterested
person" within the meaning of Section 101(14) of the Bankruptcy
Code.
Baker and Associates can be reached at:
Reese W. Baker, Esq.
Baker and Associates
950 Echo Lane, Suite 300
Houston, TX 77024-2824
Phone: (713) 869-9200
Fax: (713) 869-9100
Email: courtdocs@bakerassociates.net
About Joycare Therapy
Houston-based Joycare Therapy, LLC sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. S.D. Texas Case No.
22-32351) on Aug. 17, 2022, with up to $500,000 in assets and up to
$10 million in liabilities. Huan Le, manager, signed the petition.
Judge Eduardo V. Rodriguez oversees the case.
Reese W. Baker, Esq., at Baker and Associates is the Debtor's
counsel.
JUST BELIEVE: Wins Cash Collateral Access Thru Oct 31
-----------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida,
West Palm Beach Division, authorized Just Believe Recovery Center
of Port Saint Lucie, LLC to use cash collateral on an interim basis
in accordance with the budget, with a 10% variance, through October
31, 2022.
The Court said the cash collateral is necessary for an effective
reorganization and to avoid harm to the Debtor's bankruptcy estate.
The Debtor needs to be able to pay its regular business operating
expenses and administrative expenses and other ordinary expenses as
they become due.
ASD Specialty Healthcare, LLC may purport to have a security
interest in accounts receivable and other assets of the Debtor. In
support of the foregoing agreement and as perfection of the
purported lien thereunder, the Court finds that a UCC-1 Financing
Statement was filed in which ASD claims a security interest in the
collateral.
Texas Capital Bank, N.A. may purport to have a security interest in
the Debtor's future receivables. In support of the foregoing
agreement and as perfection of the purported lien thereunder, the
Court finds that a UCC-1 Financing Statement was filed in which
Texas claims a security interest in the collateral.
The Court finds that the Debtor is a party to a Business Loan and
Security Agreement dated April 2, 2019, with Alternative Funding
Group, LLC in which AFG may purport to have a security interest in
the Debtor's future receivables. AFG does not appear to have filed
a UCC-1 Financing Statement to perfect its purported lien.
Accordingly, AFG does not appear to have a lien on the Debtor's
cash collateral.
The Debtor is a party to a Revenue Purchase Agreement dated June
16, 2022, with City Capital NY in which City may purport to have a
security interest in Debtor’s future receivables. City does not
appear to have filed a UCC-1 Financing Statement to perfect its
purported lien.
The Debtor is a party to a Future Receipts Sale and Purchase
agreement dated January 24, 2022, with Cloudfund, LLC in which
Cloudfund may purport to have a security interest in the Debtor's
future receivables. Cloudfund does not appear to have filed a UCC-1
Financing Statement to perfect its purported lien. Accordingly,
Cloudfund does not appear to have a lien on the Debtor's cash
collateral.
The Debtor is a party to two Revenue Purchase Agreements dated July
29, 2021, and March 9, 2021, respectively with NewCo Capital Group
VI LLC in which NewCo may purport to have a security interest in
the Debtor's future receivables. NewCo does not appear to have
filed a UCC-1 Financing Statement to perfect its purported lien.
Accordingly, NewCo does not appear to have a lien on the Debtor's
cash collateral.
As adequate protection for and to the extent of the Debtor's use of
cash collateral pursuant to the Order, ASD, Texas, AFG, City,
Cloudfund and NewCo are granted, as of the Petition Date, a
replacement lien to the same extent as any pre-petition lien,
pursuant to 11 U.S.C. section 361(2) on the property set forth in
its security agreements, on an interim basis, without any prejudice
to any rights of the Debtor to seek to void the lien as to the
extent, validity, or priority of the liens.
A continued hearing on the matter is scheduled for October 25 at
1:30 p.m.
A copy of the order is available at https://bit.ly/3BR4an1 from
PacerMonitor.com.
About Just Believe Recovery Center
Just Believe Recovery Center is a residential drug & alcohol
addiction treatment center that offers personalized treatment
options. The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Fla. Case No. 22-15739) on July 27,
2022. In the petition signed by Cynthia Bellino, manager, the
Debtor disclosed up to $50 million in assets and up to $10 million
in liabilities.
Judge Mindy A. Mora oversees the case.
Craig I. Kelley, Esq., at Kelley, Fulton & Kaplan, P.L. is the
Debtor's counsel.
KOHL'S CORP: S&P Downgrades ICR to 'BB+', Outlook Stable
--------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on
Wisconsin-based department store chain Kohl's Corp.'s to 'BB+' from
'BBB-'.
S&P also lowered its rating on Kohl's secured unsecured debt to
'BB+' from 'BBB-', and it assigned it a capped '3' recovery rating,
which indicates its expectations for meaningful (50%-70%; 65%
rounded estimate) recovery in the event of default.
S&P said, "The stable outlook reflects our view that although sales
and profitability will likely stay pressured over the next year,
the company will continue to balance shareholder returns and
execute operational initiatives while sustaining leverage around 3x
on an S&P Global Ratings lease-adjusted basis in 2023.
"The downgrade reflects the secular headwinds we continue to
associate with the highly competitive department store sector and
our expectation that Kohl's operating performance will be weaker
than our prior forecast with S&P Global Ratings lease-adjusted
leverage at about 3.5x in 2022 before improving to around 3x in
2023.Kohl's operating momentum continued to slow in the second
quarter of 2022, with sales declining by 8.5% as the company
continued to face the weakening macroeconomic environment, high
inflation, and dampened consumer spending. Operating margins for
the quarter declined by more than 600 basis points. We expect weak
prospects over the next year with the company's S&P Global
Ratings-adjusted EBITDA margins decreasing to below 11% in 2022
from 14.7% in 2021, reflecting higher input costs, ongoing
investments in store initiatives, and a more promotional
environment. So far this year, Kohl's performance has been more
volatile than its peers due to inflationary pressure on its
middle-income customers and the nature of its merchandise mix,
which is concentrated in the active and casual lifestyle
categories.
"Despite clearance activity during the second quarter, inventory
levels continued to increase materially, particularly in the
women's casual and activewear categories, where we believe
promotions will likely intensify throughout the industry. S&P
Global Rating-adjusted leverage (including our adjustment for
capital and operating lease liabilities) was 3.2x for the 12 months
through second-quarter 2022. In addition, we project leverage will
be around 3.5x for the fiscal year ended 2022, which is above our
prior expectation and the downgrade threshold of mid-2x for a
'BBB-' rating. In addition, we expect free operating cash flow to
remain pressured in 2022 due to lower sales and higher inventory
levels while the company continues to sustain high capital
expenditures for its Sephora buildouts and related store
refurbishments.
"Kohl's has indicated it will explore shareholder-friendly actions,
as it reaffirmed its commitment to returning capital to
shareholders, including approximately $900 million through
dividends and share repurchases this year. It is also currently
reviewing other opportunities to unlock shareholder value,
including reevaluating selling portions of the company's real
estate portfolio. In 2023, we expect free cash flow to improve to
about $900 million and for the company to repay its $275 million
senior unsecured notes, thereby improving its leverage to around
3x. At this time, we do not factor in future potential sale
leaseback transactions given the uncertainty of the timing and
amounts.
"We believe competitive pressures in the evolving and highly
competitive department store segment remain significant.Apparel
purchases are highly discretionary, and retailer performance
remains vulnerable to economic conditions such as the recent
macroeconomic slowdown. In addition, our longer-term view is that
changing consumer apparel buying habits will be difficult to
navigate, which increases the potential for operational missteps.
Declining physical store traffic, shifting category preferences,
and online price transparency are persistent longer-term risks for
Kohl's business. We believe Kohl's efforts to leverage
partnerships--such as with Sephora, which will be rolled-out to all
its stores, could prove successful in offsetting some of these
pressures. Nevertheless, this partnership also highlights the need
to adapt the business model to secular trends and a legacy store
footprint with large square footage stores and we believe there are
ongoing execution risks with the evolution of these stores. We
think a continued shift to online shopping and competition from
off-price e-players could pressure traffic at brick-and-mortar
locations and margins. We believe this relative underperformance
highlights some of the challenges Kohl's will need to overcome to
strengthen its competitive standing, and as such, we revised our
comparable ratings analysis modifier for the company to neutral
from positive. Kohl's closest rated peers are department store
operators Nordstrom (BB+/Stable/B) and Macy's Inc. (BB/Positive/B).
We view Kohl's largely off-mall locations (about 95% of its total
stores) as a benefit as it contributes to the company's lower cost
structure and provides better accessibility and convenience for
customers. Still, Kohl's credit measures lag its peers year-to date
and we believe performance trends across the three companies have
converged over time due to the challenging backdrop they are
facing.
"The stable outlook reflects our view that sales and profitability
will likely stay pressured over the next year amid the intensely
challenging operating environment. Nevertheless, we believe the
company will continue to balance shareholder returns and execute
operational initiatives."
S&P could lower its rating on Kohl's again over the next 12 months
if:
-- Execution setbacks in its inventory management and merchandise
offerings or significant negative macroeconomic trends hindered
performance, resulting in sales and profitability performance
trailing peers in the next one to two years. Under this scenario,
S&P would expect profits to be at risk of stagnating or declining,
and it could view the business risk profile as incrementally
deteriorating; or
-- The company undertook shareholder-friendly
initiatives--including share repurchases backed by debt issuance or
a large sale-leaseback transaction--that resulted in leverage
remaining above 3x on a sustained basis.
S&P could upgrade Kohl's if it views its competitive standing more
favorably and it strengthens and maintains credit metrics that are
consistent with an investment-grade rating.
This could occur if:
-- Stable operating performance and traction with Kohl's
transformative strategies lead us to believe there were prospects
for sustained EBITDA growth and market-share preservation; and
-- The company demonstrates its commitment to sustaining leverage
in the mid-2x area or lower.
ESG credit indicators: E-2, S-2, G-2
LA COSTA LIVING ESTATES: Starts Subchapter V Case
-------------------------------------------------
La Costa Living Estates LLC, a Single Asset Real Estate, has filed
for chapter 11 protection. The Debtor elected on its voluntary
petition to proceed under Subchapter V of chapter 11 of the
Bankruptcy Code.
The Debtor reported assets of $ million to $10 million and
liabilities of the same range. The petition states that funds will
be available to unsecured creditors.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
Oct. 4, 2022, at 12:30 PM at UST-LA3, TELEPHONIC MEETING.
CONFERENCE LINE:1-866-811-2961, PARTICIPANT CODE:9609127.
Proofs of claim are due by Nov. 21, 2022.
About La Costa Living Estates
On Sept. 12, 2022, La Costa Living Estates LLC filed a petition for
relief under Subchapter V of Chapter 11 of the Bankruptcy Code
(Bankr. C.D. Cal. Case No. 22-14961). The Debtor reported assets
of $1 million to $10 million and liabilities of the same range.
Moriah Douglas Flahaut has been appointed as Subchapter V trustee.
The Debtor is represented by Stephen L Burton of Stephen L. Burton,
Attorney at Law.
LD HOLDINGS: Moody's Lowers CFR to 'B3' & Alters Outlook to Stable
------------------------------------------------------------------
Moody's Investors Service has downgraded to B3 from B2 LD Holdings
Group, LLC's (loanDepot) corporate family rating and downgraded to
Caa1 from B3 its backed senior unsecured bond rating. loanDepot's
outlook was changed to stable from negative.
Downgrades:
Issuer: LD Holdings Group, LLC
Corporate Family Rating, Downgraded to B3 from B2
Backed Senior Unsecured Regular Bond/Debenture,
Downgraded to Caa1 from B3
Outlook Actions:
Issuer: LD Holdings Group, LLC
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
The downgrade of loanDepot's ratings reflects Moody's expectation
that it will only return to profitability toward the end of the
year at the earliest. The company reported a loss of $224 million
in the second quarter following a $91 million loss in the first
quarter. Excluding non-recurring items and fair-value marks on its
mortgage servicing rights (MSR) assets, Moody's said that
loanDepot's core tax-adjusted second quarter net loss was around
$135 million. The company's weak performance was driven by lower
origination volumes, lower gain on sale margins and still elevated
expenses.
As a result of its weak operating performance, loanDepot recently
announced a series of initiatives to aggressively right-size its
cost structure as well as focus its business activities on parts of
the origination market which it feels are less competitive and
somewhat underserved. In the past, the company had a track record
of sacrificing profitability for the sake of market share growth.
Therefore, while the focus on improving profitability is credit
positive, even though it will result in reduced market share, the
ability of the company to successfully execute this strategy is
uncertain, particularly in a challenging market environment, said
Moody's.
loanDepot's capitalization, as measured by tangible common equity
(TCE) to adjusted tangible managed assets (TMA) (which excludes
Ginnie Mae loans eligible for repurchase from the denominator), was
14.0% as of June 30, 2022 down modestly from 14.4% as of March 31,
2022 as the decline in TCE during the second quarter was mostly
offset by a decline in TMA.
Fannie Mae, Freddie Mac, Ginnie Mae as well as the company's
financing facilities contain various financial covenants which
primarily relate to required profitability, capital, liquidity, and
leverage. As a result of loanDepot's loss in the second quarter,
the company breached profitability covenants. The company has
obtained waivers for these breaches and as of June 30, 2022 was in
compliance with all other financial covenants. However, the company
expects that it will need to further amend or obtain waivers during
fiscal 2022 to maintain compliance with such covenants, giving rise
to event risk for its bondholders.
As of June 30, 2022, the company had $955 million in unrestricted
cash, up from $554 as of March 31, 2022. The company had
approximately $1 billion of unsecured debt outstanding as of June
30, 2022, with $500 million maturing on November 1, 2025 and $502.5
million maturing on April 1, 2028, leaving it with a reasonable
unsecured debt maturity runway at its rating level.
The stable outlook reflects Moody's expectation that the company's
current ratings reflect the challenging operating conditions in the
mortgage sector that will continue to pressure loanDepot's
profitability, making it challenging for the company to reduce
financial leverage over the next 12-18 months. The stable outlook
also incorporates Moody's expectation of generally stable
capitalization over the next 12-18 months coupled with a reasonable
runway until the company's long-term senior unsecured debt first
matures in November 2025.
loanDepot's Caa1 long-term senior unsecured bond rating is a notch
below its B3 CFR and is reflective of its subordinate ranking to
MSR secured debt facilities in loanDepot's capital structure. The
one notch lower unsecured bond rating incorporates Moody's
expectation that the company will over time modestly reduce its
reliance on secured corporate debt, whereby the ratio of secured
debt associated with MSRs and secured corporate debt to total
corporate debt will remain around 50%.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The CFR and unsecured bond rating could be upgraded if the
company's financial performance improves materially. This could be
evidenced by improved profitability with pre-tax income (excluding
MSR fair value marks) reaching and expected to remain above 1.5%
along with TCE to TMA remaining above 14%.
The CFR and unsecured bond rating could be downgraded if leverage
deteriorates, for example if TCE to TMA declines and is expected to
remain below 11%, if the company continues to report sizeable
losses over multiple quarters, or if the company's liquidity
profile deteriorates. In addition, loanDepot's unsecured bond
rating could be downgraded if the ratio of unsecured debt to total
corporate debt decreases and is expected to remain below 50%.
The principal methodology used in these ratings was Finance
Companies Methodology published in November 2019.
LEVEL FOUR ORTHOTICS: Seeks to Hire Cross & Simon as Local Counsel
------------------------------------------------------------------
Level Four Orthotics & Prosthetitics, Inc. and affiliates seek
approval from the U.S. Bankruptcy Court for the District of
Delaware to hire Cross & Simon, LLC as their local counsel.
The firm's services include:
(a) providing the Debtors with legal advice concerning their
rights and duties, and preparing all necessary documents in
connection with the administration of their Chapter 11 cases;
(b) taking all necessary actions to protect and preserve the
Debtors' rights during the pendency of the cases, including
prosecuting actions on behalf of the Debtors, defending any actions
commenced against the Debtors, negotiating all litigation in which
the Debtors are involved, and objecting to claims filed against the
estate;
(c) representing the Debtors at hearings, meetings and
conferences on matters pertaining to their affairs; and
(d) performing all other necessary legal services.
The firm's hourly rates are as follows:
Christopher P. Simon, Esq. $695 per hour
Kevin S. Mann, Esq. $595 per hour
Stephanie MacDonald $210 per hour
Cross & Simon received a retainer in the amount of $25,000.
Kevin Mann, Esq., the firm's attorney who will be providing the
services, disclosed in a court filing that he is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
Cross & Simon can be reached at:
Kevin S. Mann, Esq.
Cross & Simon, LLC
1105 North Market Street, Suite 901
Wilmington, DE 19801
Telephone: +1 302 777 4200 (ext 105)
Fax: +1 302 777 4224
Email: kmann@crosslaw.com
About Level Four Orthotics
Level Four Orthotics & Prosthetics, Inc., doing business as Restore
POC, is a provider of custom prosthetics, orthotics, and infant
cranial remolding products. It is based in Winter Park, Fla.
Level Four and five affiliates, including Cocco Enterprises, Inc.,
sought Chapter 11 protection (Bankr. D. Del. Lead Case No.
22-10807) on Aug. 29, 2022. At the time of the filing, Level Four
reported assets and debt of $10 million to $50 million. The
Debtors have pre-bankruptcy loan obligations totaling $20,235,011
as of the petition date, secured by some or all of the assets of
each of the Debtors.
The Hon. J. Kate Stickles is the case judge.
The Debtors tapped Ruberto, Israel & Weiner, P.C. as bankruptcy
counsel; Cross & Simon, LLC as local counsel; and Verdolino &
Lowey, P.C. as accountant. Kroll Restructuring Administration, LLC
is the claims agent.
LEVEL FOUR ORTHOTICS: Taps Ruberto Israel & Weiner as Legal Counsel
-------------------------------------------------------------------
Level Four Orthotics & Prosthetitics, Inc. and affiliates seek
approval from the U.S. Bankruptcy Court for the District of
Delaware to hire Ruberto, Israel & Weiner, P.C. as their bankruptcy
counsel.
The firm's services include:
(a) advising the Debtors of their rights, powers, and duties
under Chapter 11 of the Bankruptcy Code;
(b) preparing legal documents and reviewing all financial
reports to be filed in the Debtors' Chapter 11 cases;
(c) advising the Debtors concerning, and preparing responses
to, legal papers that may be filed and served in their bankruptcy
cases;
(d) advising the Debtors with respect to, and assisting in the
negotiation and documentation of, financing agreements and related
transactions;
(e) reviewing the nature and validity of any liens asserted
against the Debtors' property and advising the Debtors concerning
the enforceability of such liens;
(f) advising the Debtors regarding their ability to initiate
actions to collect and recover property for the benefit of their
estates;
(g) advising the Debtors in connection with any sale of assets
and related documents;
(h) advising the Debtors in connection with any Chapter 11
plan and related documents;
(i) assisting the Debtors in connection with any potential
property dispositions;
(j) advising the Debtors concerning executory contract and
unexpired lease assumption, assignment and rejection;
(k) assisting the Debtors in reviewing, estimating and
resolving claims asserted against the estates;
(l) commencing and conducting litigation necessary or
appropriate to assert rights held by the Debtors, protect assets of
the Debtors' estates, or otherwise further the goal of completing
the Debtors' Chapter 11 plan;
(m) providing corporate, employee benefit, litigation, tax,
and other general non-bankruptcy services to the extent requested
by the Debtors; and
(n) performing all other necessary legal services in
connection with these cases.
The firm's hourly rates are as follows:
Partners $405 - $625
Associates $335 - $440
Paralegals $260 - $325
Ruberto received a retainer in the amount of $75,000.
James Fox, Esq., a partner at Ruberto, disclosed in a court filing
that the firm is a "disinterested person" within the meaning of
Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
James C. Fox, Esq.
Ruberto, Israel & Weiner, P.C.
255 State Street, 7th Floor
Boston, MA 02109
Phone: (617) 742-4200
Fax: (617) 742-2355
Email: jim_fox@riw.com
About Level Four Orthotics
Level Four Orthotics & Prosthetics, Inc., doing business as Restore
POC, is a provider of custom prosthetics, orthotics, and infant
cranial remolding products. It is based in Winter Park, Fla.
Level Four and five affiliates, including Cocco Enterprises, Inc.,
sought Chapter 11 protection (Bankr. D. Del. Lead Case No.
22-10807) on Aug. 29, 2022. At the time of the filing, Level Four
reported assets and debt of $10 million to $50 million. The
Debtors have pre-bankruptcy loan obligations totaling $20,235,011
as of the petition date, secured by some or all of the assets of
each of the Debtors.
The Hon. J. Kate Stickles is the case judge.
The Debtors tapped Ruberto, Israel & Weiner, P.C. as bankruptcy
counsel; Cross & Simon, LLC as local counsel; and Verdolino &
Lowey, P.C. as accountant. Kroll Restructuring Administration, LLC
is the claims agent.
LIFESCAN GLOBAL: S&P Downgrades ICR to 'B-', Outlook Stable
-----------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on blood
glucose monitoring (BGM) devices manufacturer LifeScan Global Corp.
to 'B-' from 'B'. Accordingly, S&P lowered its issue-level ratings
on the company's revolver to 'B+' from 'BB-', on the company's
first-lien debt to 'B-' from 'B' and on its second-lien debt to
'CCC+' from 'B-'.
The stable outlook reflects S&P's expectation the company will
likely be able to extend its revolver maturity (due Oct. 2023) in
the near term and will improve its cash flow generation, while
making progress toward the launch of CGM over the next 12 months.
S&P said, "The downgrade reflects our view that the risk to
Lifescan's liquidity position is elevated amid declining strip
volumes in the U.S., a challenging macroeconomic environment, and
approaching refinancing needs. We see uncertainty in the execution
of its liquidity replenishment plans." In the second quarter of
2022 the company's strip sale volumes in the U.S. (representing
about 30% of the company's net sales) experienced a 3% decline and,
when coupled with a shift in product mix, resulted in an elevated
rebate outflow of about $55 million. In the U.S., Lifescan's
contracts with managed care payors typically include material
rebate arrangements that result in working capital outflows when
strip volumes decline. In addition, in the second quarter of 2022,
the company's product mix experienced a shift that changed the
company's rebate flow and exacerbated the working capital outflow.
In addition, the company continues to invest in the development of
its CGM product. During the first half of 2022 it incurred a
considerable amount of expenses associated with the transition to
CGM. S&P said, "Although we expect Lifescan to limit the spend in
the second half of 2022, we assume it will require higher
investments in 2023, when the company gets closer to the product
launch."
Higher-than-expected working capital outflows and elevated
investment in CGM led to a free cash flow deficit of about $41
million in the first half of 2022, compared to an inflow of $34.5
million in the first half of 2021. In combination with meaningful
annual debt amortization of $103 million, the company's liquidity
position has deteriorated quickly in our view. As of July 3, 2022,
the company's combined cash balance and revolver availability
dropped to $107 million from $201 million at the end of 2021.
Although the company reported market share gains in the BGM segment
in 2022, we believe its improved market share will not fully offset
the weakness of BGM products against fast adoption of a newer
generation of glucose testing devices based on constant glucose
monitoring (CGM) or flash glucose monitoring (semi-CGM) technology
in the developed markets.
S&P now projects the available liquidity sources will only cover
the company's uses by less than 1.2x for the next 12 months and,
absent a recovery in the company's volumes in the U.S. and other
offsetting measures to improve liquidity, the company's available
sources may fall short of the approximately $103 million of
required annual debt amortization in 2023.
In addition, the company is facing refinancing risk as its revolver
(with $55 million outstanding as of July 3) becomes current in
October, 2022. Given the company's longer-term business prospects
around CGM, we believe it will successfully extend its revolver
maturity in the coming weeks. At the same time S&P's 'B-' issuer
credit rating reflects the refinancing risk of the company's first
and second lien debt due October 2024 and 2025 respectively, amid
the raising interest rates and the company's weaker performance.
S&P said, "We believe the investment in CGM will benefit LifeScan's
long-term growth prospects, but will require spending, which will
have diminish EBITDA and cash flows for the next 12 to 18 months.
We believe the company is facing secular decline in BGM, and we
view Lifescan's partnership with Sanvita Medical LLC on the
development and marketing of a CGM product as positive for the
company's long-term growth prospects. However, the product is still
in the development stage and is pending regulatory approvals. Thus,
we do not incorporate positive EBITDA contributions from CGM sales
in our forecast for 2022-2023.
"We believe the company's investment in CGM will accelerate as
Lifescan approaches its expected commercial launch and will burden
EBITDA and free cash flows. As a result, we believe that without
securing additional liquidity sources, the company's current
liquidity position may hinder its ability to invest sufficiently in
the project.
"The stable outlook reflects our expectation the company will
likely be able to extend its revolver maturity over the near term
and will improve its cash flow generation, while making progress
toward the launch of CGM over the next 12 months.
"We could lower the rating in the short-term if the company fails
to extend the revolver maturity due October 2023. We could also
lower the rating if the refinancing prospects of the company's
first and second lien debt (due October 2024 and October 2025
respectively) become less certain due to further deterioration in
the BGM segment (including acceleration in the rebates outflows) or
further delay in CGM launch.
"We could consider an upgrade after the company addresses its
refinancing needs and successfully launches its CGM product, if we
believe it could sustain its free cash flow to debt measure at 3%
or above and would sufficiently cover annual debt amortization."
ESG credit indicators: E-2, S-2, G-3
S&P said, "Environmental and social factors have an overall neutral
influence in our credit analysis of Lifescan. Governance is a
moderately negative consideration. Our assessment of the company's
financial risk profile as highly leveraged reflects corporate
decision-making that prioritizes the interests of the controlling
owners, in line with our view of the majority of rated entities
owned by private-equity sponsors. Our assessment also reflects the
generally finite holding periods and a focus on maximizing
shareholder returns."
LINDBLAD EXPEDITIONS: Moody's Alters Outlook on 'B3' CFR to Stable
------------------------------------------------------------------
Moody's Investors Service affirmed the ratings of Lindblad
Expeditions, LLC including its B3 Corporate Family Rating, B3-PD
Probability of Default Rating and its B3 senior secured note and
senior secured bank credit facility ratings. At the same time,
Moody's revised the outlook to stable from negative. The company's
speculative grade liquidity rating of SGL-3 remains unchanged.
"The affirmation and stable outlook reflect Moody's view that
improving booking trends and a full year of contribution from
Lindblad's two newest ships will enable the company to reduce
leverage to around 6x at the end of 2023," stated Pete Trombetta,
Moody's VP-Senior Analyst. The addition of the National Geographic
Endurance and National Geographic Resolution – each 126 passenger
ships purpose built for polar navigation – will increase
Lindblad's total capacity by 39% and will help drive 2023 earnings
above 2019 levels. Booking trends are steadily improving with net
revenue in the second quarter of 2022 only 1% behind 2019. Lindblad
is also less exposed to rising interest rates than peers given its
lower mix of floating rate debt.
Affirmations:
Issuer: Lindblad Expeditions, LLC
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Senior Secured Bank Credit Facility, Affirmed B3
to (LGD3) from (LGD4)
Senior Secured Regular Bond/Debenture, Affirmed B3
to (LGD3) from (LGD4)
Outlook Actions:
Issuer: Lindblad Expeditions, LLC
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Lindblad's credit profile benefits from its partnerships with
National Geographic and the World Wildlife Fund (through its
Natural Habitats brand), as well as its strong brand name
recognition in the expedition travel segment of the travel
industry. As health safety concerns related to the pandemic have
eased, Moody's expects to see the historically strong demand for
high end expedition cruises return – given their unique
destinations – along with the corresponding high net yields
relative to other luxury cruise lines. The company's credit profile
is constrained by its high leverage – Moody's forecasts
debt/EBITDA will approximate 6.0x at the end of 2023. The company
more than doubled its debt from the end of 2019 to June 30, 2022
primarily due to new ship debt. The new ship debt has not yet been
offset from earnings generated from these ships. The normal ongoing
credit risks include its small scale in terms of absolute level of
earnings and number of vessels.
The stable outlook reflects Lindblad's adequate liquidity and
Moody's forecast that the company will generate strong earnings
growth leading to debt/EBITDA improving to about 6x in 2023.
Lindblad's liquidity is adequate with cash balances of about $127
million at June 30, 2022 and full availability under its $45
million committed revolver due 2027. There are no material debt
maturities before 2027 when its revolver and $360 secured notes
come due. Beginning March 31, 2023 the company will again be
subject to a total net leverage ratio covenant of 4.75x (with
stepdowns). Lindblad's alternate sources of liquidity are limited
because the bank facilities are secured by substantially all of the
company's assets, but the company may be able to sell some assets
for liquidity if necessary (i.e. older ships).
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if debt/EBITDA were to improve and be
sustained below 5.5x with EBITA/interest coverage of above 2.0x.
Ratings could be downgraded if liquidity were to weaken in any way
or if debt/EBITDA were to remain above 6.5x.
Headquartered in New York, New York, Lindblad Expeditions, LLC and
its consolidated subsidiaries (Nasdaq: LIND) is a provider of tour
and adventure travel related services to over 40 destinations on
six continents. The company owns and operates 10 expedition ships
and five seasonal charter vessels with capacities ranging from 48
to 148 passengers. Lindblad generated net revenue of about $290
million for the 12 months ended June 30, 2022.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
LIQUI-BOX HOLDINGS: Moody's Alters Outlook on 'B3' CFR to Stable
----------------------------------------------------------------
Moody's Investors Service affirmed Liqui-Box Holdings, Inc.'s B3
Corporate Family Rating, Caa1-PD Probability of Default Rating, and
B3 rating on the company's senior secured bank credit facility. The
outlook was revised to stable from negative.
The stabilization of the outlook reflects Liqui-Box's successful
integration of the DS Smith Plastics Division acquisition,
including achievement of planned synergies, which is evident with
the improved quality of earnings. The outlook further reflects
Moody's expectation of free cash flow generation resulting from
normalized capital expenditures, working capital, and successful
pricing initiatives to capture inflationary costs.
"With the integration of the transformative DS Smith Plastics
Division acquisition complete and implementation of price
initiatives to offset inflationary costs, Moody's expect Liqui-Box
to generate free cash flow and improved EBITDA that will ultimately
reduce leverage and strengthen the balance sheet," said Scott
Manduca, Vice President at Moody's.
Affirmations:
Issuer: Liqui-Box Holdings, Inc.
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed Caa1-PD
Gtd Senior Secured Term Loan, Affirmed B3 (LGD3)
Gtd Senior Secured Revolving Credit Facility,
Affirmed B3 (LGD3)
Outlook Actions:
Issuer: Liqui-Box Holdings, Inc.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Liqui-Box's B3 CFR reflects its very high pro-forma leverage at
7.9x as of June 30, 2022, which has remained elevated due to
incremental debt raised to repay revolver borrowings. The rating
also considers Liqui-Box's track record of debt-funded
acquisitions, including the transformative acquisition of DS Smith
Plastics Division and bolt-on acquisition of Strazaplastika.
Further, the company faces customer concentration and some exposure
to cyclical end markets such as industrials and construction.
Liqui-Box is expected to benefit from improving earnings supported
by synergies achieved from the DS Smith Plastics Division
acquisition and further plant consolidation, while cost
pass-through price initiatives help mitigate the effects of input
cost, labor and energy inflation. Moody's expect leverage to
improve toward 6.5x in 2023 based on these factors. The rating also
reflects the company's significant exposure to relatively stable
end markets such as food, beverage, pharmaceuticals, and household
goods and its long-term customer contracts with high switching
costs for customers.
Liqui-Box's liquidity is adequate and encompasses an expectation of
improving free cash flow generation over the next 12 months.
However, in addition to cash of $22 million as of June 30, 2022,
the company had $52 million of borrowings under the company's $75
million revolver. Going forward, revolver borrowings are expected
to be repaid with free cash flow and cash is to build, as capital
expenditures return normalized levels post the integration of
acquisitions. The only financial covenant on the credit facilities
is a static total net leverage covenant of 7.5x. Moody's expects
the company to maintain adequate cushion under this covenant over
the next 12 months, but an acceleration in debt-funded
acquisitions, any further integration challenges, or a cyclical
downturn in the company's end markets (industrial, construction,
logistics, graphics) would put this cushion at risk. Term loan
amortization is 1.0% annually and the facility contains an excess
cash flow sweep. US assets are fully encumbered by the secured debt
and the European assets provide a modest degree of alternative
liquidity as they are not part of the collateral package. The
nearest significant debt maturity is the $75 million revolver in
February 2025.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could downgrade the company's ratings if credit metrics,
liquidity or the competitive environment deteriorate. Debt-funded
acquisitions entailing significant integration risk could also
jeopardize the rating. Specifically, the ratings could be
downgraded if debt-to-EBITDA (inclusive of Moody's adjustments)
remains above 6.5 times, funds from operations-to-debt is sustained
below 7.0%, and EBITDA-to-interest coverage is sustained below 2.25
times.
Moody's could upgrade the ratings if the company is able to
sustainably improve credit metrics and maintain good liquidity.
Specifically, the ratings could be upgraded if debt-to-EBITDA
(inclusive of Moody's adjustments) declines below 5.5 times, funds
from operations-to-debt is sustained above 9.0%, and
EBITDA-to-interest coverage is sustained above 3.0 times.
Headquartered in Richmond, Virginia, Liqui-Box is a manufacturer of
flexible and rigid packaging. Liqui-Box is a portfolio company of
Olympus Partners and does not publicly disclose financial
information.
The principal methodology used in these ratings was Packaging
Manufacturers: Metal, Glass and Plastic Containers published in
December 2021.
MAC'S KWIK: Wins Cash Collateral Access
---------------------------------------
The U.S. Bankruptcy Court for the District of Kansas authorized
Mac's Kwik Stop, Inc. to use cash collateral on an interim basis.
The Debtor is indebted to the Internal Revenue Service pursuant to
a Federal Tax Lien, which asserts a security interest in and liens
upon the Debtor's inventory. The Debtor's inventory constitutes
cash collateral as defined in 11 U.S.C. section 363(a).
In return for the IRS's consent to the Debtor's use of cash
collateral, and as adequate protection to the IRS, the agency is
granted replacement liens in post-petition cash collateral in
inventory and accounts of the Debtor to the same extent that the
IRS has valid liens on pre-petition cash collateral.
The Debtor will file monthly reports with the Court, which will be
available to all creditors through the Court's CM/ECF system or by
request to the Debtor's counsel.
The Debtor will pay the IRS monthly payments of $500 as adequate
protection beginning October 28, 2022, and continuing the 28th day
of the month thereafter.
To the extent the adequate protection provided to the IRS proves to
not be adequate to protect the agency against a post-petition
diminution in the value of its collateral arising from the stay of
action against the Debtor's property under 11 U.S.C. section 362,
from the use, sale or lease of such property under section 363,
within the meaning of section 507(b), the IRS is entitled to have
its claim for the diminution in value of its collateral allowed as
a super-priority administrative expense pursuant to section
507(b).
A copy of the order is available at https://bit.ly/3xA50Ca from
PacerMonitor.com.
About Mac's Kwik Stop, Inc.
Mac's Kwik Stop, Inc. sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. D. Kan. Case No. 22-20857) on
September 8, 2022. In the petition filed by Mohammed N. Nobi,
president, the Debtor disclosed up to $500,000 in both assets and
liabilities.
Judge Robert D. Berger oversees the case.
Colin Gotham, Esq., at Evans & Mullinix, P.A. is the Debtor's
counsel.
MAGNOLIA OFFICE: Owner Patel Reorganization Plan
------------------------------------------------
Anand Patel, owner of Magnolia Office Investments LLC, submitted a
Reorganization Plan and a Disclosure Statement for the Debtor.
The Debtor believe that confirmation of the Plan provides the best
opportunity for maximizing recoveries for its creditors. Moreover,
the Debtor believes, and will demonstrate to the Court, that
creditors will receive not less than the amount that they would
receive in a liquidation under Chapter 7 of the Bankruptcy Code.
Patel, the 100% owner, will retain his interests in the Debtor.
The Plan does not violate the Absolute Priority Rule since all
allowed creditors are being paid 100% plus reasonable interest on
their claims in accordance with 11 U.S.C. §1129(b)(2)(A) and (B).
Under the Plan, holders of Class 7 Allowed General Unsecured Claims
will be paid a pro rata share of $150.00 per month on their allowed
claim. Class 7 Claims total $13,832.51 (after the projected
objections analysis and results), which will be paid a total of
$13,832.51 payable $150.00 monthly beginning in Month 1 through
Month 12 of the Plan with a final payment of the entire allowed
claims to be made upon the sale or refinancing described in Class 1
above. Note that payments made to this class for debts owed also by
Anand Patel shall constitute a payment made for the benefit of a
creditor herein and satisfies claims against Anand Patel as well.
The Debtor is, as required by 11 U.S.C. Sec. 1129(a)(15),
committing its disposable income to the Plan over a 1 year period.
In the event the holder of an allowed unsecured claim objects to
confirmation of the plan, the value of the property to be
distributed under the plan will not be less than the projected
disposable income of the debtor to be received during the 1 year
period beginning on the date that the first payment is due under
the plan, or during the period for which the plan provides
payments, whichever is longer. In the event any secured or
administrative claims are paid in full prior to month 12, payment
in the amount of the secured or administrative claim will be paid
to general unsecured commencing the month after such full payment
and in an amount equaling at least 90% of the prior payment made to
such secured or administrative claimant. Class 7 is impaired.
Funds to be used to make cash payments under the Plan will derive
from income of the Debtor as set forth in the Prospective Budget.
The Plan Proponent believes that the Debtor will be able to make
all payments required to be made pursuant to the Plan. Moreover,
the Debtor is cash flow positive, even despite the lack of
tenant(s) on the top floor. Accordingly, the Plan Proponent assert
that the Debtor is able to perform all of its obligations under the
Plan, and as such, the Plan satisfies Section 1129(a)(11) of the
Bankruptcy Code.
Attorneys for the Debtor:
David Lloyd Merrill, Esq.
THE ASSOCIATES
2401 PGA Boulevard, Suite 280M
Palm Beach Gardens, FL 33410
Tel: (561) 877-1111
A copy of the Disclosure Statement dated September 9, 2022, is
available at https://bit.ly/3d82PPd from PacerMonitor.com.
About Magnolia Office Investments
Magnolia Office Investments LLC is a Single Asset Real Estate (as
defined in 11 U.S.C. Sec. 101(51B)). It owns the commercial office
building located at 1211 Governors Square Boulevard, Tallahassee,
Florida 3230, valued at $5.5 million.
Magnolia Office Investments sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. S.D. Fla. Case No. 22-14044) on
May 24, 2022. In the petition signed by Anand Patel, as managing
member, Magnolia Office Investments, LLC listed estimated assets
and liabilities between $1 million and $10 million each.
The case is assigned to Honorable Bankruptcy Judge Erik P.
Kimball.
David L. Merrill, Esq., at The Associates, is the Debtor's counsel.
MAGNOLIA OFFICE: Taps Marcus & Millichap as Real Estate Broker
--------------------------------------------------------------
Magnolia Office Investments, LLC seeks approval from the U.S.
Bankruptcy Court for the Southern District of Florida to hire
Marcus & Millichap Real Estate Investment Services to market for
sale its real property located at 1211 Governors Square Blvd.,
Tallahassee, Fla.
The broker will get a commission equal to 6 percent of the purchase
price of the property.
As disclosed in court filings, Marcus & Millichap is a
"disinterested person" within the meaning of Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Tyler S Kuhlman
Marcus & Millichap Real Estate Investment Services
5900 North Andrews Avenue, Suite 100
Fort Lauderdale, FL 33309
Office: (954) 245-3400
Email: tyler.kuhlman@marcusmillichap.com
About Magnolia Office Investments
Magnolia Office Investments LLC is a single asset real estate (as
defined in 11 U.S.C. Sec. 101(51B)). It owns the commercial office
building located at 1211 Governors Square Blvd., Tallahassee, Fla.
The property is valued at $5.5 million.
Magnolia Office Investments sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. S.D. Fla. Case No. 22-14044) on
May 24, 2022, with between $1 million and $10 million in both
assets and liabilities. Anand Patel, managing member of Magnolia
Office Investments, signed the petition.
Judge Erik P. Kimball oversees the case.
David L. Merrill, Esq., at The Associates, is the Debtor's legal
counsel.
MARINER HEALTH: Case Summary & 30 Largest Unsecured Creditors
-------------------------------------------------------------
Three affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
Mariner Health Central, Inc. (Lead Case) 22-10877
3060 Mercer University Drive
Suite 200
Atlanta, GA 30346
Parkview Operating Company, LP 22-10878
Parkview Holding Company GP, LLC 22-10879
Business Description: Debtor Parkview operates a skilled nursing
facility with 121 beds and Debtor Mariner
Central provides administrative, clinical
and operational support services to Parkview
and to other skilled nursing facilities.
Parkview Holdco is the general partner of
Parkview (which is its sole asset), and has
no other operations.
Chapter 11 Petition Date: September 19, 2022
Court: United States Bankruptcy Court
District of Delaware
Judge:
Debtors'
General
Bankruptcy
Counsel: Hamid R. Rafatjoo, Esq.
Carollynn H.G. Callari, Esq.
David S. Forsh, Esq.
RAINES FELDMAN LLP
1350 Avenue of the Americas, 22nd Floor
New York, NY 10019-4801
Tel: (917) 790-7100
Email: hrafatjoo@raineslaw.com
ccallari@raineslaw.com
dforsh@raineslaw.com
Debtors'
Local
Bankruptcy
Counsel: Laura Davis Jones, Esq.
Timothy P. Cairns, Esq.
Mary F. Caloway, Esq.
PACHULSKI STANG ZIEHL & JONES LLP
919 North Market Street, 17 th Floor
P.O. Box 8705
Wilmington, DE 19899-8705 (Courier 19801)
Tel: (302) 652-4100
Fax: (302) 652-4400
Email: ljones@pszjlaw.com
tcairns@pszjlaw.com
mcalloway@pszjlaw.com
Debtors'
Provider
of Additional
Personnel to
Support CRO: SIERRACONSTELLATION PARTNERS LLC
Debtors'
Claims &
Noticing
Agent: KURTZMAN CARSON CONSULTANTS LLC
Mariner Health's
Estimated Assets: $1 million to $10 million
Mariner Health's
Estimated Liabilities: $10 million to $50 million
The petitions were signed by Lawrence Perkins as chief
restructuring officer.
Full-text copies of the petitions are available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/3MDAEDQ/Mariner_Health_Central_Inc__debke-22-10877__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/375BAPA/Parkview_Holding_Company_GP_LLC__debke-22-10879__0001.0.pdf?mcid=tGE4TAMA
Consolidated List of Debtors' 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Marciela Ledesma, et al. Litigation $14,695,914
c/o Law Office Of Susan Kang Gordon
Attn: Susan Y. Kang Gordon, Esq.
21C Orinda Way, #162
Orinda, CA 94563
Susan Y. Kang Gordon
Tel: (510) 440-6146
susan@skg-law.com
c/o Fiore Acherman, a Law Corp.
Attn: Jennifer Fiore, Esq.
Attn: Sophia Achermann, Esq.
340 Pine Street, Suite 503
San Francisco, CA 94104-3237
Tel: (415) 550-0650
Email: jennifer@thefafirm.com
sophia@thefafirm.com
c/o Johnson Moore
Attn: Jody C. Moore
Attn: Gregory Johnson
100 E. Thousand Oaks Blvd., Suite 229
Thousand Oaks, CA 91360
Judy C. Moore
Gregory Johnson
Tel: (805) 988-3661
Email: judy@johnson-moore.com
gregory@johnson-moore.com
2. Integra Med Analytics, LLC Litigation $10,000,000
c/o Miller Barondes LLP
Attn: Jason H. Tokor
999 Avenue of the Stars, Suite 100
Los Angeles, CA 90067
Jason H. Tokor
Tel: (310) 552-4400
Email: jtokoro@millerbarondess.com
c/o Reid Collins & Tsai, LLP;
Attn: P. Jason Collins
Attn: Jeremy H. Wells
1301 S. Capital of Texas Highway
Building C, Suite 300
Austin TX 78746
Tel: (512) 647-6129
Email: jcollins@rctlegal.com
jwells@rctlegal.com
3. Tampa Avenue Property LLC Rent $3,867,736
Attn: Miriam Pichey
7770 Edgewater Drive, Suite 660
27 Elit Street Rear
Jaimaica Plain., MA 02130
Tel: (732) 371-3261
Email: mimi_pichey@hotmail.co
4. People of the State Litigation $2,000,000
of California
c/o
Matthew Rodriguez, Acting Attorney General
Jennifer Euler Chief Assitant AG
Luke Vanderdrift Deputy AG;
2329 Gateway Oaks Dr., Suite 200,
Sacramento, CA 95833-4252
Tel: (916) 621-1829
Email: luke.vanderdrift@doj.ca.gov
c/o
Nancy E. O'Mally District Attorney of
Alameda County
Lori Schnall Deputy District Attorney
1225 Fallon St., Suite 900
Oakland, CA 94612-4208
Lori Schnall
Tel: (510) 272-6222
Email: Lori.schnall@acgov.org
c/o
Lori E Frugoli, District Attorney of Marin
Andres Perez, Deputy District Attorney
2501 Civic Center Drive, Suite 145
San Rafael, CA 94903-4189
Andres Perez
Tel: (415) 473-6450
Email: aperez@marinercounty.or
c/o
Jeffrey Rosell, District Attorney of Santa Cruz
County
Doug Allen, ADA
701 Ocean Street, Suite 200
Santa Cruz, CA 95060
Doug Allen
Tel: (831) 454-2930
Email: douglas.allen@santacruzcounty.us
c/o
George Gascon, District Attorney of Los
Angeles County
Seza Mikikian, Deputy District Attorney
211 West Temple Street, Suite 1000
Los Angeles, CA 90012
Seza Mikikian
Tel: (213) 257-4500
Email: smikikian@da.lacounty.gov
5. Noridian Healthcare Fiscal $1,504,909
Solutions LLC Intermediary
Attn: Cynthia Thormodson, CFO
900 42nd Street S
Fargo, ND 58103
Tel: (855) 609-9960
Email: JE-ERS@noridian.com
6. Fundamental Administrative Support $1,392,000
Services Services
Attn: Mark Fulchino
920 Ridgebrook Road
Sparks, MD 21152
Tel: (410) 773-1000
Email: Mark.fulchino@fundltc.co
7. Bio-Pacific, LLC Therapy Services $627,000
Attn: Marilyn Washington
1338 20th Street
Santa Monica, CA 90404
Marilyn Washington
Tel: (310) 975-9092
Email: mjwashington@marinerhealthcare.com
8. Sky Power Secure Solutions, Inc. Security $332,500
Attn: Echezonam Michael Ndinwa Services
1508 253rd Street
Harbor City, CA 90710
Tel: (310) 531-7599
9. Iron Mountain Information Offsite $270,000
Management, LLC Storage
Attn: Michael Merski
One Federal Street
Boston, MA 02110
Tel: (615) 543-4581
Email: Michael.merski@ironmountain.com
10. JJJ Health Care Nursing $229,970
Staffing Agency, LLC Registry
Attn: Joshua Ramos
2135 Aldengate Way #2
Hayward, CA 94545
Tel: (510) 200-6504
Email: jbramos@triplejheart.com
11. Hayward Area Historical Society Rent $221,604
Attn: Dianne Curry
22380 Foothill Boulevard
Hayward, CA 94541
Tel: (510) 581-0223
Email: diane@haywardareahistory.org
12. Pharmerica Pharmacy $203,623
Attn: Robert Dries Services
805 North Whittington Parkway
Louiseville, KY 40222-5186
Tel: (844) 931-2178
Email: robert.dries@pharmerica.com
13. First Call Nursing Services Nursing $187,000
Attn: Maricar Cantora Registry
1313 North Milpitas Boulevard
Suite 154
Milpitas, CA 95035
Tel: (408) 262-1533
Email: info@firstcallnursingservices.com
14. Hooper Lundy & Bookman PC Legal Fees $150,000
Attn: Scott Kiepen
101 Montgomery Street, 11th Floor
San Francisco, CA 94104
Tel: (415) 875-8500
Email: skiepen@health-law.com
15. Harmony Healthcare Legal Fees/ $150,000
International Expert
430 Boston St., Suite 104
Topsfield, MA 01983
Kris Mastrangelo
Tel: 978-887-8919
Email: KrisBHarmony@harmony-healthcare.com
16. Boyd Gentry Consulting $116,400
Attn: Boyd Gentry Services
1499 Blake St.
Suite 10 D
Denver, CO 80202
Tel: (404) 394-6596
Email: bpg@gentryassociates.ne
17. Kingston 17 Security $104,400
Attn: Noel Scarlett Services
18 Bartol Street, #974
San Francisco, CA 94133
Tel: (888) 664-4208
Email: noelgscarlett@outlook.com
18. California, State of $92,326
Attn: Shirley N. Weber
Secretary of State
1500 11th Street
Sacramento, CA 95814
Tel: (916) 653-6814
Email: askpublicaffairs@state.gov
19. Mason Family 1993 Trust Rent $64,150
Attn: Frances Hicks Mason
2609 Honolulu Avenue
Montrose, CA 91020
Tel: (818) 957-1881
Email: fmason@dsm2cloud.com
20. Nutrition Therapy Dietician $47,500
Essentials Services
Attn: Suzanne Ousey
2350 West Shaw Avenue
Fresno, CA 9311
Tel: (408) 258-0790
Email: suzanneousey@gmail.com
21. Seyfarth Shaw Legal Fees $41,929
Attn: Cynthia Mitchell
620 8th Ave., #33
New York, NY 10018
Tel: (212) 218-5500
Email: cmitchell@seyfarth.com
22. Vitawerks Staffing $36,430
Attn: Shveta Mangal Agency
702 PORTOFINO LANE
Foster City, CA 94404
Tel: (309) 472-3146
Email: shveta@vitawerks.com
23. Medline Industries $33,215
Attn: Charles Mills
PO Box 382075
Pittsburgh, PA 15251-8075
Tel: (800) 633-5463
Email: cmills@medline.com
24. Bhupinder Bhandari MD Inc. Medical $33,000
Attn: Bhupinder Bhandari MD Director
3755 Beacon Avenue
Fremont, CA 94538
Tel: (510) 796-7796
Email: Drbhandari4service@yahoo.com
25. Diagnostic Laboratories & Lab/Xray $30,843
Radiology Services
Attn: Brendan Lamanna
930 Ridgebrook Road
Sparks Glencoe, MD 21152
Tel: (215) 442-0660 Ext. 74060
Email: Brendan.Lamanna@TridentCare.com
26. Ability Network Software-Payor $28,312
100 North 6th Street, Eligibility
Suite 900A
Minneapolis, MN 55485
Julie Lambert
Tel: 888-460-4310
Email: support@abilitynetwork.com
27. Stone Mountain Medical Chief Medical $24,000
Associates, Inc. Officer/
Attn: Karl Steinberg, M.D. Independent
3608 Napa Court Contractor
Oceanside, CA 92056
Tel: (760) 473-8253
Email: Steinberg.Karl@scrippshealth.org
28. Hayward Water System Utility $16,486
Attn: Barbara Halliday
777 B Street
Hayward, CA 9454
Tel: (510) 583-4600
Email: Barbara.halliday@hayward-ca.gov
29. Sysco San Francisco Inc. Food $10,397
Attn: Dan M. Locker
24500 Northwest Freeway
Cypress, TX 77429
Tel: (908) 672-2469
Email: Dan.locker@sysco.com
30. PG&E Utility $10,344
Attn: Brian Wong, General Counsel
77 Beale Street, 24th Floor
Mail Code B24W
San Francisco, CA 94105
Tel: (800) 468-4743
Email: CorporateSecretary@pge.com
MAXUS ENERGY: 3rd Circuit Won't Disqualify White & Case From Case
-----------------------------------------------------------------
A former Sidley Austin LLP attorney who previously represented a
party involved in a bankruptcy dispute before moving to White &
Case LLP, which represents the opposing party, did not create a
conflict meriting disqualification of the latter firm from the
case, the Third Circuit ruled in a precedential opinion Friday,
Sept. 9, 2022.
A three-judge panel of the court upheld a bankruptcy judge's denial
of a motion from Argentine energy company YPF SA to disqualify
White & Case from the Chapter 11 proceedings of its subsidiary, oil
exploration firm Maxus Energy Corp.
This case stems from the Chapter 11 bankruptcy of Maxus Energy
Corporation. In 2018, Maxus Liquidating Trustsued Maxus's parents,
YPF S.A., YPF International S.A., YPF Holdings, Inc., and CLH
Holdings, Inc., asserting fraudulent conveyance and alter ego
claims. White & Case represented the Trust from the start. Sidley
Austin LLP represents YPF. Cleary Gottlieb Steen & Hamilton LLP
represents YPF on issues related to the Motion to Disqualify and
the appeal.
Boelter was a partner in Sidley's restructuring group. She
participated in Sidley's initial pitch to represent YPF. She
helped negotiate the engagement letter, worked with others on
certain motions, was admitted pro hac vice in the proceeding, was
copied on email correspondence with YPF, attended several meetings,
and was considered by YPF executives as "an integral part" of its
legal team. She billed a total 300 hours to the YPF
representation, mostly early on.
Thomas Lauria is a partner in White & Case's restructuring group.
Lauria did not record any time related to the case. He was listed
as counsel for one of Maxus's creditors during the Chapter 11
proceedings, but he never entered an appearance. Boelter started
dating Lauria in 2017, before she pitched Sidley to YPF. In late
2018 Boelter and Lauria's relationship became exclusive, and they
lived together starting in 2019. Sidley knew of the relationship,
but it is unclear from the record whether YPF knew.
While engaged to marry Lauria, Boelter moved to his firm, White &
Case. When she did so, White & Case followed the Model Rules. From
the start, Boelter went through a standard conflict-screening
process. White & Case implemented an ethical wall, which both
parties agree qualifies as a screen, beginning on Boelter’s first
day; obtained her acknowledgment that she would comply with it; and
periodically certified her compliance. White & Case did not
give any portion of its fee from the YPF adversary proceeding to
Boelter. White & Case gave YPF written notice of Boelter's
employment the day she began with the firm. The letter explained
the nature of White & Case’s screen and included a statement of
the firm's and of Boelter’s compliance with the Model Rules.
White & Case also stated that review may be
available before a tribunal. The firm agreed to respond promptly to
any written inquiries or objections about the screening procedures.
In fact, it provided additional information to YPF attorneys in
their later discussions. Boelter says she never breached the
screen.
YPF never thought any screen could be good enough.
So it moved to disqualify White & Case from representing the Trust.
The Bankruptcy Court denied the motion after applying a
multifactored test, holding that exceptional circumstances did not
exist to impute Boelter’s conflict to the entire firm despite a
screen. YPF then moved for direct appeal, which the Bankruptcy
Court granted. The U.S. Court of Appeals for the Third Circuit
authorized YPF's appeal.
"Jessica Lauria, née Boelter ("Boelter"), moved from a law firm
representing one party in a bankruptcy dispute to the firm
representing the opposing party. Boelter's then fiance also worked
for the new firm. The American Bar Association's Model Rules of
Professional Conduct, incorporated by the Bankruptcy Court's local
rules, imputes Boelter's conflict to her new firm unless she, among
other things, "is timely screened from any participation in the
matter and is apportioned no part of the fee therefrom." Model
Rules
of Pro. Conduct r. 1.10(a)(2) (Am. Bar Ass’n, 2020). The new
firm, White & Case LLP, timely screened Boelter. But Boelter's
former client moved to disqualify White & Case, arguing that a
screen was not enough. The Bankruptcy Court denied the motion,
holding White & Case's screen was
sufficient to prevent Boelter's conflict from being imputed to the
entire firm. Because the Model Rules state that a timely screen,
together with certain other requirements, prevents conflict
imputation, we will affirm the Bankruptcy Court," Circuit Judge
Porter said in his opinion.
"As other courts have done, the Bankruptcy Court incorporated an
external set of disqualification standards, in this case the Model
Rules. See Bankr. D. Del. R. 9010-1(f); cf., e.g., United States v.
Miller, 624 F.2d 1198, 1200 (3d Cir. 1980). Without a challenge to
that incorporation, our analysis
proceeds under those rules. Although a court may still use its
inherent authority to disqualify counsel or a firm for reasons
beyond those in the incorporated rules, we are satisfied that in
these circumstances the Model Rules suffice and no need exists to
invoke inherent authority to address additional considerations."
A copy of the opinion is available at
https://www2.ca3.uscourts.gov/opinarch/212496p.pdf
About Maxus Energy Corporation
Maxus Energy Corporation and four of its subsidiaries filed
voluntary petitions for reorganization under Chapter 11 (Bankr. D.
Del. Lead Case No. 16-11501) on June 17, 2016. The Debtors engaged
Young Conaway Stargatt & Taylor, LLP, as local counsel, Morrison &
Foerster LLP as general bankruptcy counsel, Zolfo Cooper, LLC, as
financial advisor and Prime Clerk LLC as claims and noticing
agent.
The Debtors hired Keen-Summit Capital Partners LLC as real estate
broker. The Debtors also engaged Hilco Steambank to market and sell
their internet protocol numbers and other internet number
resources, and EnergyNet.com to market and sell the Debtors'
rights, title, and interest in and to the oil and gas properties.
On July 7, 2016, the United States Trustee for the District of
Delaware filed Notice of Appointment of Committee of Unsecured
Creditors. The Committee selected Schulte Roth & Zabell LLP as
counsel, and Cole Schotz as Delaware co-counsel. Berkeley Research
Group, LLC, serves as financial advisor for the Committee.
Andrew Vara, acting U.S. Trustee for Region 3, appointed the
following to a committee of retirees: John Leslie Jackson, Sr.,
Gerald G. Carlton, and Robert E. Garbesi. The Retirees Committee
retained Akin Gump Strauss Hauer & Feld LLP as counsel and Ashby &
Geddes, P.A., as co-counsel.
MIRACLE CENTER: Wins Cash Collateral Access Thru Oct 11
-------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California,
Northern Division, authorized Miracle Center Church of Ventura
County, Inc. to use cash collateral on an interim basis in
accordance with the budget through October 11, 2022.
A continued hearing on the Motion will be held on October 11 at 2
p.m
The Debtor must file a Second Amended Motion For Authority To Use
Cash Collateral on or before October 1, 2022. The Debtor and its
counsel must appear in person at the continued hearing on Motion.
Any party-in-interest may lodge opposition or other replies to the
Second Amended Motion up and until the hearing scheduled for
October 11, including orally at the hearing.
The Debtor will make monthly adequate protection payments to the
secured creditor, The First Christian Church of Ventura County, in
the amount of $25,663 by the fifteenth of the applicable month
except the September 15 payment would not be due until September
19.
The Debtor will make no payments to any unsecured creditors on
account of prepetition debt unless approved by the Court.
As previously reported by the Troubled Company Reporter, the First
Christian Church of Ventura County is the Debtor's only secured
creditor claiming a security interest in the amount of
approximately $3,208,233 against the Debtor's real property located
at County of Ventura Assessors Parcel Number 082-0-120-445. First
Christian is the sole lienholder against the Property and the
Debtor disputes the amount of First Christian's claim.
First Christian's interest in the Property is protected by an
adequate equity cushion whereby their secured claim amount
(disputed) is $3,208,233 and the estimated fair market value of the
Property is $3,390,299 based on the County of Ventura assessed
valuation as of July 5.
A copy of the order is available at https://bit.ly/3QSr1CX from
PacerMonitor.com.
About Miracle Center Church of Ventura County, Inc.
Miracle Center Church of Ventura County, Inc. is a tax-exempt
religious organization. The Debtor sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. C.D. Cal. Case No. 22-10664)
on August 29, 2022. In the petition signed by Alonzo McCowan,
CEO/president, the Debtor disclosed $3,472,792 in assets and
$3,387,733 in liabilities.
Judge Ronald A. Clifford III oversees the case.
John K. Rounds, Esq., at Rounds & Sutter LLP is the Debtor's
counsel.
MURPHY CREEK: Case Summary & One Unsecured Creditor
---------------------------------------------------
Debtor: Murphy Creek Estates, LLC
5445 DTC Parkway Suite 800
Greenwood Village, CO 80111
Chapter 11 Petition Date: September 19, 2022
Court: United States Bankruptcy Court
District of Colorado
Case No.: 22-13594
Judge: Hon. Kimberley H. Tyson
Debtor's Counsel: Bonnie Bell Bond, Esq.
LAW OFFICE OF BONNIE BELL BOND
8400 E. Prentice Avenue, Suite 1040
Englewood, CO 80111
Email: bonnie@bellbondlaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Kris Kristjansson, president Castlerock
OZF, Inc., manager.
The Debtor listed Redland, located at 1500 West Canal Court,
Littletone, Co., as its only unsecured creditor holding a claim of
$7,425.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/CIT5JUQ/Murphy_Creek_Estates_LLC__cobke-22-13594__0001.0.pdf?mcid=tGE4TAMA
NATIONAL MENTOR: S&P Alters Outlook to Negative, Affirms 'B-' ICR
-----------------------------------------------------------------
S&P Global Ratings revised its outlook on U.S.-based National
Mentor Holdings Inc. (d/b/a Sevita), a provider of home- and
community-based health services, to negative from stable and
affirmed its 'B-' issuer credit rating, 'B-' issue-level rating on
its first-lien debt, and 'CCC' issue-level rating on the
second-lien debt.
The negative outlook reflects the increasing risk that Sevita's
cash flow deficit will remain materially negative in 2023 due to
wage inflation, rising interest expenses, increased capex spending,
and potential working capital outflows related to recent
acquisitions.
The negative outlook reflects the risk that rising operating costs,
higher interest expense, working capital outflows, and elevated
capex could lead to ongoing cash flow deficits and reduced
liquidity through at least 2023. Although Sevita's topline revenue
continues to increase, the company has missed revenue expectation
because they were unable to fulfill demand due to staffing shortage
and had to employ higher wage contract workers and also hired
additional staff with higher wages ahead of expected reimbursement
increases. This has led to EBITDA contraction in 2022, contributing
to negative free operating cash flow in the $70 million to $80
million range.
In addition to wage inflation, States have recently mandated that
providers such as Sevita pass-through majority of payor rate
increases to caregivers. Further burdening free cash flow, the
company has increased its capex spending in 2022 to open new
facilities to address pent-up demand from the pandemic as well as
delayed maintenance, while at the same time faces higher working
capital outflows from recent acquisitions due to transition
contract management and system conversions.
S&P said, "We view the increase in capex as temporary and believe
capital spending will return to historical levels at about 3% of
revenue in 2023. Assuming no further acquisitions over the near
term, we also expect the company's material working capital
outflows to subside as the company completes the integration of
acquisitions from 2021. Business optimization charges will likely
decline as well as a result of lower integration and M&A
activities. However, we still expect that free operating cash flow
could remain negative in 2023 given the challenging labor market,
slow payor reimbursement, and the rising interest rate environment.
Under our base-case forecast, this leads to leverage remaining very
high at around 9x through 2023 (around 12.5x excluding leases).
"We believe the recent departure of the CFO adds execution risk
since the current management team will need to assume multiple
responsibilities at a time where the company is facing multiple
challenges.
"The company's weakened liquidity position, while sufficient for
its near-term needs, leaves little flexibility against operational
missteps. Although we expect Sevita to report cash flow deficits in
2022 and 2023, we do not anticipate cash flow deficits of more than
$85 million for 2022 and $30 million for 2023. In addition, we do
not believe the company's EBITDA will decline to the point that it
restricts access to its revolving credit facility. Sevita has an
8.5x springing net first-lien leverage covenant on its revolver,
which is triggered when the company draws on more than 35% of the
facility's commitment. We expect the company will remain in
compliance with this covenant while maintaining headroom of at
least 15%. As of June 30, 2022, the company's covenant leverage was
7.0x, with about $130 million availability under its revolving
credit facility. The company also does not face any near-term
maturities except for mandatory annual amortization of about $17
million. That said, Sevita had no cash on hand as of June 30, and
liquidity could become constrained assuming the company is unable
to materially reduce cash flow deficits in 2023.
"Our view of business risk reflects Sevita's narrow focus in the
highly fragmented behavioral health and developmental
disability-related services, with a concentration in Medicaid
reimbursement. We view the company as narrowly focused, primarily
treating individuals with disabilities and special needs. Community
Support Services is by far its largest segment (about 65%-70% net
revenues), where Sevita holds low single-digit market share in a
highly fragmented market. Although the industry is growing at a
low- to mid-single-digit rate given community and home-based care
is less expensive than traditional institutional setting, we
believe there is very little differentiation between service
offerings amongst peers. Sevita's related service offerings are
likely grouped together during reimbursement rate decisions,
increasing the company's exposure to unfavorable changes in
reimbursement rates or policies. Although the company operates with
a diverse payor mix by state, with the top five representing less
than 50% of total revenues, it generates about 85%-90% of its
revenues from government payors (primarily Medicaid) and 10%-15%
from nongovernment. Medicaid typically reimburses at a low rate
compared with other payers and rate increases can be delayed due to
state budgetary constraints.
"Despite near-term headwinds, over the longer term, we believe the
demand for community and home-based care will remain solid and
expect labor markets to improve and reimbursement rate increases to
remain slow but stable.We believe the demand for Sevita's services
will remain high since it is the largest provider in the country
with a track record of doing business across various states. The
population it serves are vulnerable and generally prefer to pick an
established organization over a newcomer. Although Medicaid rate
increases are slow and small, we believe they are stable because it
is cheaper for this population to receive care at home than in an
institutional setting. Furthermore, we expect the labor market
conditions will improve for low-skilled caregivers over time,
especially in a high inflationary environment where caregivers
might enter or return to the workforce to support the high cost of
living.
"The negative rating outlook reflects the risk that Sevita's free
cash flow deficits will remain materially negative in 2023, further
weakening the company's liquidity position.
"We could lower our rating on Sevita if there is no significant
improvement in cash flow generation in 2023, leading to a further
weakening of liquidity and our view that the capital structure is
unsustainable longer term.
"We could revise our outlook on Sevita to stable if cash flow
deficits materially improve or reverse, and we gain confidence that
free cash flow will comfortably cover fixed charges, including
annual debt amortization."
ESG credit indicators: E-2; S-2; G-3
S&P said, "Governance factors are a moderately negative
consideration in our credit rating analysis. Our assessment of the
company's financial risk profile as highly leveraged reflects
corporate decision-making that prioritizes the interests of the
controlling owners, in line with our view of the majority of rated
entities owned by private-equity sponsors. Our assessment also
reflects the generally finite holding periods and a focus on
maximizing shareholder returns."
NB HOTELS: Files Supplement to Disclosure Statement
---------------------------------------------------
The NB Hotels Dallas, LLC, supplements its Disclosure Statement
filed July 27, 2022 with the following additional information:
1. The Debtor's secured lender, RSS MSC2019-L2 - TX NHD, LLC
("Lender") asserts that the correct amount of its claim is
$61,323,430.49. A copy of Lender's proof of claim (without
exhibits) is attached hereto as Exhibit 1. The Debtor does not
agree with this calculation of the Lender's Claim. The ultimate
amount of the Claim will be negotiated by the parties or litigated
before the Court.
2. The Debtor's valuation of its Assets in its schedules and this
Disclosure Statement is based on the Debtor's opinion of value as
supported by its records, experience, operating history, and
financial projections.
3. Attached hereto as Exhibit 2 are copies of the Debtor's Monthly
Operating Reports as filed in this case.
4. The income and expense projections attached as Exhibit B to the
Disclosure Statement are founded on the Debtor's reasonable and
conservative assumptions concerning future increases in revenue and
costs. Monthly operating income is projected to rise from
$861,334.42 to $1,039,964.12 during the five years of projections,
an assumed rate of increase of approximately 3% per year. Monthly
operating expenses are projected to rise from $598,434.18 to
$670,143.38 over the same period, an assumed increase of
approximately 2% per year.
5. Under the Plan the Debtor proposes to pay off all remaining
balances due to the Lender in a lump sum payment to be made seven
years from the Effective Date of the plan. The amount of this
payment hinges on the Allowed amount of the Secured Lender's claim.
In no event will the property be worth less than this amount. The
Debtor assumes for purposes of the Plan that this payment will be
funded by a sale of the Debtor's Hotel or refinance of its debt to
the Lender, and/or capital contributions from the Debtor's equity
interest holders. The Debtor believes that these are common and
accepted assumptions based on a successful reorganization of the
Debtor's business under the Plan, the reduction of the debt owed to
the Lender due to payments under the Plan, and the increase in the
value of the Hotel expected to occur during the seven-year period
prior to the lump-sum payment.
Attorneys for the Debtor:
Joyce W. Lindauer, Esq.
JOYCE W. LINDAUER ATTORNEY, PLLC
1412 Main St. Suite 500
Dallas, TX 75202
Telephone: (972) 503-4033
Facsimile: (972) 503-4034
A copy of the Supplements to Disclosure Statement dated September
9, 2022, is available at https://bit.ly/3Ryttj6 from
PacerMonitor.com.
About NB Hotels Dallas LLC
NB Hotels Dallas LLC owns and operates the Le Meridien Hotel Dallas
located at 13402 Noel Road, Dallas, Texas. The Debtor sought
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr.
N.D. Tex. Case No. 22-30681) on April 18, 2022. In the petition
signed by Nadir Badruddin, its president, the Debtor disclosed up
to $100 million in both assets and liabilities.
Judge Harlin Dewayne Hale oversees the case.
Joyce W. Lindauer, Esq., at Joyce W. Lindauer Attorney, PLLC is the
Debtor's counsel.
Wells Fargo Bank, National Association as Trustee for Morgan
Stanley Capital Trust 2019-22 for the benefit of the Commercial
Mortgage Pass-Through Certificate Holder, as lender, is represented
by Bruce J. Zabarauskas, Esq., at Holland & Knight LLP.
NEW SK HOLDCO: Moody's Assigns Caa2 CFR, Outlook Stable
-------------------------------------------------------
Moody's Investors Service has assigned New SK Holdco Sub, LLC (dba
"Service King") a Caa2 Corporate Family Rating and a Caa2-PD
Probability of Default Rating. Moody's has also assigned a Caa2
rating to Service King's $803 million Senior Secured First Lien
Term Loan due June 2027 and a Caa2 rating to the company's $57
million Senior Secured First Lien Revolving Credit Facility
expiring December 2026. The outlook is stable.
"The ratings assignment reflects the resolution of Service King's
near dated debt maturities via an out-of-court restructuring that
resulted in a $500 million reduction in debt, a $160 million cash
injection, and maturity extensions that will give the company about
three years of operating runaway to turn the business around and
significantly improve Service King's very weak credit metrics,"
said Moody's Vice President Stefan Kahandaliyanage. "However,
despite the reduction in debt and the cash infusion, Service King's
credit metrics and liquidity both remain very weak and the company
is expected to continue to generate negative free cash flow through
the end of 2023," added Kahandaliyanage. "In order for Service
King to reduce leverage the company needs to complete a significant
overhaul of its front and back of shop operations as well as
improve body technician productivity, hiring and retention. Service
King's management is now being led by collision industry veterans
from former rival Crash Champions which Moody's view positively and
vehicle miles traveled, a key macro driver for the industry, has
recently rebounded to pre-COVID levels," Kahandaliyanage said. The
Caa2 CFR also reflects governance considerations particularly
Service King's very high leverage, weak interest coverage, and its
private equity majority ownership.
Assignments:
Issuer: New SK Holdco Sub, LLC
Corporate Family Rating, Assigned Caa2
Probability of Default Rating, Assigned Caa2-PD
Senior Secured 1st Lien Term Loan, Assigned Caa2 (LGD3)
Senior Secured 1st Lien Revolving Credit Facility,
Assigned Caa2 (LGD3)
Outlook Actions:
Issuer: New SK Holdco Sub, LLC
Outlook, Assigned Stable
RATINGS RATIONALE
Service King's Caa2 CFR is constrained by weak liquidity,
particularly Service King's cash burn which is not expected to
reverse for several quarters and reduced availability under its
revolver post-restructuring, very high leverage and very weak
interest coverage. While the company's short-term liquidity profile
has improved through a cash injection and maturity extensions, the
new management team has a relatively short period of time to
demonstrate a meaningful improvement in shop efficiency, restore
profitability and reverse its cash burn. At the same time, industry
headwinds such as parts shortages due to supply chain disruption,
labor cost inflation and, most crucially, a very tight, competitive
labor market for body technicians will challenge the turnaround
execution.
LTM June 30, 2022 leverage, proforma for the $803 million senior
secured first lien term loan, as measured by Moody's adjusted
debt-to-EBITDA is about 19x and interest coverage is negative. Over
the next 12-18 months, Moody's expects leverage to decline to the
9x-15x range and coverage to move into positive territory as
management optimizes corporate expenses and improves store
efficiency through various front and back of shop initiatives.
Moody's adjusted debt calculation includes standard adjustments for
operating leases and does not net cash on the balance sheet. The
rating is also constrained by governance considerations, including
the company's private equity majority ownership.
The rating is supported by Service King's solid market position as
the third largest multi-store-owner (MSO) with 336 stores as of
June 30, 2022 across 24 states in the highly fragmented collision
repair segment and the company's mutually-beneficial relationships
with national and major insurance carriers which represents the
vast majority of revenue.
The stable outlook reflects improved demand fundamentals as vehicle
miles traveled have returned to pre-COVID 19 levels and repair
severity, driven by the complexity of vehicle technology, continues
to rise. Improved demand fundamentals support Moody's expectation
for modestly growing revenue and earnings as the turnaround plan is
executed, resulting in a moderate decline in leverage and slight
improvement in coverage.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded with consistent improvement in
operating performance that results in sustained strengthening of
credit metrics, including positive free cash flow and at least
adequate liquidity.
The ratings could be downgraded if liquidity deteriorates for any
reason, including increased revolver reliance, or should the
probability of default increase for any reason.
New SK Holdco Sub, LLC is a leading provider of vehicle body repair
services with annual revenue of over $1 billion. The company
operates under the Service King brand name and has 336 locations in
24 states. The company is majority-owned and controlled by
affiliates of Clearlake Capital Group, L.P. ("Clearlake"), a
private equity firm. After close of the Service King restructuring
in July 2022, Clearlake invested in Crash Champions (not rated),
the fourth largest MSO, and through a shared services agreement
between Service King and Crash Champions, Clearlake assigned Crash
Champions' management team to operate Service King going forward.
The principal methodology used in these ratings was Retail
published in November 2021.
NEWAGE INC: Seeks Shortened Notice Period for Assets Bid Procedures
-------------------------------------------------------------------
NewAge Inc. and affiliates ask the U.S. Bankruptcy Court for the
District of Delaware to shorten the notice period for their
proposed bidding procedures relating to the auction sale of all or
a portion of their assets.
The Debtors have filed these cases at a critical juncture in their
restructuring efforts. After prepetition marketing and sale
efforts and negotiations with their secured creditor, they have
secured a stalking horse proposal that will set the floor for a
monetization process in these Chapter 11 Cases that, to maximize
value, should be concluded in approximately six weeks.
During the pendency of these Chapter 11 Cases, the Debtors forecast
averaging weekly net operating losses of approximately $800,000 and
incurring weekly operating disbursements averaging greater than $2
million. Therefore, in order to maximize the return to
stakeholders in these Chapter 11 Cases, a six week sale timeline is
warranted, as contemplated under the milestones in the Stalking
Horse Agreement and DIP Loan Agreement.
Notably, the Debtors request only that the Bid Procedures Motion be
heard within 18 days of the filing of the Motion to Shorten. The
time proposed should provide an opportunity for any Official
Committee of Unsecured Creditors to be appointed and retain
counsel. The Debtors have worked and will work with the Office of
the U.S. Trustee for the District of Delaware to facilitate that
process. In addition, they propose that the Committee have
additional time to file any objection to the bid procedures.
Accordingly, the Debtors are hopeful that there will be sufficient
time to resolve any issues raised by the Committee.
For the foregoing reasons, the Debtors submit that shortening
notice as requested herein is necessary to maximizing the outcome
of their in-court marketing and sale efforts, is in the best
interests of their stakeholders and estates, and will not prejudice
any party.
Accordingly, they request that (i) the Proposed Bid Procedures
Hearing be scheduled on Sept. 20, 2022, subject to the Court's
availability; (ii) parties other than the Official Committee of
Unsecured Creditors were to be required to file objections, if any,
to the Bid Procedures no later than Sept. 16, 2022, at 4:00 p.m.
(ET); and (iii) the Official Committee of Unsecured Creditors were
to be required to file objections, if any, to the Bid Procedures no
later than Sept. 19, 2022, at 12:00 p.m. (ET).
To mitigate any potential prejudice resulting from these shortened
notice and objection periods, the Debtors are serving the Motion by
overnight mail and/or electronic mail where available on the Bid
Procedures Notice Parties. They will also provide prompt notice of
the Motion to Shorten.
About NewAge, Inc.
NewAge Inc. (Nasdaq: NBEV) is a purpose-driven firm dedicated to
inspiring the planet to Live Healthy. The Utah-based Company
commercializes a portfolio of organic and healthy products
worldwide primarily through a direct-to-consumer (D2C) route to
market distribution system across more than 50 countries. The
company competes in three major category platforms including
health
and wellness, inner and outer beauty, and nutritional performance
and weight management -- through a network of exclusive
independent
Brand Partners, empowered with the leading social selling tools
and
technology available worldwide. On the Web:
http://www.NewAgeGroup.com/
NewAge Inc. and certain of its subsidiaries, Ariix LLC, Morinda
Holdings, Inc., and Morinda, Inc., sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 22-10819)
on August 30, 2022.
NewAge reported total assets of $310,902,000 against total
liabilities of $149,447,000 as of the bankruptcy filing.
The Debtors tapped GREENBERG TRAURIG, LLP as bankruptcy counsel
and
SIERRACONSTELLATION PARTNERS LLC as financial advisor. HOULIHAN
LOKEY CAPITAL, INC., conducted the prepetition marketing process
for the Debtors. STRETTO is the claims agent.
NEWAGE INC: Sept. 20 Hearing on Bidding Procedures for All Assets
-----------------------------------------------------------------
Judge Laurie Selber Silverstein of the U.S. Bankruptcy Court for
the District of Delaware granted the request of NewAge Inc. and
affiliates to shorten the notice period for their proposed bidding
procedures relating to the auction sale of all or a portion of
their assets.
The hearing to consider the relief with respect to the Bid
Procedures Motion will be held on Sept. 20, 2022.
The Official Committee of Unsecured Creditors was to file
objections, if any, to the Bid Procedures Motion no later than
Sept. 19, 2022, at 12:00 p.m.
The Order will be immediately effective and enforceable upon its
entry.
The Debtors are authorized to take all action necessary to
effectuate the relief granted in the Order.
The Court will retain jurisdiction to hear and determine all
matters arising from or related to the implementation,
interpretation, or enforcement of the Order.
About NewAge, Inc.
NewAge Inc. (Nasdaq: NBEV) is a purpose-driven firm dedicated to
inspiring the planet to Live Healthy. The Utah-based Company
commercializes a portfolio of organic and healthy products
worldwide primarily through a direct-to-consumer (D2C) route to
market distribution system across more than 50 countries. The
company competes in three major category platforms including
health
and wellness, inner and outer beauty, and nutritional performance
and weight management -- through a network of exclusive
independent
Brand Partners, empowered with the leading social selling tools
and
technology available worldwide. On the Web:
http://www.NewAgeGroup.com/
NewAge Inc. and certain of its subsidiaries, Ariix LLC, Morinda
Holdings, Inc., and Morinda, Inc., sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 22-10819)
on August 30, 2022.
NewAge reported total assets of $310,902,000 against total
liabilities of $149,447,000 as of the bankruptcy filing.
The Debtors tapped GREENBERG TRAURIG, LLP as bankruptcy counsel
and
SIERRACONSTELLATION PARTNERS LLC as financial advisor. HOULIHAN
LOKEY CAPITAL, INC., conducted the prepetition marketing process
for the Debtors. STRETTO is the claims agent.
NEWELL BRANDS: Fitch Affirms 'BB+' LongTerm IDR, Outlook Stable
---------------------------------------------------------------
Fitch Ratings has affirmed Newell Brands Inc.'s Long-Term Issuer
Default Rating (IDR) at 'BB+' and unsecured debt ratings at
'BB+'/'RR4'. The Rating Outlook is Stable.
The rating reflects Newell's position as a large diversified
consumer products company. Fitch expects Newell to sustain flat to
modestly positive top line and EBITDA in the $1.3 billion to $1.4
billion range (similar to pre-pandemic levels adjusting for
divestitures) over the medium term, with gross debt/EBITDA trending
in the mid 3x. However, top line and EBITDA are likely to be under
material pressure in the second half of 2022 and potentially the
first half of 2023, given a significant pullback in retail orders
and an overall slowdown in consumer spending, and Fitch projects
gross debt/EBITDA will increase to over 4x in 2022 before declining
to under 4x in 2023.
KEY RATING DRIVERS
Near-Term Challenges: Newell's near-term operations will be
challenged by changing consumer behavior with a shift towards
services after strong pandemic-induced demand, a heightened risk
for overall slowdown in consumer spending given inflationary
pressures, and declining customer orders as retailers reduce
inventory levels across general merchandise categories.
The company saw a strong recovery in 2021 with top-line growth of
12.8% and EBITDA of $1.45 billion, almost 10% higher than 2019
results, as categories adversely impacted during the pandemic such
as writing, home fragrance, outdoor & recreation, and connected
home and security recovered.
While topline and EBITDA was relatively flat to 2021 levels for the
first half 2022, Newell has materially lowered guidance for the
back of 2022 given a higher than expected pullback in customer
orders for food, home appliance and fragrance (collectively 39% of
2021 revenue) and outdoor and recreation (14% of revenue), leading
to both top line and gross margin pressure given high inventory
levels. The company has also seen significant headwinds from
inflation, an increase in advertising and promotion expense as a
percentage of sales and an unfavorable impact from foreign
exchange, partially offset by pricing, productivity savings and
lower overhead costs.
EBITDA Volatility Expected: Fitch expects Newell's current
challenges to negatively impact 2022 operating results, and some
could continue into 2023, resulting in EBITDA trending towards the
low $1 billion in 2022 before recovering towards $1.3 billion in
2023/2024. EBITDA margins could recover in 2023 with the easing of
inflationary pressures and realignment of inventory despite
projected modest revenue declines due to pullback in consumer
demand.
Medium-Term Low-Single Digit Topline Growth Target: Newell expects
to sustain low single-digit organic sales growth over the medium
term by strengthening brands through increased innovation, focusing
on omnichannel initiatives (with e-commerce at 22% of sales), and
accelerating international growth (one-third of sales).
In 2021, the company realigned its eight business units into three
categories to direct investments and business focus and maximize
portfolio value. The "growth and value accelerators" category
comprised of food, writing and home fragrance (together 41% of 2021
net sales) has strong growth potential and a gross margin of over
40%. Newell views the "solid value generators" category comprised
of commercial, baby and parenting (28% of net sales) as steady
businesses with some growth potential and good gross margins.
The "continuous improvement" group includes home appliances and
outdoor and recreation in the midst of a turnaround, with the main
challenge being a gross margin significantly below the company
average of 32%-33% (at 2020/2021 levels). Fitch expects its top
line to be essentially flat to modestly positive over the medium
term.
Medium-Term Margins: Newell has discussed a several-hundred basis
point improvement opportunity in operating margin based on industry
benchmarking, with a long-term target of driving operating margin
improvement of 50bp annually. Actions include reduction in overhead
costs and working capital management; for example, Newell improved
its cash conversion to 68 days in 2021 from 115 days in 2018 due to
actions such as extended payable terms and SKU reduction of 65%.
In September 2021, Newell discussed a new multi-year supply chain
initiative (Project OVID) to transform its go-to market strategy,
particularly in the U.S., moving from 23 business-specific supply
chains to a single integrated supply chain. This should generate
savings from fuller trucks, closer proximity to retailers and
distribution center optimization.
Given Newell's ongoing gross margin challenges in a number of
categories, investments required to support its brands and
potential disruption and costs related to its supply chain
initiatives, Fitch projects the EBITDA margin to remain relatively
flat to 2019-2021 levels of 13.5%-14% over the medium term, with
near-term margins in the 12% range given current topline
headwinds.
Elevated Near-Term Leverage: Fitch expects gross debt/EBITDA to
increase to over 4x in 2022 versus 3.4x in 2021 given projected
material weakness in top line and EBITDA in 2H22. Gross leverage is
projected to decline to under 4x beginning in 2023 on EBITDA margin
recovery, with net leverage trending in the mid-3x. This compares
to Newell's long-term net leverage (net debt/EBITDA) target of
2.5x.
Newell's total outstanding debt was $4.9 billion at the end of
2021. It has $1.1 billion of debt due in April 2023 and $200
million in December 2024, which Fitch expects the company to
largely refinance. While Fitch expects FCF to be an outflow of
nearly $300 million in 2022, Newell's liquidity remains reasonable
with almost full availability anticipated at year-end 2022 on its
upsized $1.5 billion revolver.
DERIVATION SUMMARY
Newell's ratings reflect its position as a large diversified
consumer products company. Fitch expects Newell to sustain flat to
modestly positive top line and EBITDA in the $1.3 billion to $1.4
billion range (similar to pre-pandemic levels adjusting for
divestitures) over the medium term, with gross debt/EBITDA trending
in the mid 3x. However, top line and EBITDA are expected to be
under material pressure in the second half 2022 and potentially
first half 2023, given a significant pull back in retail orders and
overall slowdown in consumer spending, and Fitch projects gross
debt/EBITDA will increase to over 4x in 2022 before declining to
under 4x in 2023.
ACCO Brands Corporation's 'BB'/Stable rating reflects the company's
historically consistent FCF and reasonable gross leverage, which
trended around 3.0x prior to operating challenges in 2020 related
to the coronavirus pandemic. The ratings are constrained by secular
challenges in the office products industry and channel shifts
within the company's customer mix, as well as the risk of further
debt-financed acquisitions into faster-growing geographies and
product categories.
Mattel, Inc.'s 'BB+'/Positive rating reflect the company's
meaningfully improved credit metrics achieved through better than
expected execution on both the top and bottom line, as well as
discretionary debt paydown. While Fitch expects the company to
surrender some of the revenue and margin gains achieved in 2021 as
the tailwinds from the pandemic dissipate, the Positive Outlook
reflects Fitch's view that improved competitive positioning, cost
cuts and debt reduction could result in post-pandemic credit
metrics and an operational profile supportive of an investment
grade rating over time.
Hasbro, Inc's. 'BBB-'/Stable ratings reflect its position as one of
the world's largest toy companies, its good liquidity and cash flow
profile, and expectations of leverage (gross debt to EBITDA)
maintaining below 3.5x. Hasbro's leverage increased to 5.0x in 2020
from 2.2x in 2018 due to a combination of elevated debt levels from
the acquisition of eOne and suppressed EBITDA due to challenges
stemming from the coronavirus pandemic. Strong results at the
company's Wizards of the Coast segment, a rebound in the Consumer
Products segment and the paydown of over $1 billion in debt drove
leverage back below 3.5x in 2021. The recent Outlook revision to
Stable from Negative reflects increased confidence in leverage
remaining below 3.5x given EBITDA trends and expected debt
reduction.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
-- Revenue declines over 10% to $9.5 billion in 2022 from $10.6
billion in 2021, reflecting core sales declines of 3%-4%
driven by expectations of core sales turning materially
negative at down 10% in the second half versus a positive
first half. Top line is also expected to be impacted by a 4%
decline due to divested businesses (the company divested its
Connected Home & Security on April 1, 2022 which had net sales
of $395 million in 2021) and forex headwinds of 3%. Revenue is
expected to modestly decline in 2023 assuming top line
declines continue through first half 2023, before recovering
in the low single digits thereafter;
-- Operating EBITDA is expected to be in the low $1 billion range
in 2022 before recovering towards the 1.3 billion to $1.4
billion range over 2023/2024. EBITDA margin is expected to
decline to the low 12% in 2022 (versus 13.7% in 2021) before
recovering to 13% beginning 2023;
-- Capex around $300 million and dividends at around $400 million
annually;
-- FCF (after dividends) is expected to be an outflow of around
$300 million (reflecting cash outflow from working capital as
well as a one-time cash payment on the sale of the CH&S) and
be approximately $200 million of inflow thereafter, assuming
fairly neutral working capital swings;
-- Gross debt/EBITDA increases to over 4x in 2022 versus 3.4x in
2021 given projected material weakness in top line and EBITDA
in 2H22. Leverage is projected to decline to under 4x
beginning in 2023 on EBITDA margin recovery. The leverage
projections in 2022 reflect short-term borrowings of about
$200 million at year end (before paydown in 2023).
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- A positive rating action could result from increased
confidence in the company's ability to grow core sales in the
low single digits, sustaining EBITDA growth of at least low
single digits leading to EBITDA of over $1.5 billion, with
EBITDA margins in the mid-teens and gross debt/EBITDA
sustained under 3.5x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A negative rating action could result from worse than expected
operating performance leading to reduced confidence in
Newell's ability to stabilize its business and/or lower than
expected debt reduction such that gross debt/EBITDA is
sustained above 4.0x.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: As of June 30, 2022, Newell maintained $323
million cash on hand and nearly $1.1 billion availability under its
$1.25 billion unsecured revolving credit facility (RCF) that was
due to expire in December 2023, after netting out $22 million
outstanding letters of credit and $112 million of commercial paper
borrowings at June 30, 2022. In addition, Newell has a $375 million
accounts receivable securitization facility that matures in October
2023; as of June 30, 2022, there was $260 million of outstanding
under this facility.
Borrowings under the CP program and the A/R facility relate to
seasonal working capital needs, primarily reflecting an inventory
increase to support sales and the first wave of Project Ovid
(Newell's multiyear supply chain initiative) implementation. Fitch
expects the company to maintain some borrowings on its CP program
and A/R facility at year-end given higher than expected inventory
balance given reduced customer orders and material reduction to
operating cash flow in 2022 although Fitch expects the company to
pay down the short-term borrowings in 2023.
Newell recently upsized its revolver from $1.25 billion to $1.5
billion, and extended the maturity to August 31, 2027. Newell's
total outstanding debt was $4.9 billion at the end of 2021. It has
$1.1 billion of debt due in April 2023 and $200 million due in
December 2024, which Fitch expects the company to largely
refinance.
RECOVERY CONSIDERATIONS
Fitch does not employ a waterfall recovery analysis for issuers
assigned ratings in the 'BB' category. The further up the
speculative grade continuum a rating moves, the more compressed the
notching between the specific classes of issuances becomes.
Newell's capital structure is unsecured, including its revolver and
notes. Fitch has affirmed Newell's ratings across its capital
structure to 'BB+'/'RR4', indicating average recovery prospects.
ISSUER PROFILE
Newell is a global marketer of consumer and commercial products,
marketed under Paper Mate, Sharpie, Dymo, EXPO, Parker, Elmer's,
Coleman, Marmot, Oster, Sunbeam, FoodSaver, Mr. Coffee, Rubbermaid
Commercial Products, Graco, Baby Jogger, NUK, Calphalon,
Rubbermaid, Contigo, First Alert, Mapa, Spontex, Quickie and Yankee
Candle.
ESG CONSIDERATIONS
Newell has an Environmental, Social and Governance (ESG) Relevance
Score of '4' for Financial Transparency. This reflects material
weaknesses in internal control over financial reporting related to
the company's tax accounting in 2019 and 2020, an SEC subpoena in
January 2020 related to the impairment of goodwill and other
intangibles in 2018, and a subpoena in June 2021 related to
disclosures of the potential impact of revised U.S Treasury
regulations. Operating comparability over the last few years has
also been challenging given a number of reclassifications of
continuing versus discontinued operations as well as business
segments over 2018-2021. This has a negative impact on the credit
profile and is relevant to the ratings in conjunction with the
other factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
NINE ENERGY: Regains Compliance With NYSE Listing Standards
-----------------------------------------------------------
Nine Energy Service, Inc. was notified by the New York Stock
Exchange on Sept. 9, 2022, that the Company has regained compliance
with the quantitative continued listing standards. This decision
comes as a result of the Company's achievement of compliance with
the NYSE's minimum market capitalization and shareholders' equity
requirement over the past two quarters.
On Jan. 5, 2022, the Company was notified by the NYSE of its
noncompliance with the NYSE's continued listing standards because
its average global market capitalization over a consecutive 30
trading-day period and last reported stockholders' equity were both
below $50 million.
Accordingly, the Company is no longer considered out of compliance
with the continued listing standards and the below compliance ".BC"
indicator has been removed from the Company's common shares.
Additionally, the Company will no longer be noted as being below
continued listing standards on the NYSEs web site (www.nyse.com).
In accordance with the NYSE's Listed Compa'ny Manual, the Company
will be subject to a 12-month follow-up period within which the
Company will be reviewed to ensure that the Company does not once
again fall below any of the NYSE's continued listing standards.
About Nine Energy Service
Nine Energy Service, Inc. is an oilfield services company that
offers completion solutions within North America and abroad. The
Company brings years of experience with a deep commitment to
serving clients with smarter, customized solutions and resources
that drive efficiencies. Nine Energy is headquartered in Houston,
Texas with operating facilities in the Permian, Eagle Ford,
SCOOP/STACK, Niobrara, Barnett, Bakken, Marcellus, Utica and
throughout Canada.
Nine Energy reported a net loss of $64.58 million for the year
ended Dec. 31, 2021, compared to a net loss of $378.95 million for
the year ended Dec. 31, 2020. As of June 30, 2022, the Company had
$395.75 million in total assets, $442.06 million in total
liabilities, and a total stockholders' deficit of $46.32 million.
* * *
In May 2021, Moody's Investors Service retained Nine Energy's
ratings, including its Caa3 Corporate Family Rating (CFR). Nine's
Caa3 CFR and negative outlook reflect Moody's view that the company
has an untenable capital structure given the still high debt burden
despite bond repurchases.
As reported by the TCR on Nov. 23, 2020, S&P Global Ratings raised
its issuer credit rating on Nine Energy to 'CCC' from 'SD',
reflecting its assessment of the company's credit risk following
debt repurchases.
NORTONLIFELOCK INC: Fitch Rates 2027/2030 New Secured Notes 'BB+'
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Fitch Ratings has assigned a 'BB+'/'RR4' rating to NortonLifeLock
Inc.'s (NLOK) proposed offering of senior unsecured notes due 2027
and 2030.
NLOK will use proceeds from the note offering to fund the Avast plc
acquisition and for general corporate purposes, which may include
share repurchases. The acquisition of Avast is now expected to
close on Sept. 12, 2022 following the final regulatory approvals.
NLOK's Long-Term Issuer Default Rating (IDR) is 'BB+', and its
Rating Outlook is Negative.
KEY RATING DRIVERS
Negative Outlook: The Negative Outlook reflects Fitch's concern
that leverage may be above the negative rating sensitivity of 3.5x
for a sustained period of time. NLOK has the ability to generate
significant FCF, which may be directed toward share repurchases,
acquisitions, debt reduction and dividends.
Should the company prioritize debt paydowns over the next several
quarters, Fitch would expect leverage to fall below 3.5x and the
Outlook could return to Stable. On the other hand, if NLOK
prioritizes returns to shareholders and debt funded acquisitions,
Fitch would expect leverage to remain over 3.5x for an extended
amount of time, which could result in a one-notch downgrade to
'BB'.
Acquisition Increases Leverage: With the pending acquisition of
Avast plc, NLOK plans to increase debt significantly to fund the
transaction. Assuming the transaction closes in mid-to-late 2022,
Fitch forecasts leverage (defined as total debt with equity credit
to operating EBITDA) at the end of fiscal 2024 to be in the range
of 3.5x-4.0x. However, if NLOK prioritizes debt repayment, leverage
is expected to be lower than this range. Fitch's concern is that
NLOK may not prioritize debt reduction and leverage could remain
elevated for an extended period of time.
Management has a long-term net leverage target of 2x-3x, and, in
Fitch's view, NLOK can delever to that range quickly if it chooses
to lower debt. FCF (after dividends) is expected to be over $1
billion annually. Should NLOK become aggressive with share
repurchases (which may happen if all Avast stockholders elect the
majority of stock option) or if NLOK pursues additional
acquisitions that are debt funded, leverage would remain high.
Pending Acquisition of Avast: On Aug. 10, 2021, NortonLifeLock and
Avast Plc announced that it agreed to merge. Avast is a Czech-based
cybersecurity company that offers "freemium" software as well as
premium. It has over 435 million users and 16.5 million are paying
subscribers. Its six top markets are the U.S., Canada, Brazil,
France, the UK, Russia and Germany. NLOK views the merger as one
that brings together a complimentary product portfolio. Once
combined, NLOK will have well over 500 million total users and
approximately 40 million direct customers.
International Focus: With the pending Avast acquisition and the
past Avira acquisition, NLOK is expanding its international
footprint. In January 2021, NLOK acquired Avira, a German-based
cybersecurity company that offers its customers freemium cyber
security solutions. Just like Avast's freemium subscribers, NLOK's
ultimate goal is to convert those users to paid subscription
customers. Avira added nearly 2 million customers to NLOK's
customer base.
Strong Consumer Cybersecurity Brands: Norton and LifeLock are among
the top cybersecurity brands in the consumer cybersecurity segment,
albeit a fragmented market. In Fitch's view, brand value is
particularly important for products that face competitive consumer
markets as differentiations with product features are generally
difficult and consumers rely on brand awareness and reputation. In
the competitive consumer cybersecurity markets, Norton has
consistently been recognized as a top-five brand in internet
security along with other brands including McAfee, TotalAV, and
Bitdefender. LifeLock also has strong brand awareness for identity
protection along with Identity Guard, and McAfee Identity Theft
Protection.
DERIVATION SUMMARY
NLOK's 'BB+' rating reflects its significant size, strong brand
recognition, its operating profile and EBITDA margins around 50%.
With a strong focus around the consumer market, the company has
actively been looking to grow and has been expanding its
international presence.
The company's rating is two notches above MeridianLink (MLNK) and
Instructure Holdings, Inc. (INST), which are not direct peers yet
all three are public software companies. MLNK is focused on
software systems for financial institutions. INST is focused on
learning management systems for educational institutions. The
rating for NLOK is higher given its size and stronger credit
profile. MLNK and INST have EBITDA margins in the low 40's and
30's, respectively, which is much lower than NLOK. MLNK and INST
are both significantly smaller than NLOK, which generates about 10x
the EBITDA of the smaller rated software companies. Fitch expects
gross leverage for both MLNK and INST to be below 4.0x.
NLOK is rated below other technology peers including Constellation
Software (BBB+/Stable), Citrix Systems (BBB/RWN), and Cadence
Design Systems (A-/Stable). These three are all higher rated than
NLOK since they have stronger credit profiles. However, NLOK has
consistently had stronger EBITDA and FCF margins, which benefit
from its strong consumer market position.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Our Rating Case for the Issuer
- The acquisition of Avast closes in September 2022 as planned
with no material changes;
- Revenue growth in the mid-single digits on a pro forma basis in
FY23;
- EBITDA margins of approximately 50% and improving, reflecting
recent performance as well as increased operating efficiencies
post-closing;
- Shareholder returns continue through flat dividends and share
repurchases;
- No other acquisitions are assumed.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to a Stable
Outlook:
-- Should Fitch anticipate NLOK to reduce leverage to below 3.5x
by the end of fiscal 2024, the Outlook could be revised to
Stable from Negative.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Fitch's expectation of leverage (defined as total debt with
equity credit/operating EBITDA) below 2.5x on a sustained
basis;
-- Total debt with equity credit/FCF ratio below 5x on a
sustained basis.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Fitch's expectation of leverage (defined as total debt with
equity credit/operating EBITDA) above 3.5x by the end of
fiscal 2024;
-- Total debt with equity credit/FCF ratio above 7.5x on a
sustained basis;
-- Evidence of negative organic revenue growth and/or erosion of
EBITDA and FCF margins;
-- Significant debt-financed acquisitions or share repurchases
that significantly weaken the company's credit profile for a
prolonged period of time.
LIQUIDITY AND DEBT STRUCTURE
Liquidity to Remain Solid: As of July 1, 2022, NLOK had total
liquidity of nearly $2.3 billion including almost $1.3 billion of
cash on the balance sheet and a fully undrawn secured $1 billion
revolving credit facility. When the company finances the Avast
acquisition, the revolver will increase to $1.5 billion.
ISSUER PROFILE
NortonLifeLock, Inc. is a global consumer cybersecurity company
with nearly 80 million users located in more than 150 countries.
The company offers consumers both premium and "freemium" software.
Approximately 30 million consumers use freemium software.
NOVABAY PHARMACEUTICALS: To Raise Up to $5.3M Under New Agreements
------------------------------------------------------------------
NovaBay Pharmaceuticals, Inc. has entered into a securities
purchase agreement with certain institutional investors in
connection with a private placement of 3,250 shares of a newly
created Series C Non-Voting Convertible Preferred Stock at a price
of $1,000 per share, Series A-1 warrants exercisable to purchase up
to an aggregate of 18,055,557 shares of Company common stock at an
exercise price of $0.18 per share and Series A-2 warrants
exercisable to purchase up to an aggregate of 18,055,557 shares of
Company common stock at an exercise price of $0.18 per share.
The Company expects to receive gross proceeds from the private
placement of approximately $3.25 million. The private placement is
expected to close in the fourth quarter of 2022 on or about the
date of effectiveness of Stockholder Approval and the Reverse Stock
Split and subject to satisfaction of customary closing conditions
in the Securities Purchase Agreement. The exercise price for the
Warrants and the number of shares of Company common stock
underlying the Warrants will be adjusted to reflect the Reverse
Stock Split.
NovaBay intends to use the net proceeds received from the offering
for working capital and general corporate purposes.
Ladenburg Thalmann & Co. Inc. is acting as the exclusive placement
agent for the private placement and as warrant solicitation agent
for the warrant reprice transactions.
The Series C Preferred Stock will initially be convertible into an
aggregate of approximately 18,055,557 shares of Company common
stock at a conversion price of $0.18 per share, subject to
adjustment following the Reverse Stock Split. In addition, the
conversion of the Series C Preferred Stock will be subject to
certain ownership limitations, as provided in the Securities
Purchase Agreement and in the Certificate of Designation of
Preferences, Rights and Limitations of the Series C Preferred
Stock, which will be filed and become effective in connection with
the closing of the private placement. The Series C Preferred Stock
will only be entitled to dividends in the event dividends are paid
on the Company common stock and will not have any preferences over
the Company common stock, including liquidation rights. As a
result of the number of shares of Company common stock that may be
issued upon the future conversion of the Series C Preferred Stock
and exercise of the Warrants and as a condition to closing as set
forth in the Securities Purchase Agreement, the Company will be
required to obtain stockholder approval in accordance with the NYSE
American LLC Company Guide Rule 713(a) and Rule 713(b). In
addition, as a further condition to closing the private placement,
the Company will take appropriate corporate action, including at a
meeting of stockholders, to effect a reverse split of its common
stock, as required by its governing documents and applicable law,
in order to have a sufficient number of shares of Company common
stock to issue upon the full conversion of the Series C Preferred
Stock and the full exercise of the Warrants. After the closing of
the private placement, the Series C Preferred Stock issued will be
immediately convertible, the Series A-1 Warrants will be
immediately exercisable and will expire six years following the
closing date and the Series A-2 Warrants issued will be immediately
exercisable and will expire eighteen months following the closing
date.
Pursuant to the Securities Purchase Agreement, the Purchasers and
the Company will enter into a Registration Rights Agreement, which
will provide for the Company to file an initial registration
statement with the Securities and Exchange Commission covering the
resale of the shares of the Company's common stock underlying the
Series C Preferred Stock and the Warrants no later than 30 days
after the Stockholder Approval Date and to use best efforts to have
the registration statement declared effective as promptly as
practical thereafter, and in any event no later than 90 days after
the Stockholder Approval Date.
Warrant Reprice Transactions
The Company also entered into warrant reprice transactions with
certain of its existing warrant holders to amend previously issued
Company common stock purchase warrants to reduce their exercise
price, provide an opportunity to make an initial cash exercise and
for such exercising holders to receive new Company common stock
purchase warrant, as well as certain other terms.
The Participants in the warrant reprice transactions include
warrant holders from the Company's prior warrant reprice
transaction that closed on July 23, 2020 where the Company issued
common stock purchase warrants to a limited number of accredited
investors and from its prior private placement transaction that
closed on Nov. 2, 2021 where the Company issued common stock
purchase warrants to a limited number of accredited investors. The
2020 Original Warrants have an aggregate of 6,898,566 underlying
shares of Company common stock that are currently exercisable at
$1.65 per share. The 2021 Original Warrants have an aggregate of
37,500,000 underlying shares of Company common stock that are
currently exercisable at $0.53 per share.
By letter agreement, dated Sept. 9, 2022, the Company provided the
2020 Investors holding 2020 Original Warrants and the 2021
Investors holding 2021 Original Warrants with an opportunity to
amend their respective warrants to reduce their exercise price to
$0.18 and, in the case of the 2021 Original Warrants, extend the
term of those warrants. The Amended Warrants will not be
exercisable until the later of six months and the Stockholder
Approval Date, except for an Initial Exercise by a Participant.
The terms of the letter agreements also provided the Participants
with the opportunity to make a cash exercise of their respective
warrants at the Reduced Exercise Price, and to receive a new common
stock purchase warrant to purchase a number of shares of Company
common stock equal the shares of Company common stock received by
such Participant in its own Initial Exercise. The New Warrants
will be initially exercisable on the later to occur of the
six-month anniversary of the date of issuance and the Stockholder
Approval Date. In addition, the New Warrants will have a term of
exercise of six years and an exercise price equal to $0.18. The
Company will receive approximately $2 million in aggregate proceeds
from the Initial Exercise.
The offer and sale of the Preferred Stock and the Warrants in the
private placement and the New Warrants in the warrant reprice
transactions are each being made in a transaction not involving a
public offering, and these securities have not been registered
under the Securities Act of 1933, as amended, or applicable state
securities laws. Accordingly, these securities may not be
reoffered or resold in the United States except pursuant to an
effective registration statement or an applicable exemption from
the registration requirements of the Securities Act and such
applicable state securities laws.
About Novabay
Headquartered in Emeryville, California, NovaBay Pharmaceuticals,
Inc. -- http://www.novabay.com-- is a biopharmaceutical company
focusing on commercializing and developing its non-antibiotic
anti-infective products to address the unmet therapeutic needs of
the global, topical anti-infective market with its two distinct
product categories: the NEUTROX family of products and the
AGANOCIDE compounds. The Neutrox family of products includes
AVENOVA for the eye care market, CELLERX for the aesthetic
dermatology market, and NEUTROPHASE for wound care market.
Novabay reported a net loss and comprehensive loss of $5.82 million
for the year ended Dec. 31, 2021, a net loss and comprehensive
loss of $11.04 million for the year ended Dec. 31, 2020, a net loss
and comprehensive loss of $9.66 million for the year ended Dec. 31,
2019, and a net loss and comprehensive loss of $6.54 million for
the year ended Dec. 31, 2018. As of March 31, 2022, the Company
had $24.79 million in total assets, $7.05 million in total
liabilities, and $17.75 million in total stockholders' equity.
ORGANICELL REGENERATIVE: Incurs $2.7-Mil. Net Loss in Third Quarter
-------------------------------------------------------------------
Organicell Regenerative Medicine, Inc. filed with the Securities
and Exchange Commission its Quarterly Report on Form 10-Q reporting
a net loss of $2.73 million on $1.71 million of revenues for the
three months ended July 31, 2022, compared to a net loss of $1.41
million on $1.36 million of revenues for the three months ended
July 31, 2021.
For the nine months ended July 31, 2022, the Company reported a net
loss of $5.88 million on $5.05 million of revenues compared to a
net loss of $11.80 million on $3.93 million of revenues for the
same period during the prior year.
As of July 31, 2022, the Company had $2.56 million in total assets,
$7.17 million in total liabilities, and a total stockholders'
deficit of $4.61 million.
Organicell said, "Management anticipates that the Company will
remain dependent, for the near future, on additional investment
capital to fund ongoing operating expenses and research and
development costs related to development of new products and to
perform required clinical studies in connection with the sale of
its products. The Company does not have any assets to pledge for
the purpose of borrowing additional capital. In addition, the
Company relies on its ability to produce and sell products it
manufactures that are subject to changing technology and
regulations that it currently sells and distributes to its
customers. The Company's current market capitalization, common
stock liquidity and available authorized shares may hinder its
ability to raise equity proceeds. The Company anticipates that
future sources of funding, if any, will therefore be costly and
dilutive, if available at all.
"In view of the matters described in the preceding paragraphs,
recoverability of the recorded asset amounts shown in the
accompanying consolidated balance sheet assumes that (a) the
Company is able to continue to produce products or obtain products
under supply arrangements which are in compliance with current and
future regulatory guidelines; (b) the United States economy returns
to pre-COVID-19 market conditions; (c) the Company will be able to
establish a stabilized source of revenues, including efforts to
expand sales internationally and the development of new product
offerings and/or designations of products; (d) obligations to the
Company's creditors are not accelerated; (e) the Company's
operating expenses remain at current levels and/or the Company is
successful in restructuring and/or deferring ongoing obligations;
(f) the Company is able to continue its research and development
activities, particularly in regards to remaining compliant with the
FDA and ongoing safety and efficacy of its products; and/or (g) the
Company obtains additional working capital to meet its contractual
commitments and maintain the current level of Company operations
through debt or equity sources.
"There is no assurance that the products we currently produce will
not be subject to the FDA's previously announced intended
enforcement policies regarding HCT/P's and/or the Company will be
able to complete its revenue growth strategy. There is no
assurance that the Company's research and development activities
will be successful or that the Company will be able to timely fund
the required costs of those activities. Without sufficient cash
reserves, the Company's ability to pursue growth objectives will be
adversely impacted. Furthermore, despite significant effort since
July 2015, the Company has thus far been unsuccessful in achieving
a stabilized source of revenues.
"If revenues do not increase and stabilize, if the COVID-19 crisis
is not satisfactorily managed and/or resolved, if the Company's
ability to process, sell and/or distribute the products currently
being produced or developed in the future are restricted, and/or if
additional funds cannot otherwise be raised, the Company might be
required to seek other alternatives which could include the sale of
assets, closure of operations and/or protection under the U.S.
bankruptcy laws. As of July 31, 2022, based on the factors
described above, the Company concluded that there was substantial
doubt about its ability to continue to operate as a going concern
for the 12 months following the issuance of these financial
statements."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001557376/000182912622016867/organicellregen_10q.htm
About Organicell
Headquartered in Miami, FL, Organicell Regenerative Medicine, Inc.
-- www.organicell.com -- is a clinical-stage biopharmaceutical
company principally focusing on the development of innovative
biological therapeutics for the treatment of degenerative diseases
and to provide other related services. Its proprietary products are
derived from perinatal sources and manufactured to retain the
naturally occurring microRNAs, without the addition or combination
of any other substance or diluent. Its RAAM Products and related
services are principally used in the health care industry
administered through doctors and clinics.
Organicell Regenerative reported a net loss of $12.76 million for
the year ended Oct. 31, 2021, compared to a net loss of $12.58
million for the year ended Oct. 31, 2020. As of April 30, 2022, the
Company had $2.21 million in total assets, $6.41 million in total
liabilities, and a total stockholders' deficit of $4.19 million.
Fort Lauderdale, FL-based Marcum LLP, the Company's auditor since
2015, issued a "going concern" qualification in its report dated
Feb. 14, 2022, citing that the Company has a significant working
capital deficiency, has incurred significant losses and needs to
raise additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
ORIGINCLEAR INC: Reports Unregistered Sales of Equity Securities
----------------------------------------------------------------
Between Aug. 17, 2022 and Sept. 12, 2022, Originclear, Inc. entered
into subscription agreements with certain accredited investors
pursuant to which the Company sold an aggregate of 6.4 shares of
the Company's Series Y preferred stock for an aggregate purchase
price of $637,077. The Company also issued an aggregate of
5,096,616 warrants to these investors.
Conversion of Preferred Shares
Between Aug. 17, 2022 and Aug. 31, 2022, holders of the Company's
Series Y preferred stock converted an aggregate of 4.8 Series Y
shares into an aggregate of 23,276,786 shares of the Company's
common stock.
Between Aug. 19, 2022 and Sept. 6, 2022, holders of the Company's
Series U preferred stock converted an aggregate of 125 Series U
shares into an aggregate of 4,806,655 shares of the Company's
common stock.
On Sept. 6, 2022, holders of the Company's Series L preferred stock
converted an aggregate of 50 Series L shares into an aggregate of
1,258,812 shares of the Company's common stock.
On Sept. 6, 2022, holders of the Company's Series O preferred stock
converted an aggregate of 25 Series O shares into an aggregate of
1,258,812 shares of the Company's common stock.
On Sept. 6, 2022, holders of the Company's Series P preferred stock
converted an aggregate of 6 Series P shares into an aggregate of
157,352 shares of the Company's common stock.
On Sept. 6, 2022, holders of the Company's Series R preferred stock
converted an aggregate of 100 Series R shares into an aggregate of
5,035,247 shares of the Company's common stock.
On Sept. 6, 2022, holders of the Company's Series W preferred stock
converted an aggregate of 100 Series W shares into an aggregate of
5,035,248 shares of the Company's common stock.
Issuance of Common Stock
Between Aug. 18, 2022 and Aug. 29, 2022, the Company entered into
settlement agreements with certain accredited investors pursuant to
which the Company issued an aggregate of 2,165,537 shares of the
Company's common stock in settlement of certain claims with such
persons.
Between Aug. 31, 2022 and Sept. 12, 2022, the Company issued to
consultants an aggregate of 2,459,942 shares of the Company's
common stock for services.
In connection with the foregoing, the Company relied upon the
exemption from registration provided under Section 4(a)(2) under
the Securities Act for transactions not involving a public
offering.
About OriginClear
Headquartered in Clearwater, Florida, Originclear, Inc. --
www.originclear.tech -- is a water technology company which has
developed in-depth capabilities over its 14-year lifespan. Those
technology capabilities have now been organized under the umbrella
of OriginClear Tech Group.
OriginClear reported a net loss of $2.12 million for the year ended
Dec. 31, 2021. As of June 30, 2022, the Company had $5.01 million
in total assets, $17.70 million in total liabilities, $12.18
million in commitments and contingencies, and a total shareholders'
deficit of $24.87 million.
Houston, Texas-based M&K CPAS, PLLC, the Company's auditor since
2019, issued a "going concern" qualification in its report dated
April 6, 2022, citing that the Company suffered a net loss from
operations and has a net capital deficiency, which raises
substantial doubt about its ability to continue as a going concern.
PACKABLE HOLDINGS: U.S. Trustee Appoints Creditors' Committee
-------------------------------------------------------------
The U.S. Trustee for Region 3 appointed an official committee to
represent unsecured creditors in the Chapter 11 cases of Packable
Holdings, LLC and affiliates.
The committee members are:
1. MTVL, LLC
Attn: Mick Sawka
1188 Centre St.
Newton Centre, MA 02459
Phone: 617-244-2800
Fax: 617-244-2889
Email: msawka@morningside.com
2. Luxor Capital
Attn: Jon Green and Norris Nissim
1114 Ave. of the Americas
New York, NY 10036
Phone: 917-915-0347
Email: jgreen@luxorcap.com
3. Poses Family Foundation
Attn: Frederic M. Poses
777 Arthur Godfrey Rd.
Miami Beach, FL 33140
Phone: 732-306-5641
Email: fred@theposes.com
4. Tradeswell, Inc.
Attn: Paul J. Palmieri
3600 O'Donnell St., Ste. 400
Baltimore, MD 21224
Email:paul@tradeswell.com
5. Pacvue Corp.
Attn: Scott Guilleaume
9696 Culver Blvd., Ste. 308
Culver City, CA 90232
Email: scott.guilleaume@withassembly.com
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Packable Holdings LLC
Packable Holdings LLC -- https://www.packable.com/ -- is a leading
multi-marketplace e-commerce enablement platform.
Packable Holdings and five affiliates sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No.
22-10797) on August 29, 2022. In the petition filed by Maria
Harris, as chief legal officer, the Debtor reported assets and
liabilities between $100 million and $500 million each.
Cooley LLP and Potter Anderson & Corroon LLP serve as the Debtors'
attorneys. Alvarez and Marsal North America, LLC, is the financial
advisor. Epiq Corporate Restructuring, LLC, is the claims agent.
Hilco Merchant Resources, LLC, is the liquidation agent.
PERATON HOLDING: Fitch Affirms 'B' IDR, Outlook Stable
------------------------------------------------------
Fitch Ratings has affirmed Peraton Holding Corp., Peraton Corp. and
Peraton Inc.'s 'B' Issuer Default Ratings (IDRs). Fitch has
affirmed the company's first lien credit facility at 'BB-'/'RR2'
and second lien loans at 'CCC+'/'RR6'. Fitch has also affirmed
Perspecta Enterprise Solutions LLC's senior unsecured notes at
'BBB+', which continue to benefit from an irrevocable guarantee for
any principal and interest from HP Inc. (BBB+/Stable). The Rating
Outlook is Stable.
Peraton's ratings are supported by its strong and stable FCF
generation, revenue visibility from multiyear contracts, advantages
of scale, and high degree of technology content. These positive
factors are somewhat offset by the company's leverage, which Fitch
believes will be temporarily high for a 'B' rating but decline over
the next few years. Execution remains a key watch item and will be
necessary to meet or exceed Fitch's expectations, particularly
given competition in the industry.
KEY RATING DRIVERS
High Leverage, but Delevering Through Growth: Fitch views Peraton's
leverage (debt/EBITDA) as temporarily high for the 'B' rating at
around 7.0x, but the agency forecasts leverage will decline towards
6.0x over the next 12 months to 24 months as it executes on its
growing backlog and benefits from actioned synergies. Management
has also stated its intention to use excess cash to repay debt,
which could result in deleveraging faster than Fitch's projections.
Risks to deleveraging include potential changes in either financial
policy or management strategy, increased competition, additional
debt-funded M&A activity beyond small bolt-on transactions or
unforeseen issues regarding integrating acquisitions.
Strong Profitability, Financial Flexibility: Peraton's
profitability profile is strong for the 'B' rating and is more
consistent with a higher rated company. Fitch heavily weights the
company's profitability when considering the overall rating and
views it as a mitigant against its temporarily high leverage. Fitch
forecasts the company will maintain consistent EBITDA margins in
the mid double digits and generate average FCF margins in excess of
4%-5% over the rating horizon. This could support upward rating
momentum over the next several years if coupled with paying down
debt.
Nimble Structure: Peraton has an asset-light operating model with
minimal capex and working capital requirements. In addition to
supporting its high margins, this should allow Peraton to manage
most potential downturns or disruptions well compared with
similarly rated companies. The company's operating structure also
supports the ability to execute on day-one cost synergies with each
of the company's previous acquisitions.
Advanced Technology Supports Growth: Peraton's technologically
advanced and highly diversified product portfolio, along with the
increased importance of government spending on cybersecurity
support Fitch's forecast that the company will achieve mid-single
digit organic annual revenue growth over the next few years.
Peraton is almost entirely a services-based company with highly
technological offerings across the broad spectrum of IT services
and cybersecurity.
Key focus areas of the company include intelligence, space systems
and protection, hypersonics, defensive cyber threat operations,
C5ISR, homeland security and health services. Fitch believes these
will align well with the U.S. Department of Defense's top
objectives over the foreseeable future, while increased spending on
health services technology is also likely over the rating horizon.
Stability and Visibility: Fitch considers many of Peraton's
offerings to be critical and less susceptible to economic downturns
than many peers due to the higher-end capabilities that the company
performs. Backlog has also grown significantly since the 2021
combination with book-to-bill greater than 1x in each consecutive
quarter since the transaction and over 70% of bookings related to
new business.
Peraton also does not have a material batch of contracts up for
review in the next 1 years to 2 years, which Fitch believes
mitigates the risk of a potential near-term stress scenario of
increased competition or contract loss. Peraton has overall
contract renewal rates greater than 90%, with a low likelihood of
material cancellations due to the importance of the services the
company provides. The company's meaningful exposure to classified
programs further reduces the risk of cancellations.
High Degree of Competition: Fitch considers competition to be
moderate-to-high across the various industries Peraton operates.
However, the company's diversification, management experience, and
wide range of capabilities provides an advantage when bidding on
projects and puts it in a solid position to win new business.
Following the 2021 transactions, the company became one of the
largest independent government IT and services providers. This
increased scale is generally more in line with higher-rated
entities and could provide some advantage over smaller peers.
DERIVATION SUMMARY
Peraton's rating is principally derived through the balance of its
high leverage for the rating level against steady and highly
visible growth and profitability. Fitch considers each of these
factors to be heavily weighted when forming the rating. Leverage is
significantly higher than similarly rated companies, as well as
like-sized and modestly larger peers such as Leidos and Science
Applications International, which Fitch expects would be rated
multiple notches higher than Peraton. However, the company has
higher EBITDA margins, similar cash flow margins and similar
financial flexibility as its peers, despite the higher leverage.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within the Rating Case for the Issuer
-- Mid-single digit annual organic revenue growth over the next
few years, supported by the company's high renewal rate,
likely step-ups within certain contracts, and Peraton
competing in high priority areas of government spending such
as space, cybersecurity and C5ISR;
-- Mid-teen EBITDA margins throughout the forecasts; Peraton and
the Northrop assets will likely generate margins in the low-
teens, while Perspecta will likely generate margins in the
high-teens before financing lease adjustments; any incremental
acquisitions would generate EBITDA margins in line with the
consolidated business;
-- Minimal working capital cash requirements and capex spending
over the forecast period;
-- Excess cash being deployed to debt paydown over the next few
years could lead to PRTN outperforming Fitch's forecasts;
-- No material dividends to sponsor over the next few years.
Recovery Analysis
The recovery analysis assumes that Peraton would be considered a
going concern in bankruptcy and that the company would be
reorganized rather than liquidated. A 10% administrative claim is
assumed in the recovery analysis.
Fitch assumes Peraton will receive a going-concern recovery
multiple of 7.0x EBITDA under this scenario. Fitch considers this
multiple to be in the middle-to-high range of recovery multiples
assigned to companies in the aerospace & defense sector.
Fitch's recovery assumptions are based on Peraton's pro forma
capital structure for recent acquisitions. Fitch considered the
company's strong cash flow generation, nimble operating structure,
stable margins, revenue visibility, and strong product offerings.
Fitch also weighted the company's contract diversification and key
focus areas, which align well with long-term U.S. Department of
Defense and broader U.S. government initiatives. Each of these
factors supports a medium to high recovery multiple.
Fitch assumes $900 million as the going concern EBITDA in the
analysis, which is slightly above our previous review's $860
million assumption due to backlog growth and successful contract
renewals during 2021 and 2022. Fitch estimates the hypothetical
bankruptcy emergence and GC EBITDA would be more than 20% lower
than 2022 EBITDA after finance lease adjustments.
Fitch said, "Our EBITDA assumption is derived from a hypothetical
bankruptcy that could result from either reputational damage from
poor execution or significant shift in industry dynamics or
competition, which would each result in a material loss of revenue
and deterioration of underlying operations. This decline would be
similar to a scenario if the company were to lose a significant
portion of its recompete contracts over the next 1 to 2 years. Most
of the defaulters in the aerospace & defense sector observed by
Fitch in recent bankruptcy case studies were small in scale, had
less diversified product lines or customer bases than average, or
were operating with highly leveraged capital structures."
Fitch generally assumes a fully drawn first lien revolver in its
recovery analyses since credit revolvers are tapped as companies
are under distress. Fitch also assumes the second lien term loan
holders would receive a concession payment from the first lien debt
holders under a bankruptcy scenario. This is supported by the
significant portion of second lien debt, which is in excess of 25%
of total debt. Concession payments cannot result in a recovery
above the RR6 range for the receiver. Concession payments are value
distributed from relatively senior creditors to more junior
claimants to secure reorganization approval.
The 'BB-' rating and Recovery Rating of 'RR2' on the first lien
debt is based on Fitch's recovery analysis under a going concern
scenario, which indicates strong recovery prospects. The 'CCC+'
rating and Recovery Rating of 'RR6' on the company's second lien
term loan would indicate poor recovery prospects.
The Perspecta Enterprise Solutions notes are excluded from the
recovery waterfall due to the irrevocable guarantee for any
principal and interest from HP Inc., which is rated 'BBB+'.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Leverage (debt/EBITDA) sustained below 6.0x along with clarity
and maintenance of a consistent and stable backlog indicated
by an average book-to-bill around or above 1.0x;
-- EBITDA/Interest Coverage sustained above 2.5x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Leverage sustained above 7.0x beyond 12 months to 18 months
post-transactions;
-- Material loss of major contracts leading to EBITDA/Interest
Coverage sustained around or below 1.7x;
-- Change in capital deployment strategy to fund significant
shareholder actions instead of reducing leverage.
LIQUIDITY AND DEBT STRUCTURE
Fitch considers Peraton's liquidity profile to be adequate to
support the company's liabilities and operations. The company's
EBITDA/Interest Coverage level is around 2.0x, mandatory debt
amortization is minimal, and working capital and capex requirements
are low. Peraton should also generate significant FCF to support
ongoing operations and facilitate voluntary debt prepayment. The
company's debt structure is predominantly comprised of a first lien
revolver maturing in 2026, first lien debt maturing in 2028, and
second lien term loan maturing in 2029.
In addition to this structure, there is approximately $66 million
in principal outstanding of legacy Perspecta Enterprise Solutions
LLC's 7.45% notes due 2029. The notes bear a guarantee of any
principal and interest by HP Inc. (BBB+) as successor to
Hewlett-Packard Company, which provided an irrevocable guarantee in
2008 upon its acquisition of Electronic Data Systems, LLC.
ESG Considerations
Fitch changed Peraton's ESG Relevance Score to '3' for Financial
Transparency and disclosure risk, from previous '4'. We previously
scored it a '4' due to the its private financials and intermittent
reporting, which was relevant to the ratings in conjunction with
other factors particularly given the new combination in 2021. Since
2021 we have become confident in the company's ability to deliver
timely and transparent financial statements.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
ISSUER PROFILE
Peraton Holding Corp. (Peraton) and its subsidiaries provide highly
differentiated space, intelligence, cyber, defense, homeland
security, and communications solutions, and is a partner on
missions that are critical to the security priorities of the United
States.
ESG Considerations
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
Fitch has affirmed Perspecta Enterprise Solutions LLC's notes,
which continue to benefit from an irrevocable guarantee for any
principal and interest from HP Inc. (BBB+/Stable).
PH BEAUTY: S&P Downgrades ICR to 'CCC' on Liquidity Shortfall Risk
------------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating to 'CCC' from
'CCC+' on cosmetic accessories company pH Beauty Holdings I Inc. as
it believes a default from potential distressed exchange, balance
sheet restructuring, or liquidity crisis (including a covenant
breach) is likely without unforeseen positive developments within
the next 12 months.
S&P said, "We also lowered our issue-level ratings on pH Beauty's
$25 million senior secured revolving credit facility and $270
million senior secured first-lien term loan to 'CCC'. The '3'
recovery rating is unchanged and indicates our expectation for
meaningful (50%-70%; rounded estimate: 65%) recovery in the event
of default."
The ratings reflect weak liquidity stemming from flat free
operating cash flow (FOCF), a current revolving credit facility,
and a potential covenant breach if operating performance
deteriorates further.
pH Beauty's $25 million revolving credit facility is now current
and will mature in September 2023. It must extend its maturity over
the next 12 months or repay $18 million of outstanding borrowings
under the facility. S&P believes it could be challenging for the
company to extend the maturity of its revolver, given its
outstanding balance and its forecast for continued weak FOCF in
addition to very high leverage of 21x and interest coverage below
1x. Additionally, the credit agreement for pH Beauty's senior
secured first-lien credit facilities includes a maximum net
leverage ratio of 6.5x through September 2022 that steps down to 6x
thereafter.
Though the company continues to be in compliance with its credit
agreement, its covenant cushion has become increasingly thin at 3%
headroom in June 2022, down from 8% in December 2021 and 6% in
March 2022. S&P forecasts just under 5% cushion when the covenant
steps down in December 2022, which leaves limited room for
underperformance. Although it is possible for pH Beauty to receive
a waiver from its lenders for a potential covenant breach, the
combination with the revolver maturity increases the likelihood and
need for a broader balance sheet restructuring.
Despite measures to limit freight cost pressure and some business
growth due to pricing actions, decelerating consumer trends amid a
rocky retail environment and elevated costs continue to pressure
profitability, further increasing the likelihood of a default.
pH Beauty's operating results continue to be hampered by heightened
freight costs and heavy working capital spending, resulting in
still depressed credit metrics and an increasingly strained
liquidity position with negative FOCF. The company has made
substantial working capital investments throughout the last year to
rebuild inventory levels following its initial cash conservation
measures in 2020, during which pH drastically cut inventory
spending and incurred penalties levied by its customers for failing
to meet delivery commitments. At the time, ongoing shortages in
logistics capacity, increase in sourcing time, and heightened
container costs resulted in substantially higher freight costs for
pH Beauty, as it sources the majority of its products
internationally. That weakened its EBITDA margin to about 7.3% at
the end of 2021 from its historical average high-teens EBITDA
margins. Despite pricing initiatives and taking measures to limit
freight cost pressures by executing flexible, fixed-price contracts
for about half of its ocean freight volume earlier in the year, pH
Beauty is now suffering from higher inbound transportation expenses
due to labor shortages, labor cost increases, and increased fuel
prices, as ongoing inflation and supply chain disruptions persist.
The macroeconomic landscape remains uncertain in 2022, and S&P
expects this to persist through the start of 2023. Although
consumer demand remains relatively stable in pH Beauty's U.S. and
European businesses, aided by the successful launch of its new
BYOMA skincare line, its cosmetic products are largely
discretionary and have been susceptible to recent swings in the
retail environment, as retailers pull back on inventory amid
increasing consumer demand uncertainty. Additionally, its China
business suffered from softness in this market due to COVID-19
shutdowns, with lower-than-expected volumes that hurt the company's
overall top line. S&P expects the combination of weaker demand in
this region and the effect of lower consumer discretionary spending
in the retail environment to contribute to overall lower volumes
for the year than previously expected.
The negative outlook reflects the chance S&P could lower the
ratings over the next 12 months if it believes a default is
imminent.
S&P could lower the ratings if:
-- Profitability and liquidity positions deteriorate further,
resulting in a missed payment, potential covenant compliance
breach, debt restructuring, or distressed exchange.
-- The company is unable to extend the maturity of its revolver
(due in September 2023) in the upcoming months and is unable to
repay its outstanding balance.
S&P could take a positive rating action if default scenarios are no
longer a risk over the next 12 months. This could occur if pH
Beauty:
-- Successfully addresses its revolver maturity and is expected to
remain in compliance with its financial covenants.
-- Improves its interest coverage to over 1.5x and consistently
generates positive FOCF.
-- Sees better profitability and cash flow generation, leading to
improving credit metrics and increased covenant cushion.
ESG credit indicators: E-2, S-2, G-3
PILATES AND YOGA: Gets Interim OK to Hire Legal Counsel
-------------------------------------------------------
Pilates and Yoga Center, LLC received interim approval from the
U.S. Bankruptcy Court for the Southern District of Florida to hire
Brian K. McMahon, PA to handle its Chapter 11 case.
The firm's services include:
(a) advising the Debtor with respect to its powers and
duties;
(b) advising the Debtor with respect to its responsibilities
in complying with the U.S. Trustee's Operating Guidelines and
Reporting Requirements and with the rules of the court;
(c) preparing legal papers;
(d) protecting the interest of the Debtor in all matters
pending before the court; and
(e) representing the Debtor in negotiation with its creditors
in the preparation of a Chapter 11 plan.
The Debtor will pay $500 per hour for the services of the firm's
attorney, Brian McMahon, Esq.
Mr. McMahon disclosed in a court filing that he is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
Mr. McMahon can be reached at:
Brian K. McMahon, Esq.
Brian K. McMahon, PA
1401 Forum Way, 6th Floor
West Palm Beach, FL 33401
Telephone: (561) 478-2500
Facsimile: (561) 478-3111
Email: brian@bkmbankruptcy.com
About Pilates and Yoga Center
Pilates and Yoga Center, LLC owns and operates two pilates and yoga
studios. The studios are operated in leased locations at 901 N.
Congress Ave., Unit D-103, Boynton Beach, Fla.; and 223 Sunset
Ave., Suite 160, Palm Beach, Fla.
Pilates and Yoga Center sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. S.D. Fla. Case No. 22-16923) on Sept.
6, 2022, with up to $100,000 in assets and up to $500,000 in
liabilities. Holly Andronicescu, managing member, signed the
petition.
Judge Mindy A. Mora oversees the case.
Brian K. McMahon, Esq., at Brian K. McMahon, PA is the Debtor's
counsel.
PLAYER'S POKER: Unsecured Creditors to Get 30% Under Plan
---------------------------------------------------------
Player's Poker Club Inc. submitted a First Amended Disclosure
Statement.
The Plan is reorganization plan in which the Debtor has reorganized
its business operation to enable it to make orderly distributions
to creditor of the Debtor's estate on their prepetition claims. The
Debtor estimates that distribution under the Plan, to unsecured
creditors of the bankruptcy estate will be accomplished over 3
years from the Effective Date of the Plan with distributions
occurring each year from the Effective Date of the Plan. Payments
under the Plan will be made from the proceeds of the operation of
the Debtor's business, which business is the operation of a card
room in Ventura County.
The financial projections and Plan contemplate that the Debtor will
have $1,003,079 on hand after payments are made on the Effective
Date. As of January 1, 2022, the Debtor had approximately
$1,096,565 in its operating account which is comparable to the
amount the Debtor will have after payments due on the Effective
Date. This amount is necessary as working capital for the
Business.
Priority wage claims include certain unsecured claims describe by
the Code Section 507(a) for wages, salaries and other compensation
earned during the last 180 days before the Petition Date. The Code
requires that each holder of such a Section 507(a)(4) priority wage
claim receive the present value of such claim in cash payments up
to a maximum of $12,850, as adjusted, as soon as practicable after
the Effective Date. There are no priority debt, liability or
obligation due to the Debtor; (v) commencing or continuing any
action in any manner, in any place that does not comply with or is
inconsistent with the provisions of the Plan. The injunction will
be dissolved if a violation of any provision of the Plan remains
uncured 30 days after written notice thereof to the Debtor by such
creditor.
Percent of their claims which Class 5 unsecured creditors will
receive or retain under the plan is 30%.
The hearing at which the Court will determine whether or not to
confirm the Plan will take place on Nov. 10, 2022, at 1:30 p.m. in
Courtroom 201, 1415 State Street, Santa Barbara, California 93101
via Zoom.
Ballot must be received by 4:00 p.m. pacific daylight time on
October 17, 2022.
Objections to confirmation of the Plan must be filed and served by
4:00 p.m. on October 27, 2022.
Attorneys for the Debtor:
Micheal S. Kogan, Esq.
KOGAN LAW FIRM APC
11500 W. Olympic Blvd., Suite 400
Los Angeles, CA 90064
Tel: (310) 954-1690
E-mail: mkogan@koganlawfirm.com
A copy of the First Amended Disclosure Statement dated September 9,
2022, is available at https://bit.ly/3RSDac6 from
PacerMonitor.com.
About Player's Poker Club
Ventura, Calif.-based Player's Poker Club, Inc. filed a petition
for Chapter 11 protection (Bankr. C.D. Cal. Case No. 21-10357) on
April 6, 2021, listing $3,061,422 in assets and $3,500,852 in
liabilities. Patrick Berry, general manager, signed the petition.
Judge Martin R. Barash oversees the case.
The Debtor tapped Kogan Law Firm, APC as bankruptcy counsel; Falk &
Sharp, APC as special counsel; and Kallman + Logan & Company, LLP
and RubinBrown, LLP as accountants.
PROJECT RUBY: Moody's Affirms 'B3' CFR, Outlook Stable
------------------------------------------------------
Moody's Investors Service affirmed Project Ruby Ultimate Parent
Corp.'s ("WellSky") ratings, including the B3 Corporate Family
Rating, B3-PD Probability of Default Rating, and B2 first lien
senior secured instrument rating. Concurrently, Moody's assigned a
B2 rating to the $400 million incremental non-fungible first lien
term loan. The outlook is stable.
Net proceeds from the incremental term loan, along with a $200
million of cash equity, will be used to fund an acquisition of a
provider of software for patient care transitions. Moody's believes
that this acquisition will moderately enhance WellSky's business
profile by increasing its market share in the care coordination
software market which WellSky entered in late 2020 by acquiring
Careport. Overall, Moody's expects the care coordination software
market to continue to grow driven by the need to reduce
administrative costs and manage the increasing regulatory focus on
consistent treatment across settings. The ongoing consolidation of
hospital systems will benefit scale providers and underscores the
strategic merit of the acquisition.
Assignments:
Issuer: Project Ruby Ultimate Parent Corp.
Senior Secured 1st Lien Term Loan B1, Assigned B2 (LGD3)
Affirmations:
Issuer: Project Ruby Ultimate Parent Corp.
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Senior Secured 1st Lien Bank Credit Facility, Affirmed B2 (LGD3)
Outlook Actions:
Issuer: Project Ruby Ultimate Parent Corp.
Outlook, Remains Stable
RATINGS RATIONALE
The B3 CFR is constrained by WellSky's high leverage, modest scale
and acquisition appetite. The company's aggressive financial
policies under private equity ownership are a key ESG consideration
that weighs on the credit profile. Pro forma for the acquisition,
Moody's adjusted leverage excluding certain one-time costs is
around 8.7x as of June 30, 2022. Moody's expects leverage to
improve to below 8x over the next 18 months based on the projected
mid-single digit revenue and earnings growth as well as realization
of cost synergies from the acquisition. The extended period to
de-leverage below 8x means that there is minimal flexibility to
engage in any further debt funded activity (e.g., M&A or dividend
payments). In addition, with the higher leverage and weaker
credit protection measures, the company will have very little
cushion to withstand any operational mishaps or integration
overruns.
The rating is supported by WellSky's highly recurring revenue base
and strong historic organic growth. The company's products are
"sticky" as the software is essential once fully integrated into a
healthcare provider's operations, resulting in software maintenance
and subscription retention rates in excess of 90%. The stable
revenue visibility, strong EBITDA margins and low capital
expenditure allow WellSky to generate stable free cash flow. In
addition, the company has interest rate hedges that provide some
insulation from the rising interest rates and support stronger free
cash flow generation. Moody's projects free cash flow to debt in
the range of 1.5%-2% over the next 12 to 18 months.
Moody's expects that WellSky will maintain good liquidity over the
next 12 months supported by a pro forma cash balance of around $80
million and a $110 million undrawn revolver due 2026. Over the next
12 months, Moody's anticipates that the company will generate
$30-$40 million of free cash flow. WellSky's revolver has a
springing first lien net leverage covenant of 7.5x (as defined by
the credit agreement) which is triggered at 35% revolver
utilization. Moody's expects that WellSky will maintain good
cushion under this covenant over at least the next year.
The stable outlook reflects Moody's expectation that WellSky will
reduce its leverage below 8x debt/EBITDA within 18 months post
close of the acquisition and will suspend further M&A activity
until the deleveraging has been achieved, with free cash flow to
debt in the low single digits and good liquidity.
WellSky's corporate governance risk is highly negative. Moody's
expects WellSky's financial policies to be aggressive under private
equity ownership as illustrated by the incremental debt for the
acquisition, and a history of debt funded acquisitions that has led
to increased leverage. The financial policies expose debt holders
to high event risk, reduce financial flexibility and increase
vulnerability to customer spending reductions. Moody's does not
expect the company's near-term capital allocation strategy to
prioritize debt repayment. Social risks are moderately negative and
include exposure to complex and changing regulatory environment,
cybersecurity and human capital risks. Environmental risks are
neutral-to-low, consistent with the overall software sector.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if WellSky's leverage is sustained
below 6.5x debt/EBITDA and free cash flow to debt is maintained
above 6%. The ratings could be downgraded if weaker than projected
operating performance, or another debt-funded acquisition prevents
WellSky from reducing its leverage below 8x within 18 months
following the close of the acquisition. Weaker liquidity and/or
negative free cash flow could also result in a downgrade.
Headquartered in Overland Park, Kansas, WellSky is a provider of
healthcare enterprise software and related services, primarily for
the post-acute settings. The company generated pro forma revenue of
approximately $610 million in fiscal 2022 (ending June 30). WellSky
is controlled by private equity firms TPG Capital and Leonard Green
& Partners.
The principal methodology used in these ratings was Software
published in June 2022.
PROMEDICA HEALTH: Moody's Lowers Revenue Bond Rating to Ba2
-----------------------------------------------------------
Moody's Investors Service has downgraded ProMedica Health System's
(OH) revenue bond rating to Ba2 from Baa3. The rating remains under
review for further downgrade. The system has $2.3 billion of
outstanding bonds and capital leases and $2.6 billion in operating
lease obligations.
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
The downgrade to Ba2 reflects material cashflow losses this year,
which exceeded Moody's prior expectations, a significant drain of
liquidity even with one-time cash infusions, and narrowing headroom
to quarterly bank covenants. In addition to severe losses in the
nursing home and assisted living business, the provider business
will need to reverse the year-to-date cashflow loss following solid
margins in fiscal 2021. Both operations will continue to be
challenged by high labor costs and related capacity constraints.
These challenges are partly offset by the system's cash position,
despite the decline to date, and the potential value of other
assets. Excluding $109 million of collateral already posted under
various bank agreements and remaining Medicare advances and FICA
deferrals, ProMedica's unrestricted cash at June 30, 2022 would
have been $1.4 billion. While modest to date, sales of certain
assets over the last year, such as nursing homes and interest in
the Welltower joint venture, suggest a willingness to monetize
assets.
The rating remains under review, reflecting the risk of further
material cashflow and cash losses, and pending several expected
near-term developments. These events include the finalization and
financial implications of definitive plans under the guidance of a
restructuring firm, the impact on cash, and the related
implications for meeting quarterly covenant requirements under bank
agreements.
LEGAL SECURITY
Bonds have a joint and several pledge of gross revenues of the
obligated group. In addition, the bonds are secured by a mortgage
and security interest in and assignment of rents from ProMedica
Toledo Hospital and ProMedica Flower Hospital. The obligated group
consists of the following corporations: Toledo Hospital, Flower
Hospital, ProMedica Continuing Care Services, Bay Park Hospital,
Defiance Hospital, Fostoria Hospital, Fremont Hospital, Monroe
Hospital, Bixby Hospital, Provincial House and HCR ManorCare, Inc.
The parent ProMedica Corporation, Paramount Insurance, ProMedica
Physician Group and the HCR operating entities, as well as other
smaller subsidiaries, are not obligated group members. HCR
ManorCare, Inc. is a holding company with no operations. Through a
transfer agreement with HCR and its subsidiaries, consolidated cash
on hand in excess of 14 days of operating expenses is transferred
monthly to the Obligated Group. The parent ProMedica Corporation is
the guarantor under the master lease obligation with Welltower; the
lease does not have a note on parity with the obligated group.
However, Moody's view is that the value of bondholder security and
priority of claims could be impacted due to substitution of notes
provisions in the MTI, material cash transfers between obligated
and non-obligated group entities, and the significant complexity of
the corporate structure and legal obligations including the lease.
The Second Amended and Restated MTI, effective with the issuance of
the Series 2018A&B bonds, allows for a substitution of notes, which
could lead to a different security in the future. At June 30, 2022
only 35% of the system's unrestricted cash is in the obligated
group, compared with 53% at December 31, 2022, due to transfers to
support cashflow losses in the senior care business. As of June 30,
2022, the obligated group accounted for only 33% of system
revenue.
PROFILE
ProMedica operates 11 owned acute care hospitals in two states, a
health insurance company including a dental plan (close to 390,000
members) and provides senior care in 26 states. The organization
employs over 1,200 physicians and advanced practice providers under
ProMedica Physicians. The senior care division provides services at
158 Medicare and Medicaid-certified skilled nursing and
rehabilitation centers, hospice care in 117 markets, and has more
than 50 memory care communities.
METHODOLOGY
The principal methodology used in these ratings was Not-For-Profit
Healthcare published in December 2018.
PUFF FACTORY: Taps Red Fort Capital as Financing Specialist
-----------------------------------------------------------
The Puff Factory, LLC seeks approval from the U.S. Bankruptcy Court
for the District of Oregon to employ Red Fort Capital Company as
its financing specialist.
The Debtor requires a financing specialist to prepare the necessary
documents and projections related to debtor-in-possession financing
or other sources of financing for its operations.
Rohit Kejriwal, the firm's agent, will charge $225 per hour for his
services.
As disclosed in court filings, Scarlet Oak does not have any
connection with the Debtor's creditors or any other party in
interest.
The firm can be reached through:
Rohit Kejriwal
Red Fort Capital Company
dba Scarlet Oak Capital Impact
1364 S. 3rd St.
Columbus, OH 43207
Tel: 614-407-3730
Email: rohitk@scarletoakcapital.com
About The Puff Factory
The Puff Factory, LLC is a company in Hood River, Ore., engaged in
fruit and vegetable preservation and specialty food manufacturing.
Puff Factory sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Ore. Case No. 22-30470) on March 27,
2022, with as much as $10 million in both assets and liabilities.
Jacqueline Alexander, member, signed the petition.
Judge Peter C. McKittrick oversees the case.
Michael D. O'Brien & Associates, PC and Albies & Stark, LLC serve
as the Debtor's bankruptcy counsel and special counsel,
respectively. Red Fort Capital Company, doing business as Scarlet
Oak Capital Impact, is the financing specialist.
QUARTERNORTH ENERGY: S&P Affirms 'CCC+' ICR, Outlook Positive
-------------------------------------------------------------
S&P Global Ratings affirmed its 'CCC+' issuer credit rating on
Houston-based offshore exploration and production (E&P) company
Quarternorth Energy Holding Inc. (QNE) and the 'B' issue-level
rating on the company's second-lien term loan. The second-lien
recovery rating remains '1', reflecting our expectation for very
high (90%-100%; rounded estimate: 95%) recovery in the event of a
payment default.
The positive outlook reflects our expectation that QNE's production
will range from 30,000-35,000 barrels of oil equivalent per day
(boe/d) next year, with the company generating significant free
operating cash flow to be allocated to debt reduction as well as
shareholder returns. S&P also expects management to continue to
build upon its operating track record as results of its deep-water
drilling program become more evident.
S&P believes QNE remains dependent on favorable business conditions
over the long-term as it continues to build upon its track record
as a stand-alone entity.
The company has performed reasonably well year to date by
generating more than $140 million of free cash flow amid a high oil
price environment and filled its executive vacancies after hiring
Jeff Mobley (previously chief financial officer of Gavilan
Resources LLC) and Jason Smith from Murphy Oil Corp. for the chief
operating officer role. However, management's latest production
guidance of 26,000 to 28,500 boe/d for 2022 is below our initial
expectations with a higher capital budget. Despite its hefty cash
balance of more than $300 million, the company still lacks a
traditional revolving credit facility as an emergency source of
liquidity--which is a risk given QNE's especially small scale and
concentration in the Gulf of Mexico where it is particularly
exposed to regulatory scrutiny and operational risks including
hurricanes, potential oil spills, and significant decommissioning
obligations.
The company's capital allocation year-to-date suggests balanced
approach to debt reduction and shareholder returns.
S&P said, "We expect QNE's financial metrics to remain solid over
the next two years, with average funds from operations (FFO)/debt
exceeding 100% and debt/EBITDA below 1x as the company generates
significant free operating cash flow in 2022 and 2023. The company
has already made two special dividend payments this year for a
total of $55 million, with the latter $25 million distribution set
to be made this month being paired with a $25 million prepayment
made in August on the first-lien term loan. Based on those actions,
we believe future distributions could also be matched with debt
repayment of equal or greater magnitude. Following the prepayment,
the $100 million first-lien facility due 2025 has a balance of $40
million (with an incremental $35 million available for use), and
there is still $185 million outstanding on the second-lien facility
due 2026. We note the first-lien facility was recently amended to
make unfunded amounts available as multi-draw term loans, and fixed
amortization has been reduced to $4 million annually.
Management is reviewing strategic alternatives as it awaits results
from the deep-water drilling program.
S&P said, "Although the company has not laid out any specific
target outcomes from its ongoing strategic review, we believe the
possibilities could range from some sort of business combination to
an eventual debt refinancing as it concludes capital projects
focused in the Katmai and Gunflint fields during fourth quarter
2022. The company also divested its Mexico interest during the
first quarter and closed on a sale of its 25% operated interest in
Grand Isle 43 in July; indicating it could continue to right-size
the portfolio as well. Furthermore, QNE recently completed a
handover of abandoned properties that the company was monitoring
and maintaining to prior owners in the chain of title.
"The positive outlook reflects our expectation that QNE's
production will range from 30,000-35,000 boe/d next year, with the
company generating significant free operating cash flow to be
applied to debt reduction as well as shareholder returns. We also
expect management to continue to build upon its operating track
record as results of its deep-water drilling program become more
evident.
"We could lower the rating if we foresee a specific default
scenario during the next 12 months, which could be precipitated by
rapidly weakening commodity prices, failure to meet our
expectations for production, or deteriorating liquidity.
"We could raise the rating if QNE establishes a longer and
successful operating track record and improves its overall
liquidity position."
ESG Credit Indicators: E-4, S-3, G-5
S&P said, "Environmental factors are a negative consideration in
our credit rating analysis of QuarterNorth Energy Holding Inc.
(QNE) as the exploration and production and downstream industries
contend with an accelerating energy transition and adoption of
renewable energy sources. We believe falling demand for fossil
fuels will lead to declining profitability and returns for the
industry as it fights to retain and regain investors that seek
higher return investments. Given its deep-water exposure, QNE faces
higher environmental risks than onshore producers due to its
susceptibility to interruption and damage from hurricanes.
Additionally, social factors are moderately negative given offshore
operations are more subject to fatal accidents given the inherent
risks of operating oil rigs which involve air and water
transportation of personnel, among other activities that could be
life-threatening without proper care. Governance is a very negative
consideration. We believe the company's highly leveraged financial
risk profile points to corporate decision-making that prioritizes
the interests of the controlling owners. Our assessment also
reflects their generally finite holding periods and a focus on
maximizing shareholder returns."
REDSTONE BUYER: Moody's Lowers CFR to Caa1 & First Lien Debt to B3
------------------------------------------------------------------
Moody's Investors Service downgraded Redstone Buyer LLC's (RSA
Security) ratings including its Corporate Family Rating to Caa1
from B3. Moody's also downgraded the company's first lien debt
ratings to B3 from B2 and second lien debt to Caa3 from Caa2. The
downgrade was driven by continuing challenges the company faces
separating from Dell, restructuring operations and standing its
business units up as separate entities. Although the company is
making progress through the separation and restructuring process,
disruptions have been far greater and cash flow, liquidity and
overall performance significantly weaker than original
expectations. The company has relied on asset sales and revolver
draws to effectively fund cash shortfalls. The outlook is stable.
RATINGS RATIONALE
RSA's Caa1 CFR reflects the company's very high financial leverage,
challenges and costs of setting up as a stand-alone company and
ongoing restructuring program. Leverage is well over 20x based on
January 2022 LTM results, although closer to 8x excluding
transaction, stand-up and restructuring costs and giving full-year
credit for synergies underway. Although those costs are winding
down, they will likely continue into FY 2024 and will continue to
stress the company's liquidity. The credit profile benefits from
RSA's leading positions across various enterprise cybersecurity and
risk management software markets and favorable demand drivers in
the security software industry. RSA has been updating and
modernizing its platforms including cloud security capabilities
over the past several years after falling behind several of its
competitors. Though the company has made significant progress in
new product development, the competitive environment remains
challenging and continued investment is likely required to grow the
business. Restructuring and stand-alone build out costs (including
capital expenditures) will likely continue through fiscal 2023
(fiscal year ending January) although declining. As a result free
cash flow will be negative in fiscal 2023 and possibly into fiscal
2024. Despite the challenges, RSA is setting up its different
business units to be separable and sale of any unit would likely
contribute to de-leveraging.
The stable outlook reflects the progress the company has made
separating the businesses and likelihood that performance will
stabilize towards the end of FY 2023 and cash flow will approach
breakeven levels sometime over the next 12-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if performance continues to weaken,
cash flow does not show signs of reaching breakeven levels or
covenants limit availability under the revolver. The ratings could
also face downward pressure if future asset sale proceeds are not
used to permanently pay down debt. The ratings could be upgraded if
the company is able to stabilize operations and generate sustained
positive free cash flow and cushion under its revolver covenants.
Liquidity is weak based challenges reaching breakeven free cash
flow over next 12 months. Although separation, restructuring and
stand up costs are winding down, free cash flow will likely be
negative in upcoming quarters and availability under the revolver
may be restricted. The company must be in compliance with certain
financial covenants if more than $61.25 million of the $175 million
revolver is drawn. The company had approximately $100 million
drawn as of July 29, 2022 although levels have decreased since.
Moody's expects there will be cushion under the revolver covenants
unless performance weakens.
As a software company, RSA's exposure to environmental risk is
considered low. Social risks are moderately negative and in-line
with the software industry. Social risks primarily relate to data
security, diversity in the work force and access to highly skilled
workers. RSA is owned by a consortium of private equity funds and
does not have an independent board. Moody's expect RSA will have
aggressive financial practices as demonstrated by its April 2021
recapitalization.
The following ratings were affected:
Downgrades:
Issuer: Redstone Buyer LLC (RSA Security)
Corporate Family Rating, Downgraded to Caa1 from B3
Probability of Default Rating, Downgraded to Caa1-PD
from B3-PD
Senior Secured 1st Lien Bank Credit Facility,
Downgraded to B3 (LGD3) from B2 (LGD3)
Senior Secured 2nd Lien Bank Credit Facility,
Downgraded to Caa3 (LGD6) from Caa2 (LGD5)
Outlook Actions:
Issuer: Redstone Buyer LLC (RSA Security)
Outlook, Stable
Redstone Buyer LLC (RSA Security) is an enterprise security
software company with approximately $720 million of revenue for the
fiscal year ended January 31, 2022. RSA was acquired from Dell in
September 2020 by a group of funds led by private equity firm
Symphony Technology Group (STG). After the April 2021
recapitalization, Clearlake Capital Group (Clearlake) became a
controlling shareholder along with STG.
The principal methodology used in these ratings was Software
published in June 2022.
REVLON INC: Taps Matthew Kvarda of A&M as Interim CFO
-----------------------------------------------------
Revlon, Inc. and its affiliates filed a supplemental application
seeking approval from the U.S. Bankruptcy Court for the Southern
District of New York to employ Matthew Kvarda of Alvarez & Marsal
North America, LLC as interim chief financial officer.
On Aug. 8, Victoria Dolan notified the Debtors of her intention to
retire from her position as chief financial officer, effective
Sept. 30. With the departure of Ms. Dolan, the Debtors' board of
directors appointed Mr. Kvarda as interim CFO.
The interim CFO will provide these services:
(a) assist in the preparation and oversight of the Debtors'
periodic financial reporting;
(b) provide oversight of the Debtors' finance and accounting
organizations, including managing controls regarding the
disbursement of the Debtors' funds; and
(c) shall be responsible for leading:
(i) Global finance, which consists of financial planning
and analysis, treasury and liquidity/capital structure management,
the controller group, accounting, internal control over financial
reporting (SOX), shared services, operations/supply chain finance,
global tax planning and compliance, indirect procurement, and
internal audit;
(ii) Investor relations;
(iii) Transformation and business planning; and
(iv) Enterprise Risk Management (ERM).
The Debtors will pay Alvarez & Marsal a flat monthly fee of
$165,000 for the interim CFO's services. Prior to Oct. 1, the firm
will charge $1,100 per hour, which is Mr. Kvarda's standard hourly
rate.
Mr. Kvarda can be reached at:
Matthew Kvarda
Alvarez & Marsal North America, LLC
540 West Madison Street, Suite 1800
Chicago, IL 60661
Tel: +1 312 601 4220
Fax: +1 312 332 4599
Email: mkvarda@alvarezandmarsal.com
About Revlon Inc.
Revlon Inc. manufactures, markets and sells an extensive array of
beauty and personal care products worldwide, including color
cosmetics; fragrances; skin care; hair color, hair care and hair
treatments; beauty tools; men's grooming products; anti-perspirant
deodorants; and other beauty care products. Today, Revlon's
diversified portfolio of brands is sold in approximately 150
countries around the world in most retail distribution channels,
including prestige, salon, mass, and online.
Since its breakthrough launch of the first opaque nail enamel in
1932, Revlon has provided consumers with high quality product
innovation, performance and sophisticated glamour. In 2016, Revlon
acquired the iconic Elizabeth Arden company and its portfolio of
brands, including its leading designer, heritage and celebrity
fragrances.
Revlon is among the leading global beauty companies, with some of
the world's most iconic and desired brands and product offerings in
color cosmetics, skin care, hair color, hair care and fragrances
under brands such as Revlon, Revlon Professional, Elizabeth Arden,
Almay, Mitchum, CND, American Crew, Creme of Nature, Cutex, Juicy
Couture, Elizabeth Taylor, Britney Spears, Curve, John Varvatos,
Christina Aguilera and AllSaints.
Revlon sought Chapter 11 protection (Bankr. S.D.N.Y. Case No.
22-10760) on June 15, 2022. Fifty affiliates, including Almay,
Inc, Beautyge Brands USA, Inc., and Elizabeth Arden, Inc., also
sought bankruptcy protection on June 15 and June 16, 2022.
Revlon disclosed total assets of $2,328,093,000 against total
liabilities of $3,689,240,395 as of April 30, 2022.
The Hon. David S. Jones is the case judge.
The Debtors tapped Paul, Weiss, Rifkind, Wharton & Garrison, LLP as
bankruptcy counsel; Mololamken, LLC as special litigation counsel;
PJT Partners, LP as investment banker; KPMG, LLP as tax services
provider; and Alvarez & Marsal North America, LLC as restructuring
advisor. Robert M. Caruso and Matthew Kvarda of Alvarez & Marsal
serve as the Debtors' chief restructuring officer and interim chief
financial officer, respectively. Meanwhile, Kroll Restructuring
Administration, LLC is the Debtors' claims agent and administrative
advisor.
The U.S. Trustee for Region 2 appointed an official committee of
unsecured creditors on June 24, 2022. Brown Rudnick, LLP, Province,
LLC and Houlihan Lokey Capital, Inc. serve as the committee's legal
counsel, financial advisor and investment banker, respectively.
ROCKCLIFF ENERGY: S&P Affirms 'B' ICR, Outlook Stable
-----------------------------------------------------
S&P Global Ratings affirmed its 'B' issuer credit rating on
Haynesville shale-focused oil and gas exploration and production
(E&P) company Rockcliff Energy II LLC.
S&P said, "We also affirmed our 'B+' issue-level rating on the
company's $700 million senior unsecured notes. The recovery rating
of '2' indicates our expectation for substantial recovery (70%-90%;
rounded estimate: 85%) of principal in the event of payment
default.
"The stable outlook reflects our expectation that Rockcliff will
continue its flat to low single digit production strategy and
generate substantial free cash flow. We expect it to execute a
measured annual shareholder return strategy within cash flow that
does not substantially increase leverage. We project Rockcliff's
debt to EBITDA will remain below 1x and funds from operations (FFO)
to debt above 100% in 2022 and 2023."
S&P's ratings reflect Rockcliff's low-cost structure and modest
scale.
The company produced 1 billion cubic feet equivalent per day
(bcfe/d) in the second quarter of 2022 and had year-end 2021 proved
reserves of 5 trillion cfe (65% proved undeveloped), along with a
developed reserve life of approximately 4.8 years. S&P said, "We
expect the company to average approximately 1 bcfe/d (98% gas) in
2022 and 2023 by continuing its four-rig/two-frac crew cadence in
the East Texas Haynesville shale, with a capital budget of
approximately $600 million-$650 million including an S&P adjustment
for expected inflation. We anticipate Rockcliff's flat to low
single digit production strategy will limit significant organic
improvements in scale over the near term. Although we view the
company's scale and costs favorably compared to 'B-' and 'B' rated
peers, it lacks the scale of higher-rated peers such as Comstock
Resources Inc., Ascent Resources Utica Holdings LLC, and CNX
Resources Corp."
S&P expects stable financial metrics and substantial free cash flow
over the next two years.
S&P said, "We expect FFO to debt of over 100% and leverage below
1x, while Rockcliff generates over $500 million of discretionary
cash flow across 2022 and 2023. To help counter the volatility
typical of natural gas prices, Rockcliff has hedged 70% of forecast
production volumes in 2022 and 50% hedged in 2023. Despite prices
well below market, the hedges offer protection against downside
volatility. We expect excess cash will be used to repay the
remaining $200 million of outstanding borrowings on its $900
million revolving credit facility by year-end 2022."
Financial sponsor ownership constrains Rockcliff's financial risk
profile.
Private equity firm Quantum Energy Partners maintains a 65%
interest in Rockcliff and controls three of the five board of
directors seats. In the first quarter of 2022, Rockcliff paid a
$400 million distribution funded with $100 million cash on hand and
$300 million drawn on its revolver. However, leverage remains below
Quantum's guided maximum leverage target of 1.25x, and deleveraging
is the priority for excess cash flow. S&P expects any future
distributions to be funded such that they are leverage neutral and
do not constrain liquidity.
S&P said, "The stable outlook reflects our expectation that
Rockcliff will continue its flat to low single digit production
strategy and generate substantial free cash flow. We expect
Rockcliff to execute a measured annual shareholder return strategy
that stays within cash flow and does not substantially increase
leverage. We project Rockcliff's debt to EBITDA will remain below
1x and FFO to debt above 100% in 2022 and 2023."
S&P could lower its rating if FFO to debt drops below 30% on a
sustained basis. This would most likely occur if:
-- Production falls short of our expectations;
-- The company makes a debt-funded acquisition that does not add
to near-term cash flow; or
-- Commodity prices decline below its assumptions and Rockcliff
does not take steps to reduce capital spending.
S&P could raise its rating if:
-- S&P no longer view the company as controlled by a financial
sponsor; or
-- It materially increases reserves and production or adds basin
diversity while maintaining FFO to debt above 45%.
ESG credit indicators: E-4, S-2, G-3
S&P said, "Environmental factors are a negative consideration on
our credit rating analysis on Rockcliff Energy as the E&P industry
contends with an accelerating energy transition and adoption of
renewable energy sources. We believe falling demand for fossil
fuels will lead to declining profitability and returns for the
industry as it fights to retain and regain investors that seek
higher returns. To help address these concerns, Rockcliff partnered
with Project Canary for responsibly sourced gas (RSG) certification
and installed emissions monitoring and reporting equipment on wells
covering 95% of total production. Also, proximity to U.S. Gulf
Coast liquified natural gas (LNG) export markets has the potential
to further benefit Rockcliff. Governance is a moderately negative
consideration, as is the case for most rated entities owned by
private-equity sponsors."
SCRIBEAMERICA INTERMEDIATE: S&P Downgrades ICR to 'B-'
------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S.-based
ScribeAmerica Intermediate Holdco LLC and its rating on the
company's first-lien debt to 'B-' from 'B'; the first-lien recovery
rating remains '3'.
S&P said, "The stable outlook on ScribeAmerica reflects our
expectation the company will grow organic revenue at low-single
digit rates, maintaining its margins by increasing bill rates. We
expect the company to maintain adjusted debt to EBITDA between 7.5x
and 8.5x and free operating cash flow of about $10 million for the
next two years, maintaining adequate liquidity."
The downgrade reflects S&P's expectation for sustained elevated
leverage and low cash flow despite healthy customer demand, as
labor conditions continue to suppress revenue growth. Even as
market conditions for health care providers have somewhat
stabilized following the impact of the COVID-19 pandemic, with
emergency department volumes at less than 90% of pre-COVID volume,
ScribeAmerica has not rebounded along with its customers. While the
company continues signing new contracts and expanding some existing
ones, there has not been a commensurate increase in ScribeAmerica's
revenue due to the tight labor market limiting the company's
ability to recruit enough scribes to profitably meet demand. While
the company is investing heavily in recruiting through different
channels and increasing scribe wages to grow revenue, ScribeAmerica
continues to struggle to meet current demand under current
contracts.
S&P said, "We continue to believe ScribeAmerica's services provide
value to providers due to the complexity of electronic health
record (EHR) systems and the physician and nurse shortages.
ScribeAmerica's new contracts and contract expansions, as well as
its generating revenue from new sites (mostly outpatient sites and
emergency departments), lead us to believe many of its customers
continue to view its services as essential to enhance their
efficiency by relieving doctors and nurses of their administrative
burdens and enabling them to attend to a higher number of patients.
Per our recently published commentary "U.S. Health Care Staffing
Companies Benefit From Growing Labor Imbalances," Aug. 22, 2022,
the COVID pandemic accentuated an existing supply-demand imbalance
of nurses, causing bill rates and wages for nurses to increase
significantly due to the urgent need to quickly fill positions.
Although bill rates for nurses have been modestly easing from the
peak in 2021 and early 2022, we expect that bill rates will remain
above pre-pandemic levels for the foreseeable future due to
significant labor challenges that include retirements due to the
high average age of the nursing pool, nurses leaving the industry
due to burnout, and a shortage of credentialed nurses. As such, we
believe ScribeAmerica may continue providing value as providers
seek to alleviate physicians' and nurses' schedules. Even so, we
believe some providers scrutinizing their budgets may view this
service as more discretionary and see it as an opportunity to cut
costs to offset the premium prices they are paying to retain their
doctors and nurses.
"We expect ScribeAmerica to grow revenue in the low single digit
area while maintaining margins in the mid-teens by successfully
passing wage increases onto customers and benefiting from rising
unemployment.The company has rationalized contracts and is
increasing its bill rates in line with the wage increases required
to staff open positions. While we believe the company can negotiate
additional bill increases from existing customers and charge higher
rates in new contracts, they may not be able to pass along all cost
increases to the customers, especially with larger customers.
Additionally, the company's virtual scribe offering (assisting
doctors in the exam room remotely) should be another avenue to grow
profitably, although, at first, it may be slightly lower margin at
first because of upfront hardware expenses. Finally, we expect the
weakening economy and potentially higher unemployment rates in 2023
and 2024 could benefit ScribeAmerica by helping it fill shifts more
easily with fewer wage increases.
"The stable outlook on ScribeAmerica reflects our expectation that
the company will grow organically at low single-digit rates,
maintaining its margins by increasing bill rates. We expect the
company to maintain leverage between 7.5x and 8.5x and free
operating cash flow of about $10 million over the next two years,
maintaining adequate liquidity.
"We could consider a lower rating if we do not expect sustained
revenue growth (e.g., sequential revenue declines) or the company
has difficulty maintaining margins and producing cash flow, leading
us to believe the company faces increasing refinancing risk ahead
of the 2025 maturity.
"We could raise the rating if providers continue to see value to
the scribe service, ScribeAmerica is able to supply its continued
demand, monetizing its sales pipeline, growing the business, and
sustaining free operating cash flow/debt greater than 4%. We would
also need to see the company address its 2025 maturities."
ESG credit indicators: E2 S-2 G-3
S&PS aid, "Governance factors are a moderately negative
consideration in our credit rating analysis. Our assessment of the
company's financial risk profile as highly leveraged reflects
corporate decision-making that prioritizes the interests of the
controlling owners, in line with our view of the majority of rated
entities owned by private-equity sponsors. Our assessment also
reflects the generally finite holding periods and a focus on
maximizing shareholder returns."
SEMILEDS CORP: Two Proposals Passed at Annual Meeting
-----------------------------------------------------
SemiLEDs Corporation held its 2022 Annual Meeting of Stockholders
at which the stockholders: (i) elected Trung T. Doan, Walter
Michael Gough, Dr. Edward Hsieh, Roger Lee, and Scott R. Simplot as
directors for a one-year term ending with the 2023 Annual Meeting
of Stockholders; and (ii) ratified the appointment of KCCW
accountancy Corp. as the Company's independent registered public
accounting firm for the fiscal year ended Aug. 31, 2022.
About SemiLEDs
Headquartered in Miao-Li County, Taiwan, R.O.C., SemiLEDs --
http://www.semileds.com-- develops and manufactures LED chips and
LED components for general lighting applications, including street
lights and commercial, industrial, system and residential lighting,
along with specialty industrial applications such as ultraviolet
(UV) curing, medical/cosmetic, counterfeit detection, horticulture,
architectural lighting and entertainment lighting.
SemiLEDs reported a net loss of $2.86 million for the year ended
Aug. 31, 2021, compared to a net loss of $547,000 for the year
ended Aug. 31, 2020. As of May 31, 2022, the Company had $16.43
million in total assets, $12.94 million in total liabilities, and
$3.49 million in total equity.
Diamond Bar, California-based KCCW Accountancy Corp., the Company's
auditor since 2019, issued a "going concern" qualification in its
report dated Dec. 29, 2021, citing that the Company incurred
recurring losses from operations and has an accumulated deficit,
which raises substantial doubt about its ability to continue as a
going concern.
SK GLOBAL: Unsecureds Owed $800K to Get 5% of Claims
----------------------------------------------------
SK Global Trading Inc. submitted a Fourth Amended Disclosure
Statement.
The Plan also provides that general unsecured creditors will
receive their pro rata share of a lump sum payment of $40,000,
which the Debtor projects will equate to approximately five (5%)
percent of each allowed claim, an amount which is reduced from
earlier versions of the Plan due to the impact of the Covid-19
pandemic on the Debtor's operations.
Under the Plan, Class 3 General Unsecured Claims total $794,180.
Each holder of a Class 3 Allowed General Unsecured Claim shall
receive a pro rata share of $40,000, payable in a lump sum payment
on the Effective Date of the Plan in full satisfaction of all
pre-petition claims and causes of action that exist or may exist
against the Debtor by any Class 3 creditor. The Debtor estimates
that the $40,000 payment will result in a dividend equal to 5%
percent of each Allowed General Unsecured Claim.
Although Mr. Shamim has a pre-petition general unsecured claim,
that claim will not be included in the distribution to Class 4
creditors. The Plan fixes a deadline of the hearing on confirmation
for the Debtor to object to any claims; however, the Debtor has
reviewed the claims and does not anticipate filing any objections.
There are no releases being given to the Debtor's sole Equity
Interest Holder, Abdul Shamim, for any personal liability he may
have to any Class 3 creditor. Class 3 is impaired.
The Plan shall be implemented by the Debtor based on funds
available from current operations. The Debtor has committed to
depositing the monies required to fund the payments due on the
Effective Date into the Confirmation Account to be maintained in
escrow by the Debtor's counsel so that there are no issues of
feasibility. The Debtor made an initial deposit of $50,000 into the
Confirmation Account on August 15, 2022. Ongoing monthly payments
of $503 to the SBA on account of its Class 1 Claim shall be paid
from future profits.
Attorneys for the Debtor:
J. Ted Donovan, Esq.
GOLDBERG WEPRIN FINKEL GOLDSTEIN LLP
1501 Broadway 22nd Floor
New York, NY 10036
A copy of the Fourth Amended Disclosure Statement dated September
9, 2022, is available at https://bit.ly/3eDATD9 from
PacerMonitor.com.
About SK Global Trading
Organized in 2013, SK Global Trading Inc. operates a wholesale
business selling perfume products, fragrances and watches. SK
Global generated total sales revenues of approximately $2.14
million in 2016 and approximately $2.37 million in 2017.
SK Global Trading filed a voluntary petition under Chapter 11 of
the Bankruptcy Code (Bankr. S.D.N.Y. Case No. 18-10793) on March
23, 2018. In the petition signed by Abdul Shamim, president, the
Debtor disclosed $554,500 in total assets and $2.22 million in
total liabilities. The case is assigned to Judge James L. Garrity
Jr. J. Ted Donovan, Esq., and Kevin J. Nash, Esq., at Goldberg
Weprin Finkel Goldstein LLP, serve as the Debtor's counsel.
SM ENERGY: Fitch Hikes Long-Term IDR to 'BB-', Outlook Stable
-------------------------------------------------------------
Fitch Ratings has upgraded the Long-Term Issuer Default Rating
(IDR) of SM Energy Company (SM) to 'BB-' from 'B+'. Fitch has also
affirmed the issue-level ratings for the company's reserve-based
lending credit facility (RBL) at 'BB+'/'RR1' and the senior
unsecured notes at 'BB-' and revised the recovery rating to 'RR4'
from 'RR3'. The Rating Outlook is Stable.
The upgrade to the IDR reflects SM's robust operating performance
in the Midland basin and consistently strong well results in the
Austin Chalk region as development and delineation continue across
the entirety of the acreage position. The upgrade also considers
management's simplification of the capital structure through the
repayment of the second lien notes, significant gross debt
reduction in 1H22 and conservative financial policy of maintaining
net debt of $1.0 billion. SM's size, scale and mid-cycle
debt/EBITDA below 1.5x are all consistent with 'BB-' E&P category
thresholds.
SM's rating reflects the company's strong operating performance,
ability to consistently generate FCF with proceeds used to reduce
gross debt, strong liquidity profile and solid hedging program that
protects cash flows.
KEY RATING DRIVERS
Debt Reduction Continues; Simplified Structure: Gross debt
reduction is expected to continue for SM through 2H22 as management
executes on its plan to reduce net debt to approximately $1.0
billion. SM reduced debt by approximately $551 million in 1H22
primarily through the repayment of the company's second lien notes,
which also uncomplicated the capital structure and will reduce
interest expense. Further debt reduction is supported by strong FCF
generation through the forecast period, despite management's
announced fixed dividend and share buyback program. Fitch expects
management will likely target repayment of its 2025 notes, which
will also help alleviate medium-term refinance risks.
Five Rig Drilling Program; Positive FCF: SM is planning to spend
approximately $900 million on capex in 2022 to fund its five-rig
program, which is expected to increase production to around 150
Mboepd. The capital allocation is split roughly in half between the
Midland basin (three rigs, one frac crew) and South Texas region
(two rigs, one frac crew) and management expects to average 11,000+
foot laterals across both areas. Spending in outer years will
likely be maintained between $800 million-$850 million, which
allows the company to maintain low single-digit production growth
while generating FCF at Fitch base case price deck assumptions.
Fitch forecasts $1.2 billion of FCF generation in 2022 and $800
million in 2023 at base case prices.
Measured Shareholder Returns: Fitch believes management is taking a
measured approach to shareholder returns through its modest
$0.60/share quarterly dividend and $500 million share buyback
program as the company is nearing its net debt target of $1.0
billion. Management has remained committed to debt reduction before
shareholder returns and successfully reduced debt from
approximately $2.8 billion in 1Q20 to under $1.6 billion in 2Q22.
Fitch believes the forecast FCF generation and the hedge book
support the base dividend, while the buyback program gives
management the ability to repurchase shares at opportunistic
times.
Protection from Hedge Program: SM has hedged approximately 48% of
its expected 2H22 oil production at an average price of
approximately $55 per barrel (bbl) and approximately 45% of its
expected natural gas production for 2H22 at an average price of
approximately $2.70/mcf. Hedges in 2022 are likely to reduce
revenues, given the hedged oil price is below both the average YTD
and forward Strip price, but the program will allow the company to
lock in returns, generate sufficient FCF to execute on its debt
reduction plan and support the base dividend.
Robust Midland Performance: SM's Midland Basin assets continue to
generate strong returns through best-in-class well performance and
new completion designs, which is driving higher EUR and NAV along
with increased capital efficiency. Management plans to drill 56
wells and complete 38 in the region in FY22 at an average lateral
length of 12,360 feet. The company's newly tested Wolfcamp D and
Dean wells continue to outperform peers with strong IP rates and
high oil mix upwards of 80%+. Fitch believes continued delineation
of the acreage provides further inventory upside on top of
management's already robust nine years of estimated sub-$40 oil
breakeven inventory.
Focus on Austin Chalk: SM's drilling program in South Texas has
moved from the Eagle Ford to the Austin Chalk, which has a higher
oil cut. For all of South Texas, the company estimates it will
drill 42 net wells and complete 43 with an average lateral feet per
well of 11,000. Operating costs in the region continue to remain
approximately 30% lower than total blended South Texas costs and
should improve further in 2023 through reduction in transportation
costs. Management believes the expected breakeven pricing for
Austin Chalk wells is even stronger than the Midland in the range
of $15/bbl to $30/bbl, which improves the company's cost structure
over time as more wells are drilled.
DERIVATION SUMMARY
With 2Q22 average production of 146.6 Mboepd, SM is smaller than
DJ-basin peer Civitas Resources, Inc. (BB-/Stable; 175.1 Mboepd),
but larger than Permian peers CrownRock, L.P. (BB-/Stable; 115
Mboepd in 3Q21), Matador Resources Co. (B+/Stable; 110.2 Mboepd)
and Earthstone Energy, Inc. (B+/Stable; 77.1 Mboepd). SM's oil
percentage of production at 46% is lower than both CrownRock (57%
at 3Q21) and Matador (58%), similar to Civitas (46%) and higher
than Earthstone (37%).
SM's Fitch-calculated 2Q22 unhedged half-cycle netback of $57.8/boe
is in-line with the Permian peer average, but is slightly lower
than more oil-weighted Permian peers like CrownRock and Matador.
The company's operating costs per barrel of $13.5/bbl are higher
than CrownRock, lower than Matador ($14.6/bbl) and Civitas
($14.5/bbl) and in-line with Earthstone ($13.7/bbl). SM's netback
should improve via continued cost reductions and capital efficiency
along with the shift toward the low-cost Austin Chalk region.
Meaningful FCF generation in 2022 and 2023 supports management's
debt reduction plan and leverage metrics between 1.0x-1.5x, which
is generally consistent with leverage profiles across the Permian
peer group. At management's $1.0 billion target net debt level,
Fitch projects leverage will remain at 1.0x at Fitch's $50/bbl
mid-cycle price
KEY ASSUMPTIONS
-- WTI oil price of $100/bbl in 2022, $81/bbl in 2023, $62/bbl in
2024, and $50/bbl in the long term;
-- Henry Hub natural gas price of $6.25/mcf in 2022, $4.00/mcf in
2023, $3.25/mcf in 2024 and $2.75 in the long term;
-- Average production of 150 mboepd in 2022 followed by low-to-
mid single digit growth thereafter;
-- Capex of $900 million in 2022 with growth-linked spending
thereafter;
-- $0.60 base dividend and measured increases in share buybacks;
-- No material M&A activity.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Production growth resulting in average daily production
approaching 175 Mboepd while maintaining inventory and reserve
life;
-- FCF generation that allows for further debt reduction and
proactive management of the maturity profile;
-- Successful development and strong operating performance in the
Austin Chalk region that leads to lower unit costs;
-- Mid-cycle debt/EBITDA sustained below 2.0x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Change in financial policy or hedging program that implies a
more aggressive strategy;
-- Material reduction in liquidity or inability to access debt
capital markets;
-- Mid-cycle debt/EBITDA sustained above 2.5x.
LIQUIDITY AND DEBT STRUCTURE
Strong Liquidity: At 2Q22, SM had $267 million of cash on hand and
full availability under the new $1.25 billion credit facility which
matures in 2027. SM's new senior secured credit agreement provides
for a maximum loan amount of $3.0 billion with an initial borrowing
base of $2.5 billion and elected commitment of $1.25 billion. The
credit facility has two financial maintenance covenants: a total
funded debt/adjusted EBITDAX ratio that cannot be greater than 3.5x
and an adjusted current ratio that cannot be less than 1.0 to 1.0.
Fitch does not see any covenant pressure through the rating
horizon.
Fitch believes liquidity will remain strong through the forecast
given the company's modest capital program, improving cost
structure and solid hedging program that supports FCF generation.
Fitch expects SM will continue its focus on debt repayment until it
reaches management's $1.0 billion net debt target while paying its
$0.60 quarterly dividend.
ISSUER PROFILE
SM Energy Company is an independent Exploration and Production
company that operates in the Midland Basin and South Texas regions
of the Permian Basin. The company averaged 146.6 Mboepd in 2Q22, of
which 46% was oil, 15% was NGLs and 39% was natural gas.
SOMM INC: Gets OK to Hire Gallagher & Kennedy as Corporate Counsel
------------------------------------------------------------------
Somm, Inc. received approval from the U.S. Bankruptcy Court for the
Northern District of California to employ Gallagher & Kennedy, P.A.
as its special corporate counsel.
The firm's services include:
(i) preparing, reviewing, and advising the Debtor regarding
various vendor contracts, finance documents and other contractual
agreements;
(ii) corporate governance, including among other things,
drafting corporate resolutions and other governance documents; and
(iii) trademark management and maintenance.
Gallagher & Kennedy will be paid at these rates:
Joshua S. Becker, Esq. $525 per hour
Attorneys $745 per hour
Paralegals $275 per hour
The firm received an advance fee retainer from the Debtor in the
amount of $25,000.
Joshua Becker, Esq., shareholder of Gallagher & Kennedy, disclosed
in a court filing that his firm is a "disinterested person" as the
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Joshua S. Becker, Esq.
Gallagher & Kennedy, PA
2575 East Camelback Road
Phoenix, AZ 85016-9225
Telephone: 602-530-8465
Facsimile: 602-530-8500
Email: josh.becker@gknet.com
About Somm Inc.
Somm Inc. is a wine wholesaler and importer in Sonoma, Calif. It
conducts business under the name SommSelect.
Somm filed a petition for relief under Subchapter V of Chapter 11
of the U.S. Bankruptcy Code (Bankr. N.D. Calif. Case No. 22-10267)
on July 14, 2022. Mark M. Sharf has been appointed as Subchapter V
trustee. Judge Roger L. Efremsky oversees the case.
The Debtor's balance sheet as of June 30, 2022, reflects total
assets of $1,907,983 and total liabilities of $2,520,780.
The Law Offices of Michael C. Fallon and Gallagher & Kennedy, P.A.
serve as the Debtor's bankruptcy counsel and special corporate
counsel, respectively. MCA Financial Group, Ltd. is the
restructuring advisor.
STONEBRIDGE VENTURES: Files for Chapter 11 Protection
-----------------------------------------------------
Stonebridge Ventures LLC has filed for chapter 11 bankruptcy
protection without stating a reason.
According to court filings, Stonebridge Ventures estimates between
1 and 49 creditors. The petition states funds will be available to
unsecured creditors.
A status hearing will be to be held on Oct. 12, 2022, at 10:00 a.m.
at Crtrm 5B, 411 W Fourth St., Santa Ana, CA 92701. The case judge
is Theodor Albert.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
Oct. 13, 2022, at 2:00 PM at UST-SA1, TELEPHONIC MEETING.
CONFERENCE LINE: 1-866-919-0527, PARTICIPANT CODE:2240227.
About Stonebridge Ventures
Stonebridge Ventures LLC sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. C.D. Cal. Case No. 22-11556) on
September 10, 2022. In the petition filed by Joshua R. Pukini, as
director and CFO, the Debtor reported assets and liabilities
between $1 million and $10 million.
The Debtor is represented by Summer M Shaw of Shaw & Hanover, PC.
SUPERMOOSE NEWCO: S&P Alters Outlook to Neg., Affirms 'CCC+' ICR
----------------------------------------------------------------
S&P Global Ratings revised the outlook to negative from stable and
affirmed all ratings on public safety and administration software
provider Supermoose Newco Inc. (d/b/a CentralSquare Technologies),
including its 'CCC+' issuer credit rating.
The negative outlook reflects S&P's view of deteriorating credit
quality in the absence of sustained improvements to operational
performance and cash flow.
S&P said, "We believe CentralSquare will continue to face
operational execution challenges, worsening its unsustainable
capital structure with weaker debt service coverage. The company's
persistent operational issues resurfaced in the first half of the
year, leading us to revise our view of EBITDA margins and cash flow
generation. We previously thought the company's operating leverage
was improving to sustain free cash flow generation above $20
million, but we now forecast free operating cash flow deficits of
about $1 million to $5 million at end of 2022 and 2023. Until the
company outperforms our base-case expectation, we expect adjusted
leverage to stay in the 14x-15x area through 2023.
"Cost management is key to cash flow improvements. CentralSquare's
customer retention is high and we believe the revenue base will
remain stable through economic cycles. Given the customer profile,
we expect revenue growth will be limited to the low-single digits
over the next several years. Municipal governments contract with
CentralSquare for mission-critical software for public safety and
security, but can be slow to adopt new technologies, which delays
revenue recognition. We think it is important for the company to
prudently manage its cost base as it invests in research and
development and resolves internal legacy system issues. Therefore,
we believe generating enough cash to make a significant impact on
leverage and to improve debt service capacity requires efficient
cost management. We expect EBITDA margins to remain flat in the
high-20% area while the company resolves its execution
challenges."
CentralSquare faces refinancing risk and potentially tighter
liquidity. The $125 million revolver matures in August 2023 and is
currently drawn $100 million. Given the company's tight cash flows
and our forecast of about $15 million cash at end of second quarter
2023, CentralSquare will need to refinance the facility to avoid a
default event. S&P believes the company will be able to refinance
the revolver in advance of its impending maturity, though will
likely face higher interest costs that further reduce cash flows.
S&P said, "The negative outlook reflects our view of material risks
to sustained free cash flow generation stemming from operational
underperformance. This trend will increase leverage on an already
unsustainable capital structure. Additionally, the company faces
heightened refinancing risk as it depends on successful extension
of the revolver.
"We could downgrade CentralSquare if we believe the risk of a
default or distressed exchange has increased and is more likely to
occur in the next 12 months, or if it fails to timely extend the
revolver maturity. If the company continues to demonstrate
operational issues, we could foresee its owners considering actions
that we view as a distressed exchange.
"We could revise the outlook to stable if CentralSquare sustains
modest positive free operating cash flow, refinances its revolver
and becomes consistently less reliant on the facility. This could
occur if the company improves business operations and ameliorates
execution risk on its strategy and performance."
ESG Credit Indicators: E-2; S-2; G-3
SYNEOS HEALTH: Moody's Raises CFR to 'Ba2,' Outlook Stable
----------------------------------------------------------
Moody's Investors Service upgraded the ratings of Syneos Health,
Inc., including the Corporate Family Rating to Ba2 from Ba3 and the
Probability of Default Rating to Ba2-PD from Ba3-PD. Moody's also
upgraded the senior unsecured ratings to B1 from B2. Concurrently,
Moody's affirmed the Ba2 senior secured credit facility ratings.
There is no change to Syneos' SGL-1 Speculative Grade Liquidity
Rating. The outlook is stable.
"The ratings upgrade reflects material growth of Syneos' scale and
service offering coupled with ongoing improvement in the company's
credit metrics," stated Vladimir Ronin, Moody's lead analyst for
the company. "While over the last couple of quarters Syneos has
experienced significant reduction in enterprise value, in large
part due to meaningful decline in book-to-bill ratio within the
clinical solutions segment, Moody's expects Syneos will stabilize
the metric and deliver at least mid-single digit earnings growth
over the next 12-18 months. In addition, despite recent weakness in
the share price, Moody's anticipates that the company will maintain
a conservative financial policy," continued Ronin.
Upgrades:
Issuer: Syneos Health, Inc.
Corporate Family Rating, Upgraded to Ba2 from Ba3
Probability of Default Rating, Upgraded to Ba2-PD
from Ba3-PD
Senior Unsecured Notes, Upgraded to B1 (LGD5) from
B2 (LGD6)
Affirmations:
Issuer: Syneos Health, Inc.
Senior Secured Bank Credit Facilities, Affirmed
Ba2 (LGD3)
Outlook Actions:
Issuer: Syneos Health, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
Syneos' Ba2 Corporate Family Rating reflects the company's
considerable size, geographic footprint, and strong market
positions as both a pharmaceutical contract research organization
(CRO) and provider of commercialization services. The ratings are
also supported by the company's very good liquidity, including
meaningful free cash flows. The ratings reflect Moody's expectation
for moderate financial leverage with adjusted debt/EBITDA below
4.5x. Moody's does not anticipate material debt repayment and
believes that most cash flow will go towards share repurchases and
tuck-in acquisitions. While earnings will grow as result of
favorable underlying market dynamics, Syneos' credit profile also
encompasses the risks inherent in the pharmaceutical services
industry, including project delays and cancellations. Moody's also
expects the company to successfully address its approaching debt
maturities.
The SGL-1 Speculative Grade Liquidity Rating reflects Moody's
expectation that Syneos will maintain very good liquidity over the
next 12-18 months. Liquidity is supported by cash of approximately
$106 million as of June 30, 2022, as well as Moody's expectation
that Syneos will generate meaningful free cash flow of over $400
million over the next 12 months. Syneos' liquidity is further
supported by roughly $551 million of availability under the
company's $600 million revolving credit facility expiring in August
2024. The credit agreement contains a 4.5x maximum first lien
leverage ratio. Moody's anticipates that Syneos will maintain ample
cushion under the covenant.
The first lien senior secured bank facilities are rated Ba2, in
line with the Corporate Family Rating. Although there is a layer of
loss absorption provided by $600 million of unsecured notes due
2029, which are rated B1, the presence of a $400 million accounts
receivable securitization facility limits the degree of up-notching
on the senior secured credit facilities. Syneos' use of the
securitized receivables facility has grown over time, and reduces
the value of the collateral securing the credit facilities, which
includes receivables not securitized through the receivables
facility.
Social and governance considerations are material to Syneos'
rating. Social risk considerations relate to pharmaceutical drug
pricing, which could have both positive and negative effects for
Syneos. Drug pricing pressure in the US may spur the need for
Syneos' customers to invest more heavily in R&D, which would be a
benefit. However, legislation that reduce drug prices such as the
recently passed US Inflation Reduction Act could also have a
negative impact on Syneos if pharmaceutical customers look to trim
expenses or reduce the scope of existing projects. Additionally,
large mergers could result in customer consolidation/pricing
pressure. Governance risk considerations include Syneos' appetite
for share repurchases and debt-financed acquisitions including
those that bring execution risk. This is partly mitigated by
progress to date at deleveraging in line with publicly communicated
target range of 3.5x-4.0x, on management's basis.
The stable rating outlook reflects Moody's expectation that Syneos
will stabilize its book-to-bill ratio, grow earnings in the
mid-single digits over the next 12 to 18 months and sustain
debt/EBITDA below 4.5 times.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade the ratings if Syneos demonstrates
improvement in its book-to-bill ratio along with consistent revenue
growth, stable profit margins and strong liquidity. Quantitatively,
ratings could be upgraded if adjusted debt to EBITDA is sustained
below 3.5 times.
Moody's could downgrade Syneos' ratings if company's book-to-bill
ratio experiences further declines such that operating performance
significantly weakens, or liquidity deteriorates. Ratings could
also be downgraded if the company executes material debt-funded
acquisitions or shareholder distributions, resulting in debt to
EBITDA sustained above 4.5 times. Failure to address approaching
debt maturities could result in downgrade.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
Syneos Health Inc., headquartered in Morrisville, NC, is a leading
global fully integrated biopharmaceutical solutions organization
providing outsourced clinical development, medical affairs and
commercial services for pharmaceutical and biotechnology companies.
Syneos' main area of focus is late-stage clinical trials. The
company reported revenues of approximately $5.4 billion for the
twelve months ended June 30, 2022.
TALEN ENERGY: Seeks OK of Disclosures for Equitization/Sale Plan
----------------------------------------------------------------
Talen Energy Supply, LLC, et al. submitted a Disclosure Statement.
Subject to the terms and provisions of that certain Restructuring
Support Agreement dated as of May 9, 2022 (including any exhibits
thereto and as subsequently amended and as may be further modified,
amended, or supplemented from time to time, and together with all
exhibits and schedules thereto, the "RSA"), the following parties
have agreed to support and/or vote in favor of the Plan:
* Holders of approximately 83% of the aggregate outstanding
principal amount of the Unsecured Notes;
* Holders of approximately 86% in aggregate principal amount of
Claims under the Debtors' Prepetition CAF Agreement;
* Holders of approximately 97% in aggregate principal amount of
Claims under the Debtors' Prepetition TLB Agreement;
* Holders of approximately 48% of the aggregate outstanding
principal amount of the Secured Notes;
* The holder of 100% of the Existing Equity Interests.
After extensive hard-fought, arm's-length negotiations, the Debtors
and an ad hoc group of TES' unsecured noteholders (the "Consenting
Parties") entered into that certain Restructuring Support
Agreement, dated as of May 9, 2022 (including any exhibits thereto
and as subsequently amended and as may be further modified,
amended, or supplemented from time to time, the "RSA"), prior to
filing the Chapter 11 Cases. Subsequently, on August 4, 2022 and
August 10, 2022, the Debtors and the Consenting Parties executed
the first and second amendments to the RSA (respectively, the "RSA
First Amendment" and the "RSA Second Amendment") to address
increased funding needs, implement a Sale Process (as defined
below), and update the milestones provided in the RSA.
On August 27, 2022, the Debtors and the Consenting Parties entered
into (i) the third amendment and limited joinder to the RSA (the
"RSA Third Amendment") with certain Holders of Prepetition CAF
Claims (the "CAF Consenting Parties" and, the resulting settlement,
the "CAF Settlement") and (ii) the fourth amendment and limited
joinder to the RSA (the "RSA Fourth Amendment") with certain
Holders of Prepetition TLB Claims and Secured Notes Claims (the
"First Lien Non-CAF Consenting Parties" and, the resulting
settlement, the "First Lien Non-CAF Settlement"), each of which
provides for the settlement and allowance of certain Prepetition
First Lien Secured Claims and joins the parties to the RSA in
connection therewith.
On August 29, 2022, the Debtors and the Consenting Parties entered
into a fifth amendment and limited joinder to the RSA (the "RSA
Fifth Amendment") with Talen Energy Corporation ("TEC" and,
together with its direct and indirect subsidiaries, the "Company")
and certain entities affiliated with Riverstone Holdings LLC
(collectively, "Riverstone" and, together with TEC, the "TEC
Consenting Parties"), which provides for the settlement of certain
matters between the Debtors, TEC, Riverstone, and certain of the
Cumulus Affiliates (such settlement, the "TEC Global Settlement"
and, collectively with the CAF Settlement and the First Lien
Non-CAF Settlement, the "Plan Settlements") and joins the parties
to the RSA in connection therewith.
The RSA provides that the Consenting Parties, the CAF Consenting
Parties, the First Lien Non-CAF Consenting Parties, and the TEC
Consenting Parties will support the Plan and the restructuring
transactions contemplated thereby, subject to the terms and
provisions of the RSA.
As of the date of this Disclosure Statement, (i) the Consenting
Parties are Holders of over 83% of the aggregate outstanding
principal amount of the Unsecured Notes Claims, (ii) the CAF
Consenting Parties are Holders of 86% of the aggregate principal
amount of the Prepetition CAF Claims, (iii) the First Lien Non-CAF
Consenting Parties are Holders of 97% of the aggregate principal
amount of the Prepetition TLB Claims and 48% of the aggregate
outstanding principal amount of the Secured Notes Claims, and (iv)
TEC, a TEC Consenting Party, is the Holder of 100% of the Existing
Equity Interests.
Pursuant to the RSA, the Debtors have agreed to move forward
expeditiously with the confirmation and consummation of the Plan,
and to be subject to certain milestones which, if not achieved,
enable the Requisite Consenting Parties to terminate the RSA. The
relevant milestones to be achieved include, among others:
* filing of the Plan and a motion to approve this Disclosure
Statement no later than September 15, 2022;
* entry of an order approving the Disclosure Statement by no
later October 26, 2022;
* commencement of the hearing to approve the Confirmation Order
by no later than December 21, 2022;
* entry of the Confirmation Order by no later than December 29,
2022; and
* the occurrence of the Effective Date of the Plan by no later
than May 9, 2023; provided, that this milestone may be extended by
up to six months solely to obtain regulatory approvals.
The Plan provides for a comprehensive restructuring (the
"Restructuring") pursuant to either (i) a debt-for-equity exchange
in which the equity of New Parent will be distributed to Holders of
Unsecured Notes Claims and General Unsecured Claims on account of
their Claims and to Holders of Unsecured Notes Claims and General
Unsecured Claims that participate in the Rights Offering (the
"Equitization Transaction"); or (ii) one or more sale transactions
in which one or more third-party bidder(s) will acquire either the
equity of New Parent or all or substantially all of the Debtors'
assets, including the equity in the Debtors' subsidiaries (a "Sale
Transaction").
Under the terms of the RSA, the Debtors may solicit, initiate,
facilitate, encourage, develop and negotiate one or more
alternative restructuring proposals from third parties (an
"Alternative Restructuring"), including a potential Sale
Transaction, and may toggle to a Sale Transaction if certain
conditions are met, as described more fully below. In the event an
actionable Sale Transaction does not occur, the Debtors believe the
Equitization Transaction provided for in the RSA and the Plan will
maximize value and allow the Debtors' business to reorganize with a
substantially reduced debt load and increase their cash flow on a
go-forward basis.
The Equitization Transaction is anchored by the Consenting Parties'
commitment to equitize their respective holdings of the
approximately $1.4 billion in principal amount of Unsecured Notes
Claims and backstop $1.55 billion of an up to $1.9 billion equity
rights offering. Specifically, in the event an actionable Sale
Transaction does not occur, the proposed Equitization Transaction
provides for, among other things:
* an up to $1.9 billion common equity rights offering (the
"Rights Offering"), $1.55 billion of which will be backstopped by
the Backstop Parties (the "Rights Offering Amount"), pursuant to
which eligible Holders of Unsecured Notes Claims and General
Unsecured Claims will be distributed subscription rights to
purchase shares of New Common Equity issued by New Parent (the
"Rights Offering Equity") in accordance with the Restructuring
Transactions Exhibit (as defined in the Plan), to be included in
the Plan Supplement;
* repayment of the DIP Facilities (as defined below) in full in
Cash;
* payment in full of Allowed Other Priority Claims and payment
in full, reinstatement or such other treatment of Allowed Other
Secured Claims as to render such Claims Unimpaired;
* Holders of Allowed Prepetition CAF Claims to receive payment
in full in Cash of the Settled CAF Claim Amount;
* Holders of Allowed Prepetition First Lien Non-CAF Claims to
receive payment in full in Cash of the Settled First Lien Non-CAF
Claim Amount;
* Holders of Allowed Unsecured Notes Claims to receive their
Pro Rata share of 99% of the new common equity in the New Parent
(the "New Common Equity"), less any New Common Equity distributed
to general unsecured creditors pursuant to the Plan (the "GUC
Recovery Equity Pool") or on account of the Retail PPA Incentive
Equity, subject to dilution from the Rights Offering, the Employee
Equity Incentive Plan, the New Warrants Equity, the Backstop
Periodic Premium, and the Backstop Put Premium (each as defined in
the Plan);
* Holders of Allowed Unsecured Notes Claims and Allowed General
Unsecured Claims to receive their Pro Rata share of the 1145
Subscription Rights (as defined in the Plan) and (i) with respect
to an Eligible Holder,6 the 4(a)(2) Subscription Rights (as defined
in the Plan) or (ii) with respect to an Ineligible Holder,7 solely
to the extent such Holder fully exercises its 1145 Subscription
Rights, New Common Equity or Cash, at the option of the Requisite
Consenting Parties, in the amount equal to the value of the 4(a)(2)
Subscription Rights that would have been distributable to the
Holder if such Holder was an Eligible Holder;
* Holders of Allowed General Unsecured Claims to receive their
Pro Rata share (on a Claim by Debtor basis) of the GUC Recovery
Equity Pool, subject to dilution from the Rights Offering, the
Backstop Periodic Premium, the Backstop Put Premium, the New
Warrants Equity, and the Employee Equity Incentive Plan;
* Holders of Claims that would otherwise be Allowed General
Unsecured Claims (i) in an amount of $1,000 or less or (ii) reduced
to $1,000 that are designated as General Unsecured Convenience
Claims will receive payment in full in Cash;
* the Debtors' collective bargaining agreements, pension
obligations, and asset retirement obligations to be assumed and/or
otherwise unimpaired;
* the Debtors' entry into a priority revolving credit facility
in a principal amount of at least $1,000,000,000 with the capacity
for the issuance of letters of credit (the "Exit Facility"); and
* if the TEC Global Settlement remains in effect as of the
Effective Date of the Plan, the Reinstatement of Existing Equity
Interests so as to maintain the organizational structure of the
Company as such structure exists on the Effective Date.
Pursuant to the RSA First Amendment, the Debtors are permitted to
conduct a process (the "Sale Process") to solicit, initiate,
facilitate, encourage, develop and negotiate one or more proposals
providing for an alternative restructuring to the Equitization
Transaction. The Sale Process provides a public and competitive
forum in which the Debtors may seek bids or proposals for potential
Sale Transactions. If such transactions would provide the Debtors'
Estates with higher or otherwise better value than the Equitization
Transaction, the Debtors will effectuate a Sale Transaction in lieu
of the Equitization Transaction. Under the Plan, a Sale Transaction
would provide for a waterfall distribution of the proceeds from any
Sale Transaction (the "Sale Transaction Proceeds").
Pursuant to the Plan, the Debtors may elect to pursue a Sale
Transaction premised on an Eligible Alternative Restructuring (as
defined below). The RSA provides that the Consenting Parties will
support a Sale Transaction that is an Eligible Alternative
Restructuring. An "Eligible Alternative Restructuring" is an
Alternative Restructuring that provides for:
* satisfaction in full, including any accrued but unpaid
interest (including postpetition interest at the contract rate, as
increased due to the Company's default), of all Claims arising
under (i) the DIP Documents, (ii) the Prepetition First Lien Debt
Documents (as defined in the Final DIP Order), including as set
forth in the CAF Settlement and the First Lien Non-CAF Settlement,
as applicable, and (iii) the Unsecured Notes Indentures;
* payment of any fees due and payable in accordance with the
Order (I) Authorizing the Debtors to Enter into Backstop Commitment
Letter, (II) Approving All Obligations Thereunder, and (III)
Granting Related Relief (the "Backstop Order"); and
* treatment of all other Claims against the Company on terms
that are no less favorable than as provided in the RSA.
Pursuant to the RSA First Amendment, the Debtors and Consenting
Parties have agreed to the following Sale Process timeline:
* launch outreach to third-parties following entry of the
Backstop Order on August 29, 2022;
* set deadline to receive non-binding indications of interest
no later than September 28, 2022;
* launch second round of bidding no later than October 3, 2022;
* receive all timely binding offers and draft asset purchase
agreements, subject to further negotiation, in accordance with the
Bidding Procedures no later than November 14, 2022 at 4:00 p.m.
(prevailing Central Time); and
* select a winning bidder no later than November 29, 2022.
The Debtors are presently soliciting votes on a Plan premised on
either the Equitization Transaction or a toggle to a Sale
Transaction that meets the requirements of an Eligible Alternative
Restructuring (as defined in the RSA). As set out in more detail
herein, the Debtors are presently conducting a Sale Process, which
may result in offers that do not meet the requirements of an
Eligible Alternative Restructuring. For example, such bid may not
contemplate payment of the Claims of Holders of the Unsecured Notes
in full, including postpetition interest. Accordingly, if the
Debtors elect, in their business judgment, to pursue a Sale
Transaction that does not constitute an Eligible Alternative
Restructuring on the terms and conditions set forth in the RSA, the
Requisite Consenting Parties may elect to terminate the RSA and the
Consenting Parties would not be required to vote in favor of the
amended Plan. Upon such termination of the RSA, the Debtors will
need to amend the current Plan and obtain Bankruptcy Court approval
of an amended Disclosure Statement and authority to re-solicit the
amended Plan to some or all Voting Classes.
Under the Plan, holders of Class 4 Unsecured Notes Claims will
receive, in accordance with the Restructuring Transactions, its Pro
Rata share of, as applicable:
(i) If the Equitization Transaction occurs:
a. 99% of the New Common Equity, less the New Common Equity
distributed on account of the Retail PPA Incentive Equity and the
GUC Recovery Equity Pool, and subject to dilution from the Rights
Offering, the Backstop Periodic Premium, the Backstop Put Premium,
the New Warrants Equity, and the Employee Equity Incentive Plan;
b. the 1145 Subscription Rights; and
c. with respect to:
i. Eligible Holders of Unsecured Notes Claims: the 4(a)(2)
Subscription Rights; or
ii. Ineligible Holders of Unsecured Notes Claims (if any):
solely if such Holder fully exercises its 1145 Subscription Rights,
New Common Equity or Cash, at the option of the Requisite
Consenting Parties, in the amount equal to the value of the
(4)(a)(2) Subscription Rights that would have been distributable to
such Holder if such Holder was an Eligible Holder of Unsecured
Notes Claims; or
(ii) if the Sale Transaction occurs: the Waterfall Recovery;9
provided, however, that in no event shall the Holders of Unsecured
Notes Claims receive, on account of such Claims, a recovery greater
than 100% of the Allowed Unsecured Notes Claims, including after
payment of postpetition interest on any Allowed Unsecured Notes
Claims from the Petition Date through the date of payment of such
Claim, plus any additional amounts due under the Unsecured Notes
Documents, to the maximum extent permitted by law, in each case as
provided for in the relevant indenture and as allowed under the
Bankruptcy Code. Class 4 is impaired.
Holders of Class 5 General Unsecured Claims will receive, in
accordance with the Restructuring Transactions, its Pro Rata share
(on a Claim by Debtor basis) of:
(i) if the Equitization Transaction occurs,
a. the GUC Recovery Equity Pool, subject to dilution from
the Rights Offering, the Backstop Periodic Premium, the Backstop
Put Premium, the New Warrants Equity, and the Employee Equity
Incentive Plan;
b. the 1145 Subscription Rights; and
c. with respect to:
i. Eligible Holders of General Unsecured Claims: the
4(a)(2) Subscription Rights; or
ii. Ineligible Holders of General Unsecured Claims (if
any): solely if such Holder fully exercises its 1145 Subscription
Rights, New Common Equity or Cash, at the option of the Requisite
Consenting Parties, in the amount equal to the value of the 4(a)(2)
Subscription Rights that would have been distributable to such
Holder if such Holder was an Eligible Holder of General Unsecured
Claims; or
(ii) if the Sale Transaction occurs, the Waterfall Recovery;
provided, however, that in no event shall the Holders of General
Unsecured Claims receive, on account of such Claims, a recovery
greater than 100% of the Allowed General Unsecured Claims.
Class 5 is impaired.
Definition:
"GUC Recovery Equity Pool" means, solely in the case of the
Equitization Transaction, with respect to a Debtor, in accordance
with the Value Allocation as may be modified by order of the
Bankruptcy Court, the aggregate amount of New Common Equity and
Rights Offering Subscription Rights to which Holders of General
Unsecured Claims are entitled to receive on account of their
Allowed General Unsecured Claims against such Debtor, which shall
be distributed to Holders of Allowed General Unsecured Claims in
accordance with Article III.B.6.
Holders of Class 6 General Unsecured Convenience Claims will
receive, on the Effective Date or as soon thereafter as reasonably
practicable,
(i) if the Equitization Transaction occurs, payment in full in
Cash of such Holder's Allowed General Unsecured Convenience Claim;
or
(ii) if the Sale Transaction occurs, such Holder's rights and
entitlements hereunder as a Holder of an Allowed General Unsecured
Claim and this Class shall be deemed vacant pursuant to Article
III.E of the Plan. Class 6 is impaired.
Sources of consideration for Plan Distributions:
1. Equitization Transaction. The Reorganized Debtors shall fund
distributions under the Plan (including with respect to the
settlements embodied herein) with respect to the Equitization
Transaction with (i) Cash on hand and (ii) the issuance or
distribution of (a) the New Common Equity, including pursuant to
the Rights Offering, (b) the New Warrants, and (c) the New Debt.
2. Sale Transaction. The Post-Sale Estates shall fund
distributions under the Plan with respect to the Sale Transaction
with, as applicable, (i) Cash on hand, (ii) the Sale Transaction
Proceeds, and (iii) the Post-Sale Reserve.
Attorneys for the Debtors and Debtors:
Gabriel A. Morgan, Esq.
Clifford W. Carlson, Esq.
WEIL, GOTSHAL & MANGES LLP
700 Louisiana Street, Suite 1700
Houston, TX 77002
Telephone: (713) 546-5000
Facsimile: (713) 224-9511
- and -
Matthew S. Barr, Esq.
Alexander Welch, Esq.
WEIL GOTSHAL, & MANGES LLP
767 Fifth Avenue
New York, NY 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
A copy of the Disclosure Statement dated September 9, 2022, is
available at https://bit.ly/3evgAHW from PacerMonitor.com.
About Talen Energy Corp.
Allentown, Pennsylvania-based Talen Energy Corp. is an independent
power producer founded in 2015. Riverstone Holdings LLC completed
its acquisition of the remaining 65% stake of Talen Energy in 2016
for $5.2 billion.
Talen Energy Corporation, through subsidiary Talen Energy Supply
LLC, is one of the largest competitive power generation and
infrastructure companies in North America. Through subsidiary
Cumulus Growth, TEC is developing a large-scale portfolio of
renewable energy, battery storage, and digital infrastructure
assets across its expansive footprint. On the Web:
https://www.talenenergy.com/
TES owns and/or controls approximately 13,000 Megawatts of
generating capacity in wholesale U.S. power markets, principally in
the Mid-Atlantic, Texas and Montana. Woodlands, Texas-based TES
runs 18 power generation facilities, at eight of which rely on
natural gas to make electricity.
Talen Energy Supply, LLC, and 71 affiliates sought Chapter 11
protection (Bankr. S.D. Tex. Lead Case No. 22-90054) on May 9,
2022. The Hon. Marvin Isgur is the case judge.
Talen Energy Corporation (TEC), its Cumulus Growth subsidiary, and
TES' LMBE subsidiaries are excluded from the in-court process.
TES has retained Weil Gotshal & Manges LLP as its legal advisor,
Evercore as its investment banker and Alvarez & Marsal as its
financial advisor for its restructuring. Kroll is the claims
agent.
TEC is represented by PJT Partners as financial advisors and Vinson
& Elkins as legal counsel.
Cumulus Growth is represented by Ardea Partners and DH Capital as
its investment bankers, and Gibson Dunn as legal counsel.
The Consenting Noteholders are represented by Kirkland & Ellis LLP
and Rothschild & Co US Inc.
TAP ROCK: S&P Affirms 'B-' Issuer Credit Rating, Outlook Stable
---------------------------------------------------------------
S&P Global Ratings affirmed its issuer 'B-' issuer credit rating on
Golden, Colo.-based oil and gas exploration and production (E&P)
company Tap Rock Resources LLC. The issue-level rating on its
unsecured debt remains 'B' with a '2' recovery rating, reflecting
its expectation of substantial (70%-90%; rounded estimate: 85%)
recovery in the event of a payment default.
The stable outlook reflects S&P's view that Tap Rock will increase
production and reserves through 2022 while maintaining adequate
liquidity and strong financial measures over the next 12 months.
This includes funds from operations (FFO) to debt above 60%,
partially offset by high borrowings on its credit facility.
Tap Rock has a small production and reserve base compared to higher
rated peers.
Tap Rock has approximately 26,000 net acres in the Permian Basin,
across Eddy and Lea counties in New Mexico, which provides over a
10-year development runway when utilizing four rigs. Almost 90% of
Tap Rock's acreage is held by production. Although some of Tap
Rock's acreage is on federal land, which could be at risk of more
stringent federal regulations, it does not expect any issues with
receiving permits. Tap Rock has total proved reserves as of Dec.
31, 2021, of 203 million barrels of oil equivalent (mmboe)--50%
oil, 25% natural gas liquids (NGLs), and 25% natural gas. This is
on the smaller side for companies we rate. The proportion of proved
undeveloped reserves, which will require significant additional
capital to develop, is about average compared to peers at
approximately 51%.
S&P expects increased production in 2022 and relatively flat growth
in 2023.
The company is running a five-rig program with plans to average
three or four rigs in the back half of 2022 and beyond. Tap Rock
uses a synchronized rig development approach to minimize
parent/child well issues and maximize full cycle economics. The
company spud 63 wells in the first half and expects to spud another
35 in the back half, higher than initial expectations as its pulls
some capital expenditures forward from 2023. S&P said, "We expect
production to be about 75,000-80,000 boe/d in 2022, an increase of
approximately 40% from 2021. We expect production growth in 2023 to
be about flat with 2022 despite reduced capital expenditure. Tap
Rock's exposure to liquids in both production and reserves provides
for stronger profitability compared with peers."
S&P assesses Tap Rock's financial risk as highly leveraged based on
private equity ownership.
Tap Rock was formed in 2016 with an initial investment from NGP
Energy Capital. NGP holds approximately 93% of the equity and
controls the board of directors, with three of five members. S&P
said, "We expect Tap Rock to maintain FFO to debt over 60% and debt
to EBITDA of about 0.5x-1.5x for at least the next two years.
However, companies owned by financial sponsors typically follow a
more aggressive financial policy to achieve desired returns, and
Tap Rock's financial profile assessment reflects this risk.
Additionally, in August, Tap Rock drew on its credit facility to
help fund a $200 million equity distribution. We expect additional
distributions in the second half, which could again be funded by
drawing on the credit facility. We expect Tap Rock to generate
modest free cash flow in 2022 and 2023. Furthermore, we anticipate
Tap Rock will remain focused on improving its cost structure and
capital returns."
S&P said, "The stable outlook reflects our view that Tap Rock will
increase production and reserves through 2022 while maintaining
adequate liquidity and strong financial measures over the next 12
months, including FFO to debt above 60%. We expect production to
increase in 2022 and be flat in 2023. Additionally, the company's
strong hedging program provides some cash flow protection, and we
expect positive free cash flow in 2022 and 2023."
S&P could lower the rating if:
-- S&P views leverage as unsustainable, with FFO to debt
approaching 12% given Tap Rock's business risk; or
-- Liquidity becomes constrained.
This would most likely occur if commodity prices fall below S&P's
expectations, the company does not meet expected production
targets, or its capital spending is significantly above our
expectations. Liquidity could be constrained by shareholder
distributions above its forecast.
S&P could raise its ratings on Tap Rock if the company:
-- Increases the scale of its reserves and production more
consistent with higher-rated peers;
-- Maintains adequate liquidity;
-- Reduces borrowings on its credit facility; and
-- S&P reevaluates Tap Rock's private equity ownership and
potential impact to financial policies, most likely in conjunction
with a decrease in sponsor ownership.
ESG credit indicators: E-4, S-2, G-3
TERRA MANAGEMENT: Seeks to Move Disclosures Hearing to Oct. 11
--------------------------------------------------------------
Terra Management Group, LLC and Littleton Main Street LLC moved the
Bankruptcy Court for entry of an order continuing the hearing on
the Debtors' Disclosure Statement currently scheduled for September
16, 2022 to Oct. 11, 2022.:
The Debtors have received informal comments to the Disclosure
Statement and underlying Plan from Kathleen and Delaney Keaten (the
"Keatens"). The Keatens and the Debtors are in discussions
regarding these comments and those discussions may impact the
Disclosure Statement Hearing.
Accordingly, the Debtors believe it is most efficient to not
proceed with the hearing next week and hereby request that the
Court continue the Disclosure Statement Hearing to an available
date on the Court's calendar on or about October 11, 2022 and reset
the objection deadline to on or about October 4, 2022. The proposed
extensions will help limit the issues before the Court.
The Debtors discussed the relief requested in this motion with the
counsel for the Keatens. The Keatens do not oppose the relief
requested herein.
The Debtors accordingly requested entry of an order rescheduling
the Disclosure Statement Hearing to a date on or about October 11,
2022, and resetting the objection deadline to on or about October
4, 2022, and for such other relief as the Court deems appropriate.
Attorneys for the Debtors:
Michael J. Pankow, Esq.
Anna-Liisa Mullis, Esq.
Amalia Sax-Bolder, Esq.
BROWNSTEIN HYATT FARBER SCHRECK, LLP
410 17th St., Suite 2200
Denver, CO 80202
Telephone: (303) 223-1100
Facsimile: (303) 223-1111
E-mail: mpankow@bhfs.com
amullis@bhfs.com
asax-bolder@bhfs.com
About Terra Management Group
Terra Management Group, LLC is an Englewood, Colo.-based company
engaged in activities related to real estate.
Terra Management Group and Littleton Main Street, LLC filed their
voluntary petitions for Chapter 11 protection (Bankr. D. Col. Lead
Case No. 21-15245) on Oct. 15, 2021. J. Marc Hendricks, president
and manager of Terra Management Group, signed the petitions. At the
time of the filing, Terra Management Group listed up to $100,000 in
assets and up to $50 million in liabilities while Littleton listed
as much as $50 million in both assets and liabilities.
The Hon. Kimberley H. Tyson is the case judge.
The Debtors tapped Michael J. Pankow, Esq., at Brownstein Hyatt
Farber Schreck, LLP as legal counsel, and Haynie & Company as tax
accountant.
TRANSOCEAN LTD: S&P Lowers ICR to 'CC', Outlook Negative
--------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on
Switzerland-domiciled offshore drilling contractor Transocean Ltd.
to 'CC' from 'CCC-'. At the same time, S&P lowered the issue-level
rating on the rated notes involved in the exchange to 'CC'.
S&P said, "The negative outlook reflects that we expect to lower
our issuer credit rating to 'SD' (selective default) upon the
completion of the transactions, which we expect around Sept. 30,
2022. Thereafter, we intend to review our ratings on Transocean to
incorporate the debt exchanges, other recent events, and our
forward-looking opinion on the creditworthiness of the entity."
Transocean has announced that it has entered into agreements to
exchange certain of its 0.5% exchangeable senior bonds due 2023 and
certain of its 7.25% senior unsecured guaranteed notes due 2025 for
new guaranteed exchangeable notes due 2029.
The company also announced its intention to repurchase a portion of
the 7.25% notes for about 85% of par.
S&P views the announced exchanges as distressed and tantamount to
default. Transocean Ltd. announced that it has entered into private
agreements with bondholders for the following transactions:
-- To exchange $73 million of its existing 0.5% exchangeable bonds
due 2023 (not rated, $140 million outstanding as of June 30, 2022)
for $73 million of new 4.625% senior guaranteed exchangeable bonds
due 2029 and warrants to purchase up to 31.5% of the shares
underlying the new notes. The new exchangeable bonds will be
guaranteed by Transocean and certain subsidiaries of Transocean
Inc., and would be pari passu with the company's existing senior
unsecured notes with subsidiary guarantees from such holding
company subsidiaries.
-- To exchange approximately $43.3 million of its existing 7.25%
senior unsecured guaranteed notes due 2025 (issue rating 'CCC',
$411 million outstanding as of June 30, 2022) for $38.9 million of
the new 4.625% senior guaranteed exchangeable bonds due 2029.
-- To repurchase about $13.8 million of its 7.25% senior unsecured
guaranteed notes due 2025 for approximately $11.7 million cash
(plus accrued and unpaid interest).
S&P said, "In our view, the exchanges offer participating
bondholders less than the original promise of the securities, and
thus, combined with our assessment of the company's liquidity, we
consider them selective defaults. Although the first transaction is
offering nominal principal value, a higher coupon, warrants to
purchase Transocean shares and subsidiary guarantees, we view it as
less than the original promise given the six-year maturity
extension and lower coupon relative to the current yield on
Transocean's existing guaranteed exchangeable and non-exchangeable
notes."
The company could use proceeds from new debt issuance for
additional debt repurchases. The company plans to issue $300
million of new guaranteed exchangeable notes, with about $112
million of the proceeds to be used in the exchanges and $188
million to be used for general corporate purposes, which may
include capital expenditures, working capital and the repurchase of
existing debt.
S&P said, "In our view, Transocean's liquidity remains thin. As of
June 30, 2022, and pro forma for recent credit facility amendments,
Transocean had $729 million of unrestricted cash and full
availability on its $774 million credit facility maturing in 2025,
which drops to $600 million in June 2023. We estimate the company
will generate about $500 million in funds from operations over the
next 12 months. Our analysis indicates that these sources are just
sufficient to cover debt maturities, capital expenditures and
working capital over the next year, with limited cushion.
"The negative outlook reflects that we expect to lower our issuer
credit rating on Transocean to 'SD' upon the completion of the
exchanges because we consider them to be distressed. At that time,
we will also lower our issue-level ratings on the notes being
exchanged to 'D'.
"We would lower the rating if the company executes its announced
distressed exchanges.
"Although unlikely, we could raise our rating on Transocean if we
no longer expect it to complete the distressed debt exchanges."
ESG credit indicators: E-4, S-3, G-3
TRANSOCEAN LTD: To Swap Existing Bonds for New Bonds Due 2029
-------------------------------------------------------------
Transocean Ltd. has executed privately negotiated exchange and
purchase agreements relating to certain of the 0.50% Exchangeable
Senior Bonds due 2023 and certain of the 7.25% Senior Notes due
2025 issued by Transocean Inc., Transocean's wholly-owned
subsidiary. In aggregate, these transactions provide Transocean
with an incremental $175 million in liquidity, further improving
the flexibility of the company's balance sheet.
Pursuant to the exchange and purchase agreements, Transocean Inc.
agreed to exchange (a) approximately $73.0 million aggregate
principal amount of its Existing Exchangeable Bonds for (i)
approximately $73.0 million aggregate principal amount of new
4.625% Senior Guaranteed Exchangeable Bonds due 2029 to be issued
by Transocean Inc. and (ii) warrants to subscribe for Transocean
shares, CHF 0.10 per share, equal to 31.5% of the aggregate number
of Transocean shares underlying such New Exchangeable Bonds, and
(b) approximately $43.3 million aggregate principal amount of its
2025 Priority Guaranteed Notes for approximately $38.9 million
aggregate principal amount of New Exchangeable Bonds. In addition,
pursuant to the exchange and purchase agreements, Transocean Inc.
agreed to sell approximately $188.1 million aggregate principal
amount of new and additional New Exchangeable Bonds and issue new
and additional Warrants to subscribe for Warrant Shares equal to
28.3% of the aggregate number of Transocean shares underlying such
New Exchangeable Bonds.
The New Exchangeable Bonds will be guaranteed by Transocean and
certain indirect holding company subsidiaries of Transocean Inc.:
Transocean Holdings 1 Limited, Transocean Holdings 2 Limited and
Transocean Holdings 3 Limited.
The New Exchangeable Bonds will have an initial exchange rate that
implies an exchange price that is a 22.5% premium to the volume
weighted average price of Transocean shares over the 10 trading day
period following this announcement. On or after March 30, 2026,
Transocean Inc. may redeem the New Exchangeable Bonds if the
closing price of Transocean's shares has exceeded 115% of the
exchange price for at least 20 trading days in a consecutive 30-day
trading period, subject to a make-whole payment through March 30,
2028 for any exchanges effectuated following such redemption. Each
Warrant will be exercisable for one Warrant Share at the election
of the holder, either in full or in part, at any time after the
date of issuance until 5:00 p.m., New York City time, on March 13,
2026, at an exercise price equal to a 32.25% premium to the VWAP
Price, subject to customary anti-dilution adjustments. Transocean
Inc., in its sole discretion, may elect to require the Warrants to
be exercised on a cash or cashless basis. If at any time prior to
the Expiration Time the closing sale price of Transocean shares on
the NYSE equals or exceeds $10.00 per share, subject to adjustment
in accordance with the warrant agreement governing the Warrants,
for a period of five consecutive trading days, Transocean Inc. will
have the right to effect an exercise of all (and only all) of the
Warrants upon notice to the holders of the Warrants.
The transactions are expected to close on Sept. 30, 2022, subject
to customary closing conditions.
Transocean intends to use the proceeds from the sale of the
Additional New Securities to repurchase approximately $13.8 million
in outstanding principal of the 2025 Priority Guaranteed Notes for
approximately $11.7 million plus accrued and unpaid interest, and
for general corporate purposes, which may include the repurchase of
additional debt securities of Transocean Inc., capital expenditures
and working capital.
As a result of the transactions contemplated by the exchange and
purchase agreements and after giving effect to the expected use of
proceeds described above, Transocean will have outstanding $300.0
million aggregate principal amount of New Exchangeable Bonds and
Warrants to purchase an aggregate number of Transocean shares equal
to approximately 25.4% of the aggregate number of shares underlying
the New Exchangeable Bonds. In addition, Transocean will have
retired approximately $73.0 million in outstanding principal of
Existing Exchangeable Bonds and approximately $57.1 million in
outstanding principal of 2025 Priority Guaranteed Notes.
The Exchange Securities, Additional New Securities and Transocean
shares issuable upon exchange or exercise of the Exchange
Securities and Additional New Securities, as applicable, have not
been registered under the Securities Act of 1933, as amended, or
under any state securities laws and may not be offered or sold
without registration under, or an applicable exemption from, the
registration requirements.
About Transocean
Transocean Ltd. is an international provider of offshore contract
drilling services for oil and gas wells. The Company specializes in
technically demanding sectors of the offshore drilling business
with a particular focus on ultra-deepwater and harsh environment
drilling services.
Transocean reported a net loss of $591 million for the year ended
Dec. 31, 2021, a net loss of $568 million for the year ended Dec.
31, 2020, and a net loss of $1.25 billion for the year ended Dec.
31, 2019. As of June 30, 2022, the Company had $20.55 billion in
total assets, $1.53 billion in total current liabilities, $7.84
billion in total long-term liabilities, and $11.17 billion in
total
equity.
* * *
As reported by the TCR on July 11, 2022, S&P Global Ratings lowered
its issuer credit rating on Switzerland-based offshore drilling
company Transocean Ltd to 'CCC-' from 'CCC'. S&P's 'CCC-' issuer
credit rating reflects its view that the Company will execute a
distressed exchange or debt restructuring over the next six months.
TREASURE VALLEY: Moody's Assigns Ba3 Rating to Facilities Bonds
---------------------------------------------------------------
Moody's Investors Service has assigned initial Ba3 underlying and
Aa2 enhanced ratings to the Idaho Housing and Finance Association's
$13.1 million Nonprofit Facilities Revenue Bonds (Treasure Valley
Classical Academy, Inc. Project), Series 2022A (Credit Enhancement)
and $345,000 Nonprofit Facilities Revenue Bonds (Treasure Valley
Classical Academy, Inc. Project), Series 2022B (Federally Taxable)
(Credit Enhancement). Moody's has assigned only the Ba3 rating to
the issuer's $2.8 million Nonprofit Facilities Revenue Bonds
(Treasure Valley Classical Academy, Inc. Project), Series 2022C.
Concurrently, Moody's has assigned a stable outlook on the Ba3
underlying rating. Following the issuance, these bonds will be the
only outstanding parity lien debt.
RATINGS RATIONALE
The initial Ba3 ratings reflect Treasure Valley Classical Academy's
small scope of operations, though revenues will grow to some extent
as the organization continues to fill its upper high school grade
levels. The rating also considers the charter school's improving
financial position that remains below that of most other rated
peers. The rating is supported by academic performance that
generally exceeds competing peers and unique academic offerings,
which has resulted in a substantial elementary and middle school
waitlist relative to the school's enrollment. Finally, the Ba3
rating considers the school's very high leverage, inclusive of
subordinate obligations with acceleration provisions, the need for
enrollment increases to cover future debt service, and relatively
thin anticipated debt service coverage as revenue increases are
offset by escalating debt service requirements in the coming
years.
Governance is a key driver of all initial rating actions.
Governance considerations include the supportive charter
authorization environment within the State of Idaho, with the
school's above average academic performance indicating strong
prospects for future charter renewal. Proactive governance and
outside administrative support provided by philanthropic
organizations that have allowed the school to improve its financial
position while still expanding operations are also positive
factors.
The Aa2 enhanced rating reflects the credit quality of the State of
Idaho (Aaa stable) and its moral obligation pledge under the
provisions of the Idaho Public Charter School Facilities Program.
The program's strengths include statutory requirements that the
Idaho Housing and Finance Association and the Governor request the
legislature to make an appropriation to replenish the bonds' debt
service reserve fund in the event of a draw on that fund. The
rating also reflects the essentiality of charter schools in the
state's K-12 education system and the state's established track
record of making appropriation-backed debt payments under certain
financing agreements for state projects. The two-notch distinction
between the programmatic rating and the state's issuer rating
reflects the weaknesses inherent in the contingent,
subject-to-appropriation nature of the state's support.
RATING OUTLOOK
The stable outlook reflects Moody's expectation that the school's
leverage will remain highly elevated as its financial position
continues to improve over the next several years due to enrollment
growth. Moody's also anticipate that the school's competitive
profile will remain favorable based on population growth in the
surrounding area and the school's strong academic offerings.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
Significant and sustained reduction of leverage relative to
liquidity and operating revenue
Increased days cash on hand
Not applicable for enhanced rating
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
Failure to achieve targeted enrollment growth
Draws on liquidity
Acceleration of debt service potentially driven by violation of
legal covenants or nonpayment of debt
Downgrade of the State of Idaho's issuer rating (enhanced
rating)
LEGAL SECURITY
The bonds are payable from payments received pursuant to a loan
agreement between Treasure Valley Classical Academy and the Idaho
Housing and Finance Association. The association serves as the
issuer of the debt. Under the loan agreement, the academy has
pledged to make payments from a pledge of gross revenues. The
revenues are primarily comprised of state funding, though the
agreement also includes any other revenues derived from operation
of the school. A deed of trust on the school's real estate backs
the loan in the event of nonpayment.
The school has been approved and intends to use the Idaho Public
Charter School Facilities Program for the Series 2022A and 2022B
bonds. A key requirement of the program is a direct-pay arrangement
for debt service, whereby all state per pupil payments to the
school are sent directly to the bond trustee to set aside funds in
accordance with the bond indenture. The bonds will also benefit
from a debt service reserve funded at the lesser of the standard
three-prong test or at least twelve months of debt service.
USE OF PROCEEDS
Bond proceeds will be used to acquire presently leased facilities
and to renovate and construct a new facility to serve upper
grades.
PROFILE
Treasure Valley Classical Academy is currently a single site
charter school located in Fruitland, Idaho, which is on the
northwestern edge of the Boise metropolitan area. The school serves
543 students as of 2022-23 and is in the process of gradually
expanding to a full enrollment of 702.
METHODOLOGY
The principal methodology used in the underlying ratings was US
Charter Schools published in September 2016.
TRUSENTIAL LLC: Wins Interim Cash Collateral Access Thru Oct 30
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Ohio,
Western Division, authorized Trusential, LLC to use cash collateral
on an interim basis in accordance with the budget, with a 10%
variance, through October 30, 2022.
The Debtor and Plex are parties to a prepetition "Accounts Purchase
and Security Agreement" dated November 11, 2021, wherein Plex
purchased certain prepetition accounts from the Debtor.
The Debtor acknowledged that Plex duly perfected its first priority
ownership interest in accounts that Plex purchased, with a first
priority security interest in all cash collateral. Plex's initial
UCC-1 Financing Statement was thereafter amended to add Trusential
as a debtor.
As adequate protection for the Debtor's use of Plex's cash
collateral and as security for any post-petition interest, charges,
costs and fees that may be authorized by the Court pursuant to 11
U.S.C. section 506(b), Plex is granted pursuant to 11 U.S.C.
sections 361(2) and 363 valid, perfected and enforceable
replacement adequate protection liens upon, and security interests
in, all cash collateral acquired or arising post-petition, to the
extent, validity, and in the order of priority that Plex holds
valid, perfected, and unavoidable prepetition security interests
and/or liens in the Debtor's cash collateral as of the petition
date.
In addition, due to the Debtor's use of Plex's prepetition cash
collateral, as additional adequate protection pursuant to 11 U.S.C.
section 362 and 363, Plex is authorized to retain $26,649 of
Proceeds of Accounts received by Plex prepetition, maintained in an
escrow reserve account controlled by and for the benefit of Plex in
accordance with the Factoring Agreement. The Plex Reserve Funds
serve as additional adequate protection for the Debtor's use of
Plex's cash collateral under the terms of the Order. Plex may not
apply any Plex Reserve Funds to satisfy all or any portion of
Plex's prepetition secured Claim except as may be authorized by
further Court order. Plex's reserves all rights in respect to all
such Plex Reserve Funds, including, but not limited to, any rights
of set off and recoupment under the Factoring Agreement, the
Bankruptcy Code and/or common law.
Unless consented to by Plex, in writing, the Debtor's right to use
any cash collateral pursuant to the Order will immediately
terminate after the occurrence of any of the following events:
a. If a trustee other than the Subchapter V Trustee is
appointed in the Chapter 11 Case;
b. If the Case is converted to a case under Chapter 7 of the
Bankruptcy Code; or
c. The dismissal of the Case.
In addition to the Procedural Events of Default enumerated, which
would result in an immediate cessation of the Debtor's use of cash
collateral, the Debtor's right to use any cash collateral will
terminate within three business days from a written notice by Plex
to the Debtor, the United States Trustee, and the Subchapter V
Trustee after the occurrence of any of the following events of
default:
a. Payment by the Debtor of any expenses other than those set
forth in the submitted Budget, unless Plex consents to the payment
of the specific expenses, in writing;
b. If the Debtor fails to satisfy any duty contained in the
Order or violates any term or condition of the Order;
c. If the Debtor commits a material breach under the Factoring
Agreement, other than defaults existing as of the Petition Date;
d. The Debtor fails to maintain proper and adequate insurance;
or
e. The Debtor fails to fully cooperate with Plex, as may be
requested by Plex in respect to any efforts that may be taken by
Plex in order to seek to collect from any of the following
customers/Account of the Debtor sums due on certain unpaid and
outstanding prepetition Accounts owing to Plex: Ridgewood Manor,
LLC D/B/A Ridgewood Manor D/B/A Ridgewood Manor Nursing Center,
Concord Care Center of Toledo, INC., D/B/A Concord Care Center
D/B/A The Vista at Concord Care Center of Toledo D/B/A Continental
Health Company of Toledo, LLC, and Geneva Opco LLC D/B/A Geneva
Center for Rehabilitation and Nursing.
A final hearing on the matter is set for October 25 at 3 p.m.
A copy of the order is available at https://bit.ly/3dss5jh from
PacerMonitor.com.
The Debtor projects $30,700 in total income and $13,885 in total
expenses.
About Trusential LLC
Trusential LLC -- https://www.trusentialstaffing.com/ -- is a
nurse-owned and operated healthcare staffing agency that provides
staffing placements for healthcare companies in need.
Trusential LLC filed a voluntary petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ohio
Case No. 22-31144) on Aug. 3, 2022. In the petition filed by Cyona
Taylor-Randolph, as president and sole member, the Debtor reported
assets between $500,000 and $1 million against its estimated
liabilities between $100,000 and $500,000.
Patricia B. Fugee has been appointed as Subchapter V trustee.
Patricia A. Kovacs, Attorney at Law, is the Debtor's counsel.
UNLIKELY HEROES: Files Subchapter V Case
----------------------------------------
Unlikely Heroes Inc. filed for chapter 11 protection. The Debtor
elected on its voluntary petition to proceed under Subchapter V of
chapter 11 of the Bankruptcy Code.
According to court filings, Unlikely Heroes estimates between 1 and
49 creditors. The petition states funds will be available to
unsecured creditors.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
Oct. 11, 2022, at 10:00 AM at UST-SVND2, TELEPHONIC MEETING.
CONFERENCE LINE:1-866-820-9498, PARTICIPANT CODE:6468388.
Proofs of claim are due by Nov. 22, 2022.
About Unlikely Heroes
Unlikely Heroes Inc. -- https://www.unlikelyheroes.com -- is an
American 501 nonprofit organization that rescues, restores, and
rehabilitates child victims of sex slavery around the world.
Unlikely Heroes filed a petition for relief under Subchapter V of
Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No.
22-11069) on Sept. 23, 2022, In the petition filed by Erica Grave,
as president, the Debtor reported assets between $100,000 and
$500,000 and estimated liabilities between $500,000 and $1
million.
Gregory Kent Jones has been appointed as Subchapter V trustee.
The Debtor is represented by Richard P Towne of Law Offices.
VERTEX ENERGY: Provides Update on Diesel Conversion Project
-----------------------------------------------------------
Vertex Energy, Inc. provided an update on the Company's Mobile,
Alabama Refinery renewable diesel conversion project, including a
strategic extension of the planned construction timeline.
As previously disclosed, Vertex is currently working on completing
a $90-$100 million capital project designed to modify the Mobile
Refinery's existing hydrocracking unit to produce renewable diesel
fuel on a standalone basis. Upon completion of the conversion
project, the refinery is expected to commence production of
approximately 8,000 - 10,000 barrels per day (bpd) of renewable
diesel, with production volumes anticipated to subsequently ramp up
to approximately 14,000 bpd. This project seeks to capitalize on
the rapidly growing demand for advanced sustainable fuels, while
further expanding upon Vertex's commitment to supply lower carbon
fuels solutions.
After a thorough review of project execution risk by the Company,
mechanical completion of the Mobile Refinery's renewable diesel
conversion project has been proactively extended from its initial
target of year-end 2022, to the first quarter of 2023. These risk
considerations are the result of recent COVID-19 induced product
delays and global supply chain shortages in several previously
unimpacted markets, including common pipes, valves and fittings,
and certain base bulk materials. Limited visibility into a
solution for these challenges, combined with the notable financial
benefits associated with reduced downtime and extending current
operations, have allowed the Company to respond by extending the
project timeline to ensure all necessary parts and materials are
ready and on-site prior to shutting the hydrocracker unit down.
Management now expects mechanical completion to occur in the first
quarter of 2023, with production anticipated to begin in the second
quarter of 2023, an extension of the previously communicated
timeline of approximately one quarter.
Management estimates that its decision to extend the project
timeline will result in a positive impact to fourth quarter 2022
gross margin of approximately $15 to $17 million, by maintaining
current operations through year end 2022, assuming current refining
spreads at the time of this announcement.
"I am pleased with the team's ability to remain nimble in a highly
dynamic market environment," said Benjamin P. Cowart, president and
CEO of Vertex, who continued, "While we are eager to begin the
production of renewable diesel, we are confident in this decision
to extend the timeline, while seeking to achieve an improvement in
safety and reduction in project risk, compounded by the expected
incremental financial benefit of maximizing participation in
current market economics. We look forward to continuing to execute
the project on budget, as well as advancing our commitment to
supplying lower carbon fuel solutions to the market."
About Vertex Energy
Houston-based Vertex Energy, Inc. is an energy transition company
focused on the production and distribution of conventional and
alternative fuels. Vertex owns a refinery in Mobile (AL) with an
operable refining capacity of 75,000 barrels per day and more than
3.2 million barrels of product storage, positioning it as a leading
supplier of fuels in the region. Vertex is also a processor of
used motor oil, with operations located in Houston and Port Arthur
(TX), Marrero (LA), and Columbus (OH). Vertex also owns a
facility, Myrtle Grove, located on a 41-acre industrial complex
along the Gulf Coast in Belle Chasse, LA, with existing
hydroprocessing and plant infrastructure assets, that include nine
million gallons of storage.
Vertex Energy reported a net loss of $7.66 million for the year
ended Dec. 31, 2021, a net loss of $11.40 million for the year
ended Dec. 31, 2020, and a net loss of $5.49 million for the year
ended Dec. 31, 2019. As of Dec. 31, 2021, the Company had $266.06
million in total assets, $192.55 million in total liabilities,
$43.45 million in total temporary equity, and $30.07 million in
total equity.
VILLAS OF COCOA VILLAGE: Starts Subchapter V Case
-------------------------------------------------
The Villas of Cocoa Village LLC has sought bankruptcy protection in
Florida. The Debtor elected on its voluntary petition to proceed
under Subchapter V of chapter 11 of the Bankruptcy Code.
The Debtor is a real estate developer focusing on the development
of residential real property located primarily in Brevard County,
Florida.
The Debtor is owned by Robert D. Harvey, Robert C. Dietz, and The
Barraza-Marin Group. Mr. Harvey and Mr. Dietz each own 33% of the
membership interests in the Debtor, and The Barraza-Marin Group
owns 34% of the membership interests.
The Debtor is currently in the process of constructing
townhouse-style homes in the community known as The Cottages of
Cocoa Village, with an address of 6 Rosa L Jones Drive, Cocoa,
Florida 32922, and as reflected on Plat Book 67, Page 87, of the
Official Records of Brevard County, Florida (the "Project"). The
Project consists of 18 individual lots upon which the Debtor has
constructed or intends to construct a townhouse-style home. The
Debtor entered into various purchase and sale agreements ("PSAs")
for the 18 individual townhouse lots in the Project. Development
has been in progress since 2018, and Debtor has completed the
construction of two (2) lots, Units 1 and 2, and closed on the sale
of those townhouses pre-petition. The Debtor intends to continue
with and complete the construction of the remaining 16 townhome
units.
The Debtor's principal place of business is 210 Annie Street,
Orlando, Florida 32806. The Debtor owns the real property that
constitutes the Project, with the exception of Units 1 and 2 which
were sold pre-petition.
Reasons for Filing Bankruptcy and Strategic Objectives
The Debtor was negatively impacted by the worldwide COVID-19
pandemic and
its resulting consequences, including supply chain issues,
inflation, and construction price increases. As a result, any PSAs
that remain in place are far below market value and no longer
feasible for completing the construction of Project. The Debtor's
purpose in filing a Chapter 11 case is to eliminate the existing
PSAs for the individual townhomes and to enter into new contracts
that are more consistent with current market pricing and that will
permit the Debtor to successfully complete the Project. In
addition, the Debtor intends to seek post-petition financing
through its
current lender D&S Investment Capital, LLC and to confirm that any
such financing will be secured by a first-priority lien against the
Project.
Ownership Interests in Debtor.
According to court filings, The Villas of Cocoa Village LLC
estimates between 1 and 49 creditors. The petition states funds
will be available to unsecured creditors.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
Oct. 17, 2022, at 10:00 a.m. in Room Telephonic Conference Line
877-801-2055, Participant Passcode 8940738#.
About The Villas of Cocoa Village
The Villas of Cocoa Village LLC filed a petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla.
Case No. 22-03286) on Sept. 12, 2022. In the petition filed by
Robert D. Harvey, as authorized member, the Debtor reported assets
between $500,000 and $1 million and liabilities between $1 million
and $10 million.
Robert Altman has been appointed as Subchapter V trustee.
The Debtor is represented by C Andrew Roy of Winderweedle, Haines,
Ward & Woodman, PA.
WATER MARBLE: Unsecureds to Get $100K in Plan
---------------------------------------------
Water Marble Holding, LLC submitted an Amended Plan of
Reorganization.
This Amended Plan of Reorganization under chapter 11 of the
Bankruptcy Code proposes to pay creditors of Water Marble Holding,
LLC from the Debtor's future earnings with assistance from Titus
Harvest Dome Spectrum Church, Inc., and payments guaranteed by
Marble Waters Hotel and Suites, Inc.
Class 4 General Unsecured Creditors including the unsecured claim
of GBR. The Equity Holder of the Debtor shall contribute new value
in the form of cash in the amount of $100,000.00 from the Payment
Account to be shared pro-rata between the claim holders in Class 4
on the Effective Date. Class 4 is impaired.
The Debtor shall fund the Amended Plan through the income received
from the market rate lease with the Hotel of $52,000 per month. The
Church will backstop any shortfall of payments under the Amended
Plan for the life of the Amended Plan subject to the Church's
option described in Section 4.01 of this Amended Plan. The Hotel
will provide a full guarantee of Amended Plan payment to GBR
supported by a full pledge and blanket lien of the Hotel's assets.
This includes a pledge of the furniture, fixtures and equipment,
and cash collateral of the Hotel. In addition, the Church will
contribute $300,000.00 on or before the effective date to assist
the Debtor with the payments under the Amended Plan and for the
Debtor to use as working capital. The Debtor may also disburse
these funds to the Hotel from time-to-time to assist with the
operating expenses as necessary. The Debtor will be managed by Faye
Refour post-confirmation. The Hotel will be managed by Blue Water
Hospitality.
Attorney for Debtor:
Buddy D. Ford, Esq.
Jonathan A. Semach, Esq.
Heather M. Reel, Esq.
BUDDY D. FORD, P.A.,
9301 West Hillsborough Avenue
Tampa, Florida 33615-3008
Telephone: (813) 877-4669
Facsimile: (813) 877-5543
Office Email: All@tampaesq.com
E-mail: Buddy@tampaesq.com
Jonathan@tampaesq.com
Heather@tampaesg. Com
A copy of the Amended Plan of Reorganization dated September 9,
2022, is available at https://bit.ly/3DgRkjg from
PacerMonitor.com.
About Water Marble Holding
Water Marble Holding, LLC, filed a Chapter 11 bankruptcy petition
(Bankr. M.D. Fla. Case No. 21-01034) on April 28, 2021, listing as
much as $10 million in both assets and liabilities. Judge Jerry A.
Funk oversees the case. The Law Offices of Jason A. Burgess, LLC
and Smith Hulsey & Busey serve as the Debtor's bankruptcy counsel
and special counsel, respectively.
WESCO INT'L: Moody's Hikes CFR to Ba2 & Alters Outlook to Stable
----------------------------------------------------------------
Moody's Investors Service upgraded WESCO International, Inc.'s
Corporate Family Rating to Ba2 from Ba3, Probability of Default to
Ba2-PD from Ba3-PD, and the rating on WESCO Distribution, Inc.'s
senior unsecured notes to Ba3 from B1. The outlook is stable. The
Speculative Grade Liquidity Rating is unchanged at SGL-1.
The rating upgrades reflects the improvement in WESCO's financial
profile and credit metrics stemming from revenue growth, execution
of synergy realization, and favorable end market fundamentals.
"WESCO has executed its combination with Anixter well and is
realizing the benefits of scale, capitalizing on synergy
opportunities, and has the ability to effectively serve customers
in its fundamentally robust end markets. These positive
attributes are expected to continue to flow through financial
results and support the improved WESCO credit profile," said
Moody's Vice President, Scott Manduca.
The stable outlook reflects Moody's expectation of a balanced
approach to free cash flow allocation among shareholder returns,
M&A opportunities, and maintaining a healthy balance sheet.
Upgrades:
Issuer: WESCO International, Inc.
Corporate Family Rating, Upgraded to Ba2 from Ba3
Probability of Default Rating, Upgraded to Ba2-PD from
Ba3-PD
Issuer: WESCO Distribution, Inc.
Senior Unsecured Regular Bond/Debenture, Upgraded to
Ba3 (LGD4) from B1 (LGD4)
Outlook Actions:
Issuer: WESCO International, Inc.
Outlook, Changed To Stable From Positive
Issuer: WESCO Distribution, Inc.
Outlook, Changed To Stable From Positive
RATINGS RATIONALE
WESCO's Ba2 Corporate Family Rating reflects the company's strong
market position as the leading US distributor of electrical,
communication, and utility product components. Moody's rating is
supported by WESCO's improving credit profile, including the
ability to generate robust cash flow, and very good liquidity
position. Moody's rating also reflects the expected balancing of
shareholder returns, in the form of share repurchases and newly
instituted common stock dividends beginning in 2023, with
maintaining supportive credit metrics.
WESCO's is expected to maintain very good liquidity given improving
free cash flow generation, no near term maturities, limited capital
expenditure requirements, and cash on hand.
WESCO's senior unsecured notes are rated Ba3, one notch lower than
its Ba2 CFR. The unsecured notes are contractually subordinated
to the revolving credit facility (unrated), which has a first-lien
pledge on substantially all assets of the company, except accounts
receivable backing the accounts receivable securitization
facility.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if there is a deterioration in
credit metrics caused by aggressive financial policies including
large debt funded acquisitions or shareholder returns, or a
deterioration in liquidity. Specifically, if debt-to-EBITDA
(inclusive of Moody's adjustments) approaches 4.0x,
EBITA-to-interest expense nears 3.0x and retained cash flow-to-debt
falls to around 15%.
The ratings could be upgraded if there is sustained improvement in
credit metrics and very good liquidity is maintained.
Specifically, if debt-to-EBITDA (inclusive of Moody's
adjustments) is close to 3.0x, EBITA-to-interest expense is near
4.5x, retained cash flow-to-debt is consistently above 20% and
operating margin is above 8%.
Headquartered in Pittsburgh, Pennsylvania, WESCO International,
Inc. is a leading provider of business-to-business distribution,
logistics services and supply chain solutions. For the last twelve
months ended June 30, 2022, WESCO generated $20 billion in
revenue.
The principal methodology used in these ratings was Distribution &
Supply Chain Services Industry published in June 2018.
ZOAK DEVELOPMENT: Taps Law Office of Marc Voisenat as Counsel
-------------------------------------------------------------
Zoak Development, LLC seeks approval from the U.S. Bankruptcy Court
for the Northern District of California to hire the Law Office of
Marc Voisenat as its bankruptcy counsel.
The firm's services include:
a. preparing and filing bankruptcy schedules, Chapter 11 plan
and disclosure statement;
b. appearing at the meeting of creditors and initial debtor
interview;
c. making court appearances;
d. making necessary objections on disputed debts;
e. filing adversary proceedings on behalf of the Debtor, if
necessary; and
f. filing motions to dismiss or convert the Debtor's Chapter
11 case to one under Chapter 7, if necessary.
The firm's services will be billed at the hourly rate of $450.
The Law Office of Marc Voisenat received an initial retainer of
$6,000 and a filing fee of $1,738.
As disclosed in court filings, the Law Office of Marc Voisenat is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code.
The firm can be reached at:
Marc Voisenat, Esq.
Law Office of Marc Voisenat
1330 Broadway Suite 734
Oakland, CA 94612
Tel: (510) 272-9710
Email: voisenat@gmail.com
About Zoak Development
Zoak Development, LLC, a company in Lafayette, Calif., sought
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr.
N.D. Calif. Case No. 22-40811) on Aug. 23, 2022, with between $1
million and $10 million in both assets and liabilities. Chinazam
Igweka, managing member of Zoak Development, signed the petition.
Marc Voisenat, Esq., at the Law Offices of Marc Voisenat is the
Debtor's counsel.
[^] Large Companies with Insolvent Balance Sheet
------------------------------------------------
Total
Share- Total
Total Holders' Working
Assets Equity Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------ -------- -------
7GC & CO HOLD-A VII US 230.8 219.4 -1.2
7GC & CO HOLDING VIIAU US 230.8 219.4 -1.2
ACCELERATE DIAGN AXDX* MM 58.7 -62.0 37.3
AEMETIS INC AMTXGEUR E 178.5 -122.7 -45.3
AEMETIS INC AMTXGEUR E 178.5 -122.7 -45.3
AEMETIS INC DW51 GZ 178.5 -122.7 -45.3
AEMETIS INC DW51 TH 178.5 -122.7 -45.3
AEMETIS INC DW51 QT 178.5 -122.7 -45.3
AEMETIS INC DW51 GR 178.5 -122.7 -45.3
AEMETIS INC AMTX US 178.5 -122.7 -45.3
AERIE PHARMACEUT AERI US 385.3 -141.1 191.7
AERIE PHARMACEUT 0P0 GZ 385.3 -141.1 191.7
AERIE PHARMACEUT 0P0 TH 385.3 -141.1 191.7
AERIE PHARMACEUT 0P0 QT 385.3 -141.1 191.7
AERIE PHARMACEUT AERIEUR EU 385.3 -141.1 191.7
AERIE PHARMACEUT 0P0 GR 385.3 -141.1 191.7
AIR CANADA ADH2 QT 30,364.0 -1,458.0 1,369.0
AIR CANADA ACEUR EZ 30,364.0 -1,458.0 1,369.0
AIR CANADA ADH2 GR 30,364.0 -1,458.0 1,369.0
AIR CANADA ACEUR EU 30,364.0 -1,458.0 1,369.0
AIR CANADA ADH2 TH 30,364.0 -1,458.0 1,369.0
AIR CANADA ACDVF US 30,364.0 -1,458.0 1,369.0
AIR CANADA ADH2 GZ 30,364.0 -1,458.0 1,369.0
AIR CANADA AC CN 30,364.0 -1,458.0 1,369.0
AIRSPAN NETWORKS MIMO US 155.2 -53.5 45.9
ALPINE SUMMIT EN ALPS/U CN 247.4 -15.8 -165.4
ALPINE SUMMIT EN ASEPF US 247.4 -15.8 -165.4
ALTICE USA INC-A ATUS* MM 33,119.6 -474.6 -1,901.6
ALTICE USA INC-A ATUS US 33,119.6 -474.6 -1,901.6
ALTICE USA INC-A 15PA GR 33,119.6 -474.6 -1,901.6
ALTICE USA INC-A 15PA TH 33,119.6 -474.6 -1,901.6
ALTICE USA INC-A ATUSEUR EU 33,119.6 -474.6 -1,901.6
ALTICE USA INC-A 15PA GZ 33,119.6 -474.6 -1,901.6
ALTICE USA INC-A ATUS-RM RM 33,119.6 -474.6 -1,901.6
ALTIRA GP-CEDEAR MOC AR 36,746.0 -2,403.0 -4,225.0
ALTIRA GP-CEDEAR MOD AR 36,746.0 -2,403.0 -4,225.0
ALTIRA GP-CEDEAR MO AR 36,746.0 -2,403.0 -4,225.0
ALTRIA GROUP INC MOEUR EU 36,746.0 -2,403.0 -4,225.0
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AMPLIFY ENERGY C 2OQ QT 456.5 -83.4 -78.1
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AMYRIS INC AMRS US 789.4 -243.6 123.0
AMYRIS INC 3A01 QT 789.4 -243.6 123.0
AMYRIS INC AMRSEUR EU 789.4 -243.6 123.0
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ARCH BIOPARTNERS ARCH CN 1.8 -4.0 -0.6
ARENA GROUP HOLD AREN US 186.4 -20.6 -34.2
ASCENT SOLAR TEC A8M GR 8.8 -0.3 -1.1
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ASHFORD HOSPITAL AHT US 4,030.2 -44.4 0.0
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ATLAS TECHNICAL ATCX US 523.1 -138.4 80.2
AUTOZONE INC AZ5 TH 15,275.0 -3,538.9 -1,960.4
AUTOZONE INC AZOEUR EZ 15,275.0 -3,538.9 -1,960.4
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AUTOZONE INC AZO AV 15,275.0 -3,538.9 -1,960.4
AUTOZONE INC AZ5 TE 15,275.0 -3,538.9 -1,960.4
AUTOZONE INC AZO* MM 15,275.0 -3,538.9 -1,960.4
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AVID TECHNOLOGY AVD TH 247.1 -136.4 -14.9
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BATTALION OIL CO BATL US 449.2 -15.4 -101.0
BATTALION OIL CO RAQB GR 449.2 -15.4 -101.0
BATTALION OIL CO BATLEUR EU 449.2 -15.4 -101.0
BATTERY FUTURE A BFAC/U US 353.5 346.7 0.3
BATTERY FUTURE-A BFAC US 353.5 346.7 0.3
BED BATH &BEYOND BBY TH 4,949.1 -220.3 30.9
BED BATH &BEYOND BBBY US 4,949.1 -220.3 30.9
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BENEFITFOCUS INC BNFT US 245.0 -20.6 38.8
BENEFITFOCUS INC BTF GR 245.0 -20.6 38.8
BENEFITFOCUS INC BNFTEUR EU 245.0 -20.6 38.8
BEYOND MEAT INC BYND US 1,218.1 -47.9 710.0
BEYOND MEAT INC 0Q3 TE 1,218.1 -47.9 710.0
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BIOCRYST PHARM BO1 TH 510.5 -213.2 399.5
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BIOTE CORP-A BTMD US 115.3 -103.5 73.4
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BOX INC- CLASS A BOXEUR EZ 1,066.3 -90.6 17.3
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CINEPLEX INC CGX CN 2,036.3 -256.3 -380.8
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COGENT COMMUNICA CCOI US 1,014.6 -440.2 340.6
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COMPOSECURE INC CMPO US 151.9 -335.1 51.4
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FLUENCE ENERGY I FLNC US 1,672.6 671.1 556.7
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IMMUNITYBIO INC 26CA GR 317.7 -422.0 -261.1
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INSEEGO CORP INSG-RM RM 191.3 -43.7 34.3
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L BRANDS INC-BDR B1BW34 BZ 4,901.0 -2,662.0 496.0
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MANNKIND CORP NNFN QT 285.8 -247.1 133.9
MANNKIND CORP MNKDEUR EU 285.8 -247.1 133.9
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MARKETWISE INC MKTW* MM 426.6 -359.6 -124.1
MARTIN MIDSTREAM MMLP US 636.2 -30.9 89.6
MASCO CORP MSQ QT 5,467.0 -541.0 892.0
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MATCH GROUP -BDR M1TC34 BZ 4,193.8 -452.1 177.1
MATCH GROUP INC MTCH US 4,193.8 -452.1 177.1
MATCH GROUP INC 4MGN TH 4,193.8 -452.1 177.1
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MCDONALDS CORP 0R16 LN 49,247.8 -6,369.8 1,439.2
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MCDONALDS CORP MCDCL CI 49,247.8 -6,369.8 1,439.2
MCDONALDS CORP MCD US 49,247.8 -6,369.8 1,439.2
MCDONALDS CORP MCD SW 49,247.8 -6,369.8 1,439.2
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MCKESSON CORP MCK GR 62,295.0 -1,472.0 -1,818.0
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MCKESSON CORP MCK* MM 62,295.0 -1,472.0 -1,818.0
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MCKESSON CORP MCK1EUR EU 62,295.0 -1,472.0 -1,818.0
MCKESSON CORP MCK QT 62,295.0 -1,472.0 -1,818.0
MCKESSON CORP MCK GZ 62,295.0 -1,472.0 -1,818.0
MCKESSON CORP MCK-RM RM 62,295.0 -1,472.0 -1,818.0
MCKESSON CORP MCK TH 62,295.0 -1,472.0 -1,818.0
MCKESSON-BDR M1CK34 BZ 62,295.0 -1,472.0 -1,818.0
MEDIAALPHA INC-A MAX US 285.9 -59.5 25.0
MICROSTRATEG-BDR M2ST34 BZ 2,568.4 -187.1 -54.4
MICROSTRATEGY MIGA SW 2,568.4 -187.1 -54.4
MICROSTRATEGY MSTREUR EU 2,568.4 -187.1 -54.4
MICROSTRATEGY MIGA TH 2,568.4 -187.1 -54.4
MICROSTRATEGY MIGA QT 2,568.4 -187.1 -54.4
MICROSTRATEGY MSTREUR EZ 2,568.4 -187.1 -54.4
MICROSTRATEGY MSTR* MM 2,568.4 -187.1 -54.4
MICROSTRATEGY MIGA GZ 2,568.4 -187.1 -54.4
MICROSTRATEGY MSTR-RM RM 2,568.4 -187.1 -54.4
MICROSTRATEGY MSTR AR 2,568.4 -187.1 -54.4
MICROSTRATEGY MSTR US 2,568.4 -187.1 -54.4
MICROSTRATEGY MIGA GR 2,568.4 -187.1 -54.4
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MONEYGRAM INTERN 9M1N TH 4,504.7 -184.9 -16.6
MONEYGRAM INTERN MGIEUR EU 4,504.7 -184.9 -16.6
MONEYGRAM INTERN MGIEUR EZ 4,504.7 -184.9 -16.6
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MOTOROLA SOL-CED MSI AR 11,672.0 -430.0 610.0
MOTOROLA SOLUTIO MTLA TH 11,672.0 -430.0 610.0
MOTOROLA SOLUTIO MTLA GR 11,672.0 -430.0 610.0
MOTOROLA SOLUTIO MSI1EUR EZ 11,672.0 -430.0 610.0
MOTOROLA SOLUTIO MOSI AV 11,672.0 -430.0 610.0
MOTOROLA SOLUTIO MTLA QT 11,672.0 -430.0 610.0
MOTOROLA SOLUTIO MSI1EUR EU 11,672.0 -430.0 610.0
MOTOROLA SOLUTIO MTLA GZ 11,672.0 -430.0 610.0
MOTOROLA SOLUTIO MSI-RM RM 11,672.0 -430.0 610.0
MOTOROLA SOLUTIO MOT TE 11,672.0 -430.0 610.0
MOTOROLA SOLUTIO MSI US 11,672.0 -430.0 610.0
MSCI INC 3HM GR 4,833.4 -1,026.4 368.8
MSCI INC 3HM SW 4,833.4 -1,026.4 368.8
MSCI INC 3HM GZ 4,833.4 -1,026.4 368.8
MSCI INC 3HM QT 4,833.4 -1,026.4 368.8
MSCI INC MSCIEUR EZ 4,833.4 -1,026.4 368.8
MSCI INC MSCI* MM 4,833.4 -1,026.4 368.8
MSCI INC 3HM TH 4,833.4 -1,026.4 368.8
MSCI INC MSCI AV 4,833.4 -1,026.4 368.8
MSCI INC MSCI-RM RM 4,833.4 -1,026.4 368.8
MSCI INC MSCI US 4,833.4 -1,026.4 368.8
MSCI INC-BDR M1SC34 BZ 4,833.4 -1,026.4 368.8
N/A TCDAEUR EU 114.3 -111.2 82.3
N/A CTIC1EUR E 134.5 -5.3 77.6
N/A CC-RM RM 2,884.1 -229.0 259.8
NATHANS FAMOUS NATH US 83.5 -50.8 53.2
NATHANS FAMOUS NFA GR 83.5 -50.8 53.2
NATHANS FAMOUS NATHEUR EU 83.5 -50.8 53.2
NEW ENG RLTY-LP NEN US 389.9 -59.4 0.0
NORTONLIFEL- BDR S1YM34 BZ 6,247.0 -299.0 -995.0
NORTONLIFELOCK I SYMC AV 6,247.0 -299.0 -995.0
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NOVAVAX INC NVV1 QT 2,623.0 -417.0 -20.2
NOVAVAX INC NVAXEUR EU 2,623.0 -417.0 -20.2
NOVAVAX INC NVAX* MM 2,623.0 -417.0 -20.2
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NOVAVAX INC NVAX US 2,623.0 -417.0 -20.2
NOVAVAX INC NVV1 GZ 2,623.0 -417.0 -20.2
NOVAVAX INC 0A3S LI 2,623.0 -417.0 -20.2
NOVAVAX INC NVV1 TH 2,623.0 -417.0 -20.2
NUTANIX INC - A NTNX US 2,365.7 -790.2 507.8
NUTANIX INC - A 0NU SW 2,365.7 -790.2 507.8
NUTANIX INC - A 0NU GZ 2,365.7 -790.2 507.8
NUTANIX INC - A NTNXEUR EZ 2,365.7 -790.2 507.8
NUTANIX INC - A 0NU GR 2,365.7 -790.2 507.8
NUTANIX INC - A NTNXEUR EU 2,365.7 -790.2 507.8
NUTANIX INC - A 0NU TH 2,365.7 -790.2 507.8
NUTANIX INC - A 0NU QT 2,365.7 -790.2 507.8
NUTANIX INC - A NTNX-RM RM 2,365.7 -790.2 507.8
NUTANIX INC-BDR N2TN34 BZ 2,365.7 -790.2 507.8
O'REILLY AUT-BDR ORLY34 BZ 12,067.7 -1,107.4 -1,613.3
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OAK STREET HEALT OSH US 2,063.2 -101.9 507.9
OAK STREET HEALT HE6 GZ 2,063.2 -101.9 507.9
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OAK STREET HEALT OSH3EUR EU 2,063.2 -101.9 507.9
OAK STREET HEALT HE6 TH 2,063.2 -101.9 507.9
OAK STREET HEALT HE6 QT 2,063.2 -101.9 507.9
OMEROS CORP 3O8 GR 345.6 -32.7 154.2
OMEROS CORP 3O8 TH 345.6 -32.7 154.2
OMEROS CORP OMEREUR EU 345.6 -32.7 154.2
OMEROS CORP 3O8 QT 345.6 -32.7 154.2
OMEROS CORP 3O8 GZ 345.6 -32.7 154.2
OMEROS CORP OMER US 345.6 -32.7 154.2
OPTINOSE INC OPTN US 122.8 -60.8 63.0
OPTINOSE INC 0OP GR 122.8 -60.8 63.0
OPTINOSE INC OPTNEUR EU 122.8 -60.8 63.0
OPTINOSE INC 0OP GZ 122.8 -60.8 63.0
ORACLE BDR ORCL34 BZ 130,309.0 -5,449.0 -13,815.0
ORACLE CO-CEDEAR ORCLC AR 130,309.0 -5,449.0 -13,815.0
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ORACLE CO-CEDEAR ORCLD AR 130,309.0 -5,449.0 -13,815.0
ORACLE CORP ORCL* MM 130,309.0 -5,449.0 -13,815.0
ORACLE CORP ORCL CI 130,309.0 -5,449.0 -13,815.0
ORACLE CORP ORC GR 130,309.0 -5,449.0 -13,815.0
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ORACLE CORP ORCL SW 130,309.0 -5,449.0 -13,815.0
ORACLE CORP ORCLEUR EU 130,309.0 -5,449.0 -13,815.0
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ORGANON & CO 7XP TH 10,614.0 -1,137.0 1,378.0
ORGANON & CO OGN-WEUR E 10,614.0 -1,137.0 1,378.0
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PAPA JOHN'S INTL PZZA US 836.3 -232.6 -10.7
PAPA JOHN'S INTL PP1 GR 836.3 -232.6 -10.7
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PAPAYA GROWTH OP PPYAU US 295.2 279.9 1.4
PAPAYA GROWTH OP CC40 GR 295.2 279.9 1.4
PAPAYA GROWTH OP PPYAUEUR E 295.2 279.9 1.4
PET VALU HOLDING PET CN 657.4 -49.4 46.8
PETRO USA INC PBAJ US 0.0 -0.1 -0.1
PHATHOM PHARMACE PHAT US 213.5 -7.0 188.2
PHILIP MORRI-BDR PHMO34 BZ 40,960.0 -7,260.0 -2,171.0
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POTBELLY CORP PTB QT 245.8 -8.9 -42.3
PRIME IMPACT A-A PIAI US 325.2 -12.3 -0.1
PRIME IMPACT ACQ PIAI/U US 325.2 -12.3 -0.1
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PROS HOLDINGS IN PH2 GR 461.8 -25.1 110.4
PROS HOLDINGS IN PRO1EUR EU 461.8 -25.1 110.4
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PTC THERAPEUTICS P91 TH 1,804.1 -182.2 127.3
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RAPID7 INC RPDEUR EU 1,285.5 -148.2 -53.7
RAPID7 INC R7D TH 1,285.5 -148.2 -53.7
RAPID7 INC RPD* MM 1,285.5 -148.2 -53.7
RAPID7 INC R7D GZ 1,285.5 -148.2 -53.7
RAPID7 INC R7D QT 1,285.5 -148.2 -53.7
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RED ROCK RESOR-A RRR US 3,070.3 -27.7 143.3
RED ROCK RESOR-A RRREUR EU 3,070.3 -27.7 143.3
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RED ROCK RESOR-A RRK TH 3,070.3 -27.7 143.3
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REVANCE THERAPEU RVNCEUR EU 561.9 -2.6 183.7
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REVLON INC-A REV* MM 2,503.7 -2,348.2 220.4
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REVLON INC-A REVEUR EU 2,503.7 -2,348.2 220.4
REVLON INC-A RVL1 GR 2,503.7 -2,348.2 220.4
RIMINI STREET IN RMNI US 386.2 -76.5 -49.8
RIMINI STREET IN 0QH GR 386.2 -76.5 -49.8
RIMINI STREET IN RMNIEUR EU 386.2 -76.5 -49.8
RIMINI STREET IN 0QH QT 386.2 -76.5 -49.8
RITE AID CORP RAD US 8,549.8 -8.4 741.2
RITE AID CORP RADEUR EU 8,549.8 -8.4 741.2
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ROSE HILL ACQU-A ROSE US 147.5 -10.0 0.5
ROSE HILL ACQUIS ROSEU US 147.5 -10.0 0.5
RUMBLE INC CFVI US 300.9 281.8 -3.7
SABRE CORP SABREUR EZ 5,176.7 -606.6 840.9
SABRE CORP 19S QT 5,176.7 -606.6 840.9
SABRE CORP SABREUR EU 5,176.7 -606.6 840.9
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SABRE CORP 19S GR 5,176.7 -606.6 840.9
SABRE CORP 19S TH 5,176.7 -606.6 840.9
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SBA COMM CORP 4SB TH 10,011.9 -5,398.7 -823.3
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SEAWORLD ENTERTA W2L QT 2,396.6 -401.5 -168.3
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SHELL MIDSTREAM SHLX US 2,231.0 -441.0 62.0
SILVER SPIKE-A SPKC/U CN 128.3 -6.7 0.6
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SIX FLAGS ENTERT 6FE GR 2,713.8 -537.3 -377.1
SIX FLAGS ENTERT 6FE QT 2,713.8 -537.3 -377.1
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SIX FLAGS ENTERT SIX US 2,713.8 -537.3 -377.1
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SKYX PLATFORMS C SKYX US 29.4 15.4 21.8
SLEEP NUMBER COR SNBR US 950.1 -443.0 -723.4
SLEEP NUMBER COR SL2 GR 950.1 -443.0 -723.4
SLEEP NUMBER COR SNBREUR EU 950.1 -443.0 -723.4
SLEEP NUMBER COR SL2 TH 950.1 -443.0 -723.4
SLEEP NUMBER COR SL2 QT 950.1 -443.0 -723.4
SLEEP NUMBER COR SL2 GZ 950.1 -443.0 -723.4
SMILEDIRECTCLUB SDC* MM 700.6 -258.5 237.4
SPLUNK INC S0U TH 5,209.6 -684.0 1,097.4
SPLUNK INC SPLKEUR EU 5,209.6 -684.0 1,097.4
SPLUNK INC S0U GZ 5,209.6 -684.0 1,097.4
SPLUNK INC SPLKEUR EZ 5,209.6 -684.0 1,097.4
SPLUNK INC S0U QT 5,209.6 -684.0 1,097.4
SPLUNK INC SPLK* MM 5,209.6 -684.0 1,097.4
SPLUNK INC SPLK-RM RM 5,209.6 -684.0 1,097.4
SPLUNK INC S0U GR 5,209.6 -684.0 1,097.4
SPLUNK INC SPLK US 5,209.6 -684.0 1,097.4
SPLUNK INC - BDR S1PL34 BZ 5,209.6 -684.0 1,097.4
SPRAGUE RESOURCE SRLP US 1,334.3 -95.2 -519.7
SQUARESPACE -BDR S2QS34 BZ 994.3 -42.1 -74.5
SQUARESPACE IN-A SQSP US 994.3 -42.1 -74.5
SQUARESPACE IN-A 8DT GR 994.3 -42.1 -74.5
SQUARESPACE IN-A SQSPEUR EU 994.3 -42.1 -74.5
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SQUARESPACE IN-A 8DT TH 994.3 -42.1 -74.5
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STARBUCKS CORP SBUX* MM 28,156.2 -8,658.9 -1,334.9
STARBUCKS CORP SRB TH 28,156.2 -8,658.9 -1,334.9
STARBUCKS CORP SBUX CI 28,156.2 -8,658.9 -1,334.9
STARBUCKS CORP SBUX PE 28,156.2 -8,658.9 -1,334.9
STARBUCKS CORP SBUX AV 28,156.2 -8,658.9 -1,334.9
STARBUCKS CORP SBUX TE 28,156.2 -8,658.9 -1,334.9
STARBUCKS CORP SBUXEUR EU 28,156.2 -8,658.9 -1,334.9
STARBUCKS CORP SBUX IM 28,156.2 -8,658.9 -1,334.9
STARBUCKS CORP SBUXEUR EZ 28,156.2 -8,658.9 -1,334.9
STARBUCKS CORP 0QZH LI 28,156.2 -8,658.9 -1,334.9
STARBUCKS CORP SBUX SW 28,156.2 -8,658.9 -1,334.9
STARBUCKS CORP SRB QT 28,156.2 -8,658.9 -1,334.9
STARBUCKS CORP SBUX US 28,156.2 -8,658.9 -1,334.9
STARBUCKS CORP SBUXUSD SW 28,156.2 -8,658.9 -1,334.9
STARBUCKS CORP SRB GZ 28,156.2 -8,658.9 -1,334.9
STARBUCKS CORP SBUX-RM RM 28,156.2 -8,658.9 -1,334.9
STARBUCKS CORP SBUXCL CI 28,156.2 -8,658.9 -1,334.9
STARBUCKS CORP SBUX_KZ KZ 28,156.2 -8,658.9 -1,334.9
STARBUCKS CORP SRBD BQ 28,156.2 -8,658.9 -1,334.9
STARBUCKS CORP SRB GR 28,156.2 -8,658.9 -1,334.9
STARBUCKS-BDR SBUB34 BZ 28,156.2 -8,658.9 -1,334.9
STARBUCKS-CEDEAR SBUX AR 28,156.2 -8,658.9 -1,334.9
STARBUCKS-CEDEAR SBUXD AR 28,156.2 -8,658.9 -1,334.9
STONEMOR INC STON US 1,798.0 -174.7 106.4
STONEMOR INC 3V8 GR 1,798.0 -174.7 106.4
STONEMOR INC STONEUR EU 1,798.0 -174.7 106.4
SYMBOTIC INC SYM US 612.8 73.1 146.1
TELA BIO INC TELA US 51.3 -1.5 33.7
TEMPUR SEALY INT TPXEUR EU 4,404.4 -180.9 248.1
TEMPUR SEALY INT TPD TH 4,404.4 -180.9 248.1
TEMPUR SEALY INT TPD GZ 4,404.4 -180.9 248.1
TEMPUR SEALY INT T2PX34 BZ 4,404.4 -180.9 248.1
TEMPUR SEALY INT TPX-RM RM 4,404.4 -180.9 248.1
TEMPUR SEALY INT TPX US 4,404.4 -180.9 248.1
TEMPUR SEALY INT TPD GR 4,404.4 -180.9 248.1
TERRAN ORBITAL C LLAP US 165.3 -52.5 28.2
TORRID HOLDINGS CURV US 556.6 -238.7 -56.4
TRANSDIGM - BDR T1DG34 BZ 18,819.0 -2,968.0 4,964.0
TRANSDIGM GROUP TDG* MM 18,819.0 -2,968.0 4,964.0
TRANSDIGM GROUP T7D TH 18,819.0 -2,968.0 4,964.0
TRANSDIGM GROUP TDGEUR EZ 18,819.0 -2,968.0 4,964.0
TRANSDIGM GROUP T7D QT 18,819.0 -2,968.0 4,964.0
TRANSDIGM GROUP TDGEUR EU 18,819.0 -2,968.0 4,964.0
TRANSDIGM GROUP TDG-RM RM 18,819.0 -2,968.0 4,964.0
TRANSDIGM GROUP TDG US 18,819.0 -2,968.0 4,964.0
TRANSDIGM GROUP T7D GR 18,819.0 -2,968.0 4,964.0
TRAVEL + LEISURE WD5A QT 6,477.0 -846.0 521.0
TRAVEL + LEISURE WYNEUR EU 6,477.0 -846.0 521.0
TRAVEL + LEISURE 0M1K LI 6,477.0 -846.0 521.0
TRAVEL + LEISURE WD5A GZ 6,477.0 -846.0 521.0
TRAVEL + LEISURE TNL* MM 6,477.0 -846.0 521.0
TRAVEL + LEISURE WD5A TH 6,477.0 -846.0 521.0
TRAVEL + LEISURE WD5A GR 6,477.0 -846.0 521.0
TRAVEL + LEISURE TNL US 6,477.0 -846.0 521.0
TRICIDA INC TCDA US 114.3 -111.2 82.3
TRICIDA INC 1T7 GR 114.3 -111.2 82.3
TRICIDA INC 1T7 TH 114.3 -111.2 82.3
TRICIDA INC 1T7 QT 114.3 -111.2 82.3
TRICIDA INC TCDAEUR EZ 114.3 -111.2 82.3
TRICIDA INC 1T7 GZ 114.3 -111.2 82.3
TRIUMPH GROUP TG7 TH 1,667.5 -805.3 341.5
TRIUMPH GROUP TGIEUR EU 1,667.5 -805.3 341.5
TRIUMPH GROUP TG7 GZ 1,667.5 -805.3 341.5
TRIUMPH GROUP TG7 GR 1,667.5 -805.3 341.5
TRIUMPH GROUP TGI US 1,667.5 -805.3 341.5
TUPPERWARE BRAND TUP US 1,105.9 -159.1 127.3
TUPPERWARE BRAND TUP TH 1,105.9 -159.1 127.3
TUPPERWARE BRAND TUP1EUR EU 1,105.9 -159.1 127.3
TUPPERWARE BRAND TUP1EUR EZ 1,105.9 -159.1 127.3
TUPPERWARE BRAND TUP QT 1,105.9 -159.1 127.3
TUPPERWARE BRAND TUP GZ 1,105.9 -159.1 127.3
TUPPERWARE BRAND TUP GR 1,105.9 -159.1 127.3
UBIQUITI INC 3UB GR 844.7 -382.9 310.6
UBIQUITI INC UBNTEUR EU 844.7 -382.9 310.6
UBIQUITI INC 3UB TH 844.7 -382.9 310.6
UBIQUITI INC UI US 844.7 -382.9 310.6
UNISYS CORP UISEUR EU 2,154.4 -98.5 308.3
UNISYS CORP UISEUR EZ 2,154.4 -98.5 308.3
UNISYS CORP USY1 GZ 2,154.4 -98.5 308.3
UNISYS CORP USY1 QT 2,154.4 -98.5 308.3
UNISYS CORP USY1 GR 2,154.4 -98.5 308.3
UNISYS CORP USY1 TH 2,154.4 -98.5 308.3
UNISYS CORP UIS US 2,154.4 -98.5 308.3
UNISYS CORP UIS SW 2,154.4 -98.5 308.3
UNITI GROUP INC 8XC GR 4,955.2 -2,075.2 0.0
UNITI GROUP INC UNIT US 4,955.2 -2,075.2 0.0
UNITI GROUP INC 8XC TH 4,955.2 -2,075.2 0.0
UNITI GROUP INC 8XC GZ 4,955.2 -2,075.2 0.0
UROGEN PHARMA LT UR8 GR 146.1 -40.9 121.6
UROGEN PHARMA LT URGNEUR EU 146.1 -40.9 121.6
UROGEN PHARMA LT URGN US 146.1 -40.9 121.6
USD PARTNERS LP USDP US 233.8 -30.7 0.9
VECTOR GROUP LTD VGR GR 994.6 -830.9 296.9
VECTOR GROUP LTD VGREUR EU 994.6 -830.9 296.9
VECTOR GROUP LTD VGREUR EZ 994.6 -830.9 296.9
VECTOR GROUP LTD VGR TH 994.6 -830.9 296.9
VECTOR GROUP LTD VGR QT 994.6 -830.9 296.9
VECTOR GROUP LTD VGR GZ 994.6 -830.9 296.9
VECTOR GROUP LTD VGR US 994.6 -830.9 296.9
VERISIGN INC VRSN* MM 1,762.5 -1,455.0 -5.0
VERISIGN INC VRSNEUR EZ 1,762.5 -1,455.0 -5.0
VERISIGN INC VRS TH 1,762.5 -1,455.0 -5.0
VERISIGN INC VRS QT 1,762.5 -1,455.0 -5.0
VERISIGN INC VRSNEUR EU 1,762.5 -1,455.0 -5.0
VERISIGN INC VRS GZ 1,762.5 -1,455.0 -5.0
VERISIGN INC VRSN-RM RM 1,762.5 -1,455.0 -5.0
VERISIGN INC VRSN US 1,762.5 -1,455.0 -5.0
VERISIGN INC VRS GR 1,762.5 -1,455.0 -5.0
VERISIGN INC-BDR VRSN34 BZ 1,762.5 -1,455.0 -5.0
VERISIGN-CEDEAR VRSN AR 1,762.5 -1,455.0 -5.0
VIVINT SMART HOM VVNT US 2,908.3 -1,715.6 -482.5
W&T OFFSHORE INC UWV GR 1,439.8 -124.4 164.2
W&T OFFSHORE INC WTI US 1,439.8 -124.4 164.2
W&T OFFSHORE INC WTI1EUR EU 1,439.8 -124.4 164.2
W&T OFFSHORE INC UWV TH 1,439.8 -124.4 164.2
W&T OFFSHORE INC UWV GZ 1,439.8 -124.4 164.2
WAYFAIR INC- A W* MM 4,098.0 -2,145.0 242.0
WAYFAIR INC- A 1WF GZ 4,098.0 -2,145.0 242.0
WAYFAIR INC- A WEUR EZ 4,098.0 -2,145.0 242.0
WAYFAIR INC- A 1WF GR 4,098.0 -2,145.0 242.0
WAYFAIR INC- A 1WF TH 4,098.0 -2,145.0 242.0
WAYFAIR INC- A WEUR EU 4,098.0 -2,145.0 242.0
WAYFAIR INC- A 1WF QT 4,098.0 -2,145.0 242.0
WAYFAIR INC- A W US 4,098.0 -2,145.0 242.0
WEBER INC - A WEBR US 1,721.7 -243.0 228.7
WEWORK INC-CL A WE US 19,638.0 -2,317.0 -889.0
WEWORK INC-CL A 9WE GR 19,638.0 -2,317.0 -889.0
WEWORK INC-CL A 9WE TH 19,638.0 -2,317.0 -889.0
WEWORK INC-CL A WE1EUR EU 19,638.0 -2,317.0 -889.0
WEWORK INC-CL A 9WE QT 19,638.0 -2,317.0 -889.0
WEWORK INC-CL A 9WE GZ 19,638.0 -2,317.0 -889.0
WEWORK INC-CL A WE* MM 19,638.0 -2,317.0 -889.0
WINGSTOP INC WING US 395.4 -415.5 156.8
WINGSTOP INC EWG GR 395.4 -415.5 156.8
WINGSTOP INC WING1EUR E 395.4 -415.5 156.8
WINGSTOP INC EWG GZ 395.4 -415.5 156.8
WINMARK CORP WINA US 27.1 -68.8 2.0
WINMARK CORP GBZ GR 27.1 -68.8 2.0
WW INTERNATIONAL WW US 1,390.6 -456.1 57.2
WW INTERNATIONAL WW6 SW 1,390.6 -456.1 57.2
WW INTERNATIONAL WTWEUR EZ 1,390.6 -456.1 57.2
WW INTERNATIONAL WTWEUR EU 1,390.6 -456.1 57.2
WW INTERNATIONAL WW6 QT 1,390.6 -456.1 57.2
WW INTERNATIONAL WTW AV 1,390.6 -456.1 57.2
WW INTERNATIONAL WW6 GZ 1,390.6 -456.1 57.2
WW INTERNATIONAL WW6 TH 1,390.6 -456.1 57.2
WW INTERNATIONAL WW-RM RM 1,390.6 -456.1 57.2
WW INTERNATIONAL WW6 GR 1,390.6 -456.1 57.2
WYNN RESORTS LTD WYNN* MM 11,788.5 -1,374.3 753.9
WYNN RESORTS LTD WYNN US 11,788.5 -1,374.3 753.9
WYNN RESORTS LTD WYR GR 11,788.5 -1,374.3 753.9
WYNN RESORTS LTD WYNNEUR EZ 11,788.5 -1,374.3 753.9
WYNN RESORTS LTD WYR QT 11,788.5 -1,374.3 753.9
WYNN RESORTS LTD WYNNEUR EU 11,788.5 -1,374.3 753.9
WYNN RESORTS LTD WYR GZ 11,788.5 -1,374.3 753.9
WYNN RESORTS LTD WYNN-RM RM 11,788.5 -1,374.3 753.9
WYNN RESORTS LTD WYR TH 11,788.5 -1,374.3 753.9
WYNN RESORTS-BDR W1YN34 BZ 11,788.5 -1,374.3 753.9
YELLOW CORP YEL QT 2,503.9 -324.1 255.7
YELLOW CORP YRCWEUR EU 2,503.9 -324.1 255.7
YELLOW CORP YELL US 2,503.9 -324.1 255.7
YELLOW CORP YRCWEUR EZ 2,503.9 -324.1 255.7
YELLOW CORP YEL1 TH 2,503.9 -324.1 255.7
YELLOW CORP YEL GZ 2,503.9 -324.1 255.7
YELLOW CORP YEL GR 2,503.9 -324.1 255.7
YUM! BRANDS INC YUM* MM 5,790.0 -8,568.0 246.0
YUM! BRANDS INC YUM US 5,790.0 -8,568.0 246.0
YUM! BRANDS INC YUMEUR EZ 5,790.0 -8,568.0 246.0
YUM! BRANDS INC YUMEUR EU 5,790.0 -8,568.0 246.0
YUM! BRANDS INC TGR QT 5,790.0 -8,568.0 246.0
YUM! BRANDS INC YUM SW 5,790.0 -8,568.0 246.0
YUM! BRANDS INC YUM AV 5,790.0 -8,568.0 246.0
YUM! BRANDS INC TGR TE 5,790.0 -8,568.0 246.0
YUM! BRANDS INC YUMUSD SW 5,790.0 -8,568.0 246.0
YUM! BRANDS INC TGR GZ 5,790.0 -8,568.0 246.0
YUM! BRANDS INC YUM-RM RM 5,790.0 -8,568.0 246.0
YUM! BRANDS INC TGR TH 5,790.0 -8,568.0 246.0
YUM! BRANDS INC TGR GR 5,790.0 -8,568.0 246.0
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
On Thursdays, the TCR delivers a list of recently filed
Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
The Sunday TCR delivers securitization rating news from the week
then-ending.
TCR subscribers have free access to our on-line news archive.
Point your Web browser to http://TCRresources.bankrupt.com/and use
the e-mail address to which your TCR is delivered to login.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Philadelphia, Pa., USA.
Randy Antoni, Jhonas Dampog, Marites Claro, Joy Agravante,
Rousel Elaine Tumanda, Joel Anthony G. Lopez, Psyche A. Castillon,
Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and
Peter A. Chapman, Editors.
Copyright 2022. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
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re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $975 for 6 months delivered via
e-mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Peter A.
Chapman at 215-945-7000.
*** End of Transmission ***