/raid1/www/Hosts/bankrupt/TCR_Public/230503.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, May 3, 2023, Vol. 27, No. 122
Headlines
19378 LEMMER: Seeks to Hire RHM Law as General Bankruptcy Counsel
59 NORTH 6TH STREET: Taps Goetz Fitzpatrick as Legal Counsel
77 HERON LAKES: Case Summary & Seven Unsecured Creditors
81 VILLA ROBLES: Case Summary & 10 Unsecured Creditors
AGEX THERAPEUTICS: Receives Stock Exchange Deficiency Letter
AGILE THERAPEUTICS: Releases Preliminary Expectations for Q1 2023
AGS PRO INC: Seeks Chapter 11 Bankruptcy Protection
ALL FOR ONE: Signs Merger Agreement With All Entertainment
ALLIED UNIVERSAL: Moody's Rates New $400MM Incremental Loan 'B2'
ALLIED UNIVERSAL: S&P Rates Mew $400MM First-Lien Term Loan 'B'
AMERIMARK INTERACTIVE: Hires McDonald Hopkins as Legal Counsel
AMERIMARK INTERACTIVE: Taps Riveron Management to Provide CRO
AMERIMARK INTERACTIVE: Taps Stretto Inc. as Administrative Advisor
ARCIS GOLF: $200MM Incremental Loan No Impact on Moody's 'B2' CFR
ARCIS GOLF: S&P Cuts Rating to 'B+' on New Incremental Term Loans
ARK LABORATORY: Files for Chapter 11 Bankruptcy Protection
ARUZE GAMING: Seeks to Extend Exclusivity Period to August 30
ASCENT RESOURCES: Fitch Affirms 'B' LongTerm IDR, Outlook Positive
ASCENT RESOURCES: Moody's Affirms B1 CFR & Rates Add-on Notes B3
AVINGER INC: Falls Short of Nasdaq Minimum Bid Price Requirement
AVINGER INC: Receives 510(k) Clearance for Tigereye ST
AYTU BIOPHARMA: Adzenys XR-ODT Manufacturing Site Transfer Approved
BCPE EMPIRE: Moody's Rates New $1.5BB First Lien Term Loan 'B3'
BIONIK LABORATORIES: Secures $250K Loan From Stockholder
BLINK CHARGING: Elects Kristina Peterson to Board of Directors
BOMBARDIER INC: S&P Upgrades ICR to 'B', Outlook Stable
BRAVO MULTINATIONAL: 63% Ownership Transferred to 13 Entities
CAMBER ENERGY: Two Investors Agree to Cancel Warrants
CBAK ENERGY: Falls Short of Nasdaq Minimum Bid Price Requirement
CI FINANCIAL: S&P Lowers ICR to 'BB+' Then Withdraws Rating
CINEWORLD GROUP: Class 5A Unsecureds to Get 0.3-0.5% in Plan
CNX RESOURCES: Posts $710.4 Million Net Income in First Quarter
COX INDUSTRIAL: Case Summary & 20 Largest Unsecured Creditors
CRAFTSMAN ROOFING: Commences Subchapter V Bankruptcy Case
CROWDSTRIKE HOLDINGS: Moody's Ups CFR to Ba1 & Unsec. Notes to Ba2
CROWN COMMERCIAL: Unsecureds Owed $160K Unimpaired in Plan
EAGLE PROPERTIES: Lender Seeks to Prohibit Cash Collateral Access
EARTH.COM INC: Joli Lofstedt Named Subchapter V Trustee
EARTHSNAP INC: Joli Lofstedt Named Subchapter V Trustee
EKSO BIONICS: Incurs $4.4 Million Net Loss in First Quarter
EKSO BIONICS: Stanley Stern Quits as Director
ELIZABETH JANE: Court OKs Cash Collateral Access Thru May 30
ENTERGY NEW ORLEANS: Moody's Affirms 'Ba1' Issuer Rating
ENTRADA DEVELOPMENT: Case Summary & Five Unsecured Creditors
EQUIPMENTSHARE.COM INC: Moody's Assigns 'B1' CFR, Outlook Stable
EQUIPMENTSHARE.COM INC: S&P Assigns 'B-' ICR, Outlook Stable
EXELA TECHNOLOGIES: Urges Stockholders to Vote "FOR" Stock Split
FARMA SCI LIFE: Unsecureds Owed $2.4M to Get $46K
FIRST REPUBLIC: Moody's Lowers Issuer & Subordinate Ratings to C
FORD CITY RX: Seeks Cash Collateral Access
FORREST CONCRETE: Christine Brimm Named Subchapter V Trustee
FXI HOLDINGS: S&P Downgrades ICR to 'SD' on Distressed Exchange
GOGO INC: Moody's Upgrades CFR to B1, Outlook Remains Stable
GREATER LIFE: Seeks to Hire Buckmiller, Boyette & Frost as Counsel
GWG HOLDINGS: Unsecureds Owed $20M Get 8.5% to 21.9% in Plan
HAWAIIAN HOLDINGS: Incurs $98.3 Million Net Loss in First Quarter
HEMP SYNERGISTICS: Hires R.D. Hoag & Associates as Accountant
HOUGHTON MIFFLIN: Moody's Alters Outlook on 'B3' CFR to Stable
IMPERVA INC: S&P Downgrades ICR to 'CCC+' on Continued Cash Burn
ISABEL ENTERPRISES: Court Confirms Chapter 11 Plan
JBM SPECIALTIES: Seeks OK to Hire Brokers to Sell Texas Distillery
KAF RECYCLING: Seeks to Hire Agentis PLLC as Bankruptcy Counsel
KARTES LEASING: Unsecureds to Get 100% Under Plan
KAYA HOLDINGS: Swings to $3.7 Million Net Loss in 2022
LADO ENTERPRISES: Court Confirms Reorganization Plan
LIFE TIME: Moody's Rates New $274MM First Lien Term Loan 'B2'
LIFE TIME: S&P Upgrades ICR to 'B' on Improving Performance Trends
LIGHT AND WONDER: Moody's Affirms B1 CFR & Ups Unsec. Notes to B3
LITHIA MOTORS: Moody's Affirms 'Ba1' CFR & Alters Outlook to Stable
LTL MANAGEMENT: Bankruptcy Court Paused J&J's Talc Cases
MAD ENGINE: Moody's Cuts CFR to Caa2 & Alters Outlook to Negative
MARKING IMPRESSIONS: Files Emergency Bid to Use Cash Collateral
MEDICAL CENTER: Seeks Cash Collateral Access
MERISOL VILLAGES: Unsecureds Owed $62K to Get 100% Under Plan
MK SHORE: Files Subchapter V Case Without Counsel
NABORS INDUSTRIES: Posts $61.1 Million Net Income in First Quarter
NAVIENT CORP: S&P Rates New $500MM Senior Unsecured Notes 'B+'
NEKTAR THERAPEUTICS: To Regain Full Rights to REZPEG
NEW HOPE: Moody's Lowers Rating on 2020A/B Revenue Bonds to B1
NOVUSON SURGICAL: Geoffrey Groshong Named Subchapter V Trustee
P&P CONSTRUCTION GROUP: Seeks Chapter 11 Bankruptcy Protection
PACIFICCO INC: Seeks to Hire FTI Consulting as Financial Advisor
PACIFICCO INC: Seeks to Hire Houlihan Lokey as Investment Banker
PALLADIUM CORRAL: Voluntary Chapter 11 Case Summary
PANEVAS LLC: Ruediger Mueller Named Subchapter V Trustee
PHOENIX BUILDING: Files Emergency Bid to Use Cash Collateral
POWERSCHOOL HOLDINGS: S&P Upgrades ICR to 'B', Outlook Stable
PRECIPIO INC: Granted 180-Day Extension to Regain Nasdaq Compliance
REAL BRANDS: Incurs $906K Net Loss in 2022
RIVER HEIGHTS ACADEMY: S&P Lowers LT Revenue Bond Rating to 'D'
ROBBINS ENTERPRISES: Taps Law Office of Peter M. Daigle as Counsel
ROXBY DEVELOPMENT: Case Summary & 20 Largest Unsecured Creditors
ROXBY MCLURE: Case Summary & Two Unsecured Creditors
SABRINAS ATLANTIC: Court OKs Final Cash Collateral Access
SALE LLC: David Madoff Named Subchapter V Trustee
SAN JORGE CHILDREN'S: Seeks 30-Day Extension to File Plan
SANDPIPER MANAGEMENT: Barbara Gross Named Subchapter V Trustee
SILVER CREEK: Hearing Today on Bid to Use Cash Collateral
SOUTHERN CLEARING: Amy Denton Mayer Named Subchapter V Trustee
SOUTHERN CLEARING: Seeks Cash Collateral Access
SPEIDEL CONSTRUCTION: Seeks Cash Collateral Access
SPINE GROUP: Case Summary & 20 Largest Unsecured Creditors
TAYLOR MORRISON: Moody's Raises CFR to Ba2, Outlook Remains Stable
THEE TREE HOUSE: Seeks to Hire W. Bart Meacham as Legal Counsel
THUNDER INC.: Unsecureds Owed $3.7M to Get 10% of Claims
TOP LINE GRANITE: Hires Paul E. Saperstein as Business Broker
VALCAL INC: Case Summary & 20 Largest Unsecured Creditors
VIRGIN ORBIT: Plan to Rely on Outcome of Bidding for Assets
VITAL PHARMACEUTICALS: Taps Grant Thornton as Financial Advisor
ZAYO GROUP: Moody's Lowers CFR to B3 & Alters Outlook to Stable
*********
19378 LEMMER: Seeks to Hire RHM Law as General Bankruptcy Counsel
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19378 Lemmer Dr. LLC seek approval from the U.S. Bankruptcy Court
for the Central District of California to hire RHM Law LLP as its
general bankruptcy counsel.
The firm's services include:
a. advice and assistance regarding compliance with the
requirements of the United States Trustee;
b. advice regarding matters of bankruptcy law, including the
rights and remedies of the Debtor with respect to its assets and
claims of its creditors;
c. advice regarding cash collateral matters;
d. examinations of witnesses, claimants or adverse parties,
and the preparation of reports, accounts and pleadings;
e. advice concerning the requirements of the Bankruptcy Code
and applicable rules;
f. negotiation, formulation and implementation of a Chapter 11
plan of reorganization; and
g. court appearances.
RHM Law will charge these fees:
Matthew D. Resnik, Partner $575 per hour
Roksana D. Moradi-Brovia, Partner $525 per hour
Russell J. Stong Ill, Associate $400 per hour
David M. Kritzer, Associate $400 per hour
W. Sloan Youkstetter, Associate $450 per hour
Rosario Zubia, Paralegal $135 per hour
Priscilla Bueno, Paralegal $135 per hour
Rebeca Benitez, Paralegal $135 per hour
Max Bonilla Paralegal $135 per hour
Susie Segura, Paralegal $135 per hour
The firm received an initial retainer fee of $16,738.
Matthew Resnika, Esq.., a partner at RHM Law, 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 through:
Roksana D. Moradi-Brovia, Esq.
Matthew D. Resnik, Esq.
RHM Law, LLP
17609 Ventura Blvd., Suite 314
Encino, CA 91316
Phone: (818) 285-0100
Fax: (818) 855-7013
Email: roksana@RHMFirm.com
matt@RHMFirm.com
About 19378 Lemmer Dr. LLC
19378 Lemmer Dr. LLC is a single asset real estate (as defined in
11 U.S.C. Section 101(51B)).
19378 Lemmer Dr. LLC filed its voluntary petition of relief under
Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No.
23-12053) on April 5, 2023. The petition was signed by Daniel Drake
as managing member. At the time of filing, the Debtor estimated
$500,000 to $1 million in assets and $1 million to $10 million in
liabilities.
Judge Sheri Bluebond presides over the case.
Matthew D. Resnik, Esq. at RHM LAW, LLP represents the Debtor as
counsel.
59 NORTH 6TH STREET: Taps Goetz Fitzpatrick as Legal Counsel
------------------------------------------------------------
59 North 6th Street, LLC seeks approval from the U.S. Bankruptcy
Court for the Eastern District of New York to employ Goetz
Fitzpatrick LLP as legal counsel.
The firm will render these services:
(a) advise the Debtor with respect to its powers and duties;
(b) prepare legal papers;
(c) represent the Debtor in the prosecution and defense of
various claims; and
(d) perform all other legal services for the Debtor.
The firm has been paid a pre-bankruptcy retainer of $20,000 from
the Debtor.
Gary Kushner, Esq., a partner at Goetz Fitzpatrick, disclosed in a
court filing that the firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Gary M. Kushner, Esq.
Scott D. Simon, Esq.
Goetz Fitzpatrick LLP
One Penn Plaza, 31st Floor
New York, NY 10119
Phone: (212) 695-8100
Email: gkushner@goetzfitz.com
ssimon@goetzfitz.com
About 59 North 6th Street
59 North 6th Street LLC is a Single Asset Real Estate (as defined
in 11 U.S.C. Sec. 101(51B)). The Debtor owns in fee simple title a
property located at 59 North 6th Street Brooklyn, NY 11249 valued
at $26 million.
59 North 6th Street filed a petition for relief under Chapter 11 of
the Bankruptcy Code (Bankr. E.D.N.Y. Case No. 23-41149) on April 3,
2023. In the petition filed by Rehan Perveez, managing member, the
Debtor reported total assets of $26,000,000 and total liabilities
of $26,032,348.
Judge Nancy Hershey Lord oversees the case.
Gary Kushner, Esq., at Goetz Fitzpatrick LLP serves as the Debtor's
counsel.
77 HERON LAKES: Case Summary & Seven Unsecured Creditors
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Debtor: 77 Heron Lakes, Ltd.
340 N. Sam Houston Parkway
Suite 130
Houston, TX 77060
Business Description: The Debtor is engaged in activities related
to real estate.
Chapter 11 Petition Date: May 1, 2023
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 23-31641
Debtor's Counsel: Leonard Simon, Esq.
PENDERGRAFT & SIMON LLP
2777 Allen Parkway Suite 800
Houston TX 77019
Tel: 713-528-8555
Email: lsimon@pendergraftsimon.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Joe Fogarty as president and general
partner.
A full-text copy of the petition containing, among other items, a
list of the Debtor's seven unsecured creditors is available for
free at PacerMonitor.com at:
https://www.pacermonitor.com/view/3QEP6BY/77_Heron_Lakes_Ltd__txsbke-23-31641__0001.0.pdf?mcid=tGE4TAMA
81 VILLA ROBLES: Case Summary & 10 Unsecured Creditors
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Debtor: 81 Villa Robles, Ltd.
340 N. Sam Houston Parkway, Suite 130
Houston TX 77060
Business Description: The Debtor is engaged in activities related
to real estate.
Chapter 11 Petition Date: May 1, 2023
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 23-31642
Judge: Hon. Jeffrey P. Norman
Debtor's Counsel: Leonard Simon, Esq.
PENDERGRAFT & SIMON LLP
2777 Allen Parkway Suite 800
Houston TX 77019
Tel: 713-528-8555
Email: lsimon@pendergraftsimon.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Joe Fogarty as manager and general
partner.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 10 unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/AB5ROZQ/William_P_81_Villa_Robles_Ltd__txsbke-23-31642__0001.0.pdf?mcid=tGE4TAMA
AGEX THERAPEUTICS: Receives Stock Exchange Deficiency Letter
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AgeX Therapeutics, Inc. announced that on April 20, 2023 it
received a letter from the staff of the NYSE American indicating
that AgeX does not meet certain of the Exchange's continued listing
standards as set forth in Sections 1003(a)(i), (ii), and (iii) of
the Exchange Company Guide in that AgeX has stockholders equity of
less than (A) $2,000,000 and has incurred losses from continuing
operations and/or net losses during its two most recent fiscal
years, (B) $4,000,000 and has incurred losses from continuing
operations and/or net losses during three out of four of its most
recent fiscal years, and (C) $6.0 million or more and has reported
losses from continuing operations and/or net losses in its five
most recent fiscal years.
The Deficiency Letter states that as AgeX remains subject to the
conditions set forth in prior letters from the Exchange with
respect to AgeX's deficiencies in stockholders equity, and if AgeX
is not in compliance with all of the Exchange's stockholders equity
standards, or does not make progress consistent with AgeX's
Exchange approved plan to come into compliance with the Exchange's
continued listing standards, by May 17, 2023, the Exchange will
initiate delisting proceedings as appropriate. AgeX may appeal a
staff delisting determination in accordance with Section 1010 and
Part 12 of the Exchange Company Guide.
AgeX intends to make arrangements to have its common stock quoted
on an electronic interdealer quotation system if its common stock
is delisted from the Exchange.
About Agex Therapeutics
Headquartered in Alameda, California, AgeX Therapeutics, Inc. is a
biotechnology company focused on the development and
commercialization of novel therapeutics targeting human aging and
degenerative diseases.
Agex Therapeutics reported a net loss of $10.52 million in 2022, a
net loss of $8.68 million in 2021, a net loss of $10.97 million for
the year ended Dec. 31, 2020, and a net loss of $12.38 million for
the year ended Dec. 31, 2019.
San Francisco, California-based WithumSmith+Brown, PC, the
Company's auditor since 2017, issued a "going concern"
qualification in its report dated March 31, 2023, citing that the
Company has had recurring losses and negative operating cash flows
since inception, an accumulated deficit at Dec. 31, 2022, and
insufficient cash and cash equivalents and loan proceeds at Dec.
31, 2022 to fund operations for twelve months from the date of
issuance. All of these matters raise substantial doubt about the
Company's ability to continue as a going concern.
AGILE THERAPEUTICS: Releases Preliminary Expectations for Q1 2023
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Agile Therapeutics, Inc. announced preliminary expectations for
first quarter 2023 Twirla(R) demand, net revenue and operating
expenses.
Expected First Quarter 2023 Performance Update (Unaudited)
* First Quarter 2023 Twirla Demand:
- Total demand is expected to surpass 45,000 total cycles,
representing at least 20% growth from the fourth quarter 2022 and a
single-quarter record.
- Retail demand – the Company's most profitable channel –
is expected to exceed 30,500 total cycles, also a single-quarter
record and an increase of at least 20% from the fourth quarter
2022.
- Non-retail demand is expected to exceed 14,000 total
cycles, an increase of at least 20% from the fourth quarter 2022.
- Factory sales are expected to exceed 43,000 total cycles
and to remain approximately flat compared to the fourth quarter
2022.
- March 2023 set a single-month record for total demand
cycles and the Company expects the momentum to carry into the
second quarter 2023.
* First quarter 2023 net revenue is expected to be in the range
of $3.8 to $4.0 million. First quarter wholesaler inventory levels
are expected to decrease by approximately 9 days sales or 24% from
December 31, 2022 levels.
* First Quarter 2023 operating expenses ("OPEX") are expected to
be in the range of $8.3 to $8.8 million, a 5%-10% decrease compared
to fourth quarter 2022.
"The preliminary Twirla demand data we have for the first quarter
2023 tell us that we are following a strong second half of 2022
with continued expected growth in key performance areas," said
Agile Therapeutics chairman and chief executive officer Al
Altomari. "March 2023 appears to be our strongest month in the
retail channel, and we expect the Company's telehealth
collaboration with Nurx to drive additional retail channel growth
in the second half of 2023. We continue to focus on managing our
operating expenses and expect our first quarter expenses to be
lower than the fourth quarter 2022."
"The first quarter 2023 net revenue projection falls in line with
the expectations we shared on our last earnings call. We believe
factory sales reflect wholesaler work down of inventory levels,
which rose slightly at the end of 2022. Wholesaler purchasing
patterns in April 2023, we believe, are signaling that the channel
has normalized. The strong start to 2023 demand gives us
confidence that the Company can achieve its 2023 goal of net
revenue in the range of $25-$30 million."
The preliminary results and estimates in this press release are
based on management's initial review of the Company's operations
for the quarter ended March 31, 2023, and are subject to revision
based upon its quarter-end closing procedures and the completion of
the external review of its quarter-end financial statements.
About Agile Therapeutics Inc.
Agile Therapeutics, Inc. is a women's healthcare company dedicated
to fulfilling the unmet health needs of today's women. The
Company's product and product candidates are designed to provide
women with contraceptive options that offer freedom from taking a
daily pill, without committing to a longer-acting method. Its
initial product, Twirla, (levonorgestrel and ethinyl estradiol), a
transdermal system, is a non-daily prescription contraceptive.
Agile reported a net loss of $25.41 million for the year ended Dec.
31, 2022, compared to a net loss of $71.07 million for the year
ended Dec. 31, 2021. As of Dec. 31, 2022, the Company had $14.24
million in total assets, $19.78 million in total liabilities, and a
total stockholders' deficit of $5.54 million.
Iselin, New Jersey-based Ernst & Young LLP, the Company's auditor
since 2010, issued a "going concern" qualification in its report
dated March 22, 2023, citing that the Company has generated losses
since inception, used substantial cash in operations, anticipates
it will continue to incur net losses for the foreseeable future,
requires additional capital to fund its operating needs and has
stated that substantial doubt exists about the Company's ability to
continue as a going concern.
AGS PRO INC: Seeks Chapter 11 Bankruptcy Protection
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AGS Pro Inc. filed for chapter 11 protection in the District of
Central California. The Debtor elected on its voluntary petition
to proceed under Subchapter V of chapter 11 of the Bankruptcy
Code.
The Debtor provides security services throughout the United States
and internationally with
strategic alliance partnerships. Although founded in 2017, the
Debtor's team has been trusted in the security industry by
businesses across the country and around the world for decades.
The Debtor's services include commercial security, estate security
and special events.
The Debtor's headquarters are located at 6133 Bristol Parkway,
Suites 175 and 280, Culver City, California 90230. The Debtor has
approximately 320 employees and operates in Los Angeles, Las Vegas,
and Honduras, Nicaragua and El Salvador. Many of the employees are
employed on a part time or project basis. The Debtor’s revenues
in 2022 were $13,826,904.55.
However, its profitability has been materially affected by ongoing
litigation with a competing
security company -- Allied Security. In particular, commencing in
October 2018, Allied Security filed three lawsuits in federal and
state court against the Debtor and others in the name of its
newly-purchased subsidiary, U.S. Security Associates, Inc. ("USSA")
and USSA's subsidiary, Andrews International Government Services,
Inc. ("AIGS"). The suits were filed in the wake of the resignation
of Randy Andrews (the father of AGS' CEO, Lee Andrews), as Chief
Executive Officer of AIGS and Chief Security Officer of USSA.
According to court filings, AGS Pro Inc. estimates between $10
million and $50 million in debt owed to 1 to 49 creditors. The
petition states that funds will be available to unsecured
creditors.
A telephonic meeting of creditors under 11 U.S.C. Section 341(a) is
slated for May 23, 2023 at 8:45 a.m. at UST-LA3.
About AGS Pro, Inc.
AGS Pro, Inc., provides security services throughout the United
States and internationally with strategic alliance partnerships.
Although founded in 2017, the Debtoras team has been trusted in the
security industry by businesses across the country and around the
world for decades. The Debtor's services include commercial
security, estate security and special events. The Debtor's
headquarters is located at 6133 Bristol Parkway, Suites 175 and
280, Culver City, California 90230.
AGS Pro sought protection under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. C. D. Cal. Case No. 23-12236) on April 13, 2023. In
the petition signed by Lee Andrews, chief executive
officer, the Debtor disclosed up to $10 million in assets and up to
$50 million in liabilities.
Judge Deborah J. Saltzman oversees the case.
Aaron E. de Leest, Esq., at Danning, Gill, Israel & Krasnoff, LLP,
is the Debtor's legal counsel.
ALL FOR ONE: Signs Merger Agreement With All Entertainment
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All Entertainment Media Group, Inc. and All For One Media Corp.
jointly announced that they have entered into an Agreement and Plan
of Merger to create a dynamic multimedia entertainment company with
a diverse range of assets and capabilities.
Jeffrey Burton, CEO of AEMG, expressed his excitement about the
merger, saying, "This merger is a significant milestone for our
company, and we believe that it will enable us to create even more
innovative and engaging entertainment experiences for our
audiences."
Todd Napolitano, president of AEMG, added, "We are thrilled about
the potential of this merger and the opportunities it presents to
expand our reach and capabilities. We look forward to working with
the talented team at AFOM and to exploring new ways to engage
audiences and build value for our shareholders."
Brandon Steiner, Legendary sports memorabilia executive, media
personality and advisor to AEMG, shared his positive outlook for
the merger, stating, "I believe that this merger will enable us to
create a truly innovative and dynamic entertainment company that
can deliver value to our shareholders and audiences alike. I look
forward to following the progress of this exciting new venture."
Brian Lukow, CEO of AFOM, expressed his enthusiasm for the
partnership, stating, "We are excited to join forces with AEMG and
to create a dynamic multimedia entertainment company. We believe
that the combined strengths and expertise of our two companies will
enable us to deliver a truly exceptional entertainment experience
to audiences around the world."
Upon completion of the merger, the Board of Directors of AEMG will
consist of five members acceptable to AEMG, including Jeffrey
Burton (CEO), Todd Napolitano (President), Brandon Steiner, as well
as one additional member acceptable to AEMG. The company will
continue to operate as a "smaller reporting company" in accordance
with SEC regulations.
The completion of the merger is subject to customary closing
conditions and regulatory approvals. The newly merged company will
continue to operate under the name All Entertainment Media Group,
Inc.
About All For One Media
All for One Media Corp., incorporated in the State of Utah on March
2, 2004, is a media and entertainment company focused on creating,
launching and marketing original pop music groups commonly referred
to as "boy bands" and "girl groups." The Company's former
operations were in the business of acquiring, training, and
reselling horses with an emphasis in the purchase of thoroughbred
weanlings or yearlings that were resold as juveniles. All For One
is in the business of targeting the lucrative tween demographic
across a multitude of entertainment platforms. The Company expects
to generate revenues from movie receipts, sales, downloads and
streaming of original recorded music, videos, motion pictures,
music publishing, live performances, licensed merchandise and
corporate sponsorships.
Boca Raton, Florida-based Salberg & Company, P.A., the Company's
auditor since 2019, issued a "going concern" qualification in its
report dated Dec. 29, 2022, citing that the Company has a net
income and cash used in operations of $1,835,497 and $496,569,
respectively, for the year ended September 30, 2022. The net
income was primarily the result of a gain from the extinguishment
of debt and gain on debt modification. Additionally, the Company
had an accumulated deficit, stockholders' deficit and working
capital deficit of $25,708,263, $15,725,345 and $15,587,845 as of
September 30, 2022. These matters raise substantial doubt about
the Company's ability to continue as a going concern.
ALLIED UNIVERSAL: Moody's Rates New $400MM Incremental Loan 'B2'
----------------------------------------------------------------
Moody's Investors Service has assigned a B2 rating to Allied
Universal Holdco LLC's proposed $400 million incremental first lien
term loan. The outlook is negative. Proceeds from the issuance will
be used to term out debt under the company's revolver that was
drawn previously to fund acquisitions. The transaction will be
leverage neutral. Moody's adjusted total debt to EBITDA as of the
end of 2022 was 8.2x. Any increase to the contemplated issuance
amount may put pressure on the ratings, as leverage would
increase.
Assignments:
Issuer: Allied Universal Holdco LLC
Senior Secured First Lien Term Loan, Assigned B2
RATINGS RATIONALE
The B2 CFR at Atlas Ontario LP ("Atlas Ontario") reflects the large
scale and geographic scope of Allied Universal, very high leverage
for the rating and thin margins. Debt / EBITDA was 8.2x (Moody's
adjusted, as of year-end 2022, pro forma for acquired EBITDA) and
leverage has been sustained at these elevated levels for the past
few quarters as overall debt levels have been increasing. A very
high interest expense burden also constrains cash flow and weighs
on the credit. The expectation for aggressive financial policies
and debt-funded M&A is credit negative. Margins have been pressured
due to unfavorable labor market conditions. Allied Universal's
EBITDA margins are low relative to other essential business
services companies. However, security services, which accounts for
over 83% of revenues, features very low capital investment
requirements, leading to good free cash flow conversion despite the
narrow profit margins. Allied Universal benefits from its market
position as the US's largest security services company, the
recession resistant nature of the security services business, an
ability to pass on higher wages to customers and a track record of
successfully integrating acquisitions and achieving targeted cost
reductions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The ratings could be upgraded if Moody's expects 1) debt to remain
around 5.0 times; 2) free cash flow above 6.0% of total debt; 3)
balanced financial policies; and 4) good liquidity.
The ratings could be downgraded if 1) revenue growth rates decline
toward break-even; 2) deleveraging from current levels is not
achieved and there is no clear path to leverage approaching 7.0x;
3) Profitability improvements are not achieved; or 4) free cash
flow to debt is anticipated to remain below 3.0%.
The principal methodology used in this rating was Business and
Consumer Services published in November 2021.
All financial metrics cited reflect Moody's standard adjustments.
Allied Universal, headquartered in Conshohocken, Pennsylvania and
Santa Ana, California and controlled by affiliates of private
equity sponsors Warburg Pincus and CDPQ, is one of the world's
largest security and related services company. Revenue for FY 2022
was around $19.4 billion.
ALLIED UNIVERSAL: S&P Rates Mew $400MM First-Lien Term Loan 'B'
---------------------------------------------------------------
S&P Global Ratings assigned its 'B' issue-level rating to Santa
Ana, Calif.-based Allied Universal Holdco LLC's proposed $400
million incremental nonfungible first-lien term loan facility due
May 2028. The company will use proceeds to pay down borrowings
under the company's asset-based lending (ABL) facility.
S&P said, "Our issuer credit rating on Atlas Ontario L.P. (the
parent entity), and Allied's other debt facilities are unchanged.
We believe elevated working capital needs, deferred payroll tax
payments, and higher-than-normal pension plan contributions led to
significant cash flow deficits in 2022 while profitability was
hindered amid tight labor availability. Meanwhile, the company's
ongoing acquisition activity (including its acquisition of Total
Security Services in March 2022 and Attenti Electronic Monitoring
Group Ltd. in August 2022) led to around $740 million of borrowings
under the company's ABL facility. We anticipate Allied will benefit
from improving labor availability over the next 12 months, with
declining nonbillable overtime and turnover levels. Moreover,
normalizing working capital flows should enable good cash
generation this year.
"Our issuer credit rating is limited by the company's very highly
leveraged capital structure, with S&P Global Ratings-adjusted
leverage of 10x as of 2022. We anticipate leverage will improve
toward 9x in 2023 as the company continues to expand its top line
and profitability improves."
ISSUE RATINGS—RECOVERY ANALYSIS
Key analytical factors:
-- S&P's simulated default scenario contemplates a hypothetical
default occurring from a significant market share loss amid intense
competition, eroding brand reputation, and rising labor costs while
secular changes to its customer base have a material adverse impact
on demand. These conditions lead to significant deterioration in
Allied's cash flow generation, leading to a payment default.
-- In this scenario, S&P assumes the company will reorganize as a
going concern to maximize its lenders' recovery prospects.
-- S&P used an enterprise valuation approach and have applied a
6.5x multiple to its projected emergence-level EBITDA. This is
higher than the multiples it uses for some of Allied's business
services peers and reflects the company's widely established
operating platform.
-- S&P's recovery analysis assumes that the company's $1.5 billion
ABL facility will be 60% drawn and its cash flow revolvers will be
85% drawn at the time of default.
Simulated default assumptions:
-- Simulated year of default: 2026
-- EBITDA at emergence: $1.23 billion
-- Implied enterprise value (EV) multiple: 6.5x
-- Estimated gross EV at emergence: $8.0 billion
Simplified waterfall:
-- Net recovery value (after 7% administrative expense): $7.4
billion
-- Less: asset-based lending facility outstanding of $934 million
-- Net recovery value available to first-lien debt: $6.5 billion
-- First-lien debt outstanding at default (credit facility and
senior secured notes): $11.2 billion
-- First-lien debt recovery range: 50%-70%, rounded estimate: 55%
-- Unsecured senior note debt outstanding at default: $2.1
billion
-- Unsecured senior note recovery range: 0%-10%, rounded estimate:
0%
Note: Estimated claims amounts include about six months accrued but
unpaid interest.
AMERIMARK INTERACTIVE: Hires McDonald Hopkins as Legal Counsel
--------------------------------------------------------------
AmeriMark Interactive, LLC and affiliates seek approval from the
U.S. Bankruptcy Court for the District of Delaware to hire McDonald
Hopkins LLC as their counsel.
The firm's services include:
a. advising the Debtors with respect to their powers and
duties as Debtors in possession in the continued management and
operation of their businesses and properties;
b. advising and consulting on the conduct of these chapter 11
cases, including all of the legal and administrative requirements
of operating in chapter 11;
c. attending meetings and negotiating with representatives of
creditors and other parties in interest;
d. taking all necessary actions to protect and preserve the
Debtors' estates, including prosecuting actions on the Debtors'
behalf, defending any action commenced against the Debtors, and
representing the Debtors in negotiations concerning litigation in
which the Debtors are involved, including objections to claims
filed against the Debtors' estates;
e. preparing pleadings in connection with these chapter 11
cases, including motions, applications, answers, orders, reports,
and papers necessary or otherwise beneficial to the administration
of the Debtors' estates;
f. representing the Debtors in connection with obtaining
authority to continue using cash collateral and postpetition
financing;
g. advising the Debtors in connection with any potential sale
of assets;
h. appearing before the Court and any appellate courts to
represent the interests of the Debtors' estates;
i. advising the Debtors regarding tax matters;
j. taking any necessary action on behalf of the Debtors to
negotiate, prepare, and obtain approval of a disclosure statement
and confirmation of a chapter 11 plan and all documents related
thereto; and
k. performing all other necessary legal services for the
Debtors.
The firm will charge these hourly fees:
Members $390 - $1,020
Of Counsel $345 - $990
Associates $265 - $585
Paralegals $180 - $360
In addition, the firm will seek reimbursement for out-of-pocket
expenses incurred.
David Agay, a member of McDonald Hopkins, 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 at:
David A. Agay, Esq.
McDonald Hopkins LLC
39533 Woodward Avenue. Suite 318
Bloomfield Hills, MI 48304
Tel: 248-646-5070
Email: sgross@mcdonaldhopkins.com
About Amerimark Interactive
AmeriMark Interactive, LLC is a direct marketer of women's apparel,
shoes, name-brand cosmetics, fragrances, jewelry, watches,
accessories, and other related products. It is based in Cleveland,
Ohio.
AmeriMark Interactive and affiliates sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case
No. 23-10438) on April 11, 2023. In the petition signed by its
chief restructuring officer, Stuart Noyes, AmeriMark Interactive
disclosed up to $50,000 in assets and $100 million to $500 million
in liabilities.
Judge Thomas M. Horan oversees the cases.
The Debtors tapped McDonald Hopkins, LLC and Morris, Nichols, Arsht
and Tunnell, LLP as bankruptcy counsels; Riveron Management
Services, LLC as restructuring advisor; and Consensus Advisory
Services, LLC and Consensus Securities, LLC as investment bankers.
Stretto Inc. is the notice, claims and balloting agent and
administrative advisor.
The U.S. Trustee for Region 3 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases.
Cheryl Santaniello, Esq., is the committee's attorney.
AMERIMARK INTERACTIVE: Taps Riveron Management to Provide CRO
-------------------------------------------------------------
AmeriMark Interactive, LLC and affiliates seek approval from the
U.S. Bankruptcy Court for the District of Delaware to hire Riveron
Management Services, LLC to provide an interim chief restructuring
officer and other additional personnel.
The services to be provided by the CRO include:
a. evaluating short-term cash flows and financing requirements
of the Debtors in relation to their Chapter 11 proceedings;
b. assisting the Debtors in the Chapter 11 proceedings,
including preparation and oversight of financial statements and
schedules related to the bankruptcy process, monthly operating
reports, first day pleadings, and other information required in the
bankruptcy;
c. assisting the Debtors in obtaining court approval for use of
cash collateral or other financing, including developing forecasts
and information;
d. assisting the Debtors with respect to their
bankruptcy-related claims management and reconciliation process;
e. assisting the Debtors in the development of a plan of
reorganization, including preparation of a liquidation analysis,
historical financial data and projections;
f. assisting management, where appropriate, in communications
and negotiations with other constituents critical to the successful
execution of the Debtors' bankruptcy proceedings;
g. working with the Debtors and their retained investment
banking professionals to assess any offer made pursuant to
bankruptcy court-approved sale procedures; and
h. assisting the Debtors with post-closing sale and wind-down of
the estate through a liquidation plan.
The hourly rates charged by the firm for its services are as
follows:
Senior Managing Director $695 - $1,420
Managing Director $595 - $960
Directors $495 - $925
Manager/Associates $395 - $650
Paraprofessional $200
As disclosed in court filings, Riveron Management does not hold an
interest adverse to the Debtors' estates.
The firm can be reached through:
Stuart W. Noyes
Riveron Management Services, LLC
265 Franklin Street, 10th Floor
Boston, MA 02110
Tel: 617-275-5411
Email: stuart.noyes@riveron.com
About Amerimark Interactive
AmeriMark Interactive, LLC is a direct marketer of women's apparel,
shoes, name-brand cosmetics, fragrances, jewelry, watches,
accessories, and other related products. It is based in Cleveland,
Ohio.
AmeriMark Interactive and affiliates sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case
No. 23-10438) on April 11, 2023. In the petition signed by its
chief restructuring officer, Stuart Noyes, AmeriMark Interactive
disclosed up to $50,000 in assets and $100 million to $500 million
in liabilities.
Judge Thomas M. Horan oversees the cases.
The Debtors tapped McDonald Hopkins, LLC and Morris, Nichols, Arsht
and Tunnell, LLP as bankruptcy counsels; Riveron Management
Services, LLC as restructuring advisor; and Consensus Advisory
Services, LLC and Consensus Securities, LLC as investment bankers.
Stretto Inc. is the notice, claims and balloting agent and
administrative advisor.
The U.S. Trustee for Region 3 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases.
Cheryl Santaniello, Esq., is the committee's attorney.
AMERIMARK INTERACTIVE: Taps Stretto Inc. as Administrative Advisor
------------------------------------------------------------------
AmeriMark Interactive, LLC and affiliates seek approval from the
U.S. Bankruptcy Court for the District of Delaware to hire Stretto
Inc. as their administrative advisor.
The firm's services include:
a. assisting with, among other things, solicitation, balloting
and tabulation and calculation of votes for purposes of plan
voting;
b. preparing any appropriate reports, exhibits and schedules
of information;
c. preparing an official ballot certification and, if
necessary, testifying in support of the ballot tabulation results;
d. assisting with the preparation of the Debtors' schedules of
assets and liabilities and statements of financial affairs and
gathering data in conjunction therewith;
e. generating, providing and assisting with claims objections,
exhibits, claims reconciliation and related matters;
f. facilitating any distributions pursuant to a confirmed plan
of reorganization;
g. providing confidential on-line workspaces or virtual data
rooms and publishing documents to such workspaces or data rooms;
and
h. providing such other claims processing, noticing,
solicitation, balloting and administrative services.
The firm will be paid as follows:
Analyst $33 - $66 per hour
Consultant (Associate/Senior Associate) $70 - $200 per hour
Director/ Managing Director $210 - $250 per
hour
Solicitation Associate $230 per hour
Director of Securities & Solicitations $250 per hour
Prior to the petition date, the Debtor provided Stretto an advance
in the amount of $15,000.
Sheryl Betance, a senior managing partner at Stretto, disclosed in
a court filing that her firm is a "disinterested person" as the
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Sheryl Betance
Stretto, Inc.
410 Exchange, Ste. 100
Irvine, CA 92602
Telephone: (714) 716-1872
Email: Sheryl.betance@stretto.com
About Amerimark Interactive
AmeriMark Interactive, LLC is a direct marketer of women's apparel,
shoes, name-brand cosmetics, fragrances, jewelry, watches,
accessories, and other related products. It is based in Cleveland,
Ohio.
AmeriMark Interactive and affiliates sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case
No. 23-10438) on April 11, 2023. In the petition signed by its
chief restructuring officer, Stuart Noyes, AmeriMark Interactive
disclosed up to $50,000 in assets and $100 million to $500 million
in liabilities.
Judge Thomas M. Horan oversees the cases.
The Debtors tapped McDonald Hopkins, LLC and Morris, Nichols, Arsht
and Tunnell, LLP as bankruptcy counsels; Riveron Management
Services, LLC as restructuring advisor; and Consensus Advisory
Services, LLC and Consensus Securities, LLC as investment bankers.
Stretto Inc. is the notice, claims and balloting agent and
administrative advisor.
The U.S. Trustee for Region 3 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases.
Cheryl Santaniello, Esq., is the committee's attorney.
ARCIS GOLF: $200MM Incremental Loan No Impact on Moody's 'B2' CFR
-----------------------------------------------------------------
Moody's Investors Service says Arcis Golf LLC's proposed $200
million incremental add-on to its existing first lien term loan
($160 million incremental and $40 million DDTL) due November 2028
has no impact to the company's existing ratings including the B2
Corporate Family Rating and stable outlook.
Pro forma for the new add-on and the two acquisitions, the
company's Moody's lease-adjusted debt-to-EBITDA leverage will
increase from the mid 3x range as of year-end 2022 to a mid 4x
level. Arcis Golf has delivered strong operating performance that
resulted in leverage declining from a high 4x range at the time of
the new issuance transaction in November 2021 to the current mid 3x
level at year end 2022. The company's long-term strategy is to
expand the portfolio of golf properties through acquisitions.
Although the debt funded acquisitions are credit negative because
they will increase leverage by about a turn, leverage is still
within the range Moody's expect for the B2 CFR. Moody's views the
two acquisitions as strategically sound as they will further
increase Arcis Golf's scale and diversify geographic locations.
There is no impact to the company's B2 Corporate Family Rating
(CFR), B2-PD Probability of Default Rating (PDR), B2 rating for the
first lien bank credit facilities (revolver and term loan), as well
as its stable outlook. Moody's expects leverage will decline to
about 4x over the next 12 to 18 months through earnings growth.
However, over the longer term, Moody's expects leverage will remain
range bound in the mid to high 3x to high 4x range due to the
company's growth through acquisition strategy. Over the next year,
Moody's expects the company to have good liquidity with about $80
million of cash at the close of the transaction, access to an
undrawn $75 million revolver expiring in 2026 as well as modest
free cash flow generation of about $10 million. These liquidity
sources will provide ample coverage for the $5 million of required
annual term loan amortization and the $15 million of capital lease
payments. The company is expected to significantly increase growth
capital spending (FY23 expected capex of about $48 million vs LTM
capex of about $27 million) over the next couple of years for
upgrades of facilities at various clubs. However, Arcis Golf has
the flexibility to adjust and delay growth capital spending
depending on operating performance to preserve cash if necessary
and annual maintenance capital spending is about $14 million.
RATINGS RATIONALE
Arcis Golf's B2 CFR broadly reflects its moderate leverage with pro
forma Moody's lease adjusted leverage in the mid 4x range as of
year end 2022 as well as modest scale as measured by revenue (pro
forma revenue of about $439 million). The company's core business
as a golf club owner and operator makes it susceptible to
discretionary consumer spending and factors such as varying
regional economic and weather conditions. The rating also reflects
the company's geographic concentration in Texas and Arizona where
competition is high. Golf and country clubs in general require high
capital spending for ongoing reinvestment, upgrades and maintenance
of club facilities and amenities in order to maintain its service
offerings and premium pricing. Use of high leverage under private
equity ownership and growth by tuck-in acquisition strategy also
constrain the credit profile.
However, the rating reflect the company's position as the second
largest golf club owner and operator in the US with both high end
private clubs and more accessible public courses that offer daily
fee access. Close to 40% of Arcis Golf's revenue is recurring in
nature, which is underpinned by a dues-based membership business
and affluent clientele. The company's significant real estate value
provides good collateral support with the company owning the real
estate associated with the majority of its 69 clubs (owns 62
clubs). All fee-owned real estate located in Arizona and Texas is
pledged to the credit facility, which real estate is associated
with clubs that the company estimates represents approximately 50%
of total EBITDA. Arcis also has flexibility to adjust growth
capital spending depending on operating performance to preserve
cash if necessary.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectation that over the next
12 to 18 months, debt-to-EBITDA leverage will decline to about 4x
through earnings growth. The stable outlook also reflects Moody's
expectation for good liquidity over the next year given its ample
cash balance and undrawn revolver.
The ratings could be upgraded if the company delivers continued
revenue and earnings growth with Moody's adjusted debt-to-EBITDA
sustained below 4.0x as well as good liquidity and free cash flow
to debt in the high single digit percentage range.
The ratings could be downgraded if there is deterioration in
operating performance that results in Moody's adjusted
debt-to-EBITDA sustained above 5x with weakened liquidity profile.
The rating could also come under pressure if credit metrics weaken
materially due to an aggressive financial policy including
debt-funded acquisitions.
Headquartered in Dallas, Texas, Arcis Golf LLC is an owner and
operator of golf clubs. Pro forma for the acquisitions, the company
operates 31 private clubs and 38 daily fee clubs in the US. Arcis
Golf is owned by Atairos and Fortress Investment Group. Pro forma
for the two proposed 2023 acquisitions, FY22 revenue is about $439
million.
ARCIS GOLF: S&P Cuts Rating to 'B+' on New Incremental Term Loans
-----------------------------------------------------------------
S&P Global Ratings lowered its issue-level rating on Arcis Golf
LLC's proposed upsized $460 million term loan due in 2028 and $75
million revolving credit facility due in 2026 to 'B+' from 'BB-'.
S&P also revised the recovery rating to '2' from '1' because of the
proposed first lien incremental $160 million term loan and first
lien incremental $40 million delayed draw term loan. The
incremental $160 million term loan is fungible with the original
$300 million term loan upon the close of the transaction. S&P also
assigned its 'B+' issue level rating and '2' recovery rating to the
proposed $40 million delayed draw term loan due 2028, which will
become fungible with the existing term loan when funded.
The company will use the proceeds from the incremental term loans
and some cash from its balance sheet to purchase additional clubs,
and to cover related transaction fees and expenses. S&P said,
"Although we increased our emergence EBITDA and enterprise value
assumptions in our recovery analysis to reflect the acquisitions,
this is more than offset by higher assumed secured debt claims in a
hypothetical default scenario from the incremental loans. The '2'
recovery rating indicates our expectation for substantial (70%-90%;
rounded estimate: 80%) recovery for the senior secured lenders in
the event of a default."
S&P said, "Our 'B' issuer credit rating and stable outlook on Arcis
are unchanged because we expect the company will have pro forma S&P
Global Ratings-adjusted total leverage in the mid-4x area in 2023.
This is in line with our previously published 2023 base-case
forecast despite the incremental debt and leverage from the
proposed acquisitions. Arcis reduced leverage in 2022 more than we
assumed in our previous base case. Golf rounds played remained
strong through February 2023, according to the National Golf
Foundation and Golf Datatech, with a low-single-digit percent
increase through the first two months of the year compared to 2022.
We expect pro forma revenues to increase about 25% in 2023, driven
by modestly higher same-store results and additional revenues from
newly acquired clubs. We estimate Arcis will have about $150
million of pro forma liquidity, in the form of cash balances and
revolver availability, after accounting for the proposed issuance
and acquisitions.
"We could upgrade Arcis if we expect the company to sustain
leverage below 5x despite its roll-up strategy, incorporating
acquisitions and potential shareholder returns. The company's track
record of growth through acquisitions, could limit the potential
for an upgrade, although it will likely maintain a significant
cushion against our 6.5x downgrade threshold with meaningful cash
on hand."
S&P's base-case forecast assumes:
-- U.S. GDP expands 0.7% in 2023 and 1.2% in 2024.
-- U.S. consumer spending increases 1.2% in 2023 and 0.9% in
2024.
-- Member count at private clubs increase in the low- to
mid-single-digit percents. S&P preliminary expects member growth to
moderate to the low-single-digit percent area in 2024.
-- Incorporating a full year of revenues from clubs acquired in
2022 and 2023, golf operations revenue increase about 25% in 2023.
S&P expects low-single-digit percent growth in 2024.
-- Food and beverage revenue increases about 30% in 2023 as Arcis
benefits from recent club acquisitions. S&P expects food and
beverage revenues to increase by low-single-digit percents in
2024.
-- Total revenues rise about 25% in 2023 and in the low- to
mid-single-digit percentage area in 2024.
-- About $115 million-$130 million of pro forma lease-adjusted
EBITDA in 2023 and 2024.
-- Capital expenditure including maintenance and growth are about
$40 million-$50 million in 2023 and 2024.
-- Excess cash flows after debt repayment fund moderate
tuck-in-acquisitions every year.
Based on the above assumptions, S&P arrives at the following key
credit metrics:
-- Pro forma S&P Global Ratings-adjusted debt to EBITDA in the
mid-4x area in 2023, potentially improving to low-4x in 2024
assuming no acquisitions.
-- EBITDA coverage of interest expense of about 3x in 2023 and
2024.
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- The issue-level rating is 'B+' on the company's first-lien
debt, which consists of the proposed $160 million incremental term
loan, which will raise the aggregate commitment from the existing
$300 million term loan B to a total of $460 million, the $40
million incremental delayed draw term loan, and the $75 million
revolver. The recovery rating of '2' indicates S&P's expectation of
substantial (70%-90%; rounded estimate: 80%) recovery.
-- The credit facility will be guaranteed by the borrower's
subsidiaries and secured by a first-lien security interest in
substantially all Arcis' assets, including a mortgage lien interest
on 26 Arizona and Texas real estate properties, an equity pledge of
subsidiary guarantors, and a negative pledge on other fee-owned
real estate assets, subject to customary exceptions.
-- S&P's simulated default scenario considers a payment default by
2026, reflecting a substantial decline in cash flow stemming from a
prolonged economic downturn that would significantly decrease club
members. This scenario would also likely coincide with diminished
liquidity due to heightened capital expenditure and acquisition
spending that could occur around the same time.
-- S&P estimates a gross recovery value of about $504 million
assuming an emergence EBITDA of about $78 million assuming the
company would reorganize, cut operating costs, and recoup lost
revenue coming out of bankruptcy. Its 6.5x multiple takes into
consideration Arcis' established operations which includes its
ownership of its real estate assets.
Simulated default assumptions
-- Simulated year of default: 2026
-- EBITDA at emergence: $78 million
-- EBITDA multiple: 6.5x
-- Cash flow revolver: 85% drawn at default
Simplified waterfall
-- Net enterprise value for waterfall after 5% administrative
expenses: $479 million
-- Obligor/nonobligor valuation split: 100%/0%
-- Total collateral value available to secured debt: $479 million
-- Estimated first-lien debt claims: $571 million
--Recovery expectation: 70%-90% (rounded estimate: 80%)
All debt amounts include six months of prepetition interest.
ARK LABORATORY: Files for Chapter 11 Bankruptcy Protection
----------------------------------------------------------
Ark Laboratory LLC filed for chapter 11 protection in the Eastern
District of Michigan.
Ark Laboratory, LLC, d/b/a Helix Diagnostics, is a CLIA certified,
CAP proficient, COLA accredited, medical laboratory in Waterford,
Michigan with approximately 112 employees. Helix specializes in
substance abuse testing, blood and molecular testing. Annual
projected revenue is between $18 to $20 million.
The Debtor filed its bankruptcy because of cash flow issues caused
by a combination of the following four factors:
1. Declining Medicare reimbursements,
2. A decrease in Covid testing,
3. Debtor's cost structure, and
4. Erroneous denials of claims by Meridian and Blue Cross.
The Debtor's principal and its subordinated lender infused
significant funds in 2022 in order to attempt to stabilize
operations. The Debtor's chapter 11 filing will assist the Debtor
in pivoting to a lower cost structure to maximize the value of its
assets for all constituencies
The Debtor disclosed $11,096,191 in assets against $32,057,267 in
liabilities in its schedules.
About Ark Laboratory
Ark Laboratory LLC is a medical laboratory in Waterford Township,
Michigan.
Ark Laboratory LLC filed a petition for relief under Chapter 11 of
the Bankruptcy Code (Bankr. E.D. Mich. Case No. 23-43403) on April
13, 2023. In the petition filed by Mark Allen, as manager, the
Debtor reported assets and liabilities between $10 million and $50
million each.
The Debtor is represented by:
Robert N. Bassel, Esq.
P.O. Box T
6620 HIGHLAND RD STE 240
Waterford,, MI 48327
Tel: 248-677-1234
Email: bbassel@gmail.com
ARUZE GAMING: Seeks to Extend Exclusivity Period to August 30
-------------------------------------------------------------
Aruze Gaming America, Inc. asks the U.S. Bankruptcy Court for the
District of Nevada to extend its exclusive periods in which to
file a chapter 11 plan and to solicit votes thereon to August 30,
2023 and September 29, 2023.
The Debtor explained that the relief requested will afford it the
full and fair opportunity contemplated by Congress to develop,
negotiate, and propose a viable, fair, and comprehensive plan of
reorganization, and also solicit acceptances of that plan in a
manner that will maximize value for all parties in interest.
The Debtor also stated that an extension of its exclusive periods
is also justified by progress in the resolution of issues facing
a debtor's creditors. The Debtor cited the key components of its
progress since the petition date include, inter alia:
a. preparing schedules and statements of financial affairs;
b. beginning to document and negotiate a potential sale of
the Debtor's assets;
c. pursuing and obtaining consensual cash collateral orders
to operate under a budget, maintain utilities, and bank
accounts;
d. preparing and filing Monthly Operating Reports;
e. providing financial documents and operating data to key
constituencies;
f. retaining financial advisors; and
h. developing an overall reorganization strategy
The Debtor's current exclusive filing period and exclusive
solicitation period ends on June 1, 2023 and July 31, 2023,
respectively.
Aruze Gaming America, Inc. is represented by:
Zachariah Larson, Esq.
Matthew C. Zirzow, Esq.
LARSON & ZIRZOW, LLC
850 E. Bonneville Ave.
Las Vegas, NV 89101
Tel: (702) 382-1170
E-mail: zlarson@lzlawnv.com
mzirzow@lzlawnv.com
About Aruze Gaming America
Las Vegas-based Aruze Gaming America, Inc. designs, develops and
manufactures gaming machines.
Aruze Gaming America sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. D. Nev. Case No. 23-10356) on Feb.
1, 2023. In the petition signed by its chief executive officer,
Yugo Kinoshita, the Debtor disclosed up to $10 million in assets
and up to $50 million in liabilities.
The bankruptcy filing is a part of Aruze's efforts to seek
financial restructuring in the wake of a recent garnishment
judgment against Aruze resulting from a separate judgment against
Aruze's shareholder.
Judge August B. Landis oversees the case.
The Debtor tapped Matthew C. Zirzow, Esq., at Larson & Zirzow,
LLC as legal counsel and Withum Smith+Brown, PC as tax
accountant.
The U.S. Trustee for Region 17 appointed an official committee to
represent unsecured creditors in the Debtor's Chapter 11 case.
The committee tapped Schwartz Law, PLLC and Sheppard, Mullin,
Richter & Hampton LLP as legal counsels, and Province, LLC as
financial advisor.
ASCENT RESOURCES: Fitch Affirms 'B' LongTerm IDR, Outlook Positive
------------------------------------------------------------------
Fitch Ratings has affirmed Ascent Resources Utica Holdings, LLC's
Long-Term Issuer Default Rating (LT IDR) at 'B' and revised the
Rating Outlook to Positive from Stable. Fitch has also affirmed
Ascent's first lien credit facility at 'BB'/RR1' and second lien
(2L) term loans at 'BB-'/'RR2'. Fitch has placed Ascent's senior
unsecured notes (rated 'B'/'RR4') on Rating Watch Positive. The
rating on the 2L Term Loans will be withdrawn once they are
repaid.
Ascent's rating reflects Fitch's expectations of positive FCF over
the rating horizon, debt reduction, moderate leverage,
above-average production scale and an adequate hedge book. These
factors are offset by fairly high revolver utilization and firm
transportation costs.
Fitch believes Ascent will maintain access to debt capital markets
and generate FCF to reduce refinancing risk, despite volatile
natural gas prices and challenging debt capital markets. The
Positive Outlook reflects the company's proactive approach to
dealing with the 2L term loans maturing in 2025 and the expectation
that the company will use FCF to reduce revolver borrowings over
the next 12-24 months. The Rating Watch Positive on the unsecured
notes is expected to be resolved upon repayment of the 2L term
loans, at which point Fitch expects the notes could be upgraded to
'B+'/'RR3'.
KEY RATING DRIVERS
Improving FCF Generation: Ascent's transition to growing positive
FCF generation supports its credit profile. Ascent generated $1
billion of FCF in 2022, according to Fitch calculations. Fitch
expects the company to be FCF positive over the rating horizon and
that a portion of the proceeds will be used for debt reduction.
Fitch projects that Ascent will maintain production in the 2.0-2.2
billion cubic feet equivalent per day (bcfe/d) range, which should
allow for positive FCF at Fitch's base case prices. Further FCF
growth could be realized by lower firm transportation costs,
continued drilling and completion efficiencies, and interest
savings from debt reduction/refinancing.
Improved Capital Structure and Maturity Schedule: The 2L notes with
a 2025 maturity and the revolver with a 2024 maturity were an
overhang to the credit. The extension of the revolver to 2027 and
the increase in the commitment to $2 billion is a credit positive.
Repaying the 2L notes at this time removes the 2025 maturity,
simplifies the capital structure, and will lead to improved
recovery for the unsecured notes. Fitch expects management to use
expected FCF over the next several years to reduce revolver
borrowings. This should position the company to have capital
markets access that will allow it to refinance the notes maturing
in 2026.
Netbacks Curtailed by Costs: Ascent generates strong realized
pricing compared with its peers, but this is offset by higher
operating costs due to high firm transportation costs and higher
interest costs. Although firm transportation costs are relatively
high, Fitch believes the risk of Ascent being exposed to production
mismatches is very low as the volumetric commitments are well below
production levels. The various contracts expire over time until
2032; therefore, Fitch does not expect material savings in the near
term. Lease operating expenses continue to move lower and the
removal of the high cost 2L term loans and expected reduction in
revolver borrowings over time will decrease interest expense.
Protective Hedging Program: Ascent has hedged 77% of expected gas
production for the remainder of 2023 at $3.19/thousand cubic foot
of gas (mcf) and 63% of 2024 production at $3.48/mcf. Fitch
believes that the hedging program protects Ascent's capital
spending and debt reduction plans given the current pricing
environment. While many of its peers have begun to deemphasize
hedging, Ascent maintains a robust hedging program, which is
positive for the credit.
DERIVATION SUMMARY
Ascent's EBITDA leverage of 1.5x as of Dec. 31, 2022 is in line
with other similarly rated entities.
Ascent is a large natural gas producer within the 'B' rating
category with 2022 production of 1,971 mmcfe/d. This is larger than
all of its 'B' category peers with the nearest peer being Comstock
(B+/Stable) at 1,373 mmcfe/d. Ascent is also larger than CNX
Resources (BB+/Stable) at 1,589 mmcfe/d. Production is well below
other 'BB' rated issuers including Chesapeake Energy (BB+/Positive)
at 4,000 mmcfe/d and Southwestern Energy (BB+/Positive) at 4,747
mmcfe/d.
Ascent generated unhedged netbacks of $4.93/thousand cubic feet
equivalent (mcfe) in 2022, which is slightly below its 'B' rated
peers covered by Fitch other than Aethon (B/Stable) at $4.33/mcfe
and Gulfport (B+/Stable) at $4.83/mcfe. Ascent generates a
relatively high realized price compared with its peers, but this is
offset by higher firm transportation and interest costs.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Henry Hub natural gas price of $3.50 per thousand cubic feet
(mcf) in 2023, $3.50/mcf in 2024, $3/mcf in 2025 and $2.75/mcf
thereafter;
- West Texas Intermediate oil price of $80/barrel (bbl) in 2023,
$70/bbl in 2024, $60/bbl in 2025 and $50/bbl thereafter;
- Flat to low single digit production growth over the forecast
horizon;
- Capex of $925 million in 2023 and $850 million to $900 million
over the remainder of the forecast horizon,
- FCF is expected to be directed towards debt reductions. No
assumptions of dividends or acquisitions/divestitures;
- $597 million 2026 maturity is refinanced with a $500 new bond
issue and cash on the balance sheet.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/downgrade:
- Material FCF generation that is applied to reducing revolver
borrowings;
- Mid-cycle EBITDA leverage sustained at or below 2.5x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Production declines that result in negative FCF;
- Weakening of commitment to stated financial policy, including the
hedging program;
- Mid-cycle EBITDA leverage sustained above 3.5x.
ISSUER PROFILE
Ascent is one of the largest producers of natural gas in the U.S.
in terms of daily productions and is focused on exploring for,
developing, and operating natural gas and oil properties in the
Utica Shale in the Appalachian Basin.
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.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Ascent Resources
Utica Holdings,
LLC LT IDR B Affirmed B
senior
unsecured LT B Rating Watch On RR4 B
senior secured LT BB Affirmed RR1 BB
Senior Secured
2nd Lien LT BB- Affirmed RR2 BB-
ASCENT RESOURCES: Moody's Affirms B1 CFR & Rates Add-on Notes B3
----------------------------------------------------------------
Moody's Investors Service changed Ascent Resources Utica Holdings,
LLC's outlook to positive from stable and assigned Ascent's $212.6
million add-on senior unsecured notes due 2028 a B3 rating. The
notes are expected to be fungible with the existing notes.
Concurrently, Moody's affirmed Ascent's other ratings, including
the B1 Corporate Family Rating and the B3 senior unsecured notes
rating.
Ascent is refinancing its $550 million senior secured second lien
term loan due November 2025 in a two-step process. First, the
company will borrow $578 million on its revolver (unrated) to repay
the term loan in full at a redemption price of 105% of par.
Secondly, the company will use net proceeds from its add-on senior
notes due 2028 to partially repay its revolver. The B1 rating of
the term loan will be withdrawn upon its full repayment.
"The positive outlook reflects benefits from Ascent Resources'
refinancing transaction which extends the company's debt maturity
profile with the ability to further reduce debt by repaying
revolver borrowings," commented Jonathan Teitel, a Moody's Senior
Analyst. "Ascent's positive outlook is supported by significant
natural gas hedges which sustains cash margins and free cash flow
during a period of weak natural gas prices."
Assignments:
Issuer: Ascent Resources Utica Holdings, LLC
Backed Senior Unsecured Regular Bond/Debenture, Assigned B3
Affirmations:
Issuer: Ascent Resources Utica Holdings, LLC
Corporate Family Rating, Affirmed B1
Probability of Default Rating, Affirmed B1-PD
Backed Senior Unsecured Regular Bond/Debenture, Affirmed B3
Outlook Actions:
Issuer: Ascent Resources Utica Holdings, LLC
Outlook, Changed To Positive From Stable
RATINGS RATIONALE
The positive outlook reflects Moody's expectation for Ascent to
continue generating positive free cash flow into 2024 and repaying
revolver borrowings to reduce debt. The positive outlook is
supported by the company's large hedge position which mitigates
risks from natural gas price volatility and currently weak natural
gas prices.
Ascent's B1 CFR reflects the company's large-scale natural gas
production with ample proved reserves and acreage, supporting
economies of scale, operating efficiencies and financial
flexibility. The company is geographically concentrated in the
Appalachia region, focusing on natural gas production in the Utica
Shale, but also has inventory in the Marcellus Shale. The B1 rating
is supported by Ascent's solid hedge book which sustains cash
margins during a period of weak natural gas prices, provides cash
flow visibility and mitigates risks from natural gas price
volatility. A significant portion of the company's natural gas
production for 2023 is hedged and the company has hedges into 2026.
The company hedges exposure to both Henry Hub natural gas prices
and regional basis differentials. Ascent's capital spending in 2023
is focused on a program that maintains production levels. The
company has significant firm transportation commitments, providing
flow assurance for volumes out of the Appalachia region (which has
takeaway capacity constraints) but these could be burdensome if
production drops.
Moody's expects Ascent to maintain good liquidity into 2024
supported by positive free cash flow and revolver availability.
Ascent has an RBL revolving credit facility with $2 billion of
elected commitments. The borrowing base is $3 billion and subject
to future redetermination, but Moody's expects it to remain above
the $2 billion of elected commitments. Pro forma for the
transaction, Ascent will have about $712 million in borrowings
outstanding on its revolver plus $169 million in letters of credit
issued under the facility. Ascent carries a minimal amount of cash
on its balance sheet. The revolver matures in June 2027 but has a
springing maturity to August 2026 if more than $150 million of the
senior notes due November 2026 are outstanding then. The revolver
has two financial covenants comprised of a maximum leverage ratio
of 3.5x (net of up to $100 million of cash) and a minimum current
ratio of 1x. Moody's expects Ascent to maintain compliance with
these covenants through mid-2024.
Ascent's senior unsecured notes due 2026, 2027, 2028 and 2029 are
rated B3, two notches below the CFR, reflecting effective
subordination to the large potential claims of the secured RBL
revolver.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade include further substantial
debt reduction, consistent positive free cash flow generation and
maintenance of solid liquidity. Retained cash flow (RCF) to debt
sustained above 35% at mid-cycle natural gas prices could be
supportive of a ratings upgrade.
Factors that could lead to a downgrade include an inability to
generate consistent positive free cash flow and reduce debt as
expected; RCF/debt below 25%; weakening liquidity or aggressive
shareholder distributions.
Ascent, headquartered in Oklahoma City, Oklahoma, is a privately
owned independent exploration and production company focused on
natural gas production in the Utica Shale in Ohio. The company was
formed in 2013 by its private equity sponsors, primarily The Energy
& Minerals Group and First Reserve Corporation. Riverstone became a
sponsor in 2018 when Ascent closed on several acquisitions. During
2022, Ascent produced an average of 2.1 Bcfe/d (93% natural gas).
The principal methodology used in these ratings was Independent
Exploration and Production published in December 2022.
AVINGER INC: Falls Short of Nasdaq Minimum Bid Price Requirement
----------------------------------------------------------------
Avinger, Inc. disclosed in a Form 8-K filed with the Securities and
Exchange Commission it received a letter from the Listing
Qualifications Department of The NASDAQ Stock Market, LLC on April
25, 2023, notifying the Company that it was not in compliance with
Nasdaq Listing Rule 5550(a)(2), as the minimum bid price for the
Company's listed securities was less than $1 for the previous 30
consecutive business days.
The Company has a period of 180 calendar days, or until Oct. 23,
2023, to regain compliance with the Rule. To regain compliance,
the bid price of the Company's common stock must close at $1 or
more for a minimum of ten consecutive business days during the
180-day compliance period. The notice has no present impact on the
listing of the Company's securities on Nasdaq.
If the Company does not regain compliance during such 180-day
compliance period, the Company may be eligible for an additional
180 calendar days, provided that the Company meets the continued
listing requirement for market value of publicly held shares and
all other initial listing standards for Nasdaq except for Nasdaq
Listing Rule 5550(a)(2), and provides a written notice of its
intention to cure this deficiency during the second compliance
period, including by effecting a reverse stock split, if necessary.
If it appears to Nasdaq that the Company will not be able to cure
the deficiency, or if the Company is otherwise not eligible, it
will receive written notification that its securities are subject
to delisting. At that time, the Company may appeal the delisting
determination to a hearings panel pursuant to the procedures set
forth in the applicable Nasdaq Listing Rules.
The Company intends to actively monitor its bid price and will
consider available options to resolve the deficiency and regain
compliance with the Nasdaq Listing Rules.
About Avinger
Headquartered in Redwood City, California, Avinger, Inc. --
http://www.avinger.com-- is a commercial-stage medical device
company that designs and develops image-guided, catheter-based
system for the diagnosis and treatment of patients with Peripheral
Artery Disease (PAD).
Avinger reported a net loss applicable to common stockholders of
$27.24 million for the year ended Dec. 31, 2022, a net loss
applicable to common stockholders of $21.59 million for the year
ended Dec. 31, 2021, a net loss applicable to common stockholders
of $22.87 million for the year ended Dec. 31, 2020, a net loss
applicable to common stockholders of $23.03 million for the year
ended Dec. 31, 2019, and a net loss applicable to common
stockholders of $35.69 million for the year ended Dec. 31, 2018.
San Francisco, California-based Moss Adams LLP, the Company's
auditor since 2017, issued a "going concern" qualification in its
report dated March 15, 2023, citing that the Company's recurring
losses from operations and its need for additional capital raise
substantial doubt about its ability to continue as a going concern.
AVINGER INC: Receives 510(k) Clearance for Tigereye ST
------------------------------------------------------
Avinger, Inc. announced the company has received 510(k) clearance
from the U.S. Food & Drug Administration (FDA) for Tigereye ST, its
next-generation image-guided chronic total occlusion (CTO) crossing
system.
Tigereye ST expands and advances Avinger's proprietary image-guided
CTO product line with compelling new features and benefits.
Tigereye ST incorporates design upgrades to the tip configuration
and catheter shaft to increase crossing power and procedural
success in challenging lesions, as well as design enhancements for
ease of image interpretation during the procedure. Tigereye ST
continues to provide the high-definition real-time intravascular
imaging, user-controlled deflectable tip, and faster rotational
speeds introduced to the platform in 2021. Product specifications
include a working length of 140 cm, 5 French sheath compatibility,
and low crossing profile for treatment of lesions in the peripheral
vessels both above and below the knee.
Avinger will initiate a limited launch of Tigereye ST in the
current quarter with plans to expand to full commercial
availability in the U.S. in the third quarter of 2023.
"The FDA clearance of Tigereye ST extends our ability to empower
physicians with the unique benefits of real-time visualization from
within the artery during treatment to enhance procedural safety,
efficacy, and efficiency," commented Jeff Soinski, Avinger's
President and CEO. "We are excited to initiate the limited launch
of this new device and most of all to provide an important new tool
for interventional physicians to treat their most challenging
cases."
Dr. Jaafer Golzar, Avinger's chief medical officer and a highly
experienced interventional cardiologist treating patients with
peripheral CTOs noted, "Treating CTOs presents significant
technical challenges to physicians, and we have a limited set of
minimally invasive tools to provide safe and effective outcomes for
this high-risk patient population. With Tigereye ST, a physician
can precisely control the device to stay safely within the lumen
while successfully crossing challenging lesions. Intraluminal
crossing provides a wider variety of treatment options, results in
less potential for vascular injury, and provides better long-term
clinical outcomes for patients."
Avinger's Lumivascular technology incorporates an onboard
image-guidance system to allow physicians, for the first time ever,
to see inside the artery during an atherectomy or CTO-crossing
procedure by using an imaging modality called optical coherence
tomography, or OCT. During the procedure, high-resolution
intravascular OCT images are displayed on Avinger's Lightbox
console in real-time to guide therapy. Physicians performing
therapeutic procedures with other devices must rely solely on X-ray
images and tactile feedback to guide their interventions while
treating complicated arterial disease. With the Lumivascular
approach, physicians can more accurately navigate their devices and
treat PAD lesions to deliver safe and effective outcomes, without
exposing healthcare workers and patients to the negative effects of
ionizing radiation.
About Avinger
Headquartered in Redwood City, California, Avinger, Inc. --
http://www.avinger.com-- is a commercial-stage medical device
company that designs and develops image-guided, catheter-based
system for the diagnosis and treatment of patients with Peripheral
Artery Disease (PAD).
Avinger reported a net loss applicable to common stockholders of
$27.24 million for the year ended Dec. 31, 2022, a net loss
applicable to common stockholders of $21.59 million for the year
ended Dec. 31, 2021, a net loss applicable to common stockholders
of $22.87 million for the year ended Dec. 31, 2020, a net loss
applicable to common stockholders of $23.03 million for the year
ended Dec. 31, 2019, and a net loss applicable to common
stockholders of $35.69 million for the year ended Dec. 31, 2018.
San Francisco, California-based Moss Adams LLP, the Company's
auditor since 2017, issued a "going concern" qualification in its
report dated March 15, 2023, citing that the Company's recurring
losses from operations and its need for additional capital raise
substantial doubt about its ability to continue as a going concern.
AYTU BIOPHARMA: Adzenys XR-ODT Manufacturing Site Transfer Approved
-------------------------------------------------------------------
Aytu BioPharma, Inc. announced it received U.S. Food & Drug
Administration approval of the Adzenys XR-ODT Prior Approval
Supplement. This approval enables the transfer of manufacturing of
Adzenys to the Company's third-party manufacturer.
Additionally, the Cotempla XR-ODT bioequivalence study has been
successfully completed. Accordingly, the Company expects to submit
the Cotempla site transfer PAS to the FDA in the middle of calendar
2023, with approval expected thereafter. The Company expects a
six-month review of the PAS, which would enable FDA approval by
late calendar 2023 or early calendar 2024.
"I'm pleased to report these two important milestones as we work to
improve the margins of our ADHD products by transferring the
manufacturing of our ADHD brands to a contract manufacturer,"
commented Josh Disbrow, Aytu's chief executive officer. "Our team
has done a tremendous job in advancing the site transfer of these
important ADHD brands, and I am grateful for the team's efforts
throughout this extensive operational and regulatory process. With
both milestones now achieved, we have greater visibility into the
timing of the site transfer and expect to begin manufacturing
Adzenys and Cotempla at the contract manufacturer's site in late
2023 and early 2024, respectively. Thus, we expect to begin
realizing margin improvement for the ADHD brands starting in early
calendar 2024. As we have communicated, upon the completion of the
site transfers of both products and exiting the Grand Prairie,
Texas facility, we expect to realize an estimated fifteen percent
margin improvement of the ADHD brands."
About Aytu BioPharma
Englewood, Colorado-based Aytu BioPharma, Inc., formerly known as
Aytu BioScience, Inc. -- http://www.aytubio.com-- is a
pharmaceutical company commercializing a portfolio of commercial
prescription therapeutics and consumer health products. The
Company's prescription products include Adzenys XR-ODT
(amphetamine) extended-release orally disintegrating tablets and
Cotempla XR-ODT (methylphenidate) extended-release orally
disintegrating tablets for the treatment of attention deficit
hyperactivity disorder (ADHD), as well as Karbinal ER
(carbinoxamine maleate), an extended-release antihistamine
suspension indicated to treat numerous allergic conditions, and
Poly-Vi-Flor and Tri-Vi-Flor, two complementary fluoride-based
prescription vitamin product lines available in various
formulations for infants and children with fluoride deficiency.
Aytu's consumer health segment markets a range of over-the-counter
medicines, personal care products, and dietary supplements
addressing a range of common conditions including diabetes,
allergy, hair regrowth, and gastrointestinal conditions.
Aytu Biopharma reported a net loss of $110.17 million for the year
ended June 30, 2022, compared to a net loss of $58.29 million for
the year ended June 30, 2021. As of Sept. 30, 2022, the Company had
$150 million in total assets, $96.09 million in total liabilities,
and $53.91 million in total stockholders' equity.
Denver, Colorado-based Plante & Moran, PLLC, the Company's auditor
since 2015, issued a "going concern" qualification in its
report dated Sept. 27, 2022, citing that the Company's operations
have historically consumed cash and are expected to continue to
consume cash, which raises substantial doubt about the Company's
ability to continue as a going concern.
BCPE EMPIRE: Moody's Rates New $1.5BB First Lien Term Loan 'B3'
---------------------------------------------------------------
Moody's Investors Service assigned a B3 rating to BCPE Empire
Holdings, Inc's $1.5 billion new senior secured first lien term
loan. All other ratings, including BCPE Empire Topco, Inc.'s (dba
Imperial Dade) B3 Corporate Family Rating, B3-PD Probability of
Default Rating, and the Caa2 rating on the $660 million senior
unsecured notes are unaffected. The rating outlook is stable.
The proposed transaction will extend the maturities of $1.5 billion
first lien term loans by two and half years to December 2028, which
is credit positive. However, the B3 CFR and stable outlook are
unchanged at this time because leverage is not meaningfully
affected and cash interest costs are expected to increase about $8
million annually.
Assignments:
Issuer: BCPE Empire Holdings, Inc.
Senior Secured 1st Lien Term Loan, Assigned B3
RATINGS RATIONALE
Imperial Dade's B3 CFR reflects its growing scale as a specialty
distributor, and high financial leverage with debt-to-EBITDA about
7.1x for fiscal 2022, pro forma for closed acquisitions in 2022.
Imperial Dade continues to expand its presence near major
metropolitan areas in the US and Canada, and Moody's expects
Imperial Dade to remain acquisitive and to focus on making growth
investments, including recent launch of supersites to increase
capacity and operating efficiencies. The company sells some low
priced and commodity-oriented products for which switching costs
are low and there is potential for pricing pressure, though
Moody's expects Imperial Dade to raise prices to largely mitigate
increases in product and freight costs. The ratings are supported
by Imperial Dade's well established and growing market position as
a specialty distributor of foodservice packaging (FSP) and
janitorial sanitation (Jan-San) products, driven in part by its
broad product breadth. The company benefits from a relatively
stable revenue stream owing to the disposable nature of products
sold, its well diversified customer and supplier bases, and its
relatively high EBITA margin for the industry. The company's
adequate liquidity reflects Moody's expectations for positive free
cash flow over the next 12-18 months. As of December 31, 2022, the
company had $62 million cash on hand and $486 million availability
under its $645 million committed ABL (unrated). Moody's expects the
company will rely on revolver for future acquisitions.
Governance factors include the company's aggressive financial
policies under private equity ownership including its high
financial leverage, aggressive acquisition strategy, and debt
funded shareholder dividend distributions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The stable outlook reflects Moody's expectation that Imperial
Dade's revenue and earnings will continue to improve as the company
continues to integrate completed acquisitions. Moody's also expects
Imperial Dade to generate positive free cash flow and maintain at
least adequate liquidity.
The ratings could be upgraded if the company continues to grow its
footprint and revenue scale while maintaining a stable profit
margin, and generates consistent healthy free cash flows on an
annual basis. The company would also need to sustain debt/EBITDA
below 6.0x and EBITA/interest approaching 2.0x. A ratings upgrade
will also require at least good liquidity and financial policies
that support credit metrics at the above levels.
The ratings could be downgraded if liquidity weakens for any
reason, including the company generating weak or negative free cash
flow on an annual basis, if debt/EBITDA is sustained above 8.0x, or
EBITA/interest approaches 1.0x. Ratings could also be downgraded if
the company completes a large debt-financed acquisition or
distribution to shareholders that materially increases financial
leverage.
The principal methodology used in this rating was Distribution and
Supply Chain Services published in February 2023.
Headquartered in Jersey City, New Jersey, BCPE Empire Topco, Inc.
(dba Imperial Dade), is a wholesale specialty distributor of
Foodservice Disposables (FSD) and Janitorial Sanitation (Jan-San)
products. Bain Capital LP acquired a majority stake in the company
in June 2019 and retains a majority interest following a 45% stake
sale in the company to Advent International Corporation. Imperial
Dade is private and does not publicly disclose its financials.
Imperial Dade generated about $4.9 billion of revenue for fiscal
2022 pro forma for acquisitions closed in 2022.
BIONIK LABORATORIES: Secures $250K Loan From Stockholder
--------------------------------------------------------
Bionik Laboratories Corp. disclosed in a Form 8-K filed with the
Securities and Exchange Commission it issued a convertible
promissory note and borrowed $250,000 from an existing stockholder
of the Company. The Holder subscribed to the Note pursuant to a
Subscription Agreement.
The Company intends to use the net proceeds from the Loan for the
Company's working capital and general corporate purposes.
The Note bears interest at a fixed rate of 1% per month, computed
based on a 360-day year of twelve 30-day months and will be
payable, along with the principal amount, on the two-year
anniversary of the issue date.
The Note will be convertible into equity of the Company upon the
following events on the following terms:
* On the Maturity Date without any action on the part of the
Holder, the outstanding principal and accrued and unpaid interest
under the Note will be converted into shares of common stock at a
conversion price equal to the closing price of the Company's common
stock on the Maturity Date.
* Upon the consummation of the next equity or equity linked
round of financing of the Company for cash proceeds, without any
action on the part of the Holder, the outstanding principal and
accrued and unpaid interest under the Note will be converted into
the securities (or units of securities if more than one security
are sold as a unit) issued by the Company in one or more tranches
in the context of the Qualified Financing, based upon the issuance
(or conversion) price of such securities.
The Note contains customary events of default, which, if uncured,
entitle the Holder to accelerate the due date of the unpaid
principal amount of, and all accrued and unpaid interest on, the
Note.
About BIONIK Laboratories
Bionik Laboratories Corp. -- http://www.BIONIKlabs.com-- is a
robotics company focused on providing rehabilitation and mobility
solutions to individuals with neurological and mobility challenges
from hospital to home. The Company has a portfolio of products
focused on upper and lower extremity rehabilitation for stroke and
other mobility-impaired patients, including three products on the
market and three products in varying stages of development.
Bionik reported a net loss and comprehensive loss of $10.41 million
for the year ended March 31, 2022, compared to a net loss and
comprehensive loss of $13.62 million for the year ended March 31,
2021. As of Dec. 31, 2022, the Company had $3.68 million in total
assets, $4.21 million in total liabilities, and a total
stockholders' deficit of $521,906.
In its Quarterly Report for the three months ended Dec. 31, 2022,
Bionik Laboratories said, "There can be no assurance that necessary
debt or equity financing will be available, or will be available on
terms acceptable to us, in which case we may be unable to meet our
obligations or fully implement our business plan, if at all. These
conditions raise substantial doubt about the Company's ability to
continue as a going concern."
BLINK CHARGING: Elects Kristina Peterson to Board of Directors
--------------------------------------------------------------
Kristina A. Peterson was elected to Blink Charging Co.'s Board of
Directors effective May 1, 2023.
Ms. Peterson, age 59, has been the chief executive officer of
Mayflower Partners, a cleantech financial advisory firm, since
2000. Ms. Peterson has led various solar energy investment
companies, serving in senior investment, development, operations
and asset management roles at Brookfield Renewable Partners (NYSE:
BEP) and Terraform Power (Nasdaq: TERP) from 2015 to 2018, and
serving in CEO, CFO and other senior management positions at EDF
Renewable Energy, Suntech and Greenwood Energy from 2007 to 2015.
Prior to that, she was a project and structured finance investment
banker for ABN AMRO Bank and Citibank for ten years in the energy,
infrastructure and telecom industries. Ms. Peterson has served as
a Non-Executive Director, Chair of the Remuneration Committee and a
member of the Audit Committee of Invinity Energy Systems PLC (LSE:
IES), a utility-scale battery energy storage company, since
November 2021. She has been the Co-Chair of Women Corporate
Directors Foundation, San Diego Chapter, a global group of women
corporate board directors since 2016 and has served on the board of
Coalition for Green Capital, a non-profit with a mission to halt
climate change by accelerating investment in clean energy
technologies through creation of a national green bank since 2019.
She was a director of Iteros, Inc., an energy management software
firm, from 2015 to 2020, Greenwood Energy in 2014, Solar Electric
Industry Association from 2011 to 2012, and Gemini Solar
Development Company from 2007 to 2010. Ms. Peterson was awarded
her MBA in Finance and Marketing from the University of Chicago
Booth School of Business and received her B.S. Business
Administration from Boston University. She completed additional
graduate coursework at MIT Sloan School of Management. The Company
believes Ms. Peterson's executive leadership experience in energy,
technology, investment finance and banking organizations, and board
governance experience makes her well qualified to be a member of
the board of directors.
According to the Company, during the last two years, there have
been no transactions or proposed transactions by the Company in
which Ms. Peterson has had or is to have a direct or indirect
material interest, and there are no family relationships between
Ms. Peterson and any of the Company's executive officers or other
directors.
The Company's Board of Directors has determined that Ms. Peterson
is "independent," as independence is defined in the listing rules
for the Nasdaq Stock Market.
With the addition of Ms. Peterson, the Company's Board of Directors
currently consists of nine members.
About Blink Charging
Based in Miami Beach, Florida, Blink Charging Co. (OTC: CCGID)
f/k/a Car Charging Group Inc. -- http://www.CarCharging.com-- is
an owner and operator of electric vehicle (EV) charging equipment
and has sold or deployed over 66,000 chargers, many of which are
networked EV charging stations, enabling EV drivers to easily
charge at any of Blink's charging locations worldwide. Blink's
principal line of products and services is its nationwide Blink EV
charging networks and Blink EV charging equipment, also known as
electric vehicle supply equipment ("EVSE"), and other EV related
services, and the products and services of recent acquisitions,
including SemaConnect, EB Charging, Blue Corner and BlueLA.
Blink Charging reported a net loss of $91.56 million in 2022, a net
loss of $55.12 million in 2021, a net loss of $17.85 million in
2020, a net loss of $9.65 million in 2019, and a net loss of $3.42
million in 2018.
BOMBARDIER INC: S&P Upgrades ICR to 'B', Outlook Stable
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S&P Global Ratings raised its issuer credit rating (ICR) on
Canada-based business aviation company Bombardier Inc. to 'B' from
'B-', and raised its issue-level rating on Bombardier's unsecured
debt to 'B' from 'B-'. The '4' recovery rating on about US$5.6
billion of corresponding notes and debentures is unchanged. S&P
also raised its rating on the company's preferred shares to 'CCC'
from 'CCC-'.
The stable outlook reflects S&P's expectation that Bombardier will
continue to spur earnings growth in the near term predominantly by
executing on its largely contracted backlog, which should aid in
deleveraging to or below 5.5x (S&P Global Ratings-adjusted) over
the next 12 months while maintaining good liquidity.
Solid operational and financial execution should support
sustainable deleveraging. Bombardier management exceeded its (and
our) ambitious targets for revenue, earnings, free cash flow, and
debt repayment through 2022, delivering revenue and S&P Global
Ratings-adjusted EBITDA growth of 13.6% and 44.4%, respectively.
S&P said, "Over the past couple of years, the company significantly
improved its profitability by executing cost-efficiency
initiatives, driving operating margin improvement from a
low-single-digit percentage to our expectation of more than 9% in
2023--levels closer to those of peers such as General Dynamics
Aerospace and Textron Aviation. In our view, Bombardier is managing
supply chain risks affecting the industry well by proactively
engaging with its suppliers, insourcing certain parts, and building
excess inventory. At the same time, its strategy of growing the
arguably more resilient higher-margin after-market services segment
is working well, expanding more than 20% in each of 2021 and 2022
through share gain as well as robust flight activity. In March
2023, management raised its 2025 aircraft production guidance and
financial targets, aiming to deliver approximately 150 aircraft
(versus 123 in 2022) and for revenue and reported EBITDA to be
greater than US$9.00 billion and US$1.63 billion, respectively,
reflecting growth of about 30% and 75% from 2022 levels. Also, the
company is guiding to annual free cash flow of more than US$900
million by 2025. While our revised base-case scenario reflects more
conservative assumptions compared with these ambitious targets
(which arguably reflect favorable market conditions), we believe
management can continue to spur operating leverage, and at least
sustain its improved profitability and meaningfully positive free
cash flow profile over the next couple of years as it executes on
its largely contracted backlog and protects its market position
with a relatively refreshed and competitive business jet portfolio.
Our improved conviction around Bombardier management's ability to
spur mid-to-high teen percentage earnings growth over the next
couple of years and its desire to create and sustain significant
financial flexibility (including deleveraging from opportunistic
debt repayments) to weather operational and market risks, is a key
driver of our upgrade on the company."
S&P said, "We believe Bombardier can manage to softer market
conditions. Business and private jet flight activity has slowed
since late-summer 2022, and we expect traffic in North America and
Europe will weaken this year, albeit remaining modestly higher than
pre-pandemic levels. While new aircraft orders for the industry saw
a strong rebound in 2022, we anticipate more muted levels for
2023--largely in-line with the 0.9x unit bookings-to-billings at
Bombardier in first-quarter 2023. We believe factors contributing
to a normalization of sales include above-average orders in
previous years (Bombardier posted a 1.4x unit book-to-bill in
2022), including from fleet operators; the moderation in the
economy coupled with ongoing geopolitical tensions; capital market
dislocation; higher borrowing costs; and arguably steady
improvements at commercial airlines, which could act as a
substitute to some extent. Nevertheless, we continue to believe
Bombardier can produce modest earnings growth during this period
(assuming a moderate short-lived industry downturn) while
preserving much of its liquidity. Bombardier has an attractive
revenue backlog of more than two years. We understand the aircraft
mix is diversified and contract structures (unique to the current
cycle) provide meaningful financial disincentives to cancel,
although we recognize that there could be some deferral risk. In
addition, the supply of new aircraft within Bombardier's target
segments is still tight compared with historical levels. Also, the
level of business jet production in the industry is low compared
with historical measures, and supply had already declined before a
potential downturn owing to the COVID-19 pandemic and supply-chain
challenges. Finally, we expect Bombardier management will be
disciplined and act to protect the company's improved profitability
in aircraft manufacturing, and we believe it can continue to spur
growth in its higher-margin aftermarket services segment from share
gain, given significant expansion investments through early 2023.
Lower order intake, however, could affect current-period cash flow
as well as future earnings. However, against our current economic
and market assumptions, we believe such risks are manageable. We
estimate the cash flow sensitivity to a 10% change in net order
intake is US$120 million-US$150 million depending on the degree of
mitigation effected by the company, all else being equal.
"Corporate actions could spur credit enhancement longer-term. We
view Bombardier's recent announcements that it will pursue
investments in expanding its defense and used aircraft retrofit
(certified pre-owned) businesses as opportunities to diversify its
operations into areas that we could view as less cyclical.
Bombardier has stated the potential for the defense segment to
contribute more than US$1 billion in annual revenue beyond 2025,
with an attractive profitability and return prospect. To the extent
Bombardier remains competitive with its business jet aircraft
portfolio and successfully exploits these potential new markets, we
could consider reassessing our business risk profile on the company
given its larger scale, revenue diversification, and competitive
profitability. However, we understand that these initiatives,
especially defense, could take time to commercialize.
"Bombardier remains committed to financial flexibility through
deleveraging, in our view. In 2023, Bombardier repaid about US$400
million of long-term debt and refinanced all but US$380 million of
its maturities through 2025. We believe management will remain
opportunistic and proactive in addressing its sizable 2026 and 2027
maturities over the next couple of years and will strive to even
out its long-term debt maturity profile. We also believe management
is committed to sustaining strong financial flexibility to absorb
market disruptions, operational challenges, or the timely pursuit
of longer-term strategic investments to remain competitive.
Accordingly, Bombardier recently tightened its 2025 net debt
leverage target to 2.0-2.5x from approximately 3.0x. Based on our
base-case scenario, we expect the company will deleverage to below
6x (S&P Global Ratings-adjusted; excludes cash and cash
equivalents) this year and to below 5x by 2024--credit metrics that
we believe are supportive of the ratings and afford the company
some flexibility. We also expect the company to protect much of its
sizable liquidity, which includes cash and cash equivalents of
US$1.14 billion as of March 31, 2023, and about US$279 million of
availability under its US$300 million asset-based lending (ABL)
credit facility due 2027.
"The stable outlook reflects our expectation that Bombardier will
continue to spur earnings growth in the near term predominantly by
executing on its largely contracted US$14.8 billion backlog, which
should aid deleveraging to or below 5.5x (S&P Global
Ratings-adjusted) over the next 12 months while maintaining good
liquidity.
"We could consider downgrading the company over the next 12 months
if we believe management fails to execute its growth and
deleveraging strategy, and its adjusted debt-to-EBITDA ratio stays
well above 6x by year-end 2023, with poor prospects of near-term
improvement. This could occur if the business jet industry
experiences a worse-than-expected downturn due to sharply
deteriorating macroeconomic and capital market conditions, or if
supply-chain or other operational disruptions negatively affect
Bombardier's profitability and earnings.
"We could upgrade the company over the next 12 months if we believe
it can delever at a faster pace, such that its adjusted
debt-to-EBITDA ratio approaches 4x by 2024--a stricter threshold
reflecting the company's participation in a highly cyclical
industry and limited scope of products. In this scenario, we would
expect Bombardier to profitably deliver upon its expanded business
jet production, sustain or increase its order book (which
underscores a favorable market for business aviation), and address
its longer-term debt maturities, potentially including some debt
paydown from improving discretionary cash flow generation. We would
also expect the company to at least maintain adequate liquidity."
ESG credit indicators: E-2, S-3, G-3
Social factors are a moderately negative consideration in S&P's
credit rating analysis of Bombardier. Demand (and supply) for the
company's business jets and maintenance, repair, and overhaul
services were hampered by the pandemic, as evidenced by close to
20% reduction in deliveries in 2020, and ongoing risks to the
company's supply chain remain a credit consideration. Product
safety is another key risk in the business jet market, but
Bombardier has not had issues in recent years in its business
aviation operations.
Governance factors are also a moderately negative consideration.
Management turnover, operational missteps, and a material shift of
business strategy contributed to a significant increase in debt
leverage and value erosion. S&P recognizes, however, that new
leadership since 2021 has meaningfully improved operating
efficiency and is executing well on its ambitious operational and
financial targets.
BRAVO MULTINATIONAL: 63% Ownership Transferred to 13 Entities
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Bravo Multinational, Incorporated disclosed in a Form 8-K filed
with the Securities and Exchange Commission that as a result of a
private transaction, the control block of voting stock of the
Company representing an ownership interest of approximately 63% has
been transferred from the seller Merle Ferguson initially to
Diversified Consulting, LLC, and then ultimately to the following
owners:
United Resources, LLC, controlled by Mr. Chad Doher
Broco Global, LLC, controlled by Mr. Gabe Doher
WTFJ Investments LLC, controlled by Mr. Wayne Jefferies
TSMS, LLC, controlled by Mr. Timothy Shelburn
Greenstem Consulting LLC, controlled by Ms. Kayla Slick
MBS 16 LLC, controlled by Ms. Marissa Shelburn
La La La, LLC, controlled by Mr. Brian Lemke
Carbon Capital Corp, controlled by Mr. David Appel
Executive Real Estate, controlled by Mr. Paul D'Agnese
Roman Investments PR LLC, controlled by Mr. Roman Vintfeld
The MDW & GRW Irrevocable Trust, controlled by Michael
Williams
Mr. Josh Rowland, Individually
Mr. Richard Tavano, Individually
The consideration for the shares was a cash payment of $600,000.
The source of cash consideration for the shares was personal and
corporate funds of the purchasers.
About Bravo Multinational
Based in Ontario, Canada, Bravo Multinational Incorporated --
http://www.bravomultinational.com-- is currently engaged in the
business of leasing and selling gaming equipment. The Company,
however, ceased operations in Nicaragua in 2017 due to political
and economic instabilities. The Company is planning to operate its
business in the US and other more stable democracies in Latin
America.
Bravo Multinational reported a net loss of $528,058 for the year
ended Dec. 31, 2022, compared to a net loss of $420,126 for the
year ended Dec. 31, 2021. As of Dec. 31, 2022, the Company had $73
in total assets, $1.77 million in total liabilities, and a total
stockholders' deficit of $1.77 million.
Lakewood, CO-based BF Borgers CPA PC, the Company's auditor since
2017, issued a "going concern" qualification in its report dated
March 6, 2023, citing that the Company has suffered recurring
losses from operations and has a significant accumulated deficit.
CAMBER ENERGY: Two Investors Agree to Cancel Warrants
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Camber Energy, Inc. disclosed in a Form 8-K filed with the
Securities and Exchange Commission entered into two warrant
termination agreements with Antilles Family Office, LLC and
Discover Growth Fund, LLC, the investors, pursuant to which each
Investor agreed to cancel and terminate, effective as of April 25,
2023 all warrants to purchase Camber's common stock outstanding
under (i) that certain Warrant Agreement, dated as of Dec. 30,
2021, by and between the Company and the Investor named therein,
and (ii) that certain Warrant Agreement, dated as of Dec. 31, 2021,
by and between the Company and the Investors.
The Warrant Termination Agreements are identical as to their terms.
The Investors entered into the Warrant Termination Agreements in
order to help facilitate implementation of the Company's business
plans and continued trading on the NYSE American LLC, and, in
exchange for the Termination, the Company agreed to the release and
indemnity as provided in each Warrant Termination Agreement.
Pursuant to the Warrant Termination Agreement, the Investor also
agreed that the Company may make an Early Redemption of any
remaining shares of Series C Redeemable Convertible Preferred Stock
held by the Investor provided that all Promissory Notes executed by
the Company in favor of the Investor or any of its affiliates have
been paid in full. The term "Early Redemption" has the meaning
given to it in the Fifth Amended and Restated Certificate of
Designations of Preferences, Powers, Rights and Limitations of
Series C Redeemable Convertible Preferred Stock filed by the
Company with the State of Nevada regarding such class of preferred
stock.
About Camber Energy
Based in Houston, Texas, Camber Energy, Inc. --
http://www.camber.energy-- is a growth-oriented diversified energy
company. Through its majority-owned subsidiary, Camber provides
custom energy & power solutions to commercial and industrial
clients in North America and owns interests in oil and natural gas
assets in the United States. The company's majority-owned
subsidiary also holds an exclusive license in Canada to a patented
carbon-capture system, and has a majority interest in: (i) an
entity with intellectual property rights to a fully developed,
patent pending, ready-for-market proprietary Medical & Bio-Hazard
Waste Treatment system using Ozone Technology; and (ii) entities
with the intellectual property rights to fully developed, patent
pending, ready-for-market proprietary Electric Transmission and
Distribution Open Conductor Detection Systems.
Camber Energy reported a net loss attributable to the company of
$107.74 million for the year ended Dec. 31, 2022, a net loss
attributable to the company of $169.68 million for the year ended
Dec. 31, 2021, compared to a net loss attributable to the company
of $52.01 million for the nine months ended Dec. 31, 2020.
Dallas, Texas-based Turner, Stone & Company, L.L.P., the Company's
auditor since 2021, issued a "going concern" qualification in its
report dated March 17, 2023, citing that the Company has suffered
recurring losses from operations, has a stockholder deficit and has
a net capital deficiency that raises substantial doubt about its
ability to continue as a going concern.
CBAK ENERGY: Falls Short of Nasdaq Minimum Bid Price Requirement
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CBAK Energy Technology, Inc. received notice from the Listing
Qualifications staff of The Nasdaq Stock Market LLC on April 24,
2023 notifying the Company that it is currently not in compliance
with the minimum bid price requirement set forth under Nasdaq
Listing Rule 5550(a)(2), which requires listed securities to
maintain a minimum bid price of US$1.00 per share.
Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet
the minimum bid price requirement exists if the deficiency
continues for a period of 30 consecutive business days. Based on
the closing bid price of the Company's common stock for the 30
consecutive business days from March 10 through April 21, 2023, the
Company no longer meets the minimum bid price requirement. The
Notice has no immediate effect on the listing of the Company's
common stock, which will continue to trade uninterrupted on Nasdaq
under the ticker "CBAT".
Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company has a
compliance period of 180 calendar days, or until Oct. 23, 2023, to
regain compliance with Nasdaq's minimum bid price requirement. If
at any time during the Compliance Period, the closing bid price per
share of the Company's common stock is at least $1.00 for a minimum
of 10 consecutive business days, Nasdaq will provide the Company a
written confirmation of compliance and the matter will be closed.
In the event the Company does not regain compliance with the
minimum bid price requirement by Oct. 23, 2023, the Company may be
eligible for an additional 180-calendar day grace period. If the
Company does not qualify for the second compliance period or fails
to regain compliance during the second 180-day period, then Nasdaq
will notify the Company of its determination to delist the
Company's common stock, at which point the Company will have an
opportunity to appeal the delisting determination to a Hearings
Panel.
About CBAK Energy
Liaoning Province, People's Republic of China-based CBAK Energy --
www.cbak.com.cn -- is a manufacturer of new energy high power
lithium batteries that are mainly used in light electric vehicles,
electric vehicles, electric tools, energy storage including but not
limited to uninterruptible power supply (UPS) application, and
other high-power applications. Its primary product offering
consists of new energy high power lithium batteries, but it is also
seeking to expand into the production and sale of light electric
vehicles.
CBAK Energy reported a net loss of $11.33 million for the year
ended Dec. 31, 2022, compared to net income of $61.56 million for
the year ended Dec. 31, 2021. As of Dec. 31, 2022, the Company had
$244.03 million in total assets, $119.65 million in total
liabilities, and $124.38 million in total equity.
Hong Kong, China-based Centurion ZD CPA & Co., the Company's
auditor since 2016, issued a "going concern" qualification in its
report dated April 14, 2023, citing that the Company has
accumulated deficit from recurring net losses and significant
short-term debt obligations maturing in less than one year as of
Dec. 31, 2022. All these factors raise substantial doubt about its
ability to continue as a going concern.
CI FINANCIAL: S&P Lowers ICR to 'BB+' Then Withdraws Rating
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Following CI Financial Corp.'s request to withdraw its ratings, S&P
Global Ratings said it lowered its issuer credit and senior
unsecured debt ratings on CI Financial Corp. to 'BB+' from 'BBB-'.
The rating outlook is revised to stable from negative. At the same
time, S&P assigned a recovery rating of '4' to the senior unsecured
debt, indicating an expectation for an average recovery (as defined
in its ratings criteria) in the event of a default. Subsequently,
S&P withdrew all ratings on CI.
The downgrade reflected S&P's current expectation that CI would
operate with debt to EBITDA of 4.0x-5.0x over the next 12 months.
Ratings List
DOWNGRADED; RECOVERY ASSIGNED
TO FROM
CI FINANCIAL CORP.
Senior Unsecured BB+ BBB-
Recovery Rating 4(45%)
DOWNGRADED; OUTLOOK ACTION
TO FROM
CI FINANCIAL CORP.
Issuer Credit Rating BB+/Stable/-- BBB-/Negative/--
RATINGS WITHDRAWN
TO FROM
CI FINANCIAL CORP.
Senior Unsecured NR BB+
Recovery Rating NR 4(45%)
CI FINANCIAL CORP.
Issuer Credit Rating NR/NR BB+/Stable/--
CINEWORLD GROUP: Class 5A Unsecureds to Get 0.3-0.5% in Plan
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Cineworld Group PLC, et al. submitted an Amended Joint Chapter 11
Plan of Reorganization and a Disclosure Statement.
Recognizing the need to pursue a more comprehensive restructuring
solution, in August 2022, the Debtors began preparations for the
commencement of these Chapter 11 Cases. In the lead up to the
Petition Date, the Debtors negotiated with certain of their
then-current lenders regarding the terms of a debtor-in-possession
financing facility. These negotiations resulted in entry into a
$1.935 billion superpriority, senior secured, multi-draw priming
term loan facility (the "DIP Facility").
On Sept. 8, 2022, the Bankruptcy Court held a "first day hearing"
at which the Bankruptcy Court entered, among other things, the
Interim DIP Order. The Interim DIP Order granted the Debtors access
to $514 million of the DIP Facility on an interim basis to be used
for working capital needs during the pendency of these Chapter 11
Cases, and $271 million to effectuate the purchase of the RoW
Facility by Debtor Busby AssignCo, LLC. The Interim DIP Order
further provided that $1.0 billion (the "Priming Loan Refinancing
Amount") would be placed into an escrow account under the control
of the DIP Lenders and, upon entry of a final order approving the
DIP Facility, would be used to refinance the Prepetition Priming
Facility.
In the weeks leading up to the final hearing on the DIP Facility,
the Debtors, the Creditors' Committee, the DIP Lenders, and the
Debtors' landlord constituency engaged in extensive negotiations to
achieve a consensual proposed order approving the DIP Facility on a
final basis. The consensual proposed order approving the DIP
Facility on a final basis incorporated a deal between the
Creditors' Committee and the DIP Lenders, which the Debtors
supported, providing for, among other things, (i) an agreement to
pay at least $20 million in "stub rent" owing to the Debtors'
landlords in accordance with an agreed-upon schedule, (ii) liens
and superpriority administrative expense claims for postpetition
intercompany transfers, (iii) no adequate protection liens against
entities that are not obligors of the debt, and (iv) the Debtors'
agreement to pursue a marketing process for the Debtors' business
and operations (but excluding an acquisition of the equity
interests in Cineworld Parent itself) in accordance with certain
agreed upon milestones (the "Marketing Process"). On October 31,
2022, following an uncontested hearing, the Bankruptcy Court
entered the Final DIP Order5 and, soon thereafter, the Priming Loan
Refinancing Amount was disbursed to refinance the Prepetition
Priming Facility.
Marketing Process
Seeking to build on the consensus established through the DIP
Facility negotiations, the Debtors provided the Ad Hoc Group with a
proposal setting forth the terms of a comprehensive restructuring
transaction. Soon thereafter, the Debtors, with the assistance of
their advisors and in coordination with the Ad Hoc Group and the
Creditors' Committee, commenced the first phase of Marketing
Process.
In January 2023, the Debtors' investment banker, PJT Partners LP
("PJT") initiated outreach to potential transaction parties. In
total, the Debtors reached out to over forty parties, including
various institutional investment firms and strategic bidders in the
cinema industry. Fourteen of these parties entered into
confidentiality agreements with the Debtors. The Debtors provided
those parties that executed a confidentiality agreement with access
to a virtual data room which included: (a) a presentation on the
Debtors' go-forward business plan, (b) a process letter, (c) a
teaser summary of the business, and (d) a form through which the
counterparty could address questions to the Debtors. Interested
parties were invited to participate in further discussions with PJT
regarding the Debtors' industry, business, and the facts and
circumstances of these chapter 11 cases. Subsequently, ahead of the
agreed-upon deadline of February 16, 2023, the Debtors received a
number of written indications of interest for an acquisition of
some or all of the Debtors' assets.
While the Debtors received indicative proposals for strategic
transactions involving the Debtors' entire business (including
their businesses in the United States, the United Kingdom, and
Ireland) (a "WholeCo Transaction"), none of these proposals
involved an all-cash bid for the entire business. The Debtors and
their advisors held meetings with such bidders and provided the
bidders with requested diligence. However, the Debtors and the Ad
Hoc Group jointly determined that, absent an all-cash bid
significantly in excess of the valuation underpinning the
transactions set forth in the Restructuring Support Agreement, the
Debtors would not continue the process towards completion of a
WholeCo Transaction. After evaluating the indications of interest
received through the first phase of the Marketing Process, the
Debtors, in conjunction with the Ad Hoc Group, determined that the
Marketing Process should continue with a focus on Cineworld's "Rest
of World" business encompassing its operations in Bulgaria, Czech
Republic, Hungary, Israel, Poland, Romania, and Slovakia. More
specifically, the proposals contemplated an acquisition of Debtor
Crown UK HoldCo Limited's equity interests in Crown NL Holdco BV
(such interests, the "RoW Equity"). Accordingly, the Debtors and
PJT initiated a second phase of the Marketing Process with the goal
of eliciting binding bids for the sale of the RoW Equity by a
deadline of April 10, 2023 (the "Bid Deadline"). While the Debtors
received several bids ahead of the Bid Deadline, the proposals
received did not reach the value required by the Ad Hoc Group to
pursue a sale of the RoW Equity. Accordingly, the Debtors and the
Ad Hoc Group have jointly terminated the Marketing Process.
Standalone Restructuring
In parallel with administering the Marketing Process, the Debtors
continued negotiations with the Ad Hoc Group with respect to a
standalone restructuring transaction. In early February, following
a lengthy diligence process, the Debtors received a response to the
standalone restructuring proposal they provided to the Ad Hoc
Group. On April 2, 2023, after extensive hard-fought, arm's-length
negotiations, the Debtors and the Consenting Creditors entered into
the Restructuring Support Agreement, the terms of which are
embodied in the Plan and this Disclosure Statement. The Plan
provides for a comprehensive restructuring transaction that will
(a) reduce the Debtors' funded indebtedness by approximately $4.53
billion through an equitization of the Allowed Legacy Facilities
Claims, (b) raise $800 million in aggregate gross proceeds through
the Direct Equity Allocation and the Rights Offering, which is
fully backstopped by the Equity Capital Raising Parties, to fund
the costs associated with the Debtors' emergence from these Chapter
11 Cases with any remainder to be used for general corporate
purposes, (c) provide the Debtors with $1.46 billion, net of any
original issuance discount (subject to downward adjustment based
upon the net sale proceeds realized through any Partial Sale), in
exit debt financing, which would be raised either through a
comprehensive third-party financing process or through an exit debt
facility provided by the Sponsored Facility Capital Raising
Parties, and (d) provide the Debtors with the ability to enter into
an up to $200 million in exit revolver financing, in each case, to
fund the Debtors' go-forward business operations.
Critically, the RSA reflects a global settlement reached between
the Debtors, the Ad Hoc Group, the Consenting Creditors, and the
Creditors' Committee (the "Committee Settlement"). Among other
things, the Committee Settlement provides that the Plan will
establish a post-Plan effective date litigation trust (the
"Litigation Trust"). In accordance with the Committee Settlement,
on the Plan Effective Date, the Debtors incorporated in the United
States' will transfer, or will cause to be transferred, to the
Litigation Trust (a) $10 million in Cash, (b) all of their rights,
title, and interests in the Estates's claims under the class action
lawsuit captioned In re Payment Card Interchange Fee and Merchant
Discount Antitrust Litigation, MDL 1720 (MKB) (JO) (E.D.N.Y.) and
under any such similar class action against credit card issuers
arising from similar allegations as those set forth in the
Interchange Litigation (the "Interchange Litigation," and such
claims, the "Interchange Litigation Claims") as may be identified
on or after the Effective Date, and (c) $500,000 in Cash for the
administration of the Litigation Trust, including the disposition
of the Interchange Litigation Claims and the reconciliation of
General Unsecured Claims held by beneficiaries of the Litigation
Trust for purposes of distributions. Holders of Allowed General
Unsecured Claims shall, in accordance with the allocation
determined by the Creditors' Committee, receive their allocable
share of (a) $10 million in Cash and (b) interests in the
Litigation Trust representing a right to recovery of (i) the first
$5 million of Cash recovered by the Litigation Trust from the
Interchange Litigation Claims and (ii) 50% of any Cash recovered in
excess of $5 million in connection with such claims. In addition,
the Plan provides for the payment of the reasonable and documented
expenses of BNY Mellon Corporate Trustee Services Limited, in its
capacity as indenture trustee for the Convertible Bonds, in an
amount not to exceed $700,000.
Lien Facility will be ratably reduced in an amount equal to the
proceeds of any RoW Equity sale Further, as part of the Committee
Settlement, (a) the Holders of Legacy Facilities Claims will not
receive any recovery on account of their deficiency claims and any
adequate protection claims for diminution of value beyond what is
set forth in Article III.F of this Disclosure Statement for "Class
4 Legacy Facilities Claims" and (b) all Avoidance Actions will be
released and waived under the Plan.
Under the Plan, Class 5A General Unsecured Claims Against the Class
5A Debtors total $1.41 billion to $1.45 billion. Each Holder of an
Allowed General Unsecured Claim in Class 5A will receive its
applicable share of the GUC Recovery Pool. Creditors will recover
0.3 to 0.5% of their claims. Class 5A is impaired.
Class 5B General Unsecured Claims Against the Class 5B Debtors
total $224.4 million to $916.4 million. Each Holder of an Allowed
General Unsecured Claim in Class 5B shall receive its Pro Rata
share of 60% of the GUC Recovery Pool. Creditors will cover
0.7-4.8% of their claims. Class 5B is impaired.
The Debtors and the Reorganized Debtors, as applicable, shall fund
distributions under the Plan with (1) proceeds from the Exit First
Lien Facility, (2) proceeds from the Direct Equity Allocation and
Rights Offering, (3) the New Common Stock, and (4) Cash on hand.
The solicitation mailing date will be on April 28, 2023. The Plan
supplement filing deadline will be on May 26, 2023. The voting
deadline will be on June 2, 2023 at 3:00 p.m. (prevailing Central
Time). The 3018 motion deadline will be on June 2, 2023 at 3:00
p.m. (prevailing Central Time). The Plan and Disclosure Statement
objection deadline will be on June 2, 2023 at 5:00 p.m. (prevailing
Central Time). The deadline to file voting report will be on June
11, 2023. The confirmation hearing date will be on June 12, 2023
at 8:00 a.m. (prevailing Central Time), or such other date as may
be scheduled by the Bankruptcy Court.
Co-Counsel to the Debtors:
Joshua A. Sussberg, Esq.
Ciara Foster, Esq.
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
601 Lexington Avenue
New York, NY 10022
Telephone: (212) 446-4800
Facsimile: (212) 446-4900
E-mail: joshua.sussberg@kirkland.com
ciara.foster@kirkland.com
- and -
Matthew D. Cavenaugh, Esq.
Rebecca Blake Chaikin, Esq.
Veronica A. Polnick, Esq.
Vienna Anaya, Esq.
JACKSON WALKER LLP
1401 McKinney Street, Suite 1900
Houston, TX 77010
Telephone: (713) 752-4200
Facsimile: (713) 752-4221
E-mail: mcavenaugh@jw.com
rchaikin@jw.com
vpolnick@jw.com
vanaya@jw.com
A copy of the Disclosure Statement dated April 19, 2023, is
available at https://bit.ly/3LlUyW4 from PacerMonitor.com.
About Cineworld
Group
London-based Cineworld Group PLC was founded in 1995 and is the
world's second-largest cinema chain. Cineworld operates 751 sites
with 9,000 screens in 10 countries, including the Cineworld and
Picturehouse screens in the UK and Ireland, Yes Planet in Israel,
and Regal Cinemas in the United States.
According to The Guardian, the Griedinger family, including Mooky's
brother and deputy chief executive, Israel, have struggled to
maintain control of the ailing business but have been forced to
reduce their stake from 28% in recent years. Cineworld's top five
investors include the Chinese Jangho Group at 13.8%, Polaris
Capital Management (7.82%), Aberdeen Standard Investments (4.98%)
and Aviva Investors (4.88%).
The London-listed Cineworld, which has run up debt of more than
$4.8 billion after losses soared during the pandemic, is pinning
its hopes on a meatier slate of movies in 2022 to bounce back from
a two-year lull.
Cineworld Group plc and 104 affiliates sought Chapter 11 protection
(Bankr. S.D. Texas Lead Case No. 22-90168) on Sept. 7, 2022,
estimating more than $1 billion in assets and debt. Judge Marvin
Isgur oversees the cases.
The Debtors tapped Kirkland & Ellis, LLP and Jackson Walker, LLP as
bankruptcy counsels; PJT Partners, LP as investment banker;
AlixPartners, LLP as restructuring advisor; and Ernst & Young, LLP
as tax services provider. Kroll Restructuring Administration, LLC
is the claims agent.
The U.S. Trustee for Region 7 appointed an official committee of
unsecured creditors in the Debtors' Chapter 11 cases on Sept. 23,
2022. The committee tapped Weil, Gotshal & Manges, LLP and
Pachulski Stang Ziehl & Jones, LLP as legal counsels; FTI
Consulting, Inc., as financial advisor; and Perella Weinberg
Partners, LP as investment banker.
CNX RESOURCES: Posts $710.4 Million Net Income in First Quarter
---------------------------------------------------------------
CNX Resources Corporation has filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q disclosing
net income of $710.39 million on $455.64 million of natural gas,
NGLs and oil revenue for the three months ended March 31, 2023,
compared to a net loss of $922.94 million on $744.62 million of
natural gas, NGLs and oil revenue for the three months ended March
31, 2022.
As of March 31, 2023, the Company had $8.34 billion in total
assets, $4.77 billion in total liabilities, and $3.56 billion in
total stockholders' equity.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1070412/000107041223000071/cnx-20230331.htm
About CNX Resources
CNX Resources Corporation is an independent natural gas
development, production, and midstream company, with operations
centered in the major shale formations of the Appalachian basin.
CNX Resources reported a net loss of $142.08 million in 2022, a net
loss of $498.64 million in 2021, and a net loss of $428.74 million
for the year ended Dec. 31, 2020.
* * *
This concludes the Troubled Company Reporter's coverage of CNX
Resources until facts and circumstances, if any, emerge that
demonstrate financial or operational strain or difficulty at a
level sufficient to warrant renewed coverage.
COX INDUSTRIAL: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Cox Industrial Services, LLC
f/d/b/a CGK Industries AZ, LLC
7127 E. Gila Ridge Road
Yuma, AZ 85365
Business Description: COX Industrial Services is a multi-trade
industrial based company that offers
services for the following trades: custom
metal fabrication, structural steel
fabrication and erection, and industrial
refrigeration.
Chapter 11 Petition Date: May 2, 2023
Court: United States Bankruptcy Court
District of Arizona
Case No.: 23-02866
Judge: Hon. Scott H. Gan
Debtor's Counsel: Thomas H. Allen, Esq.
ALLEN, JONES & GILES, PLC
1850 N. Central Avenue, Suite 1150
Phoenix, AZ 85004
Tel: 602-256-6000
Fax: 602-252-4712
Email: tallen@bkfirmaz.com
Total Assets as of Dec. 31, 2022: $5,793,413
Total Liabilities as of Dec. 31, 2022: $4,238,957
The petition was signed by Randy Cox as owner.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 20 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/XA6ULHY/COX_INDUSTRIAL_SERVICES_LLC__azbke-23-02866__0001.0.pdf?mcid=tGE4TAMA
CRAFTSMAN ROOFING: Commences Subchapter V Bankruptcy Case
---------------------------------------------------------
Craftsman Roofing Services Inc. filed for chapter 11 protection in
the Eastern District of North Carolina. The Debtor elected on its
voluntary petition to proceed under Subchapter V of chapter 11 of
the Bankruptcy Code.
The Debtor is in the business of commercial and residential roof
construction. It has offices in both Lynchburg, Virginia, and
Raleigh, North Carolina.
The Debtor has filed with the Bankruptcy Court motions to use cash
collateral, and pay employee wages.
According to court filings, Craftsman Roofing Services estimates $1
million to $10 million in debt to 1 to 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
May 22, 2023 at 10:00 a.m. at Raleigh 341 Meeting Room.
About Craftsman Roofing Services, Inc.
Craftsman Roofing Services, Inc. sought protection under Chapter 11
of the U.S. Bankruptcy Code (Bankr. E.D.N.C. Case No. 23-01013) on
April 13, 2023. In the petition signed by Russell Vandiver,
president, the Debtor disclosed up to $10 million in both assets
and liabilities.
The Honorable Bankruptcy Judge Pamela W Mcafee handles the case.
Philip M. Sasser, Esq., at Sasser Law Firm, serves as counsel to
the Debtor.
CROWDSTRIKE HOLDINGS: Moody's Ups CFR to Ba1 & Unsec. Notes to Ba2
------------------------------------------------------------------
Moody's Investors Service upgraded CrowdStrike Holdings, Inc.'s
Corporate Family Rating to Ba1, from Ba2, Probability of Default
Rating to Ba1-PD, from Ba2-PD, and the rating for the company's
senior unsecured notes to Ba2, from Ba3. The ratings outlook was
changed to positive, from stable. These actions reflects
CrowdStrike's strong growth prospects and Moody's expectations for
further strengthening of the company's credit profile.
Upgrades:
Issuer: CrowdStrike Holdings, Inc.
Corporate Family Rating, Upgraded to Ba1 from Ba2
Probability of Default Rating, Upgraded to Ba1-PD from Ba2-PD
Senior Unsecured Regular Bond/Debenture, Upgraded to Ba2 from Ba3
Outlook Actions:
Issuer: CrowdStrike Holdings, Inc.
Outlook, Changed To Positive From Stable
RATINGS RATIONALE
The ratings upgrade reflects CrowdStrike's strong operating
performance and growth prospects. Moody's analyst Raj Joshi said,
"CrowdStrike has established a strong track record of execution
that is reflected in the expanding capabilities of its Falcon
platform largely through organic innovation, new customer growth,
success in cross-selling software modules, and solid revenue
retention rates." CrowdStrike is the market share leader in the
modern endpoint security market. Moody's believes that the company
has structural advantages against legacy endpoint security
solutions from its cloud-based security offerings, proprietary
crowdsourced graph database, and the single, lightweight agent that
detects and prevents security breaches. CrowdStrike benefits from
secular tailwinds from growing spending on information technology
security, digital transformation of business processes, and
proliferation of endpoints connected to the networks and workloads.
Moody's expects CrowdStrike to achieve or surpass its goal of
nearly doubling Annual Recurring Revenues (ARR) to $5 billion over
the next 3 years. Growing scale and operating leverage will
continue to drive operating margin expansion toward the company's
long-term target of 20% to 22%-plus (non-GAAP basis). CrowdStrike
has strong liquidity with $2.7 billion of cash and short-term
investments and Moody's expects free cash flow of approximately $1
billion in FY '24. The rating is further supported by CrowdStrike's
growing backlog of remaining performance obligations ($3.4 billion
at FYE '23).
Moody's expects CrowdStrike's operating income under US GAAP to
remain negative through at least FY '24, as a result of the
company's large stock-based compensation expense. Total debt to
EBITDA (incorporating Moody's standard analytical adjustments,
expensing of capitalized software development expenses, growth in
unearned revenues, and cash costs to acquire sales contracts) was
about 1.2x at FYE '23, and if debt does not increase, Moody's
expects it to decline to 1x by the end of FY '24. CrowdStrike
operates in highly fragmented and intensely competitive segments of
the cybersecurity market that are further characterized by rapidly
evolving technologies. The majority of CrowdStrike's growth has
come from protecting endpoints in on-premise environments but
Moody's expects a significant share of growth over the long-term
will come from protecting endpoints and workloads in the cloud. As
a cybersecurity solutions provider, the company has above-average
risk of reputational harm and adverse impact on its business in the
event of vulnerabilities in its cybersecurity offerings.
The Ba1 CFR reflects Moody's expectations that CrowdStrike will
maintain conservative financial policies, including pursuing
moderate-sized acquisitions consistent with the historical pattern
that were largely funded with internal cash resources. Moody's does
not expect CrowdStrike to initiate a dividend or repurchase shares
over the next several years. However, the company's financial
policies will evolve over time as it grows in scale, generates
large free cash flow, builds sizeable cash balances, and dilution
from share-based compensation increases.
The positive outlook reflects Moody's expectation for strong free
cash flow growth over the next 12 to 18 months as the company
continues to make progress toward its target of $5 billion in ARR
by the end of FY '26 and operating margins above 20% in FY '25.
The SGL-1 rating reflects CrowdStrike's strong cash position, an
undrawn $750 million revolving credit facility, and approximately
$1 billion in free cash flow in FY '24.
The Ba2 rating for the senior unsecured notes reflects the
subordination of the notes to any borrowings under the $750 million
revolving credit facility, which are secured by a first priority
security interest in the assets of material domestic subsidiaries
of the borrower. The obligations under the senior notes are
guaranteed by the subsidiaries that guarantee the obligations under
the senior secured revolving credit facility.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade CrowdStrike's ratings if the company
maintains strong revenue growth rates and establishes a longer
track record of conservative financial policies, including strong
cash balances and low debt levels. Although not expected, the
rating could be downgraded if revenue growth rates decelerate
meaningfully, or the anticipated operating margin expansion and
free cash flow growth fail to materialize. In addition, shifts in
financial policy that favor large shareholder capital returns or
large, debt-funded acquisitions that erode liquidity or weaken free
cash flow relative to total debt could trigger a downgrade. The
rating could be downgraded if total debt to EBITDA (incorporating
Moody's standard analytical adjustments, expensing of capitalized
software development expenses, growth in unearned revenues, and
cash costs to acquire sales contracts) is expected to remain above
3x.
CrowdStrike provides cloud-based information technology security
products as part of its CrowdStrike Falcon platform, and related
services.
The principal methodology used in these ratings was Software
published in June 2022.
CROWN COMMERCIAL: Unsecureds Owed $160K Unimpaired in Plan
----------------------------------------------------------
Crown Commercial Real Estate and Development, LLC, submitted a
Chapter 11 Plan of Reorganization and a Disclosure Statement dated
April 19, 2023.
The Plan proposes and is contingent upon the sale of substantially
all of the Debtor's assets, including without limitation the
Property and Collateral pursuant to an Asset Purchase Agreement
(the "Sale Transaction").
The Plan provides for 4 total classes including one class of
secured creditors, one class of non-priority tax claims, one class
of unsecured claims, and one class of equity claims. All
Administrative Expenses and Priority Tax claims, if any, will be
paid in full on the Effective Date of the Plan. Unsecured creditors
holding Allowed Claims would be paid 100% of allowed claims 14 days
following the Effective Date. The Allowed Secured Claim of the
Lender will be paid $20,500,000 at the Closing of the Sales
Transaction less any Earnest Money Deposits, in full satisfaction
of its claim (as settled pursuant to the Settlement Agreement and
the Settlement Order) and the Lender shall waive and release any
unsecured claim for any deficiency balance under the Loan Documents
and release all liens with its liens attaching to the proceeds of
sale up to the settlement amount. The Closing shall take place
within 65 days following the entry of the Order Confirming Plan or
as extended pursuant to the Settlement Agreement.
Pre-petition claims of insiders will not receive a distribution
unless all previous classes are paid in full. Creditors holding
insider claims will not receive a distribution unless all prior
classes of claims are paid in full. The equity interest of the
Debtor will not receive any distribution until all other classes
are paid in full.
Class 3: General Unsecured Claims are unimpaired Based upon the
proof of claims filed before or after the claim deadline of
$28,242.97, and the scheduled undisputed claims in the amount of
$132,153.00, the total estimated claims in this class are
$160,395.97. In full satisfaction thereof, Holders of Allowed Class
3 Claims shall be paid in full on the Effective Date of the Plan.
The Plan shall be funded from cash on hand and the proceeds of the
Sale Transaction. After payment of the Administrative Expense
Claims, Priority Tax Claims, and the Allowed Secured Claim of
Lender, the Debtor shall pay the remaining claims for Class 2 and
3, with any surplus going to the Class 4 Equity Interest Holders
out of the combination of any remaining sales proceeds and the cash
reserves of the Debtor.
The Court has ordered that the hearing on the approval of the
Disclosure Statement shall be consolidated with the hearing on the
hearing on the confirmation of the Plan, which hearing has been set
for May 31, 2023 at 10:30 a.m. at the United States Bankruptcy
Court for the Northern District of Illinois, Courtroom 642 Chicago,
Illinois.
Objections to confirmation of the Plan or to approval of the
Disclosure Statement shall be filed with the Court on or before May
26, 2023 and served by the same date on the Debtor, Debtor's
counsel and the United States Trustee.
Attorney for the Debtor:
Konstantine T. Sparagis, Esq.
LAW OFFICES OF KONSTANTINE SPARAGIS, P.C.
900 W. Jackson Blvd., Ste. 4E
Chicago, IL 60607
Tel: (312) 753-6956
E-mail: gus@konstantinelaw.com
A copy of the Disclosure Statement dated April 19, 2023, is
available at https://bit.ly/3mWpPpe from PacerMonitor.com.
About Crown Commercial
Crown Commercial Real Estate and Development, LLC operates shopping
center, located at 87th Street and Cottage Grove Avenue, Chicago,
IL 60619. The Property consists of a shopping center owned and
operated for 25 years by Crown Commercial.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Ill. Case No. 22-05113) on May 3,
2022. In the petition signed by Musa P. Tadro, manager, the Debtor
disclosed up to $50,000 in assets and up to $50 million in
liabilities.
The Law Offices of Konstantine Sparagis is the Debtor's counsel.
Judge Janet S. Baer oversees the case.
EAGLE PROPERTIES: Lender Seeks to Prohibit Cash Collateral Access
-----------------------------------------------------------------
Fulton Bank, N.A. asks the U.S. Bankruptcy Court for the Eastern
District of Virginia, Alexandria Division, to prohibit Eagle
Properties and Investments, LLC from using cash collateral.
The Bank, a secured creditor, asserts a first priority deeds of
trust or mortgages against each piece of the Debtor's real
property.
Fulton says rental income from each piece of Real Property
constitutes cash collateral which the Debtor may not use without
either the Bank's consent or pursuant to a court order.
Although the Debtor and the Bank have discussed an agreement for
the use of cash collateral, the parties have not reached an
agreement and the Debtor has not obtained an order from the court
permitting it to use cash collateral with respect to the Real
Property.
The Debtor has not paid real property taxes due with respect to the
Real Property.
Each of the Bank's loans secured by deeds of trust/mortgages
against the Real Property is in payment default and the Debtor has
been collecting or will shortly be collecting rental income from
the Real Property.
A copy of the motion is available at https://bit.ly/3AEMEAZ from
PacerMonitor.com.
About Eagle Properties and Investments
Eagle Properties and Investments, LLC, is a Vienna Va.-based
company engaged in leasing real estate properties. It owns 26
properties valued at $9.37 million.
Eagle Properties and Investments filed its voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Va.
Case No. 23-10566) on April 6, 2023, with $9,429,800 in total
assets and $14,716,136 in liabilities. Amit Jain, manager, signed
the petition.
The Debtor is represented by the Law Offices of Sris, P.C. and N D
Greene, PC.
EARTH.COM INC: Joli Lofstedt Named Subchapter V Trustee
-------------------------------------------------------
Patrick Layng, U.S. Trustee for Region 11, appointed Joli Lofstedt,
Esq., as Subchapter V trustee for Earth.com, Inc.
Ms. Lofstedt, a practicing attorney in Louisville, Colo., will be
paid an hourly fee of $350 for her services as Subchapter V trustee
and will be reimbursed for work-related expenses incurred.
Ms. Lofstedt declared that she is a disinterested person according
to Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Joli A. Lofstedt, Esq.
P.O. Box 270561
Louisville, CO 80027
Phone: (303) 476-6915
Fax: (303) 604-2964
Email: joli@jaltrustee.com
About Earth.com Inc.
Earth.com, Inc., a company in Telluride, Colo., filed a petition
under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D.
Colo. Case No. 23-11621) on April 19, 2023. In the petition signed
by its chief executive officer, Eric Ralls, the Debtor disclosed
$10 million to $50 million in assets and $1 million to $10 million
in liabilities.
Judge Elizabeth E. Brown oversees the case.
Jeffrey S. Brinen, Esq., at Kutner Brinen Dickey Riley, P.C. is the
Debtor's counsel.
EARTHSNAP INC: Joli Lofstedt Named Subchapter V Trustee
-------------------------------------------------------
Patrick Layng, U.S. Trustee for Region 11, appointed Joli Lofstedt,
Esq., as Subchapter V trustee for EarthSnap, Inc.
Ms. Lofstedt, a practicing attorney in Louisville, Colo., will be
paid an hourly fee of $350 for her services as Subchapter V trustee
and will be reimbursed for work-related expenses incurred.
Ms. Lofstedt declared that she is a disinterested person according
to Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Joli A. Lofstedt, Esq.
P.O. Box 270561
Louisville, CO 80027
Phone: (303) 476-6915
Fax: (303) 604-2964
Email: joli@jaltrustee.com
About EarthSnap Inc.
EarthSnap, Inc., a company in Telluride, Colo., filed a petition
under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D.
Colo. Case No. 23-11622) on April 19, 2023. In the petition signed
by its chief executive officer, Eric Ralls, the Debtor disclosed
$10 million to $50 million in assets and $1 million to $10 million
in liabilities.
Judge Thomas B. Mcnamara oversees the case.
Jeffrey S. Brinen, Esq., at Kutner Brinen Dickey Riley, P.C. is the
Debtor's counsel.
EKSO BIONICS: Incurs $4.4 Million Net Loss in First Quarter
-----------------------------------------------------------
Ekso Bionics Holdings, Inc. has filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q disclosing a
net loss of $4.39 million on $4.12 million of revenue for the three
months ended March 31, 2023, compared to a net loss of $4.62
million on $2.57 million of revenue for the three months ended
March 31, 2022.
As of March 31, 2023, the Company had $37.10 million in total
assets, $15.82 million in total liabilities, and $21.28 million in
total stockholders' equity.
Ekso Bionics said, "Our expectation to generate operating losses
and negative operating cash flows in the future and the need for
additional funding to support our planned operations raise
substantial doubt regarding our ability to continue as a going
concern for a period of one year after the date that the financial
statements are issued. Management intends to raise funds through
one or more financings. However, due to several factors, including
those outside management's control, there can be no assurance that
the Company will be able to complete such financings on acceptable
terms or in amounts sufficient to continue operating the business
under the operating plan. If we are unable to complete sufficient
additional financings, management's plans include delaying or
abandoning certain product development projects, cost reduction
efforts for our products, and refocused sales efforts to accelerate
revenue growth above historical results. We have concluded the
likelihood that our plan to successfully reduce expenses to align
with our available cash is probable. Accordingly, we believe our
plan will be sufficient to alleviate substantial doubt for a period
of at least 12 months from the date of issuance of these
consolidated financial statements which is in the second quarter of
2024."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001549084/000154908423000019/ekso-20230331.htm
About Ekso Bionics
Ekso Bionics Holdings, Inc. -- http://www.eksobionics.com--
designs, develops, and markets exoskeleton products that augment
human strength, endurance and mobility. Its exoskeleton technology
serves multiple markets and can be utilized both by able-bodied
persons and persons with physical disabilities.
Ekso Bionics reported a net loss of $15.08 million in 2022, a net
loss of $9.76 million in 2021, a net loss of $15.83 million in
2020, a net loss of $12.13 million in 2019, and a net loss of
$26.99 million in 2018.
EKSO BIONICS: Stanley Stern Quits as Director
---------------------------------------------
Stanley Stern, a member of the Board of Directors of Ekso Bionics
Holdings, Inc., notified the Company of his resignation from the
Board, effective April 26, 2023.
In connection with his resignation from the Board, Mr. Stern's
unvested restricted stock units previously granted to him under the
Company's Amended and Restated 2014 Equity Incentive Plan will be
fully vested at the effectiveness of his resignation. The Company
is not aware of any disagreement with Mr. Stern on any matter
relating to its operations, policies or practices that resulted in
Mr. Stern's resignation.
Scott Davis, chief executive officer of the Company and a member of
the Board, commented on the retirement of Mr. Stern from the Board,
"I would like to thank Stanley for his many years of valuable
service to Ekso and its Board. We wish him the best in his future
endeavors."
Mr. Stern commented, "It has been a privilege to serve as a board
member of Ekso Bionics. While I will no longer serve on the Board,
I will continue to support the Company and its management in any
way I can."
Chief Executive Officer Bonus Increase
On April 25, 2023, the Board approved an increase in the potential
bonus payout for Scott G. Davis, the Company's chief executive
officer and a member of the Board, from 50% of his 2023 base salary
to 75% of his 2023 base salary.
Restatement of Articles of Incorporation
On April 20, 2023, the Board approved the restatement of the
Company's articles of incorporation solely to withdraw the
certificate of designations relating to the Company's Series A
Convertible Preferred Stock, no shares of which remain outstanding,
and consolidate the existing articles of incorporation and the
amendments thereto. No other changes were made in the Restated
Charter. The Company filed the Restated Charter with the Secretary
of the State of Nevada on April 25, 2023.
Amendment to Bylaws
On April 20, 2023, the Board of the Company adopted amended and
restated bylaws, which became effective immediately.
Among other things, the Amended and Restated Bylaws address the
universal proxy rules adopted by the U.S. Securities and Exchange
Commission and update certain provisions related to the calling of
stockholder and Board meetings.
About Ekso Bionics
Ekso Bionics Holdings, Inc. -- http://www.eksobionics.com--
designs, develops, and markets exoskeleton products that augment
human strength, endurance and mobility. Its exoskeleton technology
serves multiple markets and can be utilized both by able-bodied
persons and persons with physical disabilities.
Ekso Bionics reported a net loss of $15.08 million in 2022, a net
loss of $9.76 million in 2021, a net loss of $15.83 million in
2020, a net loss of $12.13 million in 2019, and a net loss of
$26.99 million in 2018. As of March 31, 2023, the Company had
$37.10 million in total assets, $15.82 million in total
liabilities, and $21.28 million in total stockholders' equity.
ELIZABETH JANE: Court OKs Cash Collateral Access Thru May 30
------------------------------------------------------------
Elizabeth Jane, Inc. sought and obtained entry of an order from the
U.S. Bankruptcy Court for the District of Maryland, Baltimore
Division, authorizing it to use cash collateral on an interim basis
in accordance with the budget through May 30, 2023.
The Debtor requires the use of cash collateral to pay ordinary
business expenses.
Using their retirement savings, the Debtor's principals opened a
retail store in Ellicott City's historic district on Main Street in
2011, where the Debtor offers products ranging from clothing to
home goods.
Then considered a "one-in-a-thousand-year" storm, in 2016, the
Debtor's business was "ground zero" to a flood that caused
catastrophic damage to historic Ellicott City. The Debtor lost
everything.
With the assistance of loyal and generous customers and the
community, and a loan the Debtor obtained from the Small Business
Administration, the Debtor reopened for business in November 2016.
Less than two years later, a second "one-in-a-thousand-year" storm
devastated historic Ellicott City again, causing severe damage and
further financial difficulties on the Debtor and its neighboring
stores and restaurants.
Two years later, in March 2020, the Debtor's operations again
suffered unprecedented challenges, impacted by protracted closures
and the lingering effects of the COVID-19 pandemic, including,
among other things, supply chain issues, increased costs, and a
general lack of liquidity to obtain and turn inventory.
The Debtor's cash flow difficulties were exacerbated as it borrowed
high interest loans in order to fund operating expenses to right
the ship. Despite diligent efforts, ultimately, the debt service of
nearly $28,000 a month proved insurmountable, causing the Debtor to
file for bankruptcy.
The Debtor's revenues were $250,000 in 2011 and exceeded $1.5
million in 2022, evidencing the resilience and viability of the
Debtor, which the Debtor believes is sustainable over the long term
if it is able to reorganize its financial affairs.
On the Petition Date, the Debtor was indebted to M&T Bank in the
amount of approximately $124,493, evidenced by, among other things,
an SBA Express term loan promissory note in the original amount of
$200,000. On July 19, 2019, M&T filed a UCC-1 Financing Statement
with the Maryland State Department of Assessments and Taxation,
asserting a first-priority lien on and against all assets of the
Debtor.
The Debtor is also indebted to M&T Bank in the amount of
approximately $24,989, evidenced by, among other things, a Business
Access Line of Credit in the original amount of $25,000, as well as
a UCC-1 Financing Statement filed with the State Department of
Assessments and Taxation on July 22, 2019. Though M&T Bank asserts
a properly perfected second priority lien securing the Business
Access Line of Credit Loan, the Debtor asserts that based on a lien
priority, as well as the value of the Debtor's assets on the
Petition Date, the second priority lien of M&T Bank, and the liens
junior thereto, are wholly unsecured.
As adequate protection, M&T is granted a replacement lien on the
same assets and in the same priority and extent of its Pre-Petition
Collateral.
In exchange for the cash collateral access, the Debtor is directed
to make an adequate protection payment to M&T in the amount of
$1,750 on May 3, 2023, without prejudice to M&T's right to seek
different or other adequate protection in any subsequent cash
collateral.
The liens and security interests granted to M&T will become and are
duly perfected without the necessity for the execution, filing or
recording of financing statements, security agreements and other
documents which might otherwise be required pursuant to applicable
non-bankruptcy law for the creation or perfection of such liens and
security interests.
A final hearing on the matter is set for May 22 at 3 p.m.
A copy of the motion is available at https://bit.ly/3LmBSo4 from
PacerMonitor.com.
A copy of the Court's order and the Debtor's budget is available at
https://bit.ly/3oPFNC5 from PacerMonitor.com.
The Debtor projects $103,400 in total income and $102,065 in total
expenses.
About Elizabeth Jane, Inc.
Elizabeth Jane, Inc. is a Maryland corporation formed in 2011. The
Debtor operates a retail store located in Ellicott City, Maryland.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Md. Case No. 23-12802) on April 24,
2023. In the petition signed by Tamara Beideman, president, the
Debtor disclosed up to $500,000 in assets and up to $1 million in
liabilities.
Judge David E. Rice oversees the case.
Steven L. Goldberg, Esq., at McNamee Hosea, P.A., represents the
Debtor as legal counsel.
ENTERGY NEW ORLEANS: Moody's Affirms 'Ba1' Issuer Rating
--------------------------------------------------------
Moody's Investors Service affirmed the ratings of Entergy Arkansas,
LLC (EAL, including its issuer rating of Baa1), Entergy
Mississippi, LLC (EML, including its issuer rating of Baa1) and
Entergy New Orleans, LLC (ENOL, including its issuer rating of
Ba1).
The outlooks for EAL and EML were changed to stable from positive
because Moody's expects their financial performance to remain
steady with historical levels. This includes adjusted ratios of CFO
before changes in working capital (CFO pre-WC) to debt between
18-20% for both utilities.
The outlook for ENOL was changed to stable from negative, due to
improved customer relationship trends in New Orleans, including
reduced pressure and severity of complaints from the New Orleans
City Council around the company's operations and management, which
intensified after Hurricane Ida in 2021.
RATINGS RATIONALE
"EAL and EML's outlooks were changed back to stable because Moody's
expects their financial performance to remain consistent with
historical levels" said Ryan Wobbrock - Vice President and Senior
Credit Officer. "There is potential to outperform in any given
year; however, Moody's expects that each utility will continue
generate cash flow to debt metrics between 18-20%, on average,
which is appropriate for their current Baa1 ratings" added
Wobbrock.
For ENOL, "The contentious rhetoric from politicians, regulators
and customers exhibited immediately after Hurricane Ida has
subsided" said Wobbrock. "While the physical effects of climate
change and socially driven policy agendas are very high and
ever-present risks for ENOL, Moody's no longer sees customer
relationship risks as amplified" added Wobbrock.
As a result, ENOL's Customer Relations score has improved to 2,
from 3. However, the utility also has very highly negative exposure
to physical climate risks for storm surges and flooding, which
drives its E-5 Issuer Profile Score. These very highly negative
environmental risks also position ENOL's credit rating well below
that of peer utilities with similar financial profiles, which
translates into its ESG Credit Impact Score of CIS-5.
Entergy Arkansas
EAL's Baa1 rating reflects steady and predictable cash flow
generation from a formula rate plan (FRP) that provides for annual
rate increases based on a forward test year for rates and separate
rider recovery for pass-through costs, such as fuel and purchased
power, regional transmission, energy efficiency and generation
investments. The company also operates in a strong legislative
environment, which were evidenced in the passage of Act 404 in
2021, which clarified certain cost recovery interpretations of the
FRP and extended the plan through 2025.
Despite these benefits, the Arkansas rate construct allows a
relatively low equity layer for rate making purposes (i.e., 37.8%
or 47.0% when excluding $1.9 billion of deferred taxes), which
increases the utility's leverage versus peers, but also restrains
EAL's earnings and cash flow potential relative to peers with
higher authorized equity ratios.
Furthermore, a 4% rate cap on rates limits the company's annual
revenues increases, which has resulted in EAL sometimes earning
below its allowed ROE bandwidth of 9.15-10.15%. As a result,
regulatory assets have been accumulating over the past several
years which has delayed some cash flow generation and has prevented
EAL from improving it financial performance beyond a ratio of CFO
pre-WC to debt consistently in the high-teen's percent range.
Entergy Mississippi
Similar to EAL, EML's credit profile benefits from steady annual
rate revenue increases derived from an FRP that is updated
annually. While EML's FRP does not incorporate a fully forecasted
test year, like the Arkansas FRP, the plan does allow for
forward-looking rate adjustments, the immediate inclusion of
generation plants in rates when placed into service and a full
equity return on energy efficiency investments and power purchase
agreements for renewable energy. Moody's views the latter two
regulatory provisions to be unique compared to other regulatory
jurisdictions and a credit positive particularly for EML as
decarbonization trends intensify.
However, like EAL's rate parameters, EML has a low equity
capitalization compared to peers and a 4% cap on annual rate
increases. EML's 46.76% equity layer is not only below industry
norms of roughly 50%, but well below that of neighboring utility
Mississippi Power (Baa1 positive), which has a 55% equity
capitalization for rates. Despite these challenges, Moody's expects
that EML will continue to steadily generate CFO pre-WC to debt at
levels approaching 20% over the next several years.
Entergy New Orleans
ENOL's stakeholder relationships have returned to historical levels
following heightened tensions in the aftermath of Hurricane Ida in
August 2021. As a result, Moody's have changed the customer
relationship The storm caused roughly $125 million of damage
(equivalent to approximately 10% of ENOL's rate base at the time)
and significant customer outages right before city elections in
November of that year. This dynamic elicited more severe political
rhetoric than normal, including various calls for an investigation
into ENOL's service performance, a management audit, market reforms
to introduce retail competition and even consideration of
municipalizing the utility.
To-date, none of these risks have materialized to negatively impact
the company and, on the contrary, ENOL was able to successfully
securitize over $200 million (including damages associated with
Hurricane Zeta in 2020) of storm related costs in December 2022 and
filed for a formula rate increase on April 28, 2023. Storm cost
securitization is materially credit supportive for the Gulf Coast
utility which has a small, concentrated service territory that is
below sea level and prone to severe storms and hurricanes.
Going forward, Moody's expects that annual electric and gas formula
rate increases will remain consistent and that the New Orleans City
Council (NOCC) will provide adequate rate relief for the utility to
be able to generate CFO pre-WC to debt ratios over 20%. ENOL's
financial profile is very strong for the current Ba1 rating, but
the credit quality of the utility is constrained by its exposure to
physical climate risk events such as storms and flooding
(Environmental Issuer Profile Score E-5), resulting in an ESG very
highly negative Credit Impact Score of CIS-5.
Outlook
EAL and EML's stable outlooks reflect Moody's expectation that each
utility's relationship with its regulatory commissions and formula
rate plan filings will continue to be supportive of operations and
cost recovery, resulting in consistent CFO pre-WC to debt ratios in
the 18-20% range.
ENOL's stable outlook incorporates Moody's view that support for
storm cost recovery will continue in New Orleans and that
stakeholder relationships have improved back to historical norms.
Moody's expects ENOL to generate a ratio of CFO pre-WC to debt over
20% on a sustainable basis.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade
EAL could be upgraded with improved regulatory support or if its
ratio of CFO pre-WC to debt improves and is sustainable at 20% or
higher.
EML could be upgraded if cost recovery provisions improve,
including more forward-looking mechanisms within its FRP, and if
its ratio of CFO pre-WC to debt improves and is sustainable at 20%
or higher.
It is unlikely that ENOL's issuer rating will be upgraded to Baa3,
due to its concentrated service territory and vulnerability to
storm activity. However, the company's ability to maintain a
financial profile that is much stronger than peer utilities and a
significantly improved regulatory and legislative support could
lead to an upgrade.
Factors that could lead to a downgrade
EAL and EML could be downgraded if their financial profiles weaken
such that their ratios of CFO pre-WC to debt decline below 17% (up
from 16% previously), on a sustained basis, or there is a
deterioration in regulatory support, including unforeseen
complications such as delayed cost recover within the FRP process.
ENOL could be downgraded if there is a combination of significant
storm damage and delayed cost recovery for repairs, if regulatory
and stakeholder relationships deteriorate or if its ratio of CFO
pre-WC to debt declines to the mid-teen's percent range for a
sustained period.
EAL, EML and ENOL are wholly owned subsidiaries of Entergy
Corporation (Baa2 stable), a multistate vertically integrated
holding company with five utility subsidiaries and System Energy
Resources, Inc., which owns the 1,400 MW Grand Gulf nuclear unit in
Mississippi. The company serves over 3 million utility customers in
Arkansas, Louisiana, Mississippi, and Texas and is headquartered in
New Orleans, Louisiana.
Affirmations:
Issuer: Entergy Arkansas, LLC
Issuer Rating, Affirmed Baa1
Senior Secured First Mortgage Bonds, Affirmed A2
Senior Secured Shelf, Affirmed (P)A2
Issuer: Entergy Mississippi, LLC
Issuer Rating, Affirmed Baa1
Senior Secured First Mortgage Bonds, Affirmed A2
Senior Secured Shelf, Affirmed (P)A2
Issuer: Entergy New Orleans, LLC
Issuer Rating, Affirmed Ba1
Senior Secured First Mortgage Bonds, Affirmed Baa2
Issuer: Pope (County of) AR
Backed Senior Unsecured Revenue Bonds, Affirmed Baa1
Outlook Actions:
Issuer: Entergy Arkansas, LLC
Outlook, Changed To Stable From Positive
Issuer: Entergy Mississippi, LLC
Outlook, Changed To Stable From Positive
Issuer: Entergy New Orleans, LLC
Outlook, Changed To Stable From Negative
The principal methodology used in these ratings was Regulated
Electric and Gas Utilities published in June 2017.
ENTRADA DEVELOPMENT: Case Summary & Five Unsecured Creditors
------------------------------------------------------------
Debtor: Entrada Development, LLC
6 Candleleaf Ct
The Hills, TX 78738-1444
Business Description: The Debtor is engaged in activities related
to real estate.
Chapter 11 Petition Date: May 2, 2023
Court: United States Bankruptcy Court
Western District of Texas
Case No.: 23-10317
Judge: Hon. H. Christopher Mott
Debtor's Counsel: Ronald Smeberg, Esq.
THE SMEBERG LAW FIRM
4 Imperial Oaks
San Antonio TX 78248-1609
Email: ron@smeberg.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Michael Dixson as president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's five unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/XZCCN4I/Entrada_Development_LLC__txwbke-23-10317__0001.0.pdf?mcid=tGE4TAMA
EQUIPMENTSHARE.COM INC: Moody's Assigns 'B1' CFR, Outlook Stable
----------------------------------------------------------------
Moody's Investors Service assigned EquipmentShare.com, Inc. a B1
corporate family rating and a B1-PD probability of default rating.
In addition, Moody's assigned a Ba3 rating to the company's $3.0
billion ABL (Asset Based Loan) revolving credit facility and a B3
rating to the company's $750 million of senior secured second lien
notes. The outlook is stable.
Proceeds will be used to repay certain existing debt including a
privately placed term loan and a portion of outstanding ABL
borrowings, as well as fees and expenses, and provide roughly $45
million of cash to the company.
Assignments:
Issuer: EquipmentShare.com, Inc.
Corporate Family Rating, Assigned B1
Probability of Default Rating, Assigned B1-PD
Senior Secured ABL Revolving Credit Facility, Assigned Ba3
Senior Secured Regular Bond/Debenture, Assigned B3
RATINGS RATIONALE
EquipmentShare's ratings reflect its good scale, with 2022 revenue
of $1.7 billion. It also incorporates Moody's expectation that the
company will continue to experience rapid and largely organic
topline growth with revenue exceeding $2.5 billion in 2023. Growth
will be driven by the technological differentiation provided by
EquipmentShare's proprietary T3 jobsite operating system, alongside
investments in equipment and branch expansion. Also supporting
growth will be EquipmentShare's OWN program, where assets of
equipment owners are connected to T3 and rented out in exchange for
a share of the revenue.
However, EquipmentShare has a short history operating at such a
large scale and Moody's believes there is execution risk associated
with the anticipated pace of equipment and branch expansion. The
company also has high leverage with Moody's adjusted debt-to-EBITDA
at 5.3 times at the end of 2022 and the company is expected to have
negative free cash flow for the next few years resulting from large
capital investment in fleet growth and branch expansion.
Governance, in particular the company's relatively aggressive
financial policy and board structure with a majority of
non-independent board members, was also a key driver in the
assignment of EquipmentShare's ratings and resulted in a credit
impact score of CIS-4.
Moody's expects EquipmentShare to have adequate liquidity over the
next 12 to 18 months, supported by approximately $500 million of
ABL availability, subject to borrowing base limitations. Moody's
anticipate a significant amount of cash outflow for capital
expenditures to fund the company's growth plans. The company is
also expected to have an available cash balance of $150 to $300
million.
EquipmentShare's $750 million of senior secured second lien notes
are rated B3, two notches below the company's B1 CFR. The notes are
subordinated to the claims of the company's $3 billion senior
secured ABL and $275 million of other equipment debt. Each of the
company's wholly-owned direct and indirect domestic existing and
future wholly owned subsidiaries, including Equipmentshare.com,
Inc., that guarantee obligations under the ABL Credit Facility also
guarantee the senior secured notes.
The stable outlook reflects Moody's expectation that the company
will grow the top-line organically around 30% in 2023 and profit
will increase such that debt-to-EBITDA approaches 5 times by the
end of the year.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if EquipmentShare establishes a
longer track record of operating performance while continuing to
profitably grow its size and scale. In addition, Moody's would
expect the company to reduce and sustain debt-to-EBITDA to below
4.0 times and maintain good liquidity.
The ratings could be downgraded if EquipmentShare's liquidity
weakens, including an inability to maintain cash together with ABL
availability based on the borrowing base of at least $500 million
all times, or if debt-to-EBITDA is sustained above 5.5 times. Also,
adoption of more aggressive financial policies, including
distributions to shareholders or debt financed acquisitions that
increase leverage could result in a downgrade.
The principal methodology used in these ratings was Equipment and
Transportation Rental published in February 2022.
EquipmentShare.com, Inc. (EquipmentShare), headquartered in
Columbia, Missouri, is an equipment rental and asset management
company. Founded in 2015, EquipmentShare operates 153 facilities
across 38 states and has approximately 4,050 employees.
EQUIPMENTSHARE.COM INC: S&P Assigns 'B-' ICR, Outlook Stable
------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issuer credit rating to
U.S.-based equipment rental provider EquipmentShare.com Inc.
S&P said, "We also assigned our 'B-' issue-level rating and '4'
recovery rating to the proposed senior secured second-lien notes
due in 2028. The '4' recovery rating indicates our view that
lenders would receive average recovery (30%-50%; rounded estimate:
40%) of principal and accrued interest in the event of a payment
default.
"Our stable outlook on EquipmentShare reflects our expectation that
leverage will decline to about 5x over the next 12 months amid a
continued favorable rental environment, supported by a persistent
shortage of new equipment amid continued supply chain challenges at
original equipment manufacturers as well as longer-term drivers of
demand, including recent legislation such as the Infrastructure
Investment and Jobs Act (IIJA) and the CHIPS and Science Act
(CSA)."
EquipmentShare has expanded to become the fourth-largest player in
the highly competitive and fragmented U.S. equipment rental
equipment industry and primarily serves the cyclical nonresidential
construction end market. The company trails United Rentals Inc.,
Sunbelt Rentals Inc., and HERC Rentals Inc. in revenue. S&P said,
"We view the equipment rental market as having limited barriers to
entry, and the company has a modest 3% share in this large and
fragmented market. EquipmentShare's highly cyclical nonresidential
construction end market accounted for 94% of revenue in 2022, with
remaining exposure from the residential construction market. In
2023, we expect continued healthy demand for equipment rental
services supported by continued nonresidential construction
activity, the start of initiatives funded by the IIJA and CSA, and
a continued secular trend toward renting (particularly in the
underpenetrated specialty subsegment)as contractors and operators
continue to shift away from owned equipment. We believe this
favorable environment will result in continued elevated equipment
utilization rates for EquipmentShare. Rental rate growth will
likely moderate throughout 2023, largely due to a tougher
comparison with the high rental rate growth environment of 2022."
EquipmentShare benefits from a differentiated software offering, a
significantly younger fleet than that of competitors, and a unique
asset-light approach to equipment rental in its OWN business. S&P
believes EquipmentShare's T3 operating system, which is
comprehensive and differentiated due to its ability to track assets
and people in addition to equipment, can help drive customer
acquisition and retention. T3 is augmented by the company's
technology-enabled fleet, nearly all of which is equipped with
telematics capabilities. EquipmentShare also has a relatively low
average fleet age of about 20 months as of Dec. 31, 2022, which
results in lower maintenance spending and potentially greater
flexibility to lower capital spending on new rental equipment
during a downturn. Lastly, the OWN program allows for an
asset-light rental revenue stream, with revenue generated from
assets owned by third parties under revenue-sharing agreements.
However, the company has scale significantly smaller than market
leaders along with outsized exposure to equipment sales. S&P views
scale as a key driver of success in the equipment rental industry,
seen in higher margins and more resilient cash flow for the largest
players such as United Rentals. Despite being the fourth-largest
player, EquipmentShare has significantly smaller scale than market
leader United Rentals, which is approximately 7x larger in revenue.
S&P views equipment sales as more volatile than equipment rental,
and they drove about 35% of EquipmentShare's revenue and about 20%
of gross profit in 2022. Additionally, EquipmentShare has moderate
customer concentration in equipment sales, with one buyer group
representing about 16% of total revenue in 2022.
Additionally, EquipmentShare has a limited track record of managing
free operating cash flow (FOCF) at its current scale during
unfavorable economic conditions. The equipment rental industry is
characterized by a countercyclical pattern of FOCF generation,
typically showing an uptick in rental fleet investment during
favorable economic conditions, paired with the ability to pull back
during industry downturns. EquipmentShare has expanded rapidly over
the past two years (to $1.7 billion in 2022 revenues from $500
million in 2020) amid an unusually favorable environment for
equipment rental players. Consequently, it has a limited track
record of curtailing discretionary capital spending and managing
this scale of FOCF during challenging economic environments. Also,
the company spends a high amount of gross capital expenditure
(capex) on fleet purchases relative to peers, which could leave it
with a substantially larger-than-intended fleet if sales demand
deteriorates quickly.
S&P said, "Our stable outlook on EquipmentShare reflects our
expectation that EquipmentShare's leverage will decline to about 5x
over the next 12 months amid a continued favorable rental
environment, supported by a persistent shortage of new equipment at
manufacturers and with longer-term demand drivers including recent
legislation such as the IIJA and CSA."
S&P could lower its rating on EquipmentShare if it views its
capital structure as unsustainable, which could occur if S&P
expects:
-- A significant deterioration in liquidity, for instance due to
limited ABL borrowing capacity or negative S&P Global
Ratings-adjusted FOCF during unfavorable market conditions; or
-- A significant increase in leverage.
S&P could raise its rating on EquipmentShare if:
-- During favorable economic conditions, S&P expects leverage will
decline below 5x and remain there; and
-- S&P expects the company to generate positive FOCF during a
downturn by managing discretionary spending on fleet growth and
sales of used equipment.
ESG credit indicators: E-2, S-2, G-2
ESG factors are an overall neutral consideration in S&P's credit
rating analysis of EquipmentShare, an equipment rental company that
primarily serves the nonresidential construction market.
EquipmentShare curates a fleet of equipment from manufacturers and
therefore has some control over the fleet's sustainability. The
company's exposure to environmental factors is lower than that of
manufacturers, given its focus on rental services.
EXELA TECHNOLOGIES: Urges Stockholders to Vote "FOR" Stock Split
----------------------------------------------------------------
Exela Technologies, Inc. encourages stockholders to vote "For" the
amendment to its Certificate of Incorporation to effect a reverse
stock split, as further described in the Company's proxy statement
filed on March 21, 2023 with the Securities and Exchange
Commission.
Exela stockholders are urged to vote online or by telephone to
ensure their shares are represented at the special meeting. It is
critical that stockholders vote, no matter how many shares they
own.
Exela said, "Our board strongly encourages that stockholders
approve the amendment to facilitate the continued listing of our
equity securities on The Nasdaq Capital Market. It is our
understanding that the current market price of our Common Stock may
affect its acceptability to certain institutional investors,
professional investors and other members of the investing public.
It is also our understanding that many brokerage houses and
institutional investors have internal policies and practices that
either prohibit them from investing in low-priced stocks or tend to
discourage individual brokers from recommending low-priced stocks
to their customers.
"Stockholders can vote by following the easy instructions on the
proxy card. If you have already submitted a proxy, you may change
your vote prior to the special meeting by voting again using the
same materials. Only your latest dated vote counts. If you hold
at Robinhood, look for an email from Proxydocs.com, and for all
other stockholders, check for an email from Proxyvote.com. Proxy
information is here:
https://www.sec.gov/Archives/edgar/data/1620179/000110465923035255/tm232081-3_defr14a.htm"
Exela stockholders who need assistance in voting their shares may
contact Exela's proxy solicitor, Morrow Sodali LLC by calling (800)
662-5200 or (collect) (203) 658-9400 or via email:
XELA@info.morrowsodali.com.
About Exela Technologies LLC
Exela Technologies is a business process automation (BPA) company,
leveraging a global footprint and proprietary technology to provide
digital transformation solutions that improve efficiency, quality,
and productivity.
Exela reported a net loss of $415.58 million in 2022, a net loss of
$142.39 million in 2021, and a net loss of $178.53 million in 2020.
As of Dec. 31, 2022, the Company had $721.91 million in total
assets, $1.53 billion in total liabilities, and a total
stockholders' deficit of $807.59 million.
Detroit, Michigan-based KPMG LLP, the Company's auditor since 2013,
issued a "going concern" qualification in its report dated April 3,
2023, citing that the Company has a history of net losses, net
operating cash outflows, working capital deficits, significant cash
payments for interest on long-term debt, and significant current
maturities of long-term debt that raise substantial doubt about its
ability to continue as a going concern.
FARMA SCI LIFE: Unsecureds Owed $2.4M to Get $46K
-------------------------------------------------
Farma Sci Life, Inc., submitted an Amended Chapter 11 Plan of
Reorganization dated April 19, 2023.
The Debtor is a Florida corporation formerly known as BMH Ventures,
Inc. and formerly known as Blue Moon Hemp, Inc. that has operated
since January of 2016. The Debtor manufactures, distributes and
engages in the online sale of cannabidiol (CBD) and Delta 8
tetrahydrocannabinol consumer products sold under the Blue Moon
Hemp brand name.
Under the Plan, Class 2 Allowed Unsecured Priority Claims of Former
Employees total $8,011.20 $8,011.20. Each holder of an Allowed
Class 2 Claim shall be paid 100% of the Allowed Amount of such
Claim in Cash, unless otherwise ordered by the Court, upon the
Effective Date. Class 6 is unimpaired.
Class 3 Allowed General Unsecured Claims total $2,488,233.29. Each
holder of an Allowed Class 3 Claim will receive the following
treatment: (i) a Pro Rata Distribution of up to $30,409 on December
31, 2025, comprised of the Debtor's disposable income for 2025, if
any, following the disposable income payment to the SBA in 2025
described in section 6.01(b); and (ii) a Pro Rata Distribution of
up to $16,155 on March 31, 2026, comprised of the Debtor's
disposable income for the first quarter of 2026. Class 3 is
impaired.
The sources of consideration for Distributions under the Plan
include the Debtor's cash on hand as of the Effective Date as well
the future profits of the Reorganized Debtor. With regard to the
Release Contribution referenced in section 6.01 of the Plan, the
sources of such payment are Christopher Cowart and John M. Maloney,
Jr.
Attorneys for Farma Sci Life, Inc.:
Bradley S. Shraiberg, Esq.
Eric Pendergraft, Esq.
SHRAIBERG PAGE P.A.
2385 NW Executive Center Drive, Suite 300
Boca Raton, FL 33431
Tel: (561) 443-0800
Fax: (561) 998-0047
E-mail: bss@slp.law
ependergraft@slp.law
A copy of the Amended Chapter 11 Plan of Reorganization dated April
19, 2023, is available at https://bit.ly/43YkNJp from
PacerMonitor.com.
About Farma Sci Life
Farma Sci Life, Inc., manufactures, distributes and engages in the
online sale of cannabidiol (CBD) and Delta 8 tetrahydrocannabinol
consumer products sold under the Blue Moon Hemp brand name.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Fla. Case No. 23-10398) on January 18,
2023. In the petition signed by John M. Maloney, Jr., president,
the Debtor disclosed up to $10 million in both assets and
liabilities.
Judge Erik P. Kimball oversees the case.
Bradley S. Shraiberg, Esq., at Shraiberg Page PA, represents the
Debtor as legal counsel.
FIRST REPUBLIC: Moody's Lowers Issuer & Subordinate Ratings to C
----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of First
Republic Bank. First Republic's long-term issuer ratings and local
currency subordinate ratings were downgraded to C from B2, and the
preferred stock non-cumulative rating was downgraded to C(hyb) from
Ca(hyb). The baseline credit assessment (BCA) and adjusted BCA were
downgraded to ca from b1. The rating agency also withdrew First
Republic's long-term and short-term local and foreign currency
counterparty risk ratings, long-term and short-term local currency
bank deposit ratings, and its long-term and short-term counterparty
risk assessment. The rating outlook is stable.
RATINGS RATIONALE
Following the downgrades, Moody's will withdraw First Republic's
ratings for business reasons.
On May 1, 2023, First Republic Bank was closed by the California
Department of Financial Protection and Innovation, which appointed
the Federal Deposit Insurance Corporation (FDIC) as receiver. The
bank's closure related to high levels of unrealized losses on its
securities and residential mortgage loans and elevated funding
costs following significant deposit outflows. The FDIC entered into
a purchase and assumption agreement with JPMorgan Chase Bank,
National Association (JPMorgan), to assume all of the deposits and
qualified financial contracts and substantially all of the assets
of First Republic. The withdrawal of the deposit ratings,
counterparty risk ratings, and counterparty risk assessments was
based on JPMorgan's assumption of these obligations, which are no
longer obligations of First Republic.
The downgrade of the BCA to ca reflects the failure of the bank,
its expected default on its corporate debt obligations, and Moody's
expectation that bank-wide losses will be consistent with the ca
level. The downgrade of the issuer, preferred stock, and
subordinated debt ratings reflect the default and a very high loss
severity as a result of the FDIC receivership.
The principal methodology used in these ratings was Banks
Methodology published in July 2021.
FORD CITY RX: Seeks Cash Collateral Access
------------------------------------------
Ford City RX, LLC asks the U.S. Bankruptcy Court for the Northern
District of Alabama, Northern Division, for authority to use cash
collateral and provide adequate protection.
The Debtor requires the use of cash collateral to permit the
continuation of its business and to manage and preserve the assets
of the estate for the benefit of the creditors.
Prior to the Petition Date, the Debtor is obligated, either as
Borrower or Co-Borrower or as Guarantor, for:
a. $70,566 Business Loan Agreement and/or Note to Fresh
Funding Solutions, Inc.
b. $81,205 Business Loan Agreement and/or Note to Royal Oak
Funding, LLC
c. $109,106 Business Loan Agreement and/or Note to McKesson
Corporation.
d. $147,900 Business Loan Agreement and/or Note to U.S. Small
Business Administration.
e. $90,000 Business Loan Agreement and/or Note to Anda, Inc.
f. $213,533 Business Loan Agreement and/or Note to Ford City
Pharmacy, Inc.
g. $5,643 Business Loan Agreement and/or Note to NewCo Capital
Group VI, LLC.
h. $6,300 Business Loan Agreement and/or Note to Fox Business
Capital.
i. $20,000 Business Loan Agreement and/or Note to Parmed
Pharmaceuticals.
The Debtor will show at the hearing that it is in the best interest
of the estate that the cash collateral securing the claim of Fresh
Funding Solutions, Inc., Royal Oak Funding, IXC, McKesson, SBA,
Anda, Inc., Ford City Pharmacy, Inc., Forward Financing, NewCo, Fox
and Parmed be used to pay the operating expenses.
Although the Debtor believes there is an "equity cushion" that
adequately protects the secured claim of Fresh Funding Solutions,
Inc., Royal Oak Funding, LLC, McKesson, SBA, Anda, Inc., Ford City
Pharmacy, Inc., Forward Financing, NewCo, Fox and Parmed, the
Debtor currently proposes the following additional adequate
protection for the use of cash collateral:
1. A continuing security interest in all accounts receivable,
and proceeds generated after the Petition Date;
2. A Replacement Lien on all accounts receivable, and
proceeds, generated after the Petition Date;
3. Adherence to the Debtor's projection of operating
expenditures and to provide Fresh Funding Solutions, Inc., Royal
Oak Funding, LLC, McKesson, SBA, Anda, Inc., Ford City Pharmacy,
Inc., Forward Financing, NewCo, Fox and Parmed with new Budgets
periodically as needed to provide for changes in revenues or
expenses.
A copy of the Debtor's motion and budget is available at
https://bit.ly/41URlCL from PacerMonitor.com.
The Debtor projects, total operating expenses, on a monthly basis,
as follows:
$14,881 for May 2023;
$14,881 for June 2023;
$14,881 for July 2023;
$14,881 for August 2023;
$14,881 for September 2023; and
$14,881 for October 2023.
About Ford City RX, LLC
Ford City RX, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Ala. Case No. 23-80761-11) on April
24, 2023. In the petition signed by Michael Keith Sigmon, managing
member, the Debtor disclosed up to $100,000 in assets and up to $1
million in liabilities.
C. Taylor Crockett, Esq., at C. Taylor Crockett, P.C., represents
the Debtor as legal counsel.
FORREST CONCRETE: Christine Brimm Named Subchapter V Trustee
------------------------------------------------------------
John Fitzgerald, III, Acting U.S. Trustee for Region 4, appointed
Christine Brimm, Esq., as Subchapter V trustee for Forrest
Concrete, LLC.
Ms. Brimm, a practicing attorney in Myrtle Beach, S.C., will be
paid an hourly fee of $350 for her services as Subchapter V trustee
and an hourly fee of $150 for paralegal services. In addition, the
Subchapter V trustee will receive reimbursement for work-related
expenses incurred.
Ms. Brimm declared that she is a disinterested person according to
Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Christine E. Brimm
P.O. Box 14805
Myrtle Beach, SC 29587
Telephone: 803-256-6582
Email: cbrimm@bartonbrimm.com
About Forrest Concrete
Forrest Concrete, LLC is a concrete contractor specializing in
residential and commercial polished concrete, pervious concrete,
and stamped concrete. The company is based in Ridgeland, S.C.
Forrest Concrete filed a petition under Chapter 11, Subchapter V of
the Bankruptcy Code (Bankr. D. S.C. Case No. 23-01171) on April 24,
2023, with $724,975 in assets and $2,987,912 in liabilities. Judge
Elisabetta Gm Gasparini oversees the case.
The Debtor is represented by W. Harrison Penn, Esq., at McCarthy,
Reynolds & Penn, LLC.
FXI HOLDINGS: S&P Downgrades ICR to 'SD' on Distressed Exchange
---------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S.-based
producer of engineered polyurethane foam solutions FXI Holdings
Inc. to 'SD' (selective default) from 'CC'. At the same time, S&P
lowered its issue-level rating on its existing 7.875% senior
secured notes to 'D' from 'CC' and subsequently withdrew the
rating.
The downgrade follows FXI's completion of a distressed debt
exchange.
As part of the transaction, the company exchanged about 99% of its
outstanding 7.875% senior secured notes due 2024 with consenting
noteholders for a combination of new 12.25% senior secured notes
due November 2026, upfront cash, and a consent fee. S&P said,
"Although the exchange was completed at par, due to the release of
the collateral on all of the existing 7.875% notes and the
later-dated maturity of the new 12.25% notes, we believe the
transaction will provide the noteholders with less value than they
were originally promised under the securities, which we view as a
selective default. Specifically, we do not believe the upfront cash
payment, consent fee, and higher coupon provide adequate offsetting
compensation for the two-year maturity extension, given the
company's liquidity profile and unsustainable leverage.
Furthermore, while the remaining portion of the 7.875% notes
following the exchange is minimal, the release of the collateral
securing the notes has effectively subordinated them to FXI's other
secured debt, which entails added risk. We note that the new 12.25%
senior secured notes issued to consenting noteholders are backed by
collateral that ranks pari passu to its existing 12.25% senior
secured notes due 2026. Additionally, we believe FXI's business
will remain challenged for the next 12 months, which--combined with
its higher interest burden following this transaction--will lead to
sustained pressure on its free cash flow and liquidity."
S&P intends to review its ratings on FXI, including its issuer
credit and issue-level ratings, over the coming days.
S&P intends to review our ratings on the company over the coming
days to incorporate the debt exchange, new debt issuance, recent
events, and its forward-looking opinion of its creditworthiness.
GOGO INC: Moody's Upgrades CFR to B1, Outlook Remains Stable
------------------------------------------------------------
Moody's Investors Service upgraded Gogo Inc.'s corporate family
rating to B1 from B2 and probability of default rating to B1-PD
from B2-PD. Moody's also upgraded the rating on Gogo Intermediate
Holdings LLC's senior secured facilities to B1 from B2. The
speculative grade liquidity rating was upgraded to SGL-1 from
SGL-2. The outlook is stable.
The upgrade reflects Gogo's faster than expected improvement in
financial metrics, in particular debt to EBITDA (Moody's adjusted)
which Moody's now expects to be around 4.3x by year end 2023 and
decline below 4x in 2024. The improvement in financial metrics is a
result of both revenue and EBITDA growth and improved governance
factors, including a revised publicly stated leverage guidance (on
a net debt basis, company adjusted) to be between 2.5x and 3.5x. In
line with this, the company has announced [1] that it would
voluntarily be paying down $100 million of its term loan in the
second quarter of 2023.
Upgrades:
Issuer: Gogo Inc.
Corporate Family Rating, Upgraded to B1 from B2
Probability of Default Rating, Upgraded to B1-PD from B2-PD
Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2
Issuer: Gogo Intermediate Holdings LLC
Backed Senior Secured Bank Credit Facility, Upgraded to B1 from
B2
Outlook Actions:
Issuer: Gogo Inc.
Outlook, Remains Stable
Issuer: Gogo Intermediate Holdings LLC
Outlook, Remains Stable
RATINGS RATIONALE
Gogo's B1 CFR reflects (1) the strong fundamentals underpinning
Gogo's business as private jet usage continues to increase, coupled
with increased demand for in-air connectivity; (2) the company's
moderate leverage with Moody's adjusted debt/EBITDA expected to
decline to around 4.3x by year-end 2023 and further in 2024; (3)
Gogo's good liquidity profile with positive free cash flow expected
over the next two years despite increased expenditures for its 5G
and Global Broadband ("GBB") initiatives.
The B1 CFR also reflects the (1) small scale and niche market focus
of the business with 2022 revenue of around $404 million; (2)
potential increase in operating expenses to address larger jet
connectivity through low-earth orbit satellite beams as part of its
GBB program; (3) potential risk to air travel demand from
increasing fuel prices or in times of economic uncertainty.
Gogo achieved strong growth in 2022 with revenue of $404 million up
20% from the previous year driven by growth in both service (+14%
vs 2021) and equipment (+42% vs 2021) revenue. This translated in
Moody's adjusted EBITDA growth of about 15% in 2022 vs. 2021. The
strong performance is due to increased overall demand for business
aviation in the US leading to a growth in the number of online
aircraft (up 8% vs. 2021) and also, albeit to a lesser extent, an
increase in the average revenue per aircraft.
In 2022 the company shipped a record 1,334 AVANCE units (its
equipment offering access to a suite of onboard products ancillary
to connectivity), a 50% increase over 2021. With a strong order
book for its products, Moody's expects Gogo's revenue to increase
in the low teens percentage in 2023 driven mostly by service
revenue.
The company had planned on completing the bulk of its investment in
upgrading its air to ground (ATG) network to 5G in 2022, but delays
due to supply chain issues mean that 2023 will see some of this
spend. In 2023, the company expects to spend an extra $30 million
in operating expenses mostly on its GBB and 5G initiatives,
stunting EBITDA growth in the short term.
Despite this, Gogo's Moody's adjusted leverage is expected to
improve to around 4.3x on the back of the company's announced $100
million voluntary debt repayment. Moody's expects leverage to
decrease further in 2024 to below 4x as the 5G investment cycle
tails off and the company continues to generate strong free cash
flow which, Moody's expects, will be partly put to use to reduce
debt further.
Gogo's ESG credit impact score is CIS-3. This is driven mostly by
governance factors as reflected in its issuer profile score of G-3.
The company's improved financial policy mitigates a relatively
short track record of moderate leverage, and a concentrated
ownership structure.
Gogo's SGL-1 speculative grade liquidity rating reflects Gogo's
very good liquidity profile. Following the company's voluntary $100
million debt repayment, Gogo will have around $88 million in cash
on hand. In addition, the company retains a fully undrawn $100
million revolving credit facility. Moody's expects Gogo to generate
positive free cash flow of around $80-$90 million in 2023. The
revolver contains a net leverage covenant set at 7.5x which is only
tested when utilization exceeds 35%.
The B1 rating on the company's senior secured facilities reflects
the probability of default of the company, as reflected in the
B1-PD PDR, an average expected recovery rate of 50% and the
particular instrument' rankings in the capital structure.
The stable outlook reflects Moody's expectations that Gogo's
leverage will remain around or below 4x Moody's adjusted in the
coming 12-18 months and that the company is likely to allocate some
of its free cash flow generation to shareholder returns once it
completes its investments in LEO satellite capacity which will
allow it to grow revenue beyond its currently addressable base of
light and medium sized aircraft.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Upwards rating pressure is currently limited given the scale of the
company and the limited total addressable market of private jets.
This said, Gogo's ratings could be upgraded if the company were to
increase scale and diversify revenue streams. An upgrade would also
require Gogo to demonstrate a consistent and sustained financial
policy translating into Moody's adjusted leverage below 3x and
sustained free cash flow to debt above 10%.
Downward rating pressure could develop should revenue and EBITDA
decline such that leverage were to be sustained above 4x.
Additionally, a material increase in competitive intensity or a
weakening in Gogo's liquidity would pressure the ratings.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
GREATER LIFE: Seeks to Hire Buckmiller, Boyette & Frost as Counsel
------------------------------------------------------------------
Greater Life Church seeks approval from the U.S. Bankruptcy Court
for the Eastern District of North Carolina to hire Buckmiller,
Boyette & Frost, PLLC to handle its chapter 11 bankruptcy
proceeding.
The firm will bill these hourly rates:
Matthew W. Buckmiller $350
Joseph Z. Frost $330
Blake Y. Boyette $330
Paraprofessionals $65 - $160
The counsel received a retainer in the amount of $7,500.
As disclosed in the court filings, Buckmiller is a disinterested
person within the meaning of Sec.101(14) of the Bankruptcy Code.
The frim can be reached through:
Joseph Z. Frost, Esq.
Matthew W. Buckmiller, Esq.
Buckmiller, Boyette & Frost, PLLC
4700 Six Forks Road, Suite 150
Tel: 919-296-5040
Fax: 919-977-7101
Email: jfrost@bbflawfirm.com
mbuckmiller@bbflawfirm.com
About Greater Life Church
Greater Life Church d/b/a Greater Life Christian Church is a
tax-exempt religious organization.
Greater Life Church d/b/a Greater Life Christian Church filed its
voluntary petition for relief under Chapter 11 of the Bankruptcy
Code (Bankr. E.D.N.C. Case No. 23-00838) on March 27, 2023. The
petition was signed by Mark L. Spell, Sr., as president. At the
time of filing, the Debtor estimated $1 million to $10 million in
both assets and liabilities.
Judge David M. Warren presides over the case.
Joseph Z. Frost, Esq., at Buckmiller, Boyette & Frost, PLLC
represents the Debtor as counsel.
GWG HOLDINGS: Unsecureds Owed $20M Get 8.5% to 21.9% in Plan
------------------------------------------------------------
GWG Holdings, Inc., et al., the Bondholder Committee, and L Bond
Management, LLC as co-proponents submitted a Disclosure Statement
for the Debtors' Further Modified Second Amended Joint Chapter 11
Plan.
The proposed Second Amended Plan seeks to achieve an orderly
wind-down of the Debtors' Estates that maximizes the value of all
estate assets. The proposed Second Amended Plan is the culmination
of more than nine months of investigations and related diligence
into the Debtors' assets by the Debtors' Independent Directors and
their advisors, and hard-fought postpetition negotiations regarding
the structure of the Second Amended Plan that resulted in a
settlement (the "Mediated Settlement") supported by the Debtors,
the Bondholder Committee, and LBM (the Bondholder Committee and LBM
being referred to herein as the "Creditor Proponents"). The Debtors
(including the Independent Directors), the Bondholder Committee,
LBM, and the Ad Hoc Broker/Dealer Committee all believe the Second
Amended Plan represents the best possible outcome for Bondholders
and urge all Bondholders to vote TO ACCEPT of the Second Amended
Plan.
As described in more detail in Article II.B.1 and Article II.C of
this Disclosure Statement, the proposed wind-down under the Second
Amended Plan will be achieved by creating two liquidating trusts:
(i) the Wind Down Trust and (ii) the Litigation Trust. The Wind
Down Trust will issue trust interests (the New WDT Interests) to
Holders of Claims and Interests that are not paid in full in cash
on the Effective Date of the Second Amended Plan. Holders of the
New WDT Interests (including the Bondholders) will receive
distributions via the Wind Down Trust from four potential sources
of value which include Policy Portfolio asset, FOXO asset,
Beneficient asset and Retained Causes of Action asset.
The Second Amended Plan is a "waterfall" Plan, which means that, in
general, the Bondholders are first in line to receive distributions
from the Wind Down Trust (subject to certain limited exceptions),
and the Bondholders and General Unsecured Creditors, pro rata, are
first in line to receive distributions on account of the Retained
Causes of Action. Each of the sources of value has uncertainty, and
the timing and amount of distributions will depend on a number of
factors that are outside the control of the Debtors.
Under the Plan, Class 4(a) General Unsecured Claims total
$20,278,288. Each Holder of an Allowed General Unsecured Claim
shall receive its pro rata share of the New Series B WDT Interests.
The New Series B WDT Interests may be redeemed at any time without
penalty at stated value and, pending any such redemption, shall be
entitled to Cash distributions, but only pursuant to the priority
of payment waterfalls described in Article IV.H and Article VI.C of
the Second Amended Plan. Creditors will recover 8.5% – 21.9% of
their claims. Class 4(a) is impaired.
Class 4(b) GUC Convenience Claims total $83,335. Each Holder
thereof will receive, and the option of the applicable Debtor,
either:
(i) payment in full in Cash of the due and unpaid portion of its
Allowed GUC Convenience Claim on the later of (x) the Effective
Date (or as soon thereafter as reasonably practicable), or (y) as
soon as practicable after the date such Claim becomes due and
payable; or
(ii) such other treatment rendering its Allowed GUC Convenience
Claim Unimpaired.
Pursuant to the Second Amended Plan, a "GUC Convenience Claim"
means an Allowed Claim in an amount greater than $0.01 but less
than or equal to $2,750.00, that would otherwise qualify as a
General Unsecured Claim; provided, that any Holder of an Allowed
General Unsecured Claim may elect to have such Claim reduced to
$2,750.00 and treated as an Allowed GUC Convenience Claim for
purposes of the Second Amended Plan; provided, further, that
notwithstanding the foregoing, the total GUC Convenience Claims
shall not exceed $150,000 in the aggregate. Class 4(b) is
unimpaired.
Class 5 DLP Entity General Unsecured Claims will receive payment in
full in Cash. Creditors will recover 100% of their claims. Class 5
is unimpaired.
The deadline to vote on the Second Amended Plan is May [24], 2023
at 4:00 p.m. (prevailing Central Time).
Co-Counsel for the Debtors:
Matthew D. Cavenaugh, Esq.
Kristhy M. Peguero, Esq.
JACKSON WALKER LLP
1401 McKinney Street, Suite 1900
Houston, TX 77010
Telephone: (713) 752-4200
E-mail: kpeguero@jw.com
mcavenaugh@jw.com
- and -
Charles S. Kelley, Esq.
MAYER BROWN LLP
700 Louisiana Street, Suite 3400
Houston, TX 77002-2730
Telephone: (713) 238-3000
E-mail: ckelley@mayerbrown.com
- and -
Thomas S. Kiriakos, Esq.
Louis S. Chiappetta, Esq.
Jamie R. Netznik, Esq.
Lisa Holl Chang, Esq.
Joshua R. Gross, Esq.
Jade Edwards, Esq.
71 S. Wacker Drive
Chicago, IL 60606
Telephone: (312) 782-0600
E-mail: tkiriakos@mayerbrown.com
lchiappetta@mayerbrown.com
jnetznik@mayerbrown.com
lhollchang@mayerbrown.com
jgross@mayerbrown.com
jmedwards@mayerbrown.com
- and -
Adam C. Paul, Esq.
Lucy F. Kweskin, Esq.
Ashley Anglade, Esq.
1221 Avenue of the Americas
New York, NY 10020-1001
Telephone: (212) 506-2500
E-mail: apaul@mayerbrown.com
lkweskin@mayerbrown.com
aanglade@mayerbrown.com
A copy of the Disclosure Statement dated April 19, 2023, is
available at https://bit.ly/3Ln22Iz from PacerMonitor.com.
About GWG Holdings
Headquartered in Dallas Texas, GWG Holdings, Inc. (NASDAQ: GWGH)
conducts its life insurance secondary market business through a
wholly-owned subsidiary, GWG Life, LLC, and GWG Life's wholly owned
subsidiaries.
GWG Holdings Inc. and affiliates sought Chapter 11 bankruptcy
protection (Bankr. S.D. Texas Lead Case No. 22-90032) on April 20,
2022. In the petition filed by Murray Holland, president and chief
executive officer, GWG Holdings disclosed between $1 billion and
$10 billion in both assets and liabilities.
Judge Marvin Isgur oversees the cases.
The Debtors tapped Mayer Brown, LLP and Jackson Walker, LLP as
bankruptcy counsels; Tran Singh, LLP as special conflicts counsel;
FTI Consulting, Inc. as financial advisor; and PJT Partners, LP as
investment banker. Donlin Recano & Company is the Debtors' notice
and claims agent.
National Founders LP, a debtor-in-possession (DIP) lender, is
represented by Michael Fishel, Esq., Matthew A. Clemente, Esq., and
William E. Curtin, Esq., at Sidley Austin, LLP.
The U.S. Trustee for Region 7 appointed an official committee to
represent bondholders in the Debtors' cases. The committee tapped
Akin Gump Strauss Hauer & Feld, LLP and Porter Hedges, LLP as legal
counsels; Piper Sandler & Co. as investment banker; and
AlixPartners, LLP as financial advisor.
HAWAIIAN HOLDINGS: Incurs $98.3 Million Net Loss in First Quarter
-----------------------------------------------------------------
Hawaiian Holdings Inc. has filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $98.26 million on $612.60 million of total operating revenue for
the three months ended March 31, 2023, compared to a net loss of
$133.28 million on $477.21 million of total operating revenue for
the three months ended March 31, 2022.
As of March 31, 2023, the Company had $4.12 billion in total
assets, $1.28 billion in total current liabilities, $1.56 billion
in long-term debt, $1.04 billion in other liabilities and deferred
credits, and $233.32 million in total shareholders' equity.
Cash, cash equivalents and short-term investments (excluding
restricted cash) totaled approximately $1.4 billion as of March 31,
2023, compared to approximately $1.4 billion as of Dec. 31, 2022.
As of March 31, 2023, the Company's current assets exceeded its
current liabilities by approximately $339.9 million as compared to
$558.0 million as of Dec. 31, 2022. Approximately $746.5 million
of the Company's current liabilities relate to its advanced ticket
sales and frequent flyer deferred revenue.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001172222/000117222223000037/ha-20230331.htm
About Hawaiian Holdings
Hawaiian Holdings, Inc.'s primary asset is sole ownership of all
issued and outstanding shares of common stock of Hawaiian Airlines,
Inc. The Company is engaged in the scheduled air transportation of
passengers and cargo amongst the Hawaiian Islands (the Neighbor
Island routes) and between the Hawaiian Islands and certain cities
in the United States (the North America routes together with the
Neighbor Island routes, the Domestic routes), and between the
Hawaiian Islands and the South Pacific, Australia, New Zealand and
Asia (the International routes), collectively referred to as its
Scheduled Operations.
Hawaiian Holdings reported a net loss of $240.08 million in 2022,
compared to a net loss of $144.77 million in 2021, a net loss of
$510.93 million in 2020, and net income of $223.98 million for the
year ended Dec. 31, 2019.
* * *
This concludes the Troubled Company Reporter's coverage of Hawaiian
Holdings until facts and circumstances, if any, emerge that
demonstrate financial or operational strain or difficulty at a
level sufficient to warrant renewed coverage.
HEMP SYNERGISTICS: Hires R.D. Hoag & Associates as Accountant
-------------------------------------------------------------
Hemp Synergistics LLC seeks approval from the U.S. Bankruptcy Court
for the Western District of Pennsylvania to hire R.D. Hoag &
Associates, LLC as its accountants.
The firm's services include:
(a) assisting the Debtor in the preparation and submission of
all financial reports required under the Federal Rules of
Bankruptcy Procedure (Bankruptcy Rules) and the local rules of this
Court; and,
(b) assisting the Debtor in reviewing ongoing financials and
preparing appropriate financial statements and budgets as may be
required from time to time.
The range of standard rates for accountants and administrative
professionals range from $50 per hour for administrative personnel
to $175 per hour for directors.
As disclosed in the court filings, R.D. Hoag & Associates is a
"disinterested person" within the meaning of Bankruptcy Code
section 101(14); and does not hold or represent any interest
adverse to the Debtor's estate.
The firm can be reached through:
Rodney W. Deloe
R D Hoag & Associates, LLC
555 N Bell Ave #100
Carnegie, PA 15106
Phone: +1 412-278-1600
Email: inquiry@rdhcpallc.com
About Hemp Synergistics
Hemp Synergistics LLC sought protection for relief under Chapter 11
of the Bankruptcy Code (Bankr. W.D. Pa. Case No. 23-20582) on March
17, 2023, listing under $1 million in both assets and liabilities.
Michael J. Roeschenthaler, Esq. at Whiteford, Taylor & Preston, LLP
represents the Debtor as counsel.
HOUGHTON MIFFLIN: Moody's Alters Outlook on 'B3' CFR to Stable
--------------------------------------------------------------
Moody's Investors Service confirmed Houghton Mifflin Harcourt
Company's (HMH) credit ratings, including its B3 corporate family
rating, and changed the outlook to stable from rating under review.
This concludes the review for downgrade initiated on January 10,
2023. Concurrently, Moody's assigned a B2 rating to HMH's $375
million incremental senior secured first lien term loan.
The rating actions follow HMH's announcement[1] that it had closed
on its previously announced acquisition of NWEA for $950 million,
inclusive of fees, transaction charges, and net working capital
changes. HMH funded the acquisition with $375 million of newly
raised senior secured first lien term loan and $575 million equity
contributed by its sponsor Veritas Capital (Veritas).
The ratings confirmation reflects Moody's view that the combination
of the strategic benefits of NWEA, substantial equity component in
the acquisition funding mix (roughly 60% of total funding), and
good liquidity post-closing help mitigate the initial leverage
increase and the integration risks. Governance considerations are
key factors in the ratings confirmation. The acquisition
strengthens HMH's competitive position in the K-12 segment by
growing digital capabilities and expanding its presence to the
assessment segment where HMH does not currently participate in a
material way.
Assignments:
Issuer: Houghton Mifflin Harcourt Company
Senior Secured First Lien Term Loan B, Assigned B2
Confirmations:
Issuer: Houghton Mifflin Harcourt Company
Corporate Family Rating, Confirmed at B3
Probability of Default Rating, Confirmed at B3-PD
Senior Secured First Lien Bank Credit Facility, Confirmed at B2
Outlook Actions:
Issuer: Houghton Mifflin Harcourt Company
Outlook, Changed To Stable From Rating Under Review
RATINGS RATIONALE
Moody's expects HMH's closing Debt/EBITDA will be high pro forma
for NWEA acquisition at roughly mid-6x (Moody's adjusted). However,
continued growth in revenue, and realization of planned synergies
following the acquisition should reduce leverage to low- to mid-5x
over the next 12-18 months. However, substantially all the leverage
improvement is likely to occur in 2024, after the
acquisition-related integration costs wind down and assuming that
HMH will be able to get its fair share of 2024 adoption
opportunities in the Core segment. Additionally, the combined
company's larger presence in the fast-growing Extensions segment
and a greater diversity in product offerings less reliant on the
highly cyclical adoption cycle should moderately reduce cash flow
volatility over time.
The proposed NWEA acquisition increases the company's scale as
measured by revenue to $1.3 billion pro forma for the acquisition
from about $1 billion currently. In addition to the benefits of
scale, the combination presents opportunities to connect NWEA's
assessment offerings directly to HMH instructional content,
providing potential to cross sell certain products or services to
each company's user base. The interconnection between assessments,
extensions and core curriculum strengthens HMH's value proposition
to its customers and differentiates from the competition. However,
it also introduces a risk that some of HMH competitors that
currently link their products to NWEA assessments may develop their
own assessment products in house or choose to switch to another
assessment provider. The acquisition is consistent with HMH's
previously articulated strategy of growing its presence in the
Extensions market, growing digital revenue and connected product
offerings.
NWEA's not-for-profit business model is very different from that of
HMH and integrating the businesses will carry substantial risk.
Reducing costs to realize targeted synergies, integrating disparate
platforms across HMH and NWEA and managing differing cultures may
be disruptive to NWEA and may take some available resources away
from growing HMH's existing Core or Extensions products, or
managing the challenged Heinemann's brand performance.
HMH's B3 CFR reflects the company's high leverage, exposure to a
highly cyclical K-12 core educational market and intense
competition. The company's business is subject to pronounced
seasonality in school spending. HMH has a good market position
within K-12 educational publishing but is dependent for most of its
revenue on state and local budgets. HMH's rating continues to
garner support from its good market position within K-12
educational publishing, a broad portfolio of educational publishing
products, a customer footprint that extends to 90% of schools in
the US, established relationships with customers, and a well-known
brand. Moody's expects that HMH's already implemented cost
structure improvements and an on-going shift to digital will result
in a business model with significantly reduced earnings volatility.
The on-going shift towards greater focus on Extensions and
continuous incremental product investment will likely provide for
reduced cash flow volatility and reduce reliance on highly cyclical
core educational materials adoptions, but there are operational and
investment risks associated with this move as well. Moody's
anticipates that competition will remain intense, particularly in
the more discretionary Extensions market.
Moody's expects HMH to maintain good liquidity, supported by
approximately $324 million of cash on hand at the end of 2022,
external liquidity provided by a committed $250 million revolver
due 2027, and lack of near-term debt maturities. Liquidity is
constrained by pronounced seasonality of operating cash flows and
some reliance on revolver borrowing to bridge seasonal cash needs.
Moody's projects negative free cash flow in the -$30 to -$40
million range in 2023 primarily because of a light adoption
pipeline this year. However, Moody's expects free cash flow to turn
positive in 2024, closer to $60 - $70 million, assuming HMH wins a
significant portion of a strong adoptions that year.
HMH's new senior secured $375 million incremental first lien term
loan, the existing $1,480 million term loan and $250 million
revolver are each rated B2, reflecting the company's B3-PD
probability of default rating, an average expected family recovery
rate of 50% at default and the debt instruments' position in the
capital structure ahead of the $390 million second lien term loan
due 2030 (unrated).
The stable rating outlook reflects Moody's expectation that
financial leverage will decrease to under 6x within 18-24 months
post closing. It also reflects Moody's expectation that HMH will
not engage in material debt-financed acquisitions or shareholder
initiatives without first reducing its financial leverage, and that
the company will generate solid free cash flow in 2024.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if HMH is able to consistently grow
revenue and earnings resulting in Debt/EBITDA (Moody's adjusted)
sustained comfortably below 5x, with a commitment to operating at
that leverage level. Good liquidity along with free-cash
flow-to-debt sustained in the mid- single-digit percentage range or
better, would also be needed.
HMH ratings could be downgraded if the expected synergies or
improvement in EBITDA do not materialize, cash costs or integration
challenges are greater than expected or operating performance
deteriorates materially such that Debt/EBITDA is sustained above
6.5x and free cash flow turns negative on other than a temporary
basis.
The principal methodology used in these ratings was Media published
in June 2021.
Headquartered in Boston, MA, Houghton Mifflin Harcourt Publishers
Inc. is one of the three largest US education solutions providers
focusing on the K-12 market. HMH has been owned by a private equity
firm Veritas Capital since 2022. HMH generated 2022 billing of
$1.103 billion.
IMPERVA INC: S&P Downgrades ICR to 'CCC+' on Continued Cash Burn
----------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Imperva Inc.
to 'CCC+' from 'B-' and its issue-only rating on the company's
first-lien credit facility to 'CCC+' from 'B-' and second-lien term
loan to 'CCC-' from 'CCC'.
S&P said, "Our stable outlook reflects our expectation that if
Imperva continues to make progress on its subscription revenue
model transition and accelerates revenue growth, it may be able to
generate modestly positive cash flow in 2024.
"We believe Imperva will report another year of negative cash flow
in 2023 due to constrained EBITDA margins and a growing interest
burden.Leadership changes in the sales organization in early 2022,
an aggressive transition to a subscription-based revenue model, and
a weakening information technology (IT) spending environment have
combined to disrupt Imperva's revenue growth trajectory and
profitability over the past year. S&P Global Ratings-adjusted
EBITDA margins have declined to about 20% and 14% in 2021 and 2022,
respectively, from about 24% in 2020. S&P Global Ratings 's
calculation of EBITDA excludes any credits given to the change in
deferred revenue and unrealized cost savings. While we expect
EBITDA margins will improve to the 18%-20% range in 2023, we
believe margin expansions will continue to be restrained in the
low-20% area in the next 18-24 months as the company continues to
pursue its subscription revenue model transition. The timing of
this transition has coincided with a rapidly rising interest rate
environment and macroeconomic headwinds, exacerbating profitability
challenges and significantly limiting Imperva's ability to generate
positive free operating cash flow, which we now expect to be
negative through at least 2023. Given the firm's four-year track
record of negative free cash flow and need to either improve EBITDA
generation or see lower interest rates to return to positive free
cash flow, we currently view the firm's capital structure as
unsustainable. If the company fails to accelerate revenue growth
and expand EBITDA margins to the mid-20% area by 2025, due to
execution missteps, increasing competitive pressures, or weaker
customer demand, it could face increasing refinancing risk when the
first-lien term loan comes to due in early 2026.
"The stable outlook on Imperva reflects our expectation that while
EBITDA margins and cash flow generation will be constrained over at
least the next 12 months due to higher interest expense, elevated
sales and marketing spending, and macroeconomic headwinds, we
believe accelerating subscription revenue growth should allow
Imperva to start generating positive cash flow again in 2024."
S&P would lower the rating on Imperva if it believed the company
were likely to face substantial risk of payment default over the
next 12 months. Factors that could lead them to make this
assessment include:
-- An inability to fully repay or extend the current revolving
credit facility maturing in January 2024;
-- Greater-than-expected cash burn that could render imminent
financial distress, putting the company at risk of servicing debt
payments without external capital infusion; or
-- If S&P believed the company would face increasing refinancing
risk as the first-lien term loan came current in January 2025.
S&P could raise the rating on Imperva if it believed the company
could generate sustainable positive free operating cash flow
through consistent and accelerating revenue growth and continued
EBITDA margins improvement to the mid-20% area.
ESG credit indicators: E2, S2, G3
S&P said, "Governance factors are a moderately negative
consideration in our credit rating analysis of the company, as is
the case for most rated entities owned by private-equity sponsors.
We believe Imperva Inc.'s highly leveraged financial risk profile
points to corporate decision-making that prioritizes the interests
of the controlling owners. This also reflects the generally finite
holding periods and a focus on maximizing shareholder returns."
ISABEL ENTERPRISES: Court Confirms Chapter 11 Plan
--------------------------------------------------
Judge Peter C. McKittrick entered an order confirming Isabel
Enterprises, Inc., and Isabel, LLC's Chapter 11 Plan dated December
12, 2022 as Modified March 15, 2023.
The Settlement Agreement to the Disclosure is approved pursuant to
FRBP 9014 and shall modify the Plan according to the agreed terms.
However, the Court makes no determination as to the validity of the
representations contained therein regarding the Class 5 Claimant
being in second position as to lien priority and the Class 4
Claimant has reserved all its rights as to lien priority vis-a-vis
Class 5.
The Court finds that the Disclosure and Plan were properly
transmitted to creditors and parties in interest and no objections
were filed. The Debtors presented changes to the original Plan
treatment resulting from negotiations with the various claimants in
the case which allowed the Debtors to avoid a contested
confirmation. Upon conclusion of the offer of proof the Court
requested that the Debtors circulate and submit a revised plan
reflecting all the changes (the "Final Plan"). The Court having
heard evidence and noting no outstanding objections to
confirmation, found that with the changes encompassed in the
Settlement Agreement attached to the Disclosure, the updated Final
Plan, and the proposed amendments, the treatment of creditors is
fair and equitable under 11 U.S.C. Sec. 1191(b) and 11 U.S.C. Sec.
1129(b).
The Class 3 Claimant is not required to submit its pre-confirmation
attorney fees for approval to the Court.
As to the remaining issues for confirmation, the Court finds
sufficient Debtors' testimony as to satisfaction of the remaining
confirmation elements of 11 USC s 1129(a) and (b) and 11 USC Sec.
1191(b). The Court finds that the Enterprises Debtor has
contributed its projected disposable income to the Plan for the
term of the Plan commitment period. The Court also finds that
because the Plan was confirmed pursuant to 11 USC s 1191(b), all
non-secured Plan payment distributions, regarding the Enterprises
Debtor, will be performed by the Case Trustee, Amy Mitchell. The
applicable commitment period of this Plan is 3 years. Therefore,
based on the testimony, Debtors' changes as outlined above, and the
Court docket and pleadings filed herein, the Court finds that all
applicable requirements for confirmation set forth in 11 USC s 1129
(a) and (b) and 1191(a) and (b) have been satisfied.
About Isabel Enterprises
Isabel LLC owns two tax lots consisting of a commercial unit
located at 330 NW 10th Avenue, #116, Portland, Oregon 97209 and a
related parking unit. Historically, Isabel LLC leased the property
to affiliate Isabel Enterprises, which operated a restaurant on the
premises commonly known as the Isabel Pearl. Amid deteriorating
conditions in the neighborhood and the pandemic, the restaurant
shut operations in July 2019.
Amid an impending sale of the property as a result of a foreclosure
action initially instituted by the Condominium Owners' Association,
Isabel Enterprises, Inc., and Isabel LLC sought Chapter 11
protection (Bankr. D. Ore. Lead Case No. 22-30801) on May 18, 2022.
In its petition, Isabel Enterprises was estimated to have $50,000
to $100,000 in assets and $1 million to $10 million in
liabilities.
The Hon. Peter C. Mckittrick oversees the cases.
Oren B. Haker, Esq., of Stoel Rives LLP, is the Debtors' counsel.
JBM SPECIALTIES: Seeks OK to Hire Brokers to Sell Texas Distillery
------------------------------------------------------------------
JBM Specialties, LLC seeks approval from the U.S. Bankruptcy Court
for the Eastern District of Texas to hire New Mill Capital
Holdings, LLC and Investment Recovery Services, LLC.
The Debtor requires the services of a broker in connection with the
sale of the Muenster Distillery in Cooke County, Texas. Investment
Recovery Services will focus on the sale of the real property from
which the distillery operates while the other firm will focus on
the liquidation of equipment and other personal property.
Both firms are jointly tasked to find a buyer for the distillery as
a turnkey operation through July 1. If a buyer for the Muenster
Distillery assets (real and personal property) is not contracted by
the conclusion of the marketing period, the firms will proceed with
an auction of the equipment and other personal property.
The Muenster Distillery real property will not be offered at
auction unless authorized by the Debtor. The auction must take
place approximately 60 days after July 1.
For a turnkey sale of the Muenster Distillery assets (real and
personal property), the firms will retain a 10 percent commission
on the sale price, with the exception of the real property for
which they will be paid at closing or will retain a 6 percent
commission (from which the buyer's broker will be compensated).
Meanwhile, the firms will retain a 10 percent commission on the
sale price of all items sold at auction and an industry standard
buyer's premium of 15 percent, plus 3 percent online platform
provider fee charged to the buyers in addition to the hammer price
at auction.
As disclosed in court filings, New Mill and Investment Recovery
Services neither hold nor represent any interest adverse to the
Debtor or its bankruptcy estate in the matters upon which they are
to be engaged.
The firms can be reached through:
Eric Weiler
New Mill Capital Holdings, LLC
11712 Moorpark St, Suite 112B
Studio City, CA 91604
Phone: 888-801-6032
Fax: 818-574-6596
Email: info@newmillcapital.com
-- and --
Britton New
Investment Recovery Services, LLC
3421 N Sylvania Ave.
Fort Worth, TX 76111
Phone: 817-222-9848
Fax: 817-834-4075
About JBM Specialties
JBM Specialties, LLC -- http://www.WhiskeyHollowDistillery.com/--
operates a beverage manufacturing business. The company is based in
Valley View, Texas.
JBM Specialties filed a petition for relief under Subchapter V of
Chapter 11 of the Bankruptcy Code (Bankr. E.D. Texas Case No.
23-40497) on March 23, 2023, with $1 million to $10 million in both
assets and liabilities. Areya Holder Aurzada has been appointed as
Subchapter V trustee.
Judge Brenda T. Rhoades oversees the case.
The Debtor is represented by Robert DeMarco, III, Esq., at
DeMarco-Mitchell, PLLC.
KAF RECYCLING: Seeks to Hire Agentis PLLC as Bankruptcy Counsel
---------------------------------------------------------------
KAF Recycling Corp seeks approval from the U.S. Bankruptcy Court
for the Southern District of Florida to hire Agentis PLLC as its
general restructuring and bankruptcy counsel.
The firm will render these services:
a. advise the Debtor with respect to its powers and duties as
debtor-in possession and the continued management of its affairs;
b. advise 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. prepare motions, pleadings, orders, applications, adversary
proceedings, and other legal documents necessary in the
administration of the case;
d. protect the interests of the Debtor and the estate in all
matters pending before the Court; and
e. represent the Debtor in negotiations with its creditors in
the preparation of a plan.
The hourly rates of the firm's counsel and staff are as follows:
Attorneys $350 - $660
Paralegals $100 - $245
Jacqueline Calderin, Esq., a shareholder of Agentis, 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:
Jacqueline Calderin, Esq.
Agentis PLLC
55 Alhambra Plaza, Suite 800
Coral Gables, FL 33134
Telephone: (305) 722-2002
Email: jc@agentislaw.com
About KAF Recycling Corp
KAF Recycling Corp sought protection for relief under Chapter 11 of
the Bankruptcy Code (Bankr. S.D. Fla. Case No. 23-12973) on April
17, 2023, listing $100,001 to $500,000 in assets and $500,001 to $1
million in liabilities. Jacqueline Calderin, Esq. at Agentis PLLC
represents the Debtor as counsel.
KARTES LEASING: Unsecureds to Get 100% Under Plan
-------------------------------------------------
Kartes Leasing, LLC submitted an Amended Plan of Reorganization for
Small Business Debtors under Chapter 11, Subchapter V, of the U.S.
Bankruptcy Code.
This Plan of Reorganization under Chapter 11 of the Bankruptcy
Code, Subchapter V, proposes to pay creditors of the Debtor from
cash flow from continued business operations.
As to Class 3 Non-priority Unsecured Claims, the Debtor will pay
the allowed unsecured claims as set forth in the claim analysis on
a monthly basis over the life of the Plan the total of 100% of
their allowed unsecured claim. These payments shall not begin until
after all administrative, priority, and secured claims have been
paid in full. Class 3 is impaired.
Counsel for the Debtor:
D. Lamar Hawkins, Esq.
GUIDANT LAW, PLC
402 East Southern Avenue
Tempe, AZ 85282
A copy of the Disclosure Statement dated April 19, 2023, is
available at https://bit.ly/41OS4VH from PacerMonitor.com.
About Kartes Leasing
Kartes Leasing, LLC filed a petition under Chapter 11, Subchapter V
of the Bankruptcy Code (Bankr. D. Ariz. Case No. 22-00997) on Feb.
18, 2022, listing up to $1 million in assets and up to $500,000 in
liabilities. Joseph E. Cotterman serves as Subchapter V trustee.
Judge Brenda Moody Whinery oversees the case.
D. Lamar Hawkins, Esq., at Guidant Law, PLC, the Law Offices of
Peter N. Greenfeld, P.C. and Onyx Accounting Group, LLC serve as
the Debtor's bankruptcy counsel, special counsel and accountant,
respectively.
KAYA HOLDINGS: Swings to $3.7 Million Net Loss in 2022
------------------------------------------------------
Kaya Holdings, Inc. has filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss of
$3.73 million on $685,379 of net sales for the year ended Dec. 31,
2022, compared to net income of $9.39 million on $889,899 of net
sales for the year ended Dec. 31, 2021.
As of Dec. 31, 2022, the Company had $843,241 in total assets,
$18.45 million in total liabilities, and a total stockholders'
deficit of $17.60 million.
At Dec. 31, 2022 the Company has a working capital deficiency of
$10,359,344 and is totally dependent on its ability to raise
capital.
Houston, TX-based M&K CPAS, PLLC, the Company's auditor since 2018,
issued a "going concern" qualification in its report dated April
27, 2023, citing that the Company had a net loss from continuing
operations, net cash used in operations, and a lack of revenues
to-date, which raises substantial doubt about its ability to
continue as a going concern.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001530746/000190359623000342/kays_10k.htm
About Kaya Holdings
Kaya Holdings, Inc. -- http://www.kayaholdings.com-- is a holding
company focusing on wellness and mental health through operations
in medical and recreational cannabis, CBD products and psychedelic
treatment clinics.
LADO ENTERPRISES: Court Confirms Reorganization Plan
----------------------------------------------------
Judge Maria Ellena Chavez-Ruark has entered an order confirming the
Plan of Reorganization and approving the Disclosure Statement of
Lado Enterprises, Inc.
Class 6 creditors shall be authorized to apply any remaining
security deposit to their pre-petition general unsecured claim.
Assets of the Debtor shall be held by the Debtor free and clear of
the liens, claims, and interests of all creditors and other parties
in interest provided for in the Plan, except for liens as
specifically provided in the Plan.
The Court finds that the Plan complies with the provisions of
Chapter 11 of the Bankruptcy Code. The Debtor has complied with
the provisions of Chapter 11 of the Bankruptcy Code. The Plan has
been proposed in good faith and not by any means forbidden by law.
About Lado Enterprises
Lado Enterprises Inc., an educational service provider in Silver
Spring, Md., sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Md. Case No. 22-14357) on Aug. 9, 2022,
listing $657,396 in assets and $1,447,002 in liabilities. Margaret
Lado Schepis, chief executive officer, signed the petition.
Judge Maria Ellena Chavez-Ruark oversees the case.
The Law Offices of Steven H. Greenfeld, LLC, serves as the Debtor's
counsel.
LIFE TIME: Moody's Rates New $274MM First Lien Term Loan 'B2'
-------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to Life Time, Inc.'s
proposed new $274 million first lien term loan due January 2026.
Proceeds from new first lien term loan will be used to repay the
remaining balance on the existing first lien term loan due December
2024. The company's existing ratings including the B3 Corporate
Family Rating, B3-PD Probability of Default Rating, B2 ratings for
its first lien credit facilities (revolver and term loan) and
senior secured notes, Caa2 rating on its unsecured notes and stable
outlook are not affected.
The existing ratings are not impacted reflecting a leverage neutral
transaction. LTM as of March 31, 2023 Moody's lease adjusted
debt-to-EBITDA leverage for Life Time is in the low 7x range, and
Moody's expects leverage will continue to decline through earning
growth driven by continued membership adds over the next year. Due
to its high capital spending for new center openings, Moody's
expects the company will have adequate liquidity over the next
year. The company had about $35 million cash as of March 31, 2023
and access to a $475 million revolver ($80 million outstanding as
of March 31; expires in December 2026). Moody's expects operating
cash flow and proceeds from sale-leaseback transactions to cover
the expected capital spending in the high $500 million range in
FY2023. Moody's expects to withdraw the B2 rating on the existing
term loan B due December 2024 if the facility is fully repaid with
proceeds from the offering as anticipated.
Moody's took the following rating actions:
Issuer: Life Time, Inc.
Proposed new Senior Secured First Lien Term Loan, assigned B2
RATINGS RATIONALE
Life Time's B3 CFR reflects its high leverage with Moody's adjusted
debt-to-EBITDA in the low 7x range for the LTM period ended March
31, 2023. Moody's expects leverage to continue to decline to a
level approaching 6x over next year through earnings growth. The
rating is constrained by the company's aggressive growth strategy
and historically high reliance on external financing to support its
new club openings including sale-leaseback transactions, landlord
incentives and incremental debt through revolver borrowings. Other
ratings constraints include Life Time's moderate geographic
concentration and business risks associated with the highly
fragmented and competitive fitness club industry, which includes
high membership attrition rates and exposure to shifts in consumer
discretionary spending and economic cycles.
However, the rating benefits from Life Time's focus on a more
affluent member base and expanded service offerings relative to
most fitness clubs that make it less susceptible to increasing
competition from the value priced fitness clubs. The rating is also
supported by the company's solid asset base from owning a portion
of its clubs. Monetization of real estate provides an additional
option to bolster liquidity if needed, and distinguishes Life Time
from most other fitness clubs where facilities are primarily
leased. Additionally, support is provided by the longer term
positive demographic fundamentals for the industry with increased
awareness and focus on fitness and health. Moody's expects Life
Time's financial policy to be somewhat more conservative than in
the past because the company is publicly traded following the
October 2021 initial public offering.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's view that lease adjusted
debt-to-EBITDA leverage will decline to a level approaching 6x over
the next year through earnings growth. The stable outlook also
reflects Moody's expectation for at least adequate liquidity over
the next year with positive free cash flow before growth capital
spending.
Ratings could be upgraded should operating performance, credit
metrics and liquidity improve. Specifically, continued membership
and EBITDA growth, meaningfully positive free cash flow before
growth investments, Moody's adjusted debt-to-EBITDA sustained below
6.0x along with at least good liquidity would be necessary for an
upgrade.
The ratings could be downgraded if there is deterioration of
membership levels or pricing, operating performance, credit metrics
or liquidity. Moody's adjusted debt-to-EBITDA sustained above 7.5x
could also prompt a downgrade.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
Headquartered in Chanhassen, MN, Life Time, Inc. operates 164
premium fitness centers in 29 states and one Canadian province
mostly in suburban locations. LTM revenue as of March 31, 2023 was
about $1.9 billion. Life Time became a publicly traded company in
October 2021 with private equity firms Leonard Green and TPG
retaining significant stakes.
LIFE TIME: S&P Upgrades ICR to 'B' on Improving Performance Trends
------------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on Life Time
Inc. to 'B' from 'B-' and its issue-level ratings on its debt by
one notch. At the same time, S&P assigned its 'BB-' issue-level
rating and '1' recovery rating (90%-100%; rounded estimate: 95%) to
its proposed first-lien senior secured term loan B.
The positive outlook reflects S&P's expectation that the company
will gradually reduce its revolver balance over the next few
quarters, improving its leverage to the mid-5x area by the end of
2023, despite our expectation for a shallow recession starting in
the second half of the year.
S&P said, "The upgrade reflects our expectation that Life Time's
leverage will decline to the mid-5x area by the end of 2023.Our
base-case forecast assumes the company's dues and center
memberships increase by approximately 10% as of year-end 2023,
compared with year-end 2022, though its memberships will still be
approximately 5% below its results as of year-end 2019. We
anticipate Life Time will continue to increase its member tally by
the mid-single-digit percent range in 2024 and onward. We also
expect the company will increase its average monthly dues from
paying center memberships to $160-$170 per member in 2023.
Furthermore, we assume the company's average prices will increase
as it sheds the legacy cohort of members paying lower rates. This
is largely in line with our previous base-case forecast; however,
we have upwardly revised our EBITDA margin assumption by about 300
basis points in 2023. The high flow through of incremental revenue
to Life Time's EBITDA, due to its coverage of its fixed-charge base
and refined cost structure, has supported an EBITDA margin in-line
with its pre-pandemic results, and we expect that it will maintain
its margin at this level. We now expect the company will end 2023
with leverage in the mid-5x area and 2024 with leverage in the
low-5x area, which compares with the high-6x area as of the end of
the first quarter of 2023.
"Life Time plans to develop new clubs and intends to fund about
half of the costs with the proceeds from sale-leaseback
transactions. We expect the company will use these proceeds to
partially finance its growth capital spending over the next several
years. We assume Life Time will spend $550 million-$600 million
annually on capital expenditure (capex) in 2023 and 2024 to develop
approximately 10 clubs per year. We also expect the company will
close on approximately $300 million of sale leasebacks in 2023 and
a similar amount in 2024. While we believe Life Time has adequate
liquidity to fund its capital spending needs over the next several
years, its club development spending typically precedes the closing
of its sale-leaseback transactions, which creates incremental
financing risk. We do not believe the company has faced difficulty
in closing its sale-leaseback transactions, though rising interest
rates and recessionary conditions in 2023 could make securing
financing more difficult. While the company drew on its revolver in
the first quarter of 2023, we expect it will be able to repay its
revolver balance during the year with proceeds from its
sale-leaseback transactions. Life Time has also stated that to
begin funding its new club development with internally generated
free cash flow, it would need to achieve about $600 million of
EBITDA. We believe the company's incremental financing risk would
be significantly decline if it generates EBITDA at that scale. The
company has also indicated a desire to begin using higher levels of
landlord financing for its new club development instead of
sale-leaseback transactions. We believe that this strategy would
support an improvement in its cash flow profile and help reduce the
financing risk related to its sale-leaseback strategy. We have yet
to see evidence that the company has begun executing this strategy
in a material way.
"We believe price increases could partially offset the reduction in
its club memberships, relative to historical levels, and the
significant inflationary pressure.Life Time has significantly
raised its monthly dues for new joiners compared with its
pre-pandemic levels, and we believe it will continue to raise
prices for new memberships in 2023, which will support increasing
annual dues revenue through at least the end of 2023. Therefore, we
believe the company could match its pre-pandemic EBITDA levels even
with a lower per-club membership base than before the price
changes. However, given the significant macroeconomic risk, this
strategy could leave Life Time vulnerable amid a recessionary
environment characterized by declining consumer spending.
"The positive outlook reflects our expectation that the company
will begin to reduce its revolver balance over the next few
quarters and could improve its leverage to the mid-5x area by the
end of 2023, even after incorporating our expectation for a shallow
recession in 2023.
"We could revise our outlook on Life Time to stable if we believe
it will accelerate its new club development such that it sustains
leverage of more than 5.5x."
S&P could lower its rating on the company if:
-- S&P believes it will likely sustain leverage of above 6.5x; or
-- S&P anticipates it may face difficulty in securing
sale-leaseback transaction to fund its growth capex.
S&P could raise its rating on Life Time if it is confident it will
achieve leverage of less than 5.5x on a sustained basis. This could
occur if the company increases its its memberships, revenue, and
EBITDA.
ESG credit indicators: E-2, S-3, G-3
LIGHT AND WONDER: Moody's Affirms B1 CFR & Ups Unsec. Notes to B3
-----------------------------------------------------------------
irst lien term loan B were affirmed at Ba3. The company's 7.0%
senior unsecured notes due 2028 and 7.25% senior unsecured notes
due 2029 were affirmed at B3. The company's 8.625% senior unsecured
notes due 2025 were upgraded to B3 from Caa2. The company's
Speculative Grade Liquidity rating was upgraded to SGL-1 from SGL-2
and the outlook remains positive.
The affirmation of the company's B1 CFR and positive outlook
reflects the significant reduction in debt in 2022 following the
sale of the company's lottery business and OpenBet sports betting
business. Moody's projects a further decline in debt-to-EBITDA to
below 4x (based on continuing operations) by 2024, as the company's
gaming operations continue to recover, and growth continues in the
company's digital operations. The improved financial profile of the
company following the reduction in debt, allows the company to
focus on its land-based and digital markets which have a large
total addressable market and opportunity for growth. Moody's
expects the company to focus on content franchises utilizing a
cross-platform gaming approach, leveraging content creation
investments and enabling player trends.
Upgrades:
Issuer: Light and Wonder International, Inc.
Backed Senior Unsecured Regular Bond/Debenture, Upgraded to B3
from Caa2, Placed on Review for Upgrade
Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2
Affirmations:
Issuer: Light and Wonder International, Inc.
Corporate Family Rating, Affirmed B1
Probability of Default Rating, Affirmed B1-PD
Backed Senior Secured 1st Lien Bank Credit Facility, Affirmed Ba3
Backed Senior Unsecured Regular Bond/Debenture, Affirmed B3
Outlook Actions:
Issuer: Light and Wonder International, Inc.
Outlook, Remains Positive
RATINGS RATIONALE
Light and Wonder International, Inc.'s' B1 CFR reflects the
meaningful reduction in debt following the sale of the company's
lottery and sports betting businesses. Leverage is expected to
continue to improve from the current level in the mid 4x range.
Positive consideration is given to the company's high level of
annual recurring revenue at near 75%, with a growing digital mix
which the company is expecting to grow to 50% over time. The
company is also well positioned to benefit from the growth of
digital gaming products, as the market continue to expand and
mature, including in igaming and in casual games with SciPlay. The
company currently owns a large portfolio of complementary gaming
products and services, both digital and non-digital, that it can
utilize and cross-sell globally among its various distribution
platforms. Key credit concerns include exposure to replacement
cycles for slot machines, with the company's new games and cabinets
looking to help drive performance in the Gaming operating segment.
Revenues are largely tied to the volume of gaming machine play and
gaming machine sales and there is risk as gaming is cyclical and
dependent on discretionary consumer spending. The company can
reduce spending on game development and capital expenditures when
revenue weakens, but the need to retain a skilled workforce to
maintain competitive technology contributes to high operating
leverage.
The company's speculative-grade liquidity rating of SGL-1 reflects
very good liquidity and sizable cash balance built in part through
continued positive free cash flow. As of December 31, 2022, the
company had unrestricted cash of $914 million and full availability
on its $750 million revolving credit facility. Moody's anticipates
the company will generate positive free cash flow over the next
twelve months of over $100 million. The company's $750 million
revolver is to be subject to a net first lien leverage ratio of
4.0x to be tested if revolver utilization is 30%. The company's
term loan does not have any financial maintenance covenants.
Moody's believe the company will maintain compliance with its
covenants and that the revolver covenant will not be sprung or
tested.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The positive outlook considers Moody's expectation that the
recovery in the company's business exhibited in 2022 will continue
over the next twelve months, with revenue growth and margin
expansion. The positive outlook also incorporates the company's
good liquidity and Moody's expectation for debt-to-EBITDA leverage
will continue to decline from current levels.
Ratings could be downgraded if liquidity deteriorates, if Moody's
anticipates the company's revenue or earnings to decline or there
are reductions in discretionary consumer spending. Debt-to-EBITDA
leverage sustained over 5.0x could result in a downgrade.
The ratings could be upgraded if debt-to-EBITDA is sustained below
4.0x, with solid top line revenue growth, good liquidity, and a
commitment to maintaining a conservative financial policy with low
leverage levels. Consistent and meaningfully positive free cash
flow while maintaining good reinvestment levels that generate solid
returns would also be required for an upgrade.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
Light and Wonder is a developer of technology-based products and
services and associated content for worldwide gaming, social and
digital gaming markets. Light & Wonder, Inc. is the publicly traded
parent company of Light and Wonder International, Inc., the direct
borrower of over $3.9 billion of rated debt. Consolidated revenue
for the latest 12-month period ended December 31, 2022 was $2.51
billion.
LITHIA MOTORS: Moody's Affirms 'Ba1' CFR & Alters Outlook to Stable
-------------------------------------------------------------------
Moody's Investors Service changed Lithia Motors, Inc.'s outlook to
stable from positive. Moody's also affirmed all of Lithia's
ratings including its Ba1 corporate family rating, Ba1-PD
probability of default rating and Ba2 senior unsecured debt
ratings. The SGL-2 speculative grade liquidity rating (SGL) remains
unchanged.
The change in outlook to stable reflects Moody's view that credit
metrics will be pressured more than anticipated as the
deterioration in gross profit per vehicle continues. It also
reflects the risks to Lithia's operating performance, particularly
gross profit per vehicle, presented by the difficult consumer
spending environment, increased interest rates and the challenges
in maintaining inventory discipline as new vehicle availability
increases. The outlook also considers Lithia's focus on achieving
its revenue target by 2025 which will be achieved in part through
material acquisitions as well as reaching its goal of profitability
for Driveway Finance Corporation (DFC). The affirmation reflects
Lithia's reasonable credit metrics, meaningful scale, increasing
geographic diversity, balanced financial strategy and good
liquidity.
Affirmations:
Issuer: Lithia Motors, Inc.
Corporate Family Rating, Affirmed Ba1
Probability of Default Rating, Affirmed Ba1-PD
Senior Unsecured Regular Bond/Debenture, Affirmed Ba2
Outlook Actions:
Issuer: Lithia Motors, Inc.
Outlook, Changed To Stable From Positive
RATINGS RATIONALE
Lithia's Ba1 corporate family rating considers its reasonable
credit metrics, meaningful scale, increasing geographic diversity,
balanced financial strategy and good liquidity. A key factor is
Lithia's ability to continue to prudently source and price its
acquisitions and to integrate them such that they are quickly
accretive as well as prudently managing the growth of DFC to where
it is meaningfully profitable on a standalone basis. For the LTM
period ending March 31, 2023, consolidated adjusted debt/EBITDA
inclusive of DFC was around 3.2 times. Overall, Moody's expects
Lithia to be able to continue to flex its operations to help
mitigate any material negative impact to its credit metrics and
liquidity regardless of the industry and economic environment.
The stable outlook recognizes the flexibility in Lithia's cost
structure which helps it mitigate the impact to profitability of
changing consumer demand as well as the deterioration in gross
profit per vehicle as inventories normalize such that credit
metrics will remain within the range appropriate for its ratings.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade would require Lithia to flawlessly source, price and
integrate any future acquisitions and continue to maintain a
conservative financial strategy, particularly surrounding the
funding of those acquisitions. Specifically, ratings could be
upgraded if on a sustained basis debt to EBITDA is maintained below
3.0 times and EBIT to Interest is above 6.0 times, while
maintaining at least good liquidity. An upgrade would also require
a firm commitment to maintaining an investment grade profile on all
fronts.
A downgrade could occur in the event a deterioration in operating
performance or a more aggressive financial strategy results in a
weakening of liquidity or credit metrics with debt to EBITDA
sustained above 4.5 times or EBIT to Interest sustained below 4.0
times.
Headquartered in Medford, Oregon, Lithia Motors, Inc. is a leading
auto retailer with over 330 stores across 25 states as well as
Canada and the United Kingdom. Revenue is approximately $28.5
billion for the twelve months ended March 31, 2023.
The principal methodology used in these ratings was Retail
published in November 2021.
LTL MANAGEMENT: Bankruptcy Court Paused J&J's Talc Cases
--------------------------------------------------------
Kevin Dunleavy of Fierce Pharma reports that on Thursday, April 20,
2023, U.S. bankruptcy judge Michael Kaplan froze more than 38,000
lawsuits as part of the company's second attempt to declare
bankruptcy for its subsidiary, LTL Management, which was
established to hold the cases. The plaintiffs allege that J&J’s
baby powder and other talc products cause cancer.
Judge Kaplan ruled that proceedings be put on hold until June 15.
The decision came after J&J offered to settle the cases for $8.9
billion. In the company's first bankruptcy try, it offered a
settlement of $2 billion. While that attempt wasn't successful, it
bought the company 19 months during which cases were on hold.
"The decision is a win for claimants, who are now one step closer
to being able to vote for themselves on whether to accept the
proposed resolution," Erik Haas, J&J's head of worldwide
litigation, said in a statement. "We are confident the vote will
overwhelmingly support the proposal, as it presents the only
equitable path forward."
Kaplan is the same New Jersey judge who affirmed J&J's ability to
use Chapter 11 in its first bankruptcy effort. That decision came
in February 2022. But three months ago, a federal appeals court
overturned the verdict, ruling that the company could not be
considered in "financial distress," since J&J had agreed to fund
LTL’s liabilities with up to $61.5 billion.
When J&J's appeal was again rejected earlier this month, the cases
became unfrozen. But that lasted for roughly two hours as the
company filed its second bankruptcy, with the new settlement
offer.
J&J has already paid a major price for litigating talc claims. In
its first-quarter earnings presentation Tuesday, April 18, 2023,
the company reported a $6.9 billion charge tied to its talc
defense, leading to a net loss of $68 million during the period.
An $8.9 billion settlement would provide approximately $120,000
each to roughly 70,000 claimants, lawyers for plaintiffs have said.
In addition to the more than 38,000 plaintiffs whose cases were
halted by the bankruptcy, many more have subsequently been filed.
Lawyers representing a large group of the plaintiffs—most of them
with claims that J&J talc products caused their ovarian cancer or
mesothelioma—are rejecting the settlement and bankruptcy claim.
"While we appreciate the bankruptcy court's attempt to support some
measure of relief for our claims, this ruling does not support the
desperate pleas of women and men who are dying every day," Leigh
O'Dell of Beasley Allen, the co-chair of the plaintiffs steering
committee, said in a statement. "We continue to believe that this
bankruptcy effort is illegitimate, that the civil courts remain the
venue to resolve civil claims."
Another group of law firms—including Nachawati Law Group of St.
Louis and Watts Guerra LLC of San Antonio—are supporting the
settlement, saying that if put to a vote, 90% of all claimants
would accept. If the deal is allowed by Kaplan, it would have to be
signed off on by at least 75% of the claimants to be approved.
J&J's offer comes after years of litigation, including a
high-profile trial that resulted in a $4.7 billion verdict against
the drugmaker. The verdict was later reduced to $2.1 billion after
appeals.
J&J has lost nine talc trials that are either on appeal or have
been resolved. Out of 41 trials, 32 have ended in a win by J&J, a
mistrial or plaintiff verdicts that were reversed on appeal.
Separately, the company in 2020 moved to settle around 1,000 cases
for $100 million, Bloomberg reported at the time.
Despite taking its talc products off the market—first in North
America in 2020 and the rest of the world this year—J&J claims
that there is no conclusive evidence that they cause cancer.
About LTL Management
LTL Management, LLC, is a subsidiary of Johnson & Johnson (J&J),
which was formed to manage and defend thousands of talc-related
claims and oversee the operations of Royalty A&M. Royalty A&M owns
a portfolio of royalty revenue streams, including royalty revenue
streams based on third-party sales of LACTAID, MYLANTA/MYLICON and
ROGAINE products.
LTL Management filed a petition for Chapter 11 protection (Bankr.
W.D.N.C. Case No. 21-30589) on Oct. 14, 2021. The case was
transferred to New Jersey (Bankr. D.N.J. Case No. 21-30589) on Nov.
16, 2021. The Hon. Michael B. Kaplan is the case judge. At the
time of the filing, the Debtor was estimated to have $1 billion to
$10 billion in both assets and liabilities.
The Debtor tapped Jones Day and Rayburn Cooper & Durham, P.A., as
bankruptcy counsel; King & Spalding, LLP and Shook, Hardy & Bacon
LLP as special counsel; McCarter & English, LLP as litigation
consultant; Bates White, LLC as financial consultant; and
AlixPartners, LLP as restructuring advisor. Epiq Corporate
Restructuring, LLC, is the claims agent.
An official committee of talc claimants was formed in the Debtor's
Chapter 11 case on Nov. 9, 2021. On Dec. 24, 2021, the U.S.
Trustee for Regions 3 and 9 reconstituted the talc claimants'
committee and appointed two separate committees: (i) the official
committee of talc claimants I, which represents ovarian cancer
claimants, and (ii) the official committee of talc claimants II,
which represents mesothelioma claimants.
The official committee of talc claimants I tapped Genova Burns LLC,
Brown Rudnick LLP, Otterbourg PC and Parkins Lee & Rubio LLP as its
legal counsel. Meanwhile, the official committee of talc claimants
II is represented by the law firms of Cooley LLP, Bailey Glasser
LLP, Waldrep Wall Babcock & Bailey PLLC, Massey & Gail LLP, and
Sherman Silverstein Kohl Rose & Podolsky P.A.
Re-Filing of Chapter 11 Petition
On January 30, 2023, a panel of the Third Circuit issued an opinion
directing this Court to dismiss the 2021 Chapter 11 Case on the
basis that it was not filed in good faith. Although the Third
Circuit panel recognized that the Debtor "inherited massive
liabilities" and faced "thousands" of future claims, it concluded
that the Debtor was not in financial distress before the filing.
On March 22, 2023, the Third Circuit entered an order denying the
Debtor's petition for rehearing. The Third Circuit entered an
order denying LTL's stay motion on March 31, 2023, and, on the dame
day, issued its mandate directing the Bankruptcy Court to dismiss
the 2021 Chapter 11 Case.
The Bankruptcy Court entered an order dismissing the 2021 Case on
April 4, 2023.
Johnson & Johnson on April 4, 2023, announced that its subsidiary
LTL Management LLC (LTL) has re-filed for voluntary Chapter 11
bankruptcy protection (Bankr. D.N.J. Case No. 23-12825) to obtain
approval of a reorganization plan that will equitably and
efficiently resolve all claims arising from cosmetic talc
litigation against the Company and its affiliates in North
America.
In the new filing, J&J said it has agreed to contribute up to a
present value of $8.9 billion, payable over 25 years, to resolve
all the current and future talc claims, which is an increase of
$6.9 billion over the $2 billion previously committed in connection
with LTL's initial bankruptcy filing in October 2021. LTL also has
secured commitments from over 60,000 current claimants to support a
global resolution on these terms.
MAD ENGINE: Moody's Cuts CFR to Caa2 & Alters Outlook to Negative
-----------------------------------------------------------------
Moody's Investors Service downgraded Mad Engine Global, LLC's
ratings including its corporate family rating to Caa2 from B3 and
probability of default rating to Caa2-PD from B3-PD. Moody's also
downgraded its senior secured first lien term loan to Caa2 from B3.
The outlook was changed to negative from stable.
The downgrade reflects the company's severely weakened credit
metrics due to a customer demand pull-back, the delayed realization
of acquisition synergies, elevated labor and freight costs, a
heavily promotional environment in 4Q'22 and higher interest rates.
As a result, Moody's adjusted debt/EBITDA is unsustainably high at
17.8x times and EBITA/Interest is 0.2x as of the year ended
December 31, 2022.
The downgrade also reflects governance considerations, particularly
that Mad Engine has been unable to meet performance expectations
due in part to synergy realization delays associated with the
Fortune Screen printing acquisition, leading to the current
extremely weak metrics. The rating also continues to consider the
financial strategy risk associated with being owned by a private
equity sponsor particularly Mad Engine's ongoing extremely high
leverage. Moody's has revised Mad Engine's Governance Issuer
Profile Score (IPS) to G-5 (very highly negative) from G-4 (highly
negative). Concurrently, Moody's has revised the company Credit
Impact Score to CIS-5 (very highly negative) from CIS-4 (highly
negative).
Mad Engine anticipates a rebound in 2023 as the company run-rates
the integration of the Fortune and Fifth Sun acquisitions and the
transition and consolidation of production and warehousing
infrastructure in Mexico and California. Furthermore, the company
expects to realize $10 million of Fortune Screen printing
acquisition synergies, benefits of $3 million of additional
headcount reductions executed in 1Q'23, lower freight and input
costs and more favorable demand signals from customers. Moody's
estimates that pro forma for these tailwinds, credit metrics would
strengthen but still remain weak at approximately 7.0x debt/EBITDA
and 0.9x EBITA/Interest.
The negative outlook reflects the significant risks to the rebound
given the uncertain macroeconomic and retail environment. It also
reflects that Mad Engine would still have weak credit metrics pro
forma for the expected rebound in performance in 2H'23.
Downgrades:
Issuer: Mad Engine Global, LLC
Corporate Family Rating, Downgraded to Caa2 from B3
Probability of Default Rating, Downgraded to Caa2-PD from B3-PD
Senior Secured 1st Lien Term Loan, Downgraded to Caa2 from B3
Outlook Actions:
Issuer: Mad Engine Global, LLC
Outlook, Changed To Negative From Stable
RATINGS RATIONALE
Mad Engine's Caa2 CFR reflects its small scale, extremely high
leverage, low interest coverage, private equity ownership, high
customer concentration and high licensor concentration. Performance
has been impacted by demand volatility, global supply chain
challenges, cost pressures, inflation, a promotional environment
coupled with delays in executing synergies on the Fortune Screen
printing acquisition.
Positive consideration is given to Mad Engine's adequate market
position and its licensing portfolio which has significantly grown
over the last decade. However, its customer concentration and niche
product focus on entertainment apparel also makes the company
susceptible to demand swings driven by their licensor's popularity
and decisions of key customers. Mad Engine's rating is also
supported by its adequate liquidity which includes $60-$70 million
of expected availability on its asset-based revolving credit
facility (ABL) and $4-$6 million of balance sheet cash over the
next 12-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A ratings upgrade would require successful achievement of targeted
synergies from the Fortune Printing acquisition and a consistent
improvement in operating performance. An upgrade would also require
maintaining adequate liquidity evidenced by positive free cash flow
and conservative financial strategies. Quantitatively, the ratings
could be upgraded if debt/EBITDA is sustained below 6.5x and
EBITA/interest approached 1.0x.
The ratings could be downgraded if the company's overall operating
performance or liquidity profile is worse than expected, including
sustained free cash flow deficits. Ratings could also be
downgraded should the probability of default increase for any
reason or recovery expectations are reduced.
Headquartered in San Diego, California, Mad Engine Global, LLC is
engaged in the design, manufacture, and wholesale distribution of
licensed and branded apparel to retailers throughout the US. The
company generates most its revenue from products sold under
licenses with blue chip entertainment companies such as The Walt
Disney Company and Marvel and sells to large blue-chip retailers
such like Walmart Inc. and Target Corporation. The company is
majority owned by Platinum Equity LLC.
The principal methodology used in these ratings was Apparel
published in June 2021.
MARKING IMPRESSIONS: Files Emergency Bid to Use Cash Collateral
---------------------------------------------------------------
Marking Impressions, Inc. asks the U.S. Bankruptcy Court for the
Middle District of Tennessee for authority to use cash collateral
for ordinary and necessary operating expenses of its business.
BILLD and the US Small Business Administration (serviced by Fifth
Third Bank) assert a security interest and lien in the cash
collateral of the Debtor. The Debtor is not aware of any other
creditor claiming an interest in the cash collateral, and more
specifically the Debtor's accounts receivables.
In connection with its business, the Debtor incurs expenses, goods
and services from third parties, employee expenses, professionals,
insurance, utilities, telephone, supplies, taxes and other
operational and capital costs.
The Debtor requests that the Court enter an order providing for the
use of cash collateral until a final hearing may be conducted.
A copy of the Debtor's motion and budget is available at
https://bit.ly/3HrUWzX from PacerMonitor.com.
The Debtor projects $288,088 in total expenses.
About Marking Impressions, Corp.
Marking Impressions, Corp. operates a specialized painting and
resurfacing business in Murfreesboro, Tennessee. The Debtor sought
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr.
M.D. Tenn. Case No. 23-01470) on April 24, 2023. In the petition
signed by Wayne Todd Pope, CEO, the Debtor disclosed $2,741,294 in
assets and $5,499,299 in liabilities.
Judge Charles M. Walker oversees the case.
Steven L. Lefkovitz, Esq., at Lefkovitz and Lefkovitz, represents
the Debtor as legal counsel.
MEDICAL CENTER: Seeks Cash Collateral Access
--------------------------------------------
Medical Center Pharmacy, LLC asks the U.S. Bankruptcy Court for the
Northern District of Alabama, Northern Division, for authority to
use cash collateral and provide adequate protection.
The Debtor has an immediate need to use cash collateral in order to
permit the continuation of its business and to manage and preserve
the assets of the estate for the benefit of the creditors.
Prior to the Petition Date, the Debtor is obligated, either as
Borrower or Co-Borrower or as Guarantor, for:
A. $307,663 Business Loan Agreement and/or Note to First Financial
Bank
B. $150,000 Business Loan Agreement and/or Note to the U.S. Small
Business Administration.
C. $70,556 Business Loan Agreement and/or Note to Fresh Funding
Solutions, Inc.
D. $165,665 Business Loan Agreement and/or Note to DMKA, LLC d/b/a
The Smarter Merchant.
E. $90,000 Business Loan Agreement and/or Note to Anda, Inc.
F. $39,220 Business Loan Agreement and/or Note to Kapitus.
G. $69,913 Business Loan Agreement and/or Note to McKesson
Corporation.
The Debtor will show at the hearing that it is in the best interest
of the estate that the cash collateral securing the claim of First
Financial, SBA, Fresh Funding, DMKA, Anda, Inc., Kapitus and
McKesson be used to pay the operating expenses.
Although the Debtor believes that there is an "equity cushion" that
adequately protects the secured claim of First Financial, SBA,
Fresh Funding, DMKA, Anda, Inc., Kapitus and McKesson, the Debtor
currently proposes the following additional adequate protection"
1. A continuing security interest in all accounts receivable,
and proceeds generated after the Petition Date;
2. A Replacement Lien on all accounts receivable, and
proceeds, generated after the Petition Date;
3. Adherence to the Debtor's projection of operating
expenditures and to provide First Financial, SBA, Fresh Funding,
DMKA, Anda, Inc., Kapitus and McKesson with new Budgets
periodically as needed to provide for changes in revenues or
expenses.
A copy of the Debtor's motion and budget is available at
https://bit.ly/3LkGR8x from PacerMonitor.com.
The Debtor projects, total operating expenses, on a monthly basis,
as follows:
$11,784 for May 2023;
$11,784 for June 2023;
$11,784 for July 2023;
$11,784 for August 2023;
$11,784 for September 2023; and
$11,784 for October 2023.
About Medical Center Pharmacy, LLC
Medical Center Pharmacy, LLC sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. N.D. Ala. Case No. 23-80762) on
April 24, 2023. In the petition signed by Michael Keith Sigmon,
managing member, the Debtor disclosed up to $500,000 in assets and
up to $1 million in liabilities.
C. Taylor Crockett, Esq. at C. Taylor Crockett, P.C., represents
the Debtor as legal counsel.
MERISOL VILLAGES: Unsecureds Owed $62K to Get 100% Under Plan
-------------------------------------------------------------
Merisol Villages, LLC, submitted a Second Amended Disclosure
Statement for the Debtor's Plan of Reorganization.
The Debtor is a Texas limited liability corporation formed in
August of 2019 for the purpose of holding and developing the
certain real property acquired in a settlement of litigation with a
former business associate.
Under the Plan, Class 3 General Unsecured Claims total $62,350.
Each holder of an Allowed Class 3 General Unsecured Claim will
receive 100% of their total Allowed Class 3 General Unsecured
Claim, plus interest fixed at the Federal judgment rate as of the
Confirmation Date, in full satisfaction of the Class 3 Allowed
Claims. Commencing on the first day of the first month following 30
days after the later to occur of (i) the Effective Date, or (ii)
the date on which the Class 3 Claim becomes an Allowed Claim the
Debtor shall pay each Allowed Class 3 Claim in equal semiannual
installments over 24 months.
The Plan contemplates that the Debtor will seek to refinance the
Class 2 Claim in an amount sufficient to pay the Class 2 Claim in
full and use additional loan proceeds to satisfy all remaining
Allowed Claims with the balance of proceeds from the refinancing to
be used to fund future development costs associated with the Real
Property. Prior to closing a refinancing transaction, the Debtor
will continue to engage in the sale of finished Lots, to the extent
that such sales do not interfere with refinancing. In the event the
Debtor does sell Lots prior to consummating a refinancing
transaction, 80% of the sales proceeds (net of closing costs) will
be paid to Capstone to be applied to its Allowed Claim and the
remaining proceeds will be used to pay Priority Tax Claims and
Unsecured Claims in accordance with the terms of the Plan. Any
remaining funds will be used to pay operating expenses of the
Debtor.
The hearing on confirmation of the Plan will be on June 15, 2023 at
2:00 p.m. (Prevailing Central Time).
The objections to Confirmation of the Plan must be filed and served
May 31, 2023, at 5:00 p.m. (Prevailing Central Time).
Attorneys for Merisol Villages, LLC:
Raymond W. Battaglia, Esq.
THE LAW OFFICES OF RAY BATTAGLIA, PLLC.
66 Granburg Circle
San Antonio, TX 78218
Telephone: (210) 601-9405
A copy of the Disclosure Statement dated April 19, 2023, is
available at https://bit.ly/3L0AXt3 from PacerMonitor.com.
About Merisol Villages
Merisol Villages, LLC, is a single asset real estate debtor (as
defined in 11 U.S.C. Section 101(51B)). It is the fee simple owner
of 25.559 acres located in Port Aransas, Texas, valued at $9.62
million.
Merisol Villages sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Texas Case No. 22-20135) on May 31,
2022. In the petition filed by Charles J. Castor, Jr., sole member,
the Debtor listed assets and liabilities between $1 million and $10
million.
Judge David R. Jones oversees the case.
Raymond Battaglia, Esq., at the Law Offices of Ray Battaglia, PLLC
is the Debtor's counsel.
MK SHORE: Files Subchapter V Case Without Counsel
-------------------------------------------------
MK Shore LLC filed for chapter 11 protection in the Eastern
District of New York. The Debtor elected on its voluntary
petition to proceed under Subchapter V of chapter 11 of the
Bankruptcy Code.
The Court will convene a hearing on May 17, 2023, at 1:00 p.m. on
account of the deficient Chapter 11 case for the Debtor's failure
to be represented by counsel. The debtor's attorney must file a
notice of appearance with the court by May 4, 2023, otherwise the
case will be dismissed.
According to court filings, MK Shore LLC estimates between $1
million and $10 million in debt owed`to 1 to 49 creditors. The
petition states that funds will not be available to unsecured
creditors.
A teleconference meeting of creditors under 11 U.S.C. Section
341(a) is slated for May 22, 2023 at 2:30 p.m.
About MK Shore LLC
MK Shore LLC is a Single Asset Real Estate (as defined in 11 U.S.C.
Sec. 101 (51 B)).
MK Shore LLC filed a petition for relief under Subchapter V of
Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No.
23-41270) on April 13, 2023. In the petition filed by Mark Allen,
as manager, the Debtor reported assets and liabilities between $1
million and $10 million.
Jolene E Wee has been appointed as Subchapter V trustee.
The case is overseen by the Honorable Bankruptcy Judge Jil
Mazer-Marino.
NABORS INDUSTRIES: Posts $61.1 Million Net Income in First Quarter
------------------------------------------------------------------
Nabors Industries Ltd. has filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing net income
of $61.06 million on $789 million of total revenues and other
income for the three months ended March 31, 2023, compared to a net
loss of $174.67 million on $568.70 million of total revenues and
other income for the three months ended March 31, 2022.
As of March 31, 2023, the Company had $4.70 billion in total
assets, $3.42 billion in total liabilities, $691.09 million in
redeemable noncontrolling interest in subsidiary, and $582.38
million in total equity.
The Company's primary sources of liquidity are cash and
investments, availability under its revolving credit facility and
cash generated from operations. As of March 31, 2023, the Company
had cash and short-term investments of $475.7 million and working
capital of $472.8 million. As of Dec. 31, 2022, the Company had
cash and short-term investments of $452.3 million and working
capital of $404.2 million.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1163739/000155837023007028/nbr-20230331x10q.htm
About Nabors
Nabors Industries Ltd. (NYSE: NBR) owns and operates land-based
drilling rig fleets and provides offshore platform rigs in the
United States and several international markets. Nabors also
provides directional drilling services, tubular services,
performance software, and innovative technologies for its own rig
fleet and those of third parties.
Nabors Industries reported a net loss of $307.22 million in 2022, a
net loss $543.69 million in 2021, a net loss of $762.85 million in
2020, a net loss of $680.51 million in 2019, a net loss of $612.73
million in 2018, and a net loss of $540.63 million in 2017.
* * *
Egan-Jones Ratings Company, on December 13, 2022, maintained its
'CCC-' foreign currency and local currency senior unsecured ratings
on debt issued by Nabors Industries, Inc. EJR also maintained its
'C' rating on commercial paper issued by the Company.
NAVIENT CORP: S&P Rates New $500MM Senior Unsecured Notes 'B+'
--------------------------------------------------------------
S&P Global Ratings assigned its 'B+' debt rating on Navient
Corporation's proposed issuance of $500 million in senior unsecured
notes due 2030. The company intends to use net proceeds for general
corporate purposes, including debt repurchases, which could include
redemptions, open market debt repurchases, or tender offers.
The debt rating at 'B+' is one notch below the issuer credit rating
on Navient (BB-/Stable/B), as the company's unencumbered assets to
unsecured debt ratio is well below 1.0x. S&P excludes from
unencumbered assets the company's overcollateralization balances
associated with its asset-backed securities trusts, although the
company has successfully borrowed funds against the
overcollateralized balances.
S&P said, "We expect the company will prudently address its
upcoming unsecured debt maturities. As of March 31, 2023, Navient
had $300 million in unsecured notes due September 2023 and $1.4
billion due in 2024. Liquidity from primary sources (unrestricted
cash, investments, and unencumbered loans) stood at $669 million.
Navient may also draw additional liquidity from its secured
facilities, which totaled $1.1 billion as of first-quarter 2023.
"The stable outlook on Navient indicates our expectation that it
will be able to manage unsecured debt maturities in the next 12
months and deliver steady operating results. We also expect Navient
will maintain a risk-adjusted capital ratio over 7.0%. We note that
there is remaining uncertainty regarding the impact of the
government's student loan forgiveness plan. Nevertheless, we do not
believe a student loan forgiveness program, in the form currently
discussed, will result in a change to Navient's ratings or outlook,
at this time."
NEKTAR THERAPEUTICS: To Regain Full Rights to REZPEG
----------------------------------------------------
Nektar Therapeutics announced it will be regaining the full rights
to REZPEG from Eli Lilly and Company.
As announced in a press release issued on April 17, Nektar plans to
move forward with REZPEG and will initiate a Phase 2b study in
patients with moderate-to-severe atopic dermatitis in 2023. The
company will also explore other auto-immune indications for the
development plan for REZPEG.
Phase 1b data for REZPEG in atopic dermatitis were presented at an
investment presentation made by Eli Lilly and Company in December
2021 and at the 2022 European Academy of Dermatology (EADV).
REZPEG evidenced a dose-dependent improvement over placebo for key
efficacy measures of mean change in EASI, EASI-75, vIGA-AD scores,
and Itch NRS ≥4-point scales. These improvements were observed
for an additional 36 weeks following the 12-week treatment period.
"The promising Phase 1b data presented at the 2022 EADV conference
warrant moving REZPEG forward into Phase 2 development," said
Jonathan Silverberg, MD, PhD, MPH, Associate Professor of
Dermatology at The George Washington University School of Medicine
and Health Sciences in Washington, DC and the Director of Clinical
Research and Contact Dermatitis. "The durability of the response
may offer an opportunity for a quarterly maintenance dosing regimen
and improved long-term disease control."
The proof-of-concept data presented to-date on REZPEG also
evidenced REZPEG's ability to stimulate Tregs to target an immune
system imbalance resulting in an improvement of disease activity in
patients. In addition, REZPEG data were recently highlighted in a
talk by Eric Lawrence Simpson, MD, FAAD at the 2023 American
Academy of Dermatology (AAD) Annual Meeting on March 17, 2023 in
the scientific session covering atopic dermatitis, as a potential
future remittive therapy.
"We are pleased to be regaining full rights to REZPEG," said Howard
W. Robin, president and CEO of Nektar. "We plan to work quickly to
initiate a Phase 2b study in atopic dermatitis. We believe the
strong data generated to-date for REZPEG in atopic dermatitis show
the significant potential for REZPEG to emerge as an innovative new
mechanism with the possibility of disease resolution in a growing
biologic treatment field. We are excited about REZPEG's
immune-modulatory profile and believe it could offer great hope in
the future to patients who are managing this common and
debilitating condition. We look forward to demonstrating this in
the clinic as quickly as possible."
About Nektar Therapeutics
Nektar Therapeutics -- http://www.nektar.com-- is a
biopharmaceutical company with a robust, wholly owned R&D pipeline
of investigational medicines in oncology and immunology as well as
a portfolio of approved partnered medicines. Nektar is
headquartered in San Francisco, California, with additional
operations in Huntsville, Alabama.
Nektar Therapeutics reported a net loss of $368.20 million in 2022,
a net loss of $523.84 million in 2021, a net loss of $444.44
million in 2020, and a net loss of $440.67 million in 2019. As of
Sept. 30, 2022, the Company had $781.01 million in total assets,
$368.78 million in total liabilities, and $412.22 million in total
stockholders' equity.
* * *
This concludes the Troubled Company Reporter's coverage of Nektar
Therapeutics until facts and circumstances, if any, emerge that
demonstrate financial or operational strain or difficulty at a
level sufficient to warrant renewed coverage.
NEW HOPE: Moody's Lowers Rating on 2020A/B Revenue Bonds to B1
--------------------------------------------------------------
Moody's Investors Service has downgraded to B1 from Ba3 the ratings
on New Hope Cultural Education Facilities Finance Corporation's
(TX) $34,975,000 Student Housing Revenue Bonds (NCCD Brenham
Properties LLC - Blinn College Project), Series 2020A and
$1,095,000 Taxable Student Housing Revenue Bonds (NCCD - Brenham
Properties LLC - Blinn College Project), Series 2020B (collectively
the "Bonds"). The outlook is revised to negative from ratings under
review. The rating action concludes the review for downgrade
initiated on March 8, 2023.
RATINGS RATIONALE
The downgrade is based on the lower than expected (55%) project
occupancy for the spring 2023 semester, which has resulted in a
less than adequate financial performance following completion of
construction in August of 2022. The project has enough money on
hand to cover the July 1, 2023 debt service payment. If project
occupancy does not materially increase in the 2023-2024 academic
year, revenues will likely be insufficient to cover the January 1,
2024 debt service payment. Capitalized Interest funds are depleted
and other operating contingency funds (outside of the debt service
reserve fund) are projected to be utilized to pay the July 1st,
2023 debt service payment. Social considerations, specifically
weak enrollment at the College, is a key driver of this rating
action as enrollment remains considerably below pre-pandemic
levels.
RATING OUTLOOK
The outlook is negative due to the project's declining liquidity
position and occupancy challenges that are expected to continue
over the outlook period. A further downgrade is likely should
occupancy not materially increase in the 2023-2024 academic year.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
Enrollment and occupancy growth and/or support from the
College that positively impacts debt service coverage.
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
Weak financial performance as measured by low and/or declining
debt service coverage levels
Expectation of future taps to the debt service reserve
Prolonged sub-par occupancy and rent levels
LEGAL SECURITY
The bonds are special limited obligations payable solely from the
revenues of the project and other funds held with Trustee. The
obligations are secured by payments made under the Loan Agreement,
a leasehold mortgage, and amounts held by the Trustee under the
Indenture. The project is a stand-alone housing project with
non-recourse to Blinn College, the State of Texas, National Campus
and Community Development Corporation, or the Issuer.
PROFILE
The Obligor and Owner, NCCD - Brenham Properties LLC, is a single
member limited liability company organized and existing under the
laws of the State of Texas for the purpose of developing and
financing certain facilities for the benefit of Blinn College. The
sole member of the Obligor is National Campus Community Development
Corporation, a 501(c)(3) Texas non-profit corporation.
METHODOLOGY
The principal methodology used in these ratings was Global Housing
Projects published in June 2017.
NOVUSON SURGICAL: Geoffrey Groshong Named Subchapter V Trustee
--------------------------------------------------------------
Gregory Garvin, Acting U.S. Trustee for Region 18, appointed
Geoffrey Groshong, Esq., as Subchapter V trustee for Novuson
Surgical, Inc.
Mr. Groshong, a practicing attorney in Seattle, Wash., will be paid
an hourly fee of $400 for his services while Kalen Daniels, the
paralegal assisting the Subchapter V trustee, will be paid an
hourly fee of $150. In addition, Mr. Groshong will receive
reimbursement for work-related expenses incurred.
Mr. Groshong declared that he is a disinterested person according
to Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Geoffrey Groshong
600 Stewart Street, Suite 1300
Seattle, WA 98101
Telephone: 206.508.0585
Email: trustee@groshonglaw.com
About Novuson Surgical
Novuson Surgical, Inc., a company in Bothell, Wash., filed a
petition under Chapter 11, Subchapter V of the Bankruptcy Code
(Bankr. W.D. Wash. Case No. 23-10728) on April 21, 2023, with
$100,000 to $500,000 in assets and $1 million to $10 million in
liabilities. Stuart B. Mitchell, president of Novuson Surgical,
signed the petition.
Judge Timothy W. Dore oversees the case.
Aditi Paranjpye, Esq., at Cairncross & Hempelmann, P.S., is the
Debtor's counsel.
P&P CONSTRUCTION GROUP: Seeks Chapter 11 Bankruptcy Protection
--------------------------------------------------------------
P&P Construction Group LLC and BRH-Garver Construction, LLC, filed
for chapter 11 protection in the Southern District of Texas.
The Debtors are a civil engineering contractor focused on
micro-tunneling (or trenchless excavation) and related
infrastructure projects, public and private projects, related
service competencies, as well as other areas of site/civil
construction. The Debtors own and operate a large fleet of
equipment in addition to operating an in-house fabrication facility
that manufactures tools and equipment for specialty projects. The
Debtors rely on their relationship network with vendors and
subcontractors to deliver complete solutions primarily as prime
contractor.
According to court filings, P&P Construction Group LLC estimates
between $10 million and $50 million in debt owed to 200 to 999
creditors. The petition states that funds will not be available to
unsecured creditors.
About P&P Construction Group
P&P Construction Group LLC -- https://www.brhgarver.com -- is known
for its ability to handle difficult and one-of-a-kind civil
construction projects throughout the United States.
P&P Construction Group LLC and BRH-Garver Construction, LLC filed
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. S.D. Tex. Lead Case No. 23-90292) on April 12, 2023. In the
petition filed by Mark Allen, as manager, P&P Construction reported
assets up to $50,000 and liabilities between $10 million and $50
million.
The Debtors are represented by:
Michael P Cooley, Esq.
Reed Smith LLP
7600 S. Santa Fe
Building D
Houston, TX 77061
PACIFICCO INC: Seeks to Hire FTI Consulting as Financial Advisor
----------------------------------------------------------------
Pacificco Inc., Catalina Marketing Corporation and their
debtor-affiliates seek approval from the U.S. Bankruptcy Court for
the Southern District of New York to hire FTI Consulting, Inc. as
its financial advisors.
The firm's services include:
-- assistance with ongoing business plan review, analysis of
financial and operational trends and metrics, and assessment of
go-forward strategies and initiatives, if needed;
-- assistance regarding the valuation of the present level of
operations and identification of areas of potential cost savings,
including overhead and operating expense reductions and efficiency
improvements;
-- assistance in the preparation of financial information for
distribution to creditors and others, including, but not limited
to, cash flow projections and budgets, cash receipts and
disbursement analysis, analysis of various asset and liability
accounts, and analysis of proposed transactions for which Court
approval is sought;
-- attendance at meetings and assistance in discussions with
potential investors, banks and other lenders, any official
committee(s) appointed in these chapter 11 cases, the Office of the
U.S. Trustee, other parties in interest, and each of the
foregoing's respective professionals, as requested, if needed;
-- analysis of creditor claims by type, entity and individual
claim, including assistance with development of databases, as
necessary, to track such claims;
-- assistance in the preparation of information and analysis
necessary for the confirmation of a plan in these chapter 11
cases;
-- assistance to the Company's investment banker, Houlihan Lokey
as requested; and
-- render such other general business consulting or such other
assistance as Debtors' management or counsel may deem necessary
that are consistent with the role of a financial advisor and not
duplicative of services provided by other professionals in this
proceeding.
The firm will be paid at these rates:
Senior Managing Directors $1,045 to $1,495 per hour
Directors/Senior Directors/
Managing Directors $785 to $1,055 per hour
Consultants/Senior Consultants $435 to $750 per hour
Administrative/Paraprofessionals $175 to $325 per hour
The firm received a retainer in the amount of $300,000.
Heath Gray, a senior managing director at FTI, disclosed in a court
filing that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Robert Del Genio
FTI Consulting, Inc.
1166 Avenue of the Americas, 15th Floor
New York, NY 10036
Tel: (646) 717-3123
Email: robert.delgenio@fticonsulting.com
About Catalina Marketing
Catalina Marketing Corporation provides an extensive network of
in-store, point-of-sale data acquisition and promotional delivery
systems, present in approximately 22,000 retail locations in the
U.S. Catalina is currently party to agreements with approximately
59 retailer partners to utilize Catalina's networked servers and
high-speed printers at multiple POS locations in each of the
retailers' stores.
Catalina Marketing and 14 affiliated entities sought Chapter 11
bankruptcy protection in the U.S. Bankruptcy Court for the Southern
District of New York on March 28, 2023. Affiliate PacificCo Inc.
(Bankr. S.D.N.Y. Case No. 23-10470) is the lead case. The Debtors
listed $100 million to $500 million in estimated assets and
liabilities on a consolidated basis. The petitions were signed by
Michael Huffmaster as chief financial officer.
The Hon. Philip Bentley oversees the cases. Garty T. Holtzer,
Esq., Kevin Bostel, Esq., and Rachael Foust, Esq., at Weil, Gotshal
& Manges LLP, serve as the Debtors' counsel. FTI Consulting, Inc.,
serves as the Debtors' financial advisor. Houlihan Lokey is the
Debtors' investment banker. Kurtzman Carson Consultants LLC is the
Debtors' claims, noticing and solicitation agent.
Catalina and several affiliates previously sought Chapter 11
bankruptcy protection on Dec. 12, 2018 with a prepackaged plan that
would reduce debt by $1.6 billion. The 2018 lead case was In re
Checkout Holding Corp. (Bankr. D. Del. Case No. 18-12794). In the
2018 petition, Catalina disclosed funded debt of $1.9 billion as of
the bankruptcy filing. Assets were in the range of $1 billion to
$10 billion. On January 31, 2019, the Hon. Kevin Gross confirmed
the company's Plan of Reorganization allowing Catalina to reduce
debt by more than 80% from about $1.9 billion to about $280 million
upon emergence.
In the 2018 Plan, first lien lenders owed $55 million on a first
lien revolver and $1.02 billion on a first lien term loan were
slated to receive their pro rata share of 90% of the equity in the
reorganized Debtors, subject to dilution by a contemplated
management incentive plan. Second Lien Lenders owed $460 million
on a second-lien term loan will receive their pro rata share of 10%
of the New Common Stock, subject to dilution. Allowed general
unsecured claims were paid in the ordinary course and otherwise
unimpaired.
PACIFICCO INC: Seeks to Hire Houlihan Lokey as Investment Banker
----------------------------------------------------------------
Pacificco Inc., Catalina Marketing Corporation and their
debtor-affiliates seek approval from the U.S. Bankruptcy Court for
the Southern District of New York to hire Houlihan Lokey Capital,
Inc. as their investment banker.
The firm's services include:
(a) assisting the Debtors in the development and distribution
of selected information, documents and other materials, including,
if appropriate, advising the Group in the preparation of an
offering memorandum;
(b) assisting the Debtors in evaluating indications of
interest and proposals regarding any Transaction(s) from current
and/or potential lenders, equity investors, acquirers and/or
strategic partners;
(c) assisting the Debtors with the negotiation of any
Transaction(s), including participating in negotiations with
creditors and other parties involved in any Transaction(s);
(d) attending meetings of the Debtors' Board of Directors,
creditor groups, official constituencies and other interested
parties, as the Debtors and Houlihan Lokey mutually agree, except
to the extent provided below; and
(e) providing such other investment banking services as may be
agreed upon by Houlihan Lokey and the Debtors.
Houlihan will be paid as follows:
(a) Monthly Fees: In addition to the other fees provided, upon
the Effective Date, and on every monthly anniversary of the
Effective Date during the term of this Agreement, the Debtors shall
pay Houlihan Lokey in advance, without notice or invoice, a
nonrefundable cash fee of $125,000. Each Monthly Fee shall be
earned upon Houlihan Lokey's receipt thereof in consideration of
Houlihan Lokey accepting this engagement and performing services.
50 percent of the Monthly Fees previously paid on a timely basis to
Houlihan Lokey on or after April 27, 2023 shall be credited against
the next Transaction Fee to which Houlihan Lokey becomes entitled
hereunder (it being understood and agreed that no Monthly Fee shall
be credited more than once), except that, in no event, shall such
Transaction Fee be reduced below zero. In addition, $1,104,166.67
of monthly fees previously paid on a timely basis to Houlihan
Lokey pursuant to the previous engagement letters dated Sep 10,
2021 and May 6, 2022 shall be credited against the next Transaction
Fee to which Houlihan Lokey becomes entitled hereunder (it being
understood and agreed that such amount shall not be credited more
than once), except that in no event, shall such Transaction Fee be
reduced below zero.
(b) Transaction Fee(s): In addition to the other fees provided
for herein, the Debtors shall pay Houlihan Lokey the following
transaction fee(s):
(i) Restructuring Transaction Fee. Upon the earlier of: (A)
in the case of an out-of-court Restructuring Transaction, the
closing of such Restructuring Transaction, and (B) in the case of
an in-court Restructuring Transaction, the date of confirmation of
a plan of reorganization or liquidation under Chapter 11 or Chapter
7 of the Bankruptcy Code pursuant to an order of the applicable
bankruptcy court, Houlihan Lokey shall earn, and the Debtors shall
promptly pay to Houlihan Lokey, a cash fee (Restructuring
Transaction Fee) of $2,900,000; and
(ii) Financing Transaction Fee. Upon the closing of each
Financing Transaction, Houlihan Lokey shall earn, and the Debtors
shall thereupon pay to Houlihan Lokey immediately and directly from
the gross proceeds of such Financing Transaction, as a cost of such
Financing Transaction, a cash fee (Financing Transaction Fee) equal
to the sum of: (A) 1.25 percent of the gross proceeds of any
indebtedness raised or committed in connection with a revolving
credit facility or asset based lending facility; (B) 2 percent of
the gross proceeds of any indebtedness raised or committed that is
senior to other indebtedness of the Debtors, secured by a first
priority lien and unsubordinated, with respect to both lien
priority and payment, to any other obligations of the Debtors
(other than with respect to debtor-in-possession financing); (C) 3
percent of the gross proceeds of any indebtedness raised or
committed that is secured by a lien (other than a first lien), is
unsecured and/or is subordinated; and (D) 5 percent of the gross
proceeds of all equity or equity-linked securities (including,
without limitation, convertible securities and preferred stock)
placed or committed. To the extent existing stakeholders of the
Debtors provide or commit new money capital as part of a Financing
Transaction, the Financing Transaction Fee directly associated with
the new money provided or committed by the existing stakeholders
shall be credited 50 percent against the applicable Financing
Transaction Fee. Furthermore, as long as the Financing Transaction
Fee is smaller than the Restructuring Transaction Fee, 50 percent
of the Financing Transaction Fee that is attributable to Third
Parties shall be credited against the Restructuring Transaction Fee
to which Houlihan Lokey becomes entitled hereunder (it being
understood and agreed that no Financing Transaction Fee shall be
credited more than once), except that, in no event shall such
Restructuring Transaction Fee be reduced below zero. For the
avoidance of doubt, any previously received financing by the
Debtors or currently committed financing to the Debtors as of the
Effective Date shall be excluded from any Financing Transaction Fee
payable under this Agreement.
(c) Expenses. In addition to all of the other fees and
expenses described in this Agreement, and regardless of whether any
Transaction is consummated, the Debtors shall, upon Houlihan
Lokey's request, reimburse Houlihan Lokey for its reasonable and
documented out of-pocket expenses incurred from time to time in
connection with its services hereunder, but in no event greater
than $25,000 without the Debtors' prior approval, which approval
shall not be unreasonably withheld. Houlihan Lokey bills its
clients for its reasonable out-of-pocket expenses including, but
not limited to (i) travel-related and certain other expenses,
without regard to volume-based or similar credits or rebates
Houlihan Lokey may receive from, or fixed-fee arrangements made
with, travel agents, airlines or other vendors, and (ii) research,
database and similar information charges paid to third party
vendors, and reprographics expenses, to perform client-related
services that are not capable of being identified with, or charged
to, a particular client or engagement in a reasonably practicable
manner, based upon a uniformly applied monthly assessment or
percentage of the fees due to Houlihan Lokey.
John Popehn, managing director at Houlihan, disclosed in court
filings that his firm is a "disinterested person" within the
meaning of Bankruptcy Code Section 101(14).
The firm can be reached through:
John Popehn
Houlihan Lokey Capital, Inc.
245 Park Avenue, 20th Floor
New York, NY 10167
Tel: (212)-497-4100
Fax: (212)-661-3070
About Catalina Marketing
Catalina Marketing Corporation provides an extensive network of
in-store, point-of-sale data acquisition and promotional delivery
systems, present in approximately 22,000 retail locations in the
U.S. Catalina is currently party to agreements with approximately
59 retailer partners to utilize Catalina's networked servers and
high-speed printers at multiple POS locations in each of the
retailers' stores.
Catalina Marketing and 14 affiliated entities sought Chapter 11
bankruptcy protection in the U.S. Bankruptcy Court for the Southern
District of New York on March 28, 2023. Affiliate PacificCo Inc.
(Bankr. S.D.N.Y. Case No. 23-10470) is the lead case. The Debtors
listed $100 million to $500 million in estimated assets and
liabilities on a consolidated basis. The petitions were signed by
Michael Huffmaster as chief financial officer.
The Hon. Philip Bentley oversees the cases. Garty T. Holtzer,
Esq., Kevin Bostel, Esq., and Rachael Foust, Esq., at Weil, Gotshal
& Manges LLP, serve as the Debtors' counsel. FTI Consulting, Inc.,
serves as the Debtors' financial advisor. Houlihan Lokey is the
Debtors' investment banker. Kurtzman Carson Consultants LLC is the
Debtors' claims, noticing and solicitation agent.
Catalina and several affiliates previously sought Chapter 11
bankruptcy protection on Dec. 12, 2018 with a prepackaged plan that
would reduce debt by $1.6 billion. The 2018 lead case was In re
Checkout Holding Corp. (Bankr. D. Del. Case No. 18-12794). In the
2018 petition, Catalina disclosed funded debt of $1.9 billion as of
the bankruptcy filing. Assets were in the range of $1 billion to
$10 billion. On January 31, 2019, the Hon. Kevin Gross confirmed
the Debtors's Plan of Reorganization allowing Catalina to reduce
debt by more than 80 percent from about $1.9 billion to about $280
million upon emergence.
In the 2018 Plan, first lien lenders owed $55 million on a first
lien revolver and $1.02 billion on a first lien term loan were
slated to receive their pro rata share of 90 percent of the equity
in the reorganized Debtors, subject to dilution by a contemplated
management incentive plan. Second Lien Lenders owed $460 million
on a second-lien term loan will receive their pro rata share of 10
percent of the New Common Stock, subject to dilution. Allowed
general unsecured claims were paid in the ordinary course and
otherwise unimpaired.
PALLADIUM CORRAL: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Palladium Corral, LLC
9111 N. Lop 1604
San Antonio TX 78249
Chapter 11 Petition Date: May 2, 2023
Court: United States Bankruptcy Court
Western District of Texas
Case No.: 23-50546
Judge: Hon. Michael M. Parker
Debtor's Counsel: Dean W. Greer, Esq.
WEST & WEST ATTORNEYS AT LAW, P.C.
2929 Mossrock, Suite 204
San Antonio TX 78230
Tel: (210) 342-7100
Email: dean@dwgreerlaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Brian J. Smith as managing member.
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/I6SHC7Q/Palladium_Corral_LLC__txwbke-23-50546__0001.0.pdf?mcid=tGE4TAMA
PANEVAS LLC: Ruediger Mueller Named Subchapter V Trustee
--------------------------------------------------------
Mary Ida Townson, U.S. Trustee for Region 21, appointed Ruediger
Mueller as Subchapter V trustee for Panevas, LLC.
Mr. Mueller will be paid an hourly fee of $350 for his services as
Subchapter V trustee and will be reimbursed for work-related
expenses incurred.
Mr. Mueller declared that he is a disinterested person according to
Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Ruediger Mueller
1112 Watson Court
Reunion, Florida 34747
Email: truste@tcmius.com
About Panevas LLC
Panevas, LLC filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. M.D. Fla. Case No. 23-01589) on April 21,
2023, with $1,011,963 in assets and $2,613,430 in liabilities.
Panayiotis Vasiloudes, manager, signed the petition.
Judge Roberta A. Colton oversees the case.
Stephenie Biernacki Anthony, Esq., at Anthony & Partners, LLC is
the Debtor's counsel.
PHOENIX BUILDING: Files Emergency Bid to Use Cash Collateral
------------------------------------------------------------
The Phoenix Building Management LLC asks the U.S. Bankruptcy Court
for the Eastern District of Massachusetts, Eastern Division, for
authority to use cash collateral and provide adequate protection.
The Debtor seeks to use the cash collateral of secured creditor
U.S. Bank National Association, as Trustee for Velocity Commercial
Capital Loan Trust 2022-4, and Amida Special Opportunity
Investments, LLC. The Debtor will need to fund certain ongoing
expenses, including payment to the Bank, on or about May 5, 2023.
The Debtor has no unsecured creditors. The Debtor's only secured
creditors, except for possibly the Town of Rockland for current
unpaid real estate taxes, are:
(1) U.S. Bank National Association, as Trustee for Velocity
Commercial Capital Loan Trust 2022-4, which holds a mortgage and
assignment of rents on the Property. The Debtor believes the Bank
asserts it is currently owed approximately $1.62 million. The
Debtor disputes this amount; and
(2) Amida Special Opportunity Investments, LLC, which holds a
subordinate mortgage and assignment of rents, which secure a
guaranty by the Debtor of the obligations of an entity also owned
by the Debtor's principal, William Barry. The Debtor does not pay
Amida, which is paid by the primary obligor. The Debtor believes
Amida is owed approximately $1.1 million. The debt to Amida is also
collateralized by other properties, including property owned by the
primary obligor.
The Debtor asserts that any cash collateral used by the Debtor will
be used solely to maintain operations and generate at least an
equal amount of cash collateral. However, in addition, the Debtor
also proposes to grant to the Bank (and Amida) the following as
additional adequate protection:
a. The Debtor will grant to the Bank and Amida continuing
replacement liens and security interests to the same validity,
extent and priority that each would have had in the absence of the
bankruptcy filing;
b. The Debtor will remain within its Budget, within an overall
margin of 10%; and,
c. The Debtor will make monthly adequate protection payments
on account of its obligations to the Bank in the amount of $10,000,
representing an amount equal to interest-only payments on the
obligation, by the 10th day of each month, provided that the
application of the adequate protection payments to principal or
interest will be reserved until further Court order.
A copy of the motion is available at https://bit.ly/41P03T7 from
PacerMonitor.com.
A copy of the budget is available at https://bit.ly/3Lhuo5x from
PacerMonitor.com.
The Debtor projects total expenses, on a monthly basis, as
follows:
$14,275 for April 2023;
$12,387 for May 2023; and
$12,387 for June 2023.
About The Phoenix Building Management
The Phoenix Building Management LLC owns two commercial and eight
residential units (currently fully tenanted) located at 315-321
Union St., Rockland, Mass., having an appraised value of $2.4
million.
Phoenix Building Management filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. D. Mass. Case No.
23-10579) on April 14, 2023, with $2,500,000 in assets and
$1,627,000 in liabilities. The petition was signed by William T.
Barry as manager.
David B. Madoff, Esq., at Madoff & Khoury, LLP represents the
Debtor as counsel.
POWERSCHOOL HOLDINGS: S&P Upgrades ICR to 'B', Outlook Stable
-------------------------------------------------------------
S&P Global Ratings raised our issuer credit rating on PowerSchool
Holdings Inc. to 'B' from 'B-'. At the same time, S&P raised its
issue-level rating on PowerSchool's first-lien term loan to 'B'
from 'B-'. S&P's '3' recovery rating on the first-lien term loan
(50%-70%; rounded estimate: 50%) is unchanged.
The stable outlook reflects S&P's expectation that PowerSchool will
benefit from favorable industry trends and that the company will
maintain its leading market positions within the K-12 student
information services (SIS), enterprise resource planning (ERP), and
learning management systems (LMS) end markets. The stable outlook
is also driven by strong free cash flow generation and net revenue
retention rates of above 100%.
PowerSchool Holdings Inc. should benefit from favorable industry
trends.
The company's revenues have consistently improved in the
double-digit percent area, growing at a CAGR of 20% between 2019
and 2022, and reached $631 million, driven by strong demand for its
broad and unified platform, higher cross-selling, strong renewal,
and annual price increases. PowerSchool's products have now reached
about 80% of U.S. and Canada students. However, its customers uses
an average of two out of it 19 products, which provides the company
with meaningful cross-selling opportunities across its customer
base. In recent years, the number of customers using four or more
products has grown nearly 30% year over year. In addition, the K-12
school district funding situation continues to be stable, partly
driven by congressional funding since the start of the pandemic.
The company is now focusing on the international market, which
provides it with additional opportunities for expansion.
PowerSchool has made OneConnect a channel partner, which will allow
the company to serve 240 million students across Sub-Saharan
Africa. S&P expects international sales to contribute a meaningful
percentage of total revenues in the mid- to long-term and diversify
its geographic revenue base.
PowerSchool continues to deleverage and generate solid free cash
flow since its IPO.
PowerSchool repaid approximately 50% of its debt from IPO proceeds
in fiscal 2021. S&P said, "As a result of reduced debt and improved
EBITDA, the company has deleveraged to 8x at the end of 2022, and
we expect it to further de-lever to below 7x by 2023. Further, we
expect free cash flow to be in $130 million-$135 million range in
2023. Note that we the treat the $410 million TRA liability as debt
in our calculations."
S&P said, "The stable outlook reflects our expectation that
PowerSchool will benefit from favorable industry trends and that
the company will maintain its leading market positions within the
K-12 SIS, ERP, and LMS end markets. The stable outlook is also
driven by strong free cash flow generation and net revenue
retention rates of above 100%.
"We would consider a downgrade to 'B-' if free cash flow to debt
falls to the low-single-digit-percentage area. This could occur due
to a combination of higher-than-expected R&D expenses, elevated
capitalized development costs and slowing demand for PowerSchool's
software. We could also consider a downgrade if the TRA gets
settled with debt and this results in leverage sustained above 7x
and free operating cash flow (FOCF) to debt under 5%.
"We could raise the rating to 'B+' if the company's FOCF to debt
approached 15% and S&P Global Ratings-adjusted leverage fell to
under 6x. We would view continued product diversity and growth
coming from all of its major selling categories as a positive and
supporting an upgrade."
ESG credit indicators: E-2 S-2 G-3
PRECIPIO INC: Granted 180-Day Extension to Regain Nasdaq Compliance
-------------------------------------------------------------------
Precipio, Inc. received notification by the NASDAQ Stock Market
that the Company has been granted a 180-day extension to allow the
Company to meet the required minimum $1.00 per share closing bid
price of its common stock for 10 consecutive business days for
continued inclusion on the Nasdaq Capital Market Exchange.
Following its review process, Nasdaq determined Precipio is
eligible for an extension of an additional 180 calendar days to
allow it to regain compliance with the minimum share price
requirement. Assuming that during this extension period, the
closing bid price of the Company's common stock meets the
requirements of above $1.00 for the required minimum 10 consecutive
business days, and provided that the Company meets all the other
listing requirements, Nasdaq will provide the Company with written
confirmation that it is compliant with its listing requirements.
As preliminary results of Q1-2023 have demonstrated, Precipio is
well on its way to achieving its revenue and profitability targets
for the year.
Precipio said, "We believe that as a biotech with proprietary
technologies serving a multi-billion dollar diagnostic market,
distribution channels with the world's leading players, we have the
necessary ingredients to demonstrate significant shareholder
value.
"We expect that advancing towards profitability at a circa $22M run
rate should translate, even at conservative revenue multiples of
2-3x, to a market cap well over $50M; given the current number of
shares outstanding, this would equate to a share price above $1.00.
Management is optimistic that the nearing results will translate
into a share price appreciation that will clear the $1.00 minimum
bid Nasdaq requirement and that thereby compliance will be
regained.
"We continue to make progress on our commercial goals as the entire
company is focused on growing our customers and revenue to achieve
these revenue and subsequent valuation goals," said Ilan Danieli,
CEO. "In looking at our pipeline we have never been in a better
position to reach and even exceed these goals, and I am confident
we will get there well within the 180-day timeline."
About Precipio
Omaha, Nebraska-based Precipio, Inc., formerly known as
Transgenomic, Inc. -- http://www.precipiodx.com-- is a healthcare
solutions company focused on cancer diagnostics. Its business
mission is to address the pervasive problem of cancer misdiagnoses
by developing solutions to mitigate the root causes of this problem
in the form of diagnostic products, reagents and services.
Precipio reported a net loss of $12.18 million in 2022, a net loss
of $8.52 million in 2021. As of Dec. 31, 2022, the Company had
$21.50 million in total assets, $5.14 million in total liabilities,
and $16.37 million in total stockholders' equity.
New Haven, CT-based Marcum LLP, the Company's auditor since 2016,
issued a "going concern" qualification in its report dated March
30, 2023, citing that the Company 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.
REAL BRANDS: Incurs $906K Net Loss in 2022
------------------------------------------
Real Brands Inc. has filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss of
$905,944 on $11,133 of total revenue for the year ended Dec. 31,
2022, compared to a net loss of $2.79 million on $5,546 of total
revenue for the year ended Dec. 31, 2021.
As of Dec. 31, 2022, the Company had $1.16 million in total assets,
$1.91 million in total liabilities, and a total stockholders'
deficit of $752,895.
Houston, TX-based M&K CPAS, PLLC, the Company's auditor since 2023,
issued a "going concern" qualification in its report dated April
28, 2023, citing that the Company has recurring net losses and
negative cash flows from operations which raises substantial doubt
about its ability to continue as a going concern.
Real Brands said, "We had limited operations during 2022 due to a
lack of funds to purchase inventory and to market our products. We
continue to pursue additional sources of capital though we have no
current arrangements with respect to, or sources of, additional
financing at this time and there can be no assurance that any such
financing will become available. We will need to raise additional
capital in order to execute on our business plan. We intend on
raising additional capital in the short term by selling equity
through private placements."
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001084133/000126493123000015/real10k22.htm
About Real Brands
Headquartered in North Providence, RI, Real Brands Inc. is a
publicly traded, vertically integrated, early entrant (2017) in
the
hemp-derived cannabinol ("CBD") market that specializes in hemp CBD
oil/isolate extraction, wholesaling of CBD oils and isolate,
manufacturing, production and sales of hemp-derived CBD consumer,
celebrity brands, and white label products.
RIVER HEIGHTS ACADEMY: S&P Lowers LT Revenue Bond Rating to 'D'
---------------------------------------------------------------
S&P Global Ratings lowered its long-term rating on River Heights
Academy (RHA, formerly known as Summit Academy), Mich.'s series
2005 public school academy refunding revenue bonds to 'D' from
'CC'.
"The lowered rating follows RHA's missed bond principal payment on
May 1, 2023, pursuant to a forbearance agreement between the school
and UMB Bank N.A., as trustee," said S&P Global Ratings credit
analyst Jesse Brady. Under our criteria, we consider the nonpayment
of principal and/or interest in a timely and full manner as
equivalent to default.
The rating action follows RHA's missed interest payment on May 1,
2023, as permitted under its forbearance agreement between the
school and UMB Bank, as trustee. The agreement is effective from
April 20, 2023, to June 30, 2023, and permits RHA to miss interest
payments during this time frame.
According to our methodology on timeliness of payments (see "S&P
Global Ratings Definitions," published Aug. 7, 2020), if a payment
is missed on its due date, we would assign a rating of 'D'.
Initially chartered in 2000 by Central Michigan University (CMU),
RHA is located in Flat Rock, Mich., approximately 25 miles
southwest of Detroit, and served approximately 180 students in
pre-kindergarten through eighth grade as of the start of the
2022-2023 school year. Its charter was last renewed in June 2020
for a three-year term extending through June 30, 2023. However, on
March 20, 2023, RHA's board of directors approved a resolution to
not seek a renewal of its charter contract with CMU, which will
result in RHA ceasing operations and its permanent closure as of
June 30, 2023.
ROBBINS ENTERPRISES: Taps Law Office of Peter M. Daigle as Counsel
------------------------------------------------------------------
Robbins Enterprises, LLC seeks approval from the U.S. Bankruptcy
Court for the District of Massachusetts to hire The Law Office of
Peter M. Daigle as its attorneys.
The Debtor requires legal counsel to:
a) assist and advise the Debtor relative to the administration
of its Chapter 11 bankruptcy proceeding;
b) represent the Debtor before the bankruptcy court and
advising the Debtor on all pending litigations, hearings, motions,
and of the decisions of the court;
c) review and analyze all applications, orders, and motions
filed with the court by third parties in this proceeding and
advising the Debtor thereon;
d) attend all meetings conducted pursuant to Section 341(a) of
the Bankruptcy Code and representing the Debtor at all
examinations;
e) communicate with creditors and all other parties in
interest;
f) assist the Debtor in preparing all necessary legal papers
supporting positions taken by the Debtor, and preparing witnesses
and reviewing documents in this regard;
g) confer with all other professionals, including any
accountants and consultants retained by the Debtor and by any other
party in interest;
h) assist the Debtor in its negotiations with creditors or
third parties concerning the terms of any proposed plan of
reorganization;
i) prepare, draft and prosecute the plan of reorganization and
disclosure statement; and
j) perform other legal services required by the Debtor.
The Law Office of Peter M. Daigle will charge these hourly fees:
Attorneys $450
Associates $325
In addition, the firm will receive reimbursement for out-of-pocket
expenses incurred.
Peter Daigle, Esq., a partner at The Law Office of Peter M. Daigle,
disclosed in a court filing that his firm is a "disinterested
person" within the meaning of Section 101(14) of the Bankruptcy
Code.
Peter M. Daigle can be reached at:
Peter M. Daigle, Esq.
The Law Office of Peter M. Daigle
1550 Falmouth Road, Suite 10
Centerville, MA 02632
Tel: (508) 771-7444
About Robbins Enterprises
Robbins Enterprises, LLC sought protection for relief under Chapter
11 of the Bankruptcy Code (Bankr. D. Mass. Case No. 23-10508) on
April 3, 2023, listing under $1 million in both assets and
liabilities. Peter M. Daigle, Esq. at DAIGLE LAW OFFICE represents
the Debtor as counsel.
ROXBY DEVELOPMENT: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Roxby Development LLC
d/b/a The McClure House Hotel
d/b/a Roxby Labs
d/b/a The McClure House a Ramada by Wyndham
c/o Jeffrey J. Morris
1200 Market Street
Wheeling, WV 26003
Business Description: Located in the heart of downtown Wheeling,
the McLure House Hotel offers guests either
a lively art and culture scene, riverfront
festivals, or the quiet beauty of natural
parks.
Chapter 11 Petition Date: May 1, 2023
Court: United States Bankruptcy Court
Northern District of West Virginia
Case No.: 23-00212
Debtor's Counsel: Salene Kraemer, Esq.
MAZURKRAEMER
314 Old Farm Rd
Pittsburgh, PA 15228
Tel: (412) 427-7075
Email: salene@mazurkraemer.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by Jeffrey Morris as president.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/RTSC4GA/Roxby_Development_LLC__wvnbke-23-00212__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
1. Bowles Rice Legal Services $19,604
600 Quarrier Street
Charleston, WV 25301
2. Carney & Sloan Food Service $10,000
518 Main St #2524 Equipment
Wheeling, WV 26003
3. City of Wheeling Fire Protection Utilities $10,110
801 Main St,
Wheeling, WV 26003
4. Dave and Dee Smith Unsecured Loan $50,000
158 Applewood Drive
Wheeling, WV 26003
5. Dendi Medical Supplies $87,714
P.O. Box 2611
Raleigh, NC
27602-2611
6. Gusto Payroll Services Payroll Loan $149,000
Attn: Sadie
525 20th Street
San Francisco, CA 94107
7. Internal Revenue Service Payroll Taxes $140,000
Centralized Insolvency Operation
Post Office Box 7346
Philadelphia, PA
19101-7346
8. Johnson Boiler Works Vendor $11,527
53 Marshall St N,
Benwood, WV 26031
9. Julie Cartwright Credit Card $15,000
248 Township Road 15 Debt for
Rayland, OH 4394 Utilities
10. L&L Painting, LLC $67,000
1456 Little Grave
Creek Drive
Glen Dale, WV 26038
11. McKesson Medical Supplies $658,434
6555 State Hwy 161
Irving, TX 75039
12. Medline $132,463
c/o The CKB Firm
30 N. LaSalle Street,
Suite 1570
Chicago, IL 60602
13. Mountaineer Gas Utilities $20,000
PO Box 5201
Charleston, WV
25361-0201
14. Mountaineer Gas Utilities $18,000
PO Box 5201
Charleston, WV
25361-0201
15. Ohio County Property Tax Property Taxes $56,000
1500 Chapline St # 204
Wheeling, WV 26003
16. Reinhart Food Service $10,902
100 Harborview Plz Vendor
La Crosse, WI
54601-4290
17. Sisterson & Co Accounting $18,000
310 Grant St Suite 2100 Services
Pittsburgh, PA 15219
18. WV State Department of Tax Sales and Use $29,082
Market Street Tax
Wheeling, WV 26003
19. WV State Department of Tax Payroll Taxes $27,000
Market Street
Wheeling, WV 26003
20. WV State Department Hotel $20,000
of Tax Occupancy
Market Street Tax
Wheeling, WV 26003
ROXBY MCLURE: Case Summary & Two Unsecured Creditors
----------------------------------------------------
Debtor: Roxby McLure, LLC
1200 Market Street
Wheeling, WV 26003
Business Description: The Debtor offers housing options for
students staying in Sacramento.
Chapter 11 Petition Date: May 2, 2023
Court: United States Bankruptcy Court
Northern District of West Virginia
Case No.: 23-00213
Judge: Hon. David L. Bissett
Debtor's Counsel: Salene Kraemer, Esq.
MAZURKRAEMER
314 Old Farm Rd
Pittsburgh, PA 15228
Tel: (412) 427-7075
Email: salene@mazurkraemer.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Jeffrey J. Morris as president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's two unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/337CGWY/Roxby_McLure_LLC__wvnbke-23-00213__0001.0.pdf?mcid=tGE4TAMA
SABRINAS ATLANTIC: Court OKs Final Cash Collateral Access
---------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida,
Fort Lauderdale Division, authorized Sabrinas Atlantic Window
Cleaning and Pressure Cleaning, LLC to use cash collateral on a
final basis and provide adequate protection to Vox Funding, LLC,
Funding Metrics, LLC d/b/a Lendini and Financial Advance, LLC.
The Debtor is permitted to use cash collateral to pay: (a) amounts
expressly authorized by the Court, including any payments to the
Subchapter V Trustee; (b) the current and necessary expenses set
forth in the budget, plus an amount not to exceed 10% for each line
item; and (c) additional amounts as may be expressly approved in
writing by Vox, Lendini and/or Fora, to the extent any of the
merchant cash advance lenders have an interest in the cash
collateral.
This authorization will continue until the effective date of any
confirmed plan of reorganization of the Debtor, or until further
Court order.
The MCAs will have a post-petition interest against cash collateral
to the same extent and with the same validity and priority as its
respective p repetition interest, without the need to file or
execute any document as may otherwise be required under applicable
nonbankruptcy law.
A copy of the order is available at https://bit.ly/44iLlp9 from
PacerMonitor.com.
The budget provides for total expenses, on a monthly basis, as
follows:
$128,853 for April 2023;
$130,233 for May 2023;
$121,233 for June 2023; and
$89,233 for July 2023.
About Sabrinas Atlantic Window Cleaning
Sabrinas Atlantic Window Cleaning and Pressure Cleaning, LLC is in
the business of residential window cleaning and pressure cleaning
with a small portion of its business consisting of commercial
window cleaning and pressure cleaning.
The Debtor sought protection from Chapter 11 of the U.S. Bankruptcy
Code (Bankr. S.D. Fla. Case No. 22-18568) on November 3, 2022. In
the petition signed by Rachel Euler, manager, the Debtor disclosed
up to $50,000 in assets and up to $500,000 in liabilities.
Judge Scott M. Grossman oversees the case.
Michael A. Nardella, Esq., at Nardella & Nardella, PLLC, is the
Debtor's counsel.
SALE LLC: David Madoff Named Subchapter V Trustee
-------------------------------------------------
The U.S. Trustee for Region 1 appointed David Madoff, Esq., a
partner at Madoff & Khoury, LLP, as Subchapter V trustee for Sale,
LLC.
Mr. Madoff will be compensated at $415 per hour for his services as
Subchapter V trustee and will be reimbursed for work-related
expenses incurred.
In court filings, Mr. Madoff declared that he is a disinterested
person according to Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
David B. Madoff
Madoff & Khoury, LLP
124 Washington Street, Suite 202
Foxborough, MA 02035
Phone: (508) 543-0040
Email: madoff@mandkllp.com
About Sale LLC
Sale, LLC is a family-owned cafe with homestyle breakfasts and
classic lunch eats such as sandwiches, hamburgers, muffins and
pancakes. The company is based in Burlington, Mass.
Sale, LLC filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. D. Mass. Case No. 23-10545) on April 10,
2023, with $7,500 in assets and $3.2 million in liabilities. David
B. Madoff, Esq., a partner at Madoff & Khoury, LLP, has been
appointed as Subchapter V trustee.
Judge Christopher J. Panos oversees the case.
Marques C. Lipton, Esq., at Lipton Law Group, LLC, represents the
Debtor as legal counsel.
SAN JORGE CHILDREN'S: Seeks 30-Day Extension to File Plan
---------------------------------------------------------
San Jorge Children's Hospital, Inc., filed a motion for entry of an
order extending by 30 days the April 20, 2023 deadline for the
Debtor to file its Disclosure Statement and Plan of
Reorganization.
Since December 2022, the Debtor has been entertaining offers of
unrelated third parties, sharing documents, and assessing whether
the same are feasible under the circumstances of the case at bar.
To this date, the Debtor has identified what appears to be the best
offer received at the moment. As such, efforts are being focused on
advancing the development of a conditional asset purchase agreement
and biding procedures that are intended to be submitted to the
Court and parties in interest.
While the Debtor is significantly advanced in the draft of the
Disclosure Statement and the Plan of Reorganization, having these
documents in a more advance or final stage will allow the Debtor to
fully disclose them together or significantly close with the filing
of the Disclosure Statement and the Plan, or even incorporate them
within these filings.
The above will provide a more complete scope of the reorganization
process and provide comprehensive detail to parties in interest as
to how the Debtor intends to move forward with its reorganization.
Also, having the intended conditional asset purchase agreement in a
more complete stage, will allow the Debtor to fully submerge itself
in negotiations with its secured creditor as to how net proceeds of
the sale of Debtor's assets will be distributed among the estate
and its creditors.
With that spirit and purpose in mind, the Debtor moves the Court to
grant an extension of extension of 21 days for the time to file its
Disclosure Statement and Plan of Reorganization.
Attorney for the Debtor:
Wigberto Lugo Mender. Esq.
Alexis A. Betancourt Vincenty, Esq.
Lugo Mender Group, LLC
100 Carr 165 Suite 501
Guaynabo, P.R. 00968-8052
Tel: (787) 707-0404
Fax: (787) 707-0412
E-mail: wlugo@lugomender.com
a_betancourt@lugomender.com
About San Jorge Children's Hospital
San Jorge Children's Hospital, Inc. operates a hospital
specializing in pediatrics in San Juan, P.R.
San Jorge Children's Hospital filed its voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case
No. 22-02630) on Sept. 1, 2022, with between $10 million and $50
million in both assets and liabilities. Edward P. Smith, chief
operating officer, signed the petition.
Judge Maria De Los Angeles Gonzalez presides over the case.
The Debtor tapped Wigberto Lugo Mender, Esq., at Lugo Mender Group,
LLC as bankruptcy counsel and Galindez, LLC as external auditor.
Cardona Jimenez Law Offices, P.S.C. represents the official
committee of unsecured creditors appointed in the Debtor's case.
* * *
The Debtor's exclusive period to propose a Chapter 11 Plan expired
on March 21, 2023.
SANDPIPER MANAGEMENT: Barbara Gross Named Subchapter V Trustee
--------------------------------------------------------------
Tiffany Carroll, Acting U.S. Trustee for Region 15, appointed
Barbara Gross, Esq., a practicing attorney in San Diego, Calif., as
Subchapter V trustee for Sandpiper Management, LLC.
Ms. Gross will be paid an hourly fee of $405 for her services as
Subchapter V trustee and will be reimbursed for work-related
expenses incurred.
Ms. Gross declared that she is a disinterested person according to
Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Barbara Gross, Esq.
P.O Box 16346
San Diego, CA 92176
Telephone: (619) 782-9233
Email: Barbara@BGross.Law
About Sandpiper Management
Sandpiper Management, LLC filed a petition under Chapter 11,
Subchapter V of the Bankruptcy Code (Bankr. S.D. Calif. Case No.
23-01096) on April 23, 2023, with up to $50,000 in assets and
$100,001 to $500,000 in liabilities. Judge Margaret M. Mann
oversees the case.
The Debtor is represented by Jorge I. Hernandez, Esq., at the Law
Office of Jorge I. Hernandez.
SILVER CREEK: Hearing Today on Bid to Use Cash Collateral
---------------------------------------------------------
Silver Creek Industries, LLC asks the U.S. Bankruptcy Court for the
Central District of California, Riverside Division, for authority
to use the cash collateral of First-Citizens Bank & Trust Company,
Successor by Merger to CIT Bank, N.A, as a Lender and as
Administrative Agent. The Debtor requires immediate access to cash
collateral to ensure that the Debtor has funds sufficient to pay
its accruing operating expenses and thereby preserve the value of
its estate for the benefit of the Debtor's creditors.
A hearing on the matter is set for May 3, 2023 at 1:30 p.m.
Historically, the Debtor's operations have been profitable. The
Debtor generated almost $22 million in net income in 2019 and
almost $18 million in net income in 2020. However, the Debtor's
operations became unprofitable in 2021. The Debtor had almost $11
million in operating losses in 2021 and losses of approximately
$31.0 million in 2022. The Debtor’s operations have been
unprofitable in 2023.
The following secured claims have been asserted against the
Debtor.
1. CIT's Secured Claims. On October 19, 2020, the Debtor, SCRS
and SCL, as Borrowers, and CIT executed the Credit Agreement,
pursuant to which CIT advanced to the Borrowers a term loan in the
original principal amount of $45 million. The Borrowers'
obligations under the Loan allegedly have been guaranteed by BVA
LLC and BVA Inc.
The Loan was evidenced by a Term Loan Note, dated as of October 19,
2020. CIT asserts that the Loan has been secured by a Pledge and
Security Agreement and by an Intellectual Property Security
Agreement, and that CIT perfected its security interests by, among
other things, the filing of UCC-1 financing statements.
CIT asserts that, as of the date of the filing of the Debtor's
Chapter 11 petition, the Debtor and the other Borrowers owed to CIT
an amount in excess of $48 million. CIT asserts the Loan is secured
by substantially all of the assets of the Debtor (including cash
collateral but excluding bankruptcy avoidance actions),
substantially all of the assets of Borrowers SCRS and SCL and
substantially all of the assets of the Holding Companies, and that
CIT's security interests have been duly perfected by, in part, the
Financing Statements.
2. The Debtor believes additional secured claims may be
asserted by America First MultiFamily Investors, L.P., U.S. Bank
N.A as Fiscal Agent for California Housing Finance Agency, as
Governmental Lender Financing Division, XL Construction, and BBMR
Enterprises, Inc.
In 2021, the Debtor started having financial difficulties. The
causes of the Debtor's financial difficulties include the COVID-19
pandemic. The Debtor historically has generated a substantial
amount of revenue from manufacturing modular buildings for schools
and commercial projects. As a result of the COVID-19 pandemic,
however, orders for school projects and commercial projects slowed,
resulting in a significant loss of revenue from such projects. In
order to try to maintain revenue, the Debtor took on a larger
number of residential projects. The residential projects generally
were lower profitability jobs than the school and commercial
projects, resulting in a reduction in profitability of the Debtor's
business.
The Debtor's school projects and many other projects require the
Debtor to provide performance and payment surety bonds. Given the
deterioration in the Debtor's financial affairs, in or about
December 2022, the Debtor's pre-petition surety bond provider,
Hartford, gave notice to the Debtor that Hartford no longer would
provide to the Debtor new surety bonds for the Debtor's projects.
CIT asserts against the Debtor a secured claim in an amount in
excess of $48 million. As a result of the deterioration in the
Debtor's financial affairs, the Debtor is concerned that it will
not be able to service timely the amount of such debt.
As adequate protection, CIT will be granted replacement liens in
the Debtor's post-petition cash, accounts receivable and inventory,
and the proceeds of each of the foregoing, to the same extent and
priority as any valid, duly perfected and unavoidable liens in cash
collateral held by CIT and any Disputed Secured Claimant as of the
Petition Date.
A copy of the motion is available at https://bit.ly/42581ai from
PacerMonitor.com.
About Silver Creek Industries LLC
Silver Creek Industries LLC is a modular construction company
headquartered in California. The Debtor sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. C.D. Cal. Case No.
23-11677) on April 24, 2023. In the petition signed by James
McGeever, managing member, the Debtor disclosed up to $50 million
in assets and up to $100 million in liabilities.
Judge Scott H. Yun oversees the case.
Robert E. Opera, Esq., at Winthrop Golubow Hollander, LLP,
represents the Debtor as legal counsel.
SOUTHERN CLEARING: Amy Denton Mayer Named Subchapter V Trustee
--------------------------------------------------------------
The U.S. Trustee for Region 21 appointed Amy Denton Mayer, Esq., a
practicing attorney in Tampa, Fla., as Subchapter V trustee for
Southern Clearing & Grinding, Inc.
Ms. Mayer will be paid an hourly fee of $350 for her services as
Subchapter V trustee and will be reimbursed for work-related
expenses incurred.
Ms. Mayer declared that she is a disinterested person according to
Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Amy Denton Mayer
10 E. Madison Street, Suite 200
Tampa, Florida 33602
Telephone: (813) 229-0144
Email: amayer@subvtrustee.com
About Southern Clearing & Grinding
Southern Clearing & Grinding, Inc. is a turnkey vegetation removal
contractor in Saint Petersburg, Fla.
Southern Clearing & Grinding filed a petition under Chapter 11,
Subchapter V of the Bankruptcy Code (Bankr. M.D. Fla. Case No.
23-01586) on April 21, 2023, with $4,205,593 in assets and
$4,212,083 in liabilities. Shane Dinkins, president of Southern
Clearing & Grinding, signed the petition.
Judge Catherine Peek McEwen oversees the case.
Jeffrey S. Ainsworth, Esq., at BransonLaw, PLLC is the Debtor's
legal counsel.
SOUTHERN CLEARING: Seeks Cash Collateral Access
-----------------------------------------------
Southern Clearing and Grinding, Inc. asks the U.S. Bankruptcy Court
for the Middle District of Florida, Tampa Division, for authority
to use cash collateral and provide adequate protection.
The Debtor filed a previous case under Subchapter V of Chapter 11,
styled In re: Southern Clearing & Grinding, Inc., Case No.
20-51567-JPS, previously pending in the Middle District of Georgia,
Macon Division. The Previous Case was closed on August 27, 2021,
after the entry of an Order Confirming First Amended Subchapter V
Plan of Reorganization on May 3, 2021, and the entry of a Final
Decree on July 7, 2021.
Since the confirmation and reorganization in the Previous Case,
there has been a substantial and material change in circumstances
that is not attributable to the Debtor and for which the Debtor
should not be justly held accountable. In particular, since the
conclusion of the Previous Case, the nature, availability, and
profitability of the various projects the Debtor takes on has
changed substantially. More specifically, the larger projects the
Debtor has historically taken on that require large equipment and
large crews have steadily paid less and become less profitable to
the point the Debtor has determined in its business judgment the
projects should no longer be taken on by the Debtor.
Part of the difficulty in making a profit from the large projects
is due to the lease payments and debt service that the Debtor has
had to take on to finance the large equipment and vehicles
necessary for these large projects. In addition, the Debtor has
noticed the customers on large projects generally attempt to refuse
to pay for work performed, or slow pay for work performed, in what
appears to have evolved into a business practice for large general
contractors, which causes cash flow issues on large projects.
Accordingly, after analysis and consultation, the Debtor has
determined in its business judgment that it would be more
successful and more profitable if it focuses its attention and
business on smaller projects from paying clients. The Debtor
intends to either auction or surrender the large equipment and
vehicles that will now be unnecessary, so that the secured claims
that are secured by such equipment can be satisfied.
As of the Petition Date, the Debtor has approximately $65,852 of
cash in deposit accounts. It is owed approximately $19,000 in
accounts receivable that are 90 days old or less, and $511,021 in
accounts receivable that are over 90 days old; and a tax refund in
the approximate amount of $125,000. The Debtor's other personal
property -- consisting mostly of equipment, machinery, and vehicles
-- is valued at approximately $3.6 million. The Debtor's earnings
going forward may arguably be subject to creditors' alleged liens,
and to the extent the future earnings may be deemed to be cash
collateral, the Debtor seeks authority to use same.
The Debtor owes approximately $2.713 million to Synovus Bank for a
U.S. Small Business Administration loan that is secured by a UCC
Financing Statement (No. 145-2019-000462) filed on September 30,
2019.
These entities may hold an inferior lien or security interest in
the Debtor's cash collateral:
CT Corporation System, as Representative
Corporation Service Company, as Representative
Channel Partners, LLC
IMS Fund LLC
North Mill Credit Trust
John Deere Construction and Forestry Company
Everyday Funding Group
Without conceding that Synovus, as Senior Secured Creditor, or the
Inferior Interests have a lien on the Debtor's cash collateral, as
adequate protection for the use of Synovus' and the Inferior
Interests' cash collateral, the Debtor proposes to grant creditors
a replacement lien with the same validity, extent, and priority as
their respective prepetition lien(s), if any.
A copy of the motion is available at https://bit.ly/41OGwlQ from
PacerMonitor.com.
About Southern Clearing & Grinding, Inc.
Southern Clearing & Grinding, Inc. is a turnkey vegetation removal
contractor. The Debtor sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No. 23-01586) on April
21, 2023. In the petition signed by Shane Dinkins, president, the
Debtor disclosed $4,205,593 in assets and $4,212,083 in
liabilities.
Jeffrey S. Ainsworth, Esq., at Bransonlaw, PLLC, represents the
Debtor as legal counsel.
SPEIDEL CONSTRUCTION: Seeks Cash Collateral Access
--------------------------------------------------
Speidel Construction, Inc. d/b/a Speidel Airfield Marking, asks the
U.S. Bankruptcy Court for the Middle District of Tennessee for
authority to use cash collateral for ordinary and necessary
operating expenses of its business.
Fifth Third Bank and the US Small Business Administration (serviced
by Fifth Third Bank) asserts a security interest and lien in cash
collateral of the Debtor. The Debtor is not aware of any other
creditor claiming an interest in the cash collateral, and more
specifically the Debtor's accounts receivables. AFG and Volunteer
State Bank may assert a lien on the accounts receivables of the
Debtor, but after review of the UCC-1s, it appears that Fifth Third
Bank and the SBA serviced by Fifth Third Bank are in senior
position.
In connection with its business, the Debtor incurs expenses, goods
and services from third parties, employee expenses, professionals,
insurance, utilities, telephone, supplies, taxes and other
operational and capital costs.
The Debtor requests that the Court enter an order providing for the
use of cash collateral until a final hearing may be conducted.
A copy of the Debtor's motion is available at
https://bit.ly/3ADiy0M from PacerMonitor.com.
About Speidel Construction, Inc.
Speidel Construction, Inc. operates a specialized painting and
resurfacing business in Murfreesboro, Tennessee. The Debtor sought
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. M.
D. Tenn. Case No. 23-01473) on April 24, 2023. In the petition
signed by Wayne Todd Pope, as owner, the Debtor disclosed $712,222
in assets and $$1,683,616 in liabilities.
Judge Marian F. Harrison oversees the case.
Steven L. Lefkovitz, Esq., at Lefkovitz and Lefkovitz, represents
the Debtor as legal counsel.
SPINE GROUP: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: The Spine Group, PLLC
493 S Sequin Ave
New Braunfels TX 78130
Business Description: The Spine Group is an interventional pain
management practice located throughout Texas
in Kyle, Floresville, San Antonio, La
Vernia, and Gonzales, Texas. The
interventional pain management practice
specializes in treating numerous pain
conditions such as back and neck pain,
sciatica, and facet arthritis.
Chapter 11 Petition Date: May 2, 2023
Court: United States Bankruptcy Court
Western District of Texas
Case No.: 23-50554
Judge: Hon. Craig A. Gargotta
Debtor's Counsel: Joyce W. Lindauer, Esq.
JOYCE W. LINDAUER ATTORNEY, PLLC
1412 Main Street, Suite 500
Dallas TX 75202
Tel: (972) 503-4033
Fax: (972) 503-4034
Email: joyce@joycelindauer.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Eric Miller, M.D. as president.
A copy of the Debtor's list of 20 largest unsecured creditors is
available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/HN2WGRI/The_Spine_Group_PLLC__txwbke-23-50554__0002.0.pdf
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/HAWORHQ/The_Spine_Group_PLLC__txwbke-23-50554__0001.0.pdf?mcid=tGE4TAMA
TAYLOR MORRISON: Moody's Raises CFR to Ba2, Outlook Remains Stable
------------------------------------------------------------------
Moody's Investors Service upgraded the corporate family rating and
senior unsecured notes of Taylor Morrison Communities, Inc. to Ba2
from Ba3 and the Probability of Default Rating to Ba2-PD from
Ba3-PD. The company's speculative grade liquidity rating (SGL) was
also upgraded to SGL-1 from SGL-2. The outlook is stable.
The upgrade of the CFR reflects the company's track record of debt
reduction and free cash flow generation. The upgrade of the SGL
rating reflects the company's strong liquidity profile, including
ample internal cash generation to cover future obligations as well
as minimal reliance on external sources of liquidity. The company
has taken a proactive approach to debt reduction through the
paydown of over $600 million of bonds. Moody's expects continued
deleveraging through 2024, with debt to book capitalization
trending closer to 30% as a result of increased retained earnings.
"Moody's believe Taylor Morrison's improved financial position and
strong liquidity should help it weather weaker operating
fundamentals within the homebuilding sector as affordability
challenges reduce demand for single family homes," said Griselda
Bisono, Moody's Vice President-Senior Analyst.
The stable outlook reflects Moody's expectation that Taylor
Morrison will continue to maintain a conservative financial policy
while maintaining gross margins well above 20%.
Upgrades:
Issuer: Taylor Morrison Communities, Inc.
Corporate Family Rating, Upgraded to Ba2 from Ba3
Probability of Default Rating, Upgraded to Ba2-PD from Ba3-PD
Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2
Senior Unsecured Regular Bond/Debenture, Upgraded to Ba2 from Ba3
Outlook Actions:
Issuer: Taylor Morrison Communities, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
Taylor Morrison's Ba2 CFR is supported by the company's scale and
strong market position within existing markets, diverse product
platform that includes a mix of entry level, move up and active
adult homes, as well as strong credit metrics. The rating is
constrained by reduced affordability, particularly for entry level
buyers, due to accelerated home price appreciation over the past
two years coupled with increased mortgage interest rates.
Consequently Moody's expect Taylor Morrison's gross margins to
decline to about 25% over the next 12-18 months, from 27% at the
end of 2022, as pricing power for homebuilders diminishes.
The speculative grade liquidity rating of SGL-1 reflects Moody's
expectation of very strong liquidity for Taylor Morrison over the
next 12-18 months. Moody's assessment of the company's liquidity
incorporates robust free cash flow generation due to lower expected
land spend, a large and mostly untapped revolver, plenty of cushion
on financial covenants and a sizable pool of unencumbered land.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings upgrade would require the maintenance of strong credit
metrics, including debt to book capitalization below 35%,
homebuilding EBIT to interest coverage above 6.0x and gross margin
above 20%. An upgrade would also require maintenance of
conservative financial policies, including strong cash flow and
liquidity, in addition to sector conditions remaining favorable.
The ratings could be downgraded if the company's financial policies
grow more aggressive or operating results weaken meaningfully.
Specifically, the ratings could be downgraded if homebuilding debt
to book capitalization increases toward 45%, homebuilding EBIT to
interest coverage declines below 5.0x, gross margin declines
significantly, or there is a material weakening of liquidity.
The principal methodology used in these ratings was Homebuilding
and Property Development published in October 2022.
Taylor Morrison Communities, Inc., the wholly owned and debt
issuing subsidiary of Taylor Morrison Home Corporation ("TMHC"), is
a national homebuilder and developer based in Scottsdale, Arizona
and operates under three brands, Taylor Morrison, Darling Homes and
William Lyon Signature. The company serves a wide array of consumer
groups from coast to coast, including first-time, move-up, luxury,
and 55 plus buyers.
THEE TREE HOUSE: Seeks to Hire W. Bart Meacham as Legal Counsel
---------------------------------------------------------------
Thee Tree House, LLC seeks approval from the U.S. Bankruptcy Court
for the Middle District of Florida to employ W. Bart Meacham, Esq.,
a Tampa, Florida lawyer, as its special litigation counsel.
The firm will represent the Debtor in the adversary proceedings
filed by Palscher, Inc. (Adversary Proceeding No.:
8:23-ap-00009-CED.)
Mr. Meacham will bill $275 per hour for his services.
Mr. Meacham assured the court that he does not represent or hold
any interest adverse to the Debtor or to the estate with respect to
the matter on which he is to be employed.
The firm can be reached through:
W. Bart Meacham, Esq.
308 East Plymouth Street
Tampa, Florida 33603.
Phone: (813) 258-0300
Fax: (813) 425-6969
About Thee Tree House
Thee Tree House, LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. M.D. Fla. Case No. 19-11768) on Dec. 13,
2019. At the time of the filing, the Debtor had estimated assets
of between $100,001 and $500,000 and liabilities of between
$500,001 and $1 million. Judge Caryl E. Delano oversees the case.
The Debtor is represented by McIntyre Thanasides Bringgold Elliott
Grimaldi Guito & Matthews, P.A.
THUNDER INC.: Unsecureds Owed $3.7M to Get 10% of Claims
--------------------------------------------------------
Thunder Incorporated d/b/a Escobar Construction, submitted a
Chapter 11 Plan and a Disclosure Statement.
Thunder proposes to restructure its debts through the Plan and
accomplish payments under the Plan with funds generated from the
operation of Thunder's business and/or the proceeds from the
recovery of accounts receivable. The Effective Date of the Plan is
30 days following entry of a final order confirming the Plan.
Under the Plan, Class 12 General Unsecured Claims total
$3,713,000.95. General unsecured creditors, Class 4 Claimants, will
receive a dividend of 10% of their claims paid in 60 equal monthly
payments of $6,569.13. The source of the payment will be the net
monthly income from operation of Thunder's business and/or the
proceeds from the recovery of accounts receivable. Class 12 is
impaired.
The Plan will be funded by the following: (a) the net monthly
income from the operation of Thunder's business; (b) the proceeds
from the recovery of accounts receivable; (c) the recovery from the
Marina Landscape litigation and, if necessary, (d) contributions to
be made by Ronald 0. Escobar, Thunder's sole shareholder.
General Insolvency Counsel for Thunder Incorporated dba Escobar
Construction:
Raymond H. Aver, Esq.
LAW OFFICES OF RAYMOND H. AVER
A Professional Corporation
10801 National Boulevard, Suite 100
Los Angeles, CA 90064
Telephone: (310) 571-3511
E-mail: ray@averlaw.com
A copy of the Disclosure Statement dated April 19, 2023, is
available at https://bit.ly/3L1Zk9Z from PacerMonitor.com.
About Thunder Inc.
Thunder Inc., doing business as Escobar Construction, is a
construction company in California.
Thunder Inc. filed a petition for relief under Subchapter V of
Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No.
22-15357) on Sept. 30, 2022. In the petition filed by Ronald O.
Escobar, as chief executive officer, the Debtor reported assets and
liabilities between $1 million and $10 million each.
The case is overseen by the Honorable Bankruptcy Judge Barry
Russell.
Gregory K. Jones has been appointed as Subchapter V trustee.
The Debtor is represented by Raymond H. Aver, Esq., at the Law
Offices of Raymond H. Aver.
TOP LINE GRANITE: Hires Paul E. Saperstein as Business Broker
-------------------------------------------------------------
Top Line Granite Design Inc. seeks approval from the U.S.
Bankruptcy Court for the District of Massachusetts to hire Paul E.
Saperstein Co., Inc. as its business broker.
The broker will assist the Debtor with the continuing solicitation
of better and high counteroffers of its estate.
The broker will earn a commission equal to 1.25 percent of the
sales price.
Paul E. Saperstein does not represent any interest adverse to the
Estate and is a "disinterested person" as that term is defined in
11 U.S.C. Sec. 101(14), according to court filings.
The firm can be reached through:
Michael Saperstein
Paul E. Saperstein Co., Inc.
144 Centre Street
Holbrook, MA 04023
Tel: (617) 227-6553
Email: msaperstein@pesco.com
About Top Line Granite Design
Top Line Granite Design Inc., a manufacturer of cut stone and stone
products in Tyngsboro, Mass., filed a petition under Chapter 11,
Subchapter V of the Bankruptcy Code (Bankr. D. Mass. Case No.
22-40216) on March 25, 2022, listing up to $10 million in assets
and up to $50 million in liabilities. Steven Weiss serves as
Subchapter V trustee.
Alan L. Braunstein, Esq., at Riemer and Braunstein, LLP is the
Debtor's legal counsel.
VALCAL INC: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Valcal Inc.
309 Cranes Roost Bouolevard
Suite 2000
Altamonte Springs, FL 32701
Chapter 11 Petition Date: May 2, 2023
Court: United States Bankruptcy Court
Middle District of Florida
Case No.: 23-01675
Debtor's Counsel: Jeffrey S. Ainsworth, Esq.
BRANSONLAW, PLLC
1501 E. Concord Street
Orlando, FL 32803
Tel: 407-894-6834
Email: jeff@bransonlaw.com
Total Assets: $970,720
Total Liabilities: $2,055,075
The petition was signed by Giovanni Martinez as president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 20 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/MMGWZHQ/VALCAL_INC__flmbke-23-01675__0001.0.pdf?mcid=tGE4TAMA
VIRGIN ORBIT: Plan to Rely on Outcome of Bidding for Assets
-----------------------------------------------------------
Virgin Orbit Holdings, Inc., et al. submitted a Joint Chapter 11
Plan and a Disclosure Statement.
In order to maximize value for all stakeholders, the Debtors are in
the process of pursuing a competitive sale process for their
assets. To that end, on April 7, 2023, the Debtors Filed a motion
with the Bankruptcy Court (the "Bidding Procedures Motion"),
seeking authorization to conduct a competitive and robust sale
process, which the Debtors believe will ensure that they maximize
the value of their assets.
Under the Bidding Procedures and the Plan, the assets of the
Debtors will be marketed pursuant to the Bidding Procedures Order,
which shall permit bids to acquire all or substantially all of the
assets of the Debtors.
Subject to the entry of Bidding Procedures Order, to be a qualified
bid (a "Qualified Bid"), a third party bid must meet the
requirements established in the Bidding Procedures for the
submission of qualified bids. In the event that at least two
Qualified Bids are obtained with regard to any particular asset,
the Debtors shall conduct an auction to determine the highest or
otherwise best bid for such Debtors' asset. VIL, as a secured
lender, or its designee may credit bid on account of some or all of
the Prepetition Secured Notes Claims or the DIP Facility.
In full and final satisfaction, settlement, and release of and in
exchange for each Allowed DIP Facility Claim, each DIP Facility
Claim shall be paid in full in Cash or such lesser amount as agreed
to by the Holder of the DIP Facility Claims.
On the Effective Date, except to the extent that a Holder of an
Allowed General Unsecured Claim and the Debtor against which such
Allowed General Unsecured Claim is asserted agree to less favorable
treatment for such Holder, each Holder of an Allowed General
Unsecured Claim shall receive, in full and final satisfaction of
its Allowed General Unsecured Claim, its Pro Rata Share of the
greater of (a) the GUC Cash-Out Pool or (b) GUC Distributable
Proceeds, in each case not to exceed the Allowed amount of such
Holder's General Unsecured Claim. Any Allowed General Unsecured
Claim that has been expressly assumed by the applicable Successful
Bidder under the applicable Sale Transaction Documentation shall
not be an obligation of the Debtors. For the avoidance of doubt and
notwithstanding anything to the contrary in the Plan, the rights of
the Holders of General Unsecured Claims to receive Distributable
Proceeds (including those obtained by the Debtors or the Plan
Administrator following the Effective Date) shall not be
extinguished by the Plan until payment in full thereof or the
depletion of all assets of the Debtors' Estates. These Claims are
Impaired under the Plan and are entitled to vote.
"GUC Cash-Out Pool" means cash equal to $[____], which amount shall
be determined by the Debtors with the consent of the Required
Consenting Creditors. "GUC Distributable Proceeds" means all
Distributable Proceeds remaining after payment in full in Cash of
the Prepetition Secured Notes Claims.
On and after the Effective Date, in accordance with the Wind-Down
Budget, the Debtors shall (a) continue in existence for purposes of
(i) winding down the Debtors' businesses and affairs as
expeditiously as reasonably possible, (ii) resolving Disputed
Claims as provided hereunder, (iii) paying Allowed Claims not
assumed by the applicable Successful Bidder as provided hereunder,
(iv) filing appropriate tax returns, (v) complying with their
continuing obligations under the applicable Sale Transaction
Documentation (including with respect to the transfer of permits to
the applicable Successful Bidder as contemplated therein), and (vi)
administering the Plan in an efficacious manner; and (b) thereafter
liquidate and dissolve as set forth in the Plan. The Plan
Administrator shall carry out these actions for the Debtors.
The Plan Administrator shall also have the power and authority to
take any action necessary to wind down and dissolve any of the
direct and indirect non-Debtor subsidiaries of Virgin Orbit
Holdings, Inc. and shall be authorized to file a certificate of
dissolution or similar documents for any of such Entities, together
with all other necessary corporate and company documents, to effect
the dissolution of such Entities under the applicable laws of the
jurisdiction in which such Entities were formed. On the Effective
Date, the Debtors shall retain proceeds from the Wind-Down Amount
in accordance with the terms of the Wind-Down Budget. Any remaining
amounts in the Wind-Down Amount following all required
distributions therefrom in accordance with the terms of the
Wind-Down Budget shall promptly be distributed in accordance with
the Bankruptcy Code and the Plan.
The Debtors shall fund distributions under the Plan from the
Distributable Proceeds in accordance with the terms of the Sale
Transaction Documents and the Plan.
"Distributable Proceeds" means all Cash of the Debtors on or after
the Effective Date, including the proceeds of any retained Causes
of Action and the proceeds of all non-Cash assets of the Debtors'
Estates, after giving effect to (i) the satisfaction of all
Administrative Claims (including DIP Facility Claims), Priority Tax
Claims, Other Priority Claims, and Other Secured Claims in
accordance with the Plan, in each case to the extent Allowed
against the Debtors; (ii) the funding of the Professional Fee
Escrow Account; and (iii) the funding of the Wind-Down Amount. For
the avoidance of doubt, any proceeds of a Sale Transaction
distributed prior to the Effective Date shall not be considered
Distributable Proceeds.
The voting deadline to accept or reject the Plan is 5:00 p.m.
Eastern Time on June 26, 2023, unless extended by the Debtors
(subject to any consent right of the Required Consenting Creditors)
(the "Voting Deadline"). The record date for determining which
Holders of Claims may vote on the Plan is May 22, 2023 (the "Voting
Record Date").
Proposed Counsel for the Debtors:
Robert S. Brady, Esq.
Michael R. Nestor, Esq.
Kara Hammond Coyle, Esq.
Allison S. Mielke, Esq.
YOUNG CONAWAY STARGATT & TAYLOR, LLP
Rodney Square, 1000 North King Street
Wilmington, DE 19801
Telephone: (302) 571-6600
Facsimile: (302) 571-1253
E-mail: rbrady@ycst.com
mnestor@ycst.com
kcoyle@ycst.com
amielke@ycst.com
- and -
Jeffrey E. Bjork, Esq.
LATHAM & WATKINS LLP
355 South Grand Avenue, Suite 100
Los Angeles, CA 90071
Telephone: (213) 485-1234
Facsimile: (213) 891-8763
Email: jeff.bjork@lw.com
- and -
George Klidonas, Esq.
Anupama Yerramalli, Esq.
Liza L. Burton, Esq.
1271 Avenue of the Americas
New York, NY 10020
Telephone: (212) 906-1200
Facsimile: (212) 751-4864
E-mail: george.klidonas@lw.com
anu.yerramalli@lw.com
liza.burton@lw.com
A copy of the Disclosure Statement dated April 19, 2023, is
available at https://bit.ly/3n4iL9Y from cases.ra.kroll.com, the
claims agent.
About Virgin Orbit
Virgin Orbit Holdings, Inc (Nasdaq: VORB) --
http://www.virginorbit.com/-- operates one of the most flexible
and responsive space launch systems ever built. Founded by Sir
Richard Branson in 2017, the Company began commercial service in
2021, and has already delivered commercial, civil, national
security, and international satellites into orbit. Virgin Orbit's
LauncherOne rockets are designed and manufactured in Long Beach,
California, and are air-launched from a modified 747-400 carrier
aircraft that allows Virgin Orbit Holdings, Inc., to operate from
locations all over the world in order to best serve each customer's
needs.
Virgin Orbit Holdings, Inc., and its affiliates sought relief under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case
No. 23-10405) on April 4, 2023.
In the petition filed by Daniel M. Hart, as chief executive, the
Debtor reported total assets amounting to $242,978,000 and total
debtamounting to $153,491,000 as of Sept. 30, 2022.
The Debtors tapped YOUNG CONAWAY STARGATT & TAYLOR, LLP, and LATHAM
& WATKINS LLP as counsel; DUCERA PARTNERS LLC as investment banker
and financial advisor; and ALVAREZ & MARSAL NORTH AMERICA LLC as
restructuring advisor. KROLL RESTRUCTURING ADMINISTRATION LLC is
the claims agent.
VITAL PHARMACEUTICALS: Taps Grant Thornton as Financial Advisor
---------------------------------------------------------------
Vital Pharmaceuticals, Inc. and its affiliates filed a supplemental
application seeking approval from the U.S. Bankruptcy Court for the
Southern District of Florida to expand the scope of services of
Grant Thornton, LLP as their financial advisor.
The Debtors seek to expand the scope of services to include the
additional services set forth the Transaction Advisory Services
SOW.
Grant Thornton's services under the Transaction Advisory Services
SOW, include:
(a) Financial Due Diligence - Additional Support
-- prepare redacted report and redacted excel data book
-- review and execute access letters for multiple parties
-- call and prepare responses to questions from potential
buyers, investors, lenders, and representations and warranties
insurance providers
-- analyze Net Working Capital adjustments and assistance
with analyzing and identifying the potential Net Working Capital
target
-- roll forward of the Quality of Earnings analysis to a
more recent period e.g., Jan. 2023, if needed
(b) Purchase Agreement Advisory
-- provide the Debtors accounting and financial
(non-legal) input on the purchase agreement, including, without
limitation:
-- purchase price and price adjustment clauses.
-- the basis of preparation of the closing
statement(s).
-- closing accounts procedures and policies.
-- the basis of preparation of any earn-out accounts
and earn-out account procedures.
-- financial and accounting representations and
warranties.
-- financial definitions, including working capital and
net debt.
-- review of the accounting dispute resolution clauses in
the purchase agreement.
-- provide negotiation support, including, without
limitation:
-- prepare working capital and net debt schedules from
buyer vs. seller perspective to contextualize the purchase price.
-- proactive support in establishing the “target
working capital.”
-- commentary on the contentious areas of the purchase
price adjustments, and preparation of potential arguments and
justifications to align these in the Debtors' favor.
-- assistance in agreeing to the price adjustment
principles with bidders.
Grant Thornton's fees under the Transaction Advisory Services SOW
are:
Partner/Principal $907
Managing Director $831
Director $746 Manager $608
Senior Associate $428
Associate $347
India - Manager $404
India - Senior Associate $209
Mark Margulies, managing partner at Grant Thornton, 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 at:
Mark Margulies
Grant Thornton, LLP
1301 International Parkway, Suite 300
Fort Lauderdale, FL, 33323
Tel: +1 954 331 1116
Email: mark.margulies@us.gt.com
About Vital Pharmaceuticals
Since 1993, Florida-based Vital Pharmaceuticals, Inc., doing
business as Bang Energy and as VPX Sports, has developed
performance beverages, supplements, and workout products to fuel
high-energy lifestyles. VPX Sports is the maker of Bang energy
drinks, among other consumer products.
Vital Pharmaceuticals, Inc., along with certain of its domestic
subsidiaries and affiliates, filed voluntary petitions for
protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Fla. Lead Case No. 22-17842) on Oct. 10, 2022.
VPX estimated $500 million to $1 billion in assets and liabilities
as of the bankruptcy filing.
The Hon. Scott M. Grossman is the case judge.
The Debtors tapped Latham & Watkins, LLP as general bankruptcy
counsel; Berger Singerman, LLP as local counsel; Huron Consulting
Group, Inc. as CTO services provider; Rothschild & Co US, Inc. as
investment banker; and Grant Thornton, LLP as financial advisor.
Stretto, Inc. is the notice, claims and solicitation agent.
The U.S. Trustee for Region 21 appointed an official committee of
unsecured creditors on Nov. 1, 2022. The committee tapped
Lowenstein Sandler, LLP as general bankruptcy counsel; Sequor Law,
P.A. as local counsel; and Lincoln Partners Advisors, LLC as
financial advisor.
ZAYO GROUP: Moody's Lowers CFR to B3 & Alters Outlook to Stable
---------------------------------------------------------------
Moody's Investors Service downgraded Zayo Group Holdings, Inc.'s
corporate family rating to B3 from B2 and its probability of
default rating to B3-PD from B2-PD. Moody's also downgraded the
rating on the company's existing first lien credit facilities,
comprised of its $1.05 billion revolver and aggregate $5.96 billion
of USD and Eurodollar term loans, and $1.48 billion first lien
secured notes to B3 from B2. Zayo's $1.08 billion of senior
unsecured notes were downgraded to Caa2 from Caa1. The CFR
downgrade and change of outlook to stable from negative reflects
Moody's expectation that while Zayo will continue to operate with
elevated debt leverage (Moody's adjusted) over the next two-plus
years, capital intensity reductions and the potential for steadier
and more sustained net install growth will likely contribute to a
delayed pace of deleveraging towards 6x (Moody's adjusted)
beginning in late 2024.
Downgrades:
Issuer: Zayo Group Holdings, Inc.
Corporate Family Rating, Downgraded to B3 from B2
Probability of Default Rating, Downgraded to B3-PD from B2-PD
Senior Secured First Lien Bank Credit Facility, Downgraded to B3
from B2
Senior Secured First Lien Regular Bond/Debenture, Downgraded to B3
from B2
Senior Unsecured Regular Bond/Debenture, Downgraded to Caa2 from
Caa1
Outlook Actions:
Issuer: Zayo Group Holdings, Inc.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Zayo's B3 CFR reflects continued elevated leverage of around 8.1x
(Moody's adjusted) for the fiscal year-ending December 31, 2022,
which is above Moody's prior expectations for peak leverage.
Moody's only expects the company's leverage to approach 7x (Moody's
adjusted) by year-end 2024, and notes that debt leverage remains
well above historical levels of around 5.2x prior to the company's
2020 LBO. Moody's had expected sustained leverage near or below
6.0x within about two years of the company's 2020 LBO, but the
external and negative impacts of the Covid pandemic thwarted some
of the company's earlier growth potential. This elevated debt
leverage is offset by the company's base of contracted recurring
revenue and valuable fiber optic network assets which comprise the
majority of the company's revenue and EBITDA. The company has a
solid position in a competitive market due to the reach of its
metro, regional and long distance networks which span both North
America and Europe. Capturing a greater share of the growth in its
addressable end markets remains critical to Zayo's achieving both
greater scale and the potential to drive debt leverage meaningfully
lower. Customers' increasing bandwidth needs, largely driven by
wireless network densification and accelerating adoption of cloud
services by enterprises, are foundational to the company's business
model. Future bandwidth needs of 5G network deployments and
potential associated emerging technologies, products and services
provide additional upside opportunities.
While costs associated with Zayo's comprehensive transformation of
its organizational structure and culture, including critical
investments in network, sales and improvements in operational
processes, have negatively impacted EBITDA margins, Moody's
believes the company now has the appropriate workforce and network
assets to better drive steady organic bookings and net install
growth on a largely success-based basis going forward. The company
still expects to realize additional and fairly sizable operating
cost savings, including from centralized procurement efforts and
other internal efficiencies of around $135 million on a run-rate
basis by year-end 2024. Steady execution over the next 12-18 months
on bookings growth, continued churn mitigation and net install
growth will be key to any upward credit trajectory. Enterprise
demand trends in an economic slowdown could pressure liquidity, but
Moody's believes the operational investments the company has
largely completed have strengthened the value proposition of its
extensive network, improved automation capabilities and can support
accelerated revenue and margin growth.
As the bulk of capital investments are success-based with
reasonable payback periods, even slight improvements in capital
efficiency and lower churn can drive free cash flow growth. Moody's
believes the company's long term churn potential has a floor of
around 1.1%, or slightly below the 1.17% level in Q4 2022. Moody's
anticipates Zayo will further solidify its focus on short payback,
success-based capital investments going forward to win carrier and
web-centric customers and large enterprises in industry verticals,
as well as regional businesses on or near existing network
infrastructure. As a private entity Zayo has taken a methodical and
longer term approach to bolstering the foundational strengths of
its business model to better capture the end market growth
potential of its Networks segment. Moody's believes the company's
overall capital intensity will slowly lessen beginning in 2024 and
that its business model can begin to deliver sustained positive
free cash flow beginning in late 2024 and beyond.
Moody's expects Zayo will have adequate liquidity over the next 12
months. Moody's expects the company will generate negative free
cash flow in 2023 in excess of $250 million given largely
success-based capital intensity levels and positive free cash flow
generation below $100 million in 2024. Free cash flow could become
constrained should capital intensity expand to higher levels.
Higher growth-oriented investing, if financed in a more balanced
manner that includes equity contributions, should result in
expanding EBITDA over time that can accelerate debt deleveraging.
Moody's expects Zayo to maintain around $135 million of balance
sheet cash. Approximately $240 million was drawn under the
company's $1.05 billion secured revolving credit facility at
December 31, 2022. Moody's expects this revolver draw will increase
to around $465 million at year-end 2023 and remain at that
approximate level at year-end 2024.
The instrument ratings reflect both the probability of default of
Zayo, as reflected in the B3-PD probability of default rating, an
average expected family recovery rate of 50% at default given the
mix secured and unsecured debt in the capital structure, and the
loss given default assessment of the debt instruments in the
capital structure based on a priority of claims. The senior secured
credit facilities, which include the company's first lien revolver
and USD and Eurodollar first lien term loans, and first lien
secured notes are rated B3, in line with the company's B3 CFR given
both the level of first lien debt in the capital structure and the
loss absorption from the company's senior unsecured notes. The
senior unsecured notes are rated Caa2, two notches below the CFR,
reflecting their junior rank within the capital structure.
Zayo's stable outlook reflects Moody's view that the company's debt
leverage (Moody's adjusted) has likely peaked and that continued
execution of current bookings and net install trends will result in
improving EBITDA growth and begin to deliver a steady pace of
deleveraging towards 6x (Moody's adjusted) beginning in late 2024.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade Zayo's B3 rating if debt leverage is near 6x
and free cash flow/debt is in the low-to-mid single-digits, both on
a sustained, Moody's adjusted basis.
The rating could be downgraded if leverage remains above 7x
(Moody's adjusted), if execution falters, if liquidity tightens or
deteriorates above current expectations or if capital intensity
increases such that Zayo is unable to generate sustainable positive
free cash flow by 2025.
Headquartered in Boulder, Colorado, Zayo Group Holdings, Inc. is a
leading global provider of bandwidth infrastructure, with
significant networks in the US, Canada and Europe. Zayo's products
and offerings enable high-bandwidth applications, such as
cloud-based computing, video, mobile, social media,
machine-to-machine connectivity, and other bandwidth-intensive
applications. The company's over 7,000 customers include wireless
and wireline carriers, media, tech, content, finance, healthcare
and other large enterprises. Zayo's 141,000-plus route mile global
network includes 400-plus metro markets and connectivity to over
45,000 buildings. The company's primary products include
high-capacity dark and lit fiber solutions, wavelength, ethernet,
IP transit, WAN and other connectivity solutions, as well as data
and voice solutions to small and medium-sized businesses through
its Allstream segment.
The principal methodology used in these ratings was Communications
Infrastructure published in February 2022.
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