/raid1/www/Hosts/bankrupt/TCR_Public/230915.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, September 15, 2023, Vol. 27, No. 257
Headlines
140 WEST 121: Hires Kirby Aisner& Curley LLP as Counsel
1778 DEAN ST: Case Summary & One Unsecured Creditor
1982 INVESTMENT: Court Approves Disclosure Statement
2125 FLATBUSH: Hires Rachel S. Blumenfeld PLLC as Counsel
2127 FLATBUSH: Hires Rachel S. Blumenfeld PLLC as Counsel
2M RESEARCH: Claims to be Paid From Available Cash and Income
5200 SAMPLE: Wins Interim Cash Collateral Access
560 SEVENTH AVENUE: Court OKs Cash Collateral Access Thru Oct 16
8300 HOLDING: Voluntary Chapter 11 Case Summary
AKUMIN INC: Signs Separation Agreement With Former CCAO
ALCOA CORP: S&P Affirms 'BB+' Issuer Credit Rating, Outlook Pos.
AMYRIS INC: Hires Stretto Inc. as Administrative Advisor
AMYRIS INC: Will Pay Creditor Group Attorney Fees Up to $750,000
APPHARVEST PRODUCTS: Chapter 11 Asset Sale Approved
ARCHDIOCESE OF NEW ORLEANS: Hires TMC Realty LLC as Broker
ARCIMOTO INC: Agrees to Terminate President
ASPIRA WOMEN'S: Regains Compliance With Nasdaq Listing Requirement
ASPIRA WOMEN'S: Signs Consulting Agreement With Dr. Ryan Phan
AULT ALLIANCE: Issues $2.2 Million Term Note to Investor
AVANT DIAGNOSTICS: Hires Verstandig Law Firm as Counsel
AVENTURA PHASE: Obtains Court's CCAA Initial Stay Order
AVERY ASPHALT: Unsecureds Get Remaining Amount of Unsecured Fund
AVIENT CORP: Moody's Rates New $732MM First Lien Term Loan 'Ba1'
AVINGER INC: Effects a 1-for-15 Reverse Common Stock Split
B&B BUILDERS: Oct. 17 Hearing on Final Approval of Disclosures
B&E TRANSPORT: Hires Eric A. Liepins PC as Counsel
B&G FOODS: Moody's Affirms B3 CFR & Rates New $500MM Unsec Notes B1
BAUSCH + LOMB CORP: Fitch Assigns 'BB-' Rating on Secured Term Loan
BCPE GRILL: Moody's Assigns First Time B3 Corporate Family Rating
BIG BOY TOYS: Hires Emmett L. Goodman Jr. LLC as Counsel
BIO365 LLC: Unsecureds to Get $700K Over 5-Year Period
BLUE LIGHTNING: Files Emergency Bid to Use Cash Collateral
BLUE STAR: Closes $5 Million Public Common Stock Offering
BOOST NEWCO: Moody's Assigns 'Ba3' CFR, Outlook Stable
C&S GROUP: S&P Places 'BB-' ICR on Watch Negative on High Leverage
C.W. KELLER: Hires Madoff & Khoury LLP as Counsel
CALAMP CORP: Interim CEO to Receive $13K Monthly Stipend
CANO HEALTH: Falls Short of NYSE Stock Bid Price Requirement
CARBON CONSULTANTS: Court OKs Cash Collateral Access Thru Oct 5
CENTERPOINT PRODUCTIONS: Hires Jones & Jones CPA as Accountant
CITGO HOLDING: S&P Affirms 'B-' Long-Term ICR, Outlook Stable
CITGO PETROLEUM: Moody's Rates $1.1BB Secured Notes 'B3'
CLUE OPCO: Moody's Assigns First Time Ba3 Corporate Family Rating
COGECO COMMUNICATIONS: Moody's Rates New $1.55BB Secured Loans 'B1'
COTTLE CHRISTI: Seeks to Hire Lorie Meadows as Accountant
COTTLE LLC: Hires Seeks to Hire Lorie Meadows as Accountant
COTY INC: Fitch Gives 'BB' FirstTime LongTerm IDR, Outlook Positive
COTY INC: Fitch Rates Proposed EUR500MM Sr. Secured Notes 'BB+'
CSC 1 LLC: Hires Bronson Law Offices P.C. as Counsel
CSG SYSTEMS: Moody's Affirms 'Ba2' CFR, Outlook Remains Stable
CSTN MERGER: Moody's Affirms 'Caa2' CFR, Outlook Remains Negative
CUSTOM LOGGING: Court OKs Interim Cash Collateral Access
CVR ENERGY: Moody's Affirms 'Ba3' CFR, Outlook Remains Negative
CWGS ENTERPRISES: Moody's Lowers CFR to 'B2', Outlook Stable
DEAN GUTIERREZ: Wins Cash Collateral Access on Final Basis
DIAMOND OFFSHORE: Moody's Assigns 'B2' CFR, Outlook Stable
DIMENSIONS IN SENIOR: Affiliate to Sell Assets to Market Ready
DIOCESE OF BUFFALO: Hires Hanna Commercial as Real Estate Broker
DIOCESE OF CAMDEN: Ordered to Rework Its Bankruptcy Plan
DIVE PLACE II: Court OKs Cash Collateral Access Thru Oct 3
DIVERSITY FREIGHT: Court OKs Cash Collateral Access on Final Basis
ELENAROSE CAPITAL: Seeks Cash Collateral Access
ELETSON HOLDINGS: To File for Chapter 11 Bankruptcy
ENVISION HEALTHCARE: MGPO Opposes Plan Confirmation
ENVISION HEALTHCARE: Plan Does Not Affect the Pending Litigation
EYECARE PARTNERS: CEO Clark Left Company After Cash Burn
FORWARD AIR: Fitch Assigns 'BB-' LongTerm IDR, Outlook Stable
FREEDOM MORTGAGE: Moody's Rates New $600MM Unsecured Bond 'B2'
FREEDOM MORTGAGE: S&P Rates New $600MM Senior Unsecured Notes 'B'
FTX GROUP: Former Exec. Salame Pleads Guilty on Criminal Charges
FTX GROUP: Wants to Clawback Payments to Naomi Osaka, Shaq O'Neal
FULTON MERCER: Hires Weiss Law Group, LLC as Counsel
FUTURE PRESENT: Taps Mashiah & Sheffer as Transactional Counsel
GAFC SERVICES: Hires Jacqueline E. Hernandez Santiago as Counsel
GRACO SERVICES: Seeks to Hire C. Taylor Crockett as Legal Counsel
GREEN DISTRICT: Seeks to Hire DelCotto Law as Counsel
GROM SOCIAL: Closes $3 Million Public Stock Offering
GWD INC: Case Summary & 20 Largest Unsecured Creditors
HAYS MECHANICAL: Voluntary Chapter 11 Case Summary
IDAHO HOUSING: Moody's Rates Series 2023A/B Revenue Bonds 'Ba3'
INNOVATIVE GENOMICS: Court OKs Cash Collateral Access Thru Sept 21
INSPIREMD INC: All Four Proposals Passed at Annual Meeting
ITTELLA INTERNATIONAL: Committee Taps Brinkman as Legal Counsel
ITTELLA INTERNATIONAL: Hires Loeb & Loeb LLP as Counsel
JANE STREET: Fitch Affirms LongTerm IDR at 'BB+', Outlook Stable
KASPIEN HOLDINGS: Raises Going Concern Doubt
KATANA ELECTRONICS: Seeks to Tap Beynon & Associates as Accountant
KNS MOTEL: Case Summary & 20 Largest Unsecured Creditors
LATHAM POOL: Moody's Affirms 'B1' CFR & Alters Outlook to Negative
LAURA'S ORIGINAL: Amends Plan to Include Brotman Secured Claim Pay
LEARFIELD COMMUNICATIONS: S&P 'SD' On Debt-For-Equity Exchange
LEARFIELD: Closes Deleveraging Transaction with Lenders
LJF INC: Case Summary & 20 Largest Unsecured Creditors
LTL MANAGEMENT: Questions Chapter 11 Distress Need in Appeal
LUCAS MACYSZYN: Files Emergency Bid to Use Cash Collateral
LURADIANT LLC: May Sell Willard Property for $625,000
M.V.J. AUTO: Taps Kingcade, LSS Law as Bankruptcy Counsel
MCDERMOTT INTL: Reaches Debt Restructuring Deal With Stakeholders
METROPLEX RECOVERY: Files Emergency Bid to Use Cash Collateral
MEZCLA ONE: Gets OK to Hire Herron Hill Law Group as Counsel
MICAH PROPERTY: Gets OK to Sell Chino Hill Property for $3.4MM
MIDWEST DOUGH: Seeks Cash Collateral Access
MILE HI TRANSPORTATION: Seeks Cash Collateral Access
MINIM INC: Cuts Workforce by 78%, Mulls Possible Bankruptcy Filing
MINIM INC: George Kassas Resigns as Director
MMEX RESOURCES: Says Continuing Losses Raise Going Concern Doubt
MONICATTI AUTO: Hires Stevenson & Bullock P.L.C. as Counsel
MOTOS AMERICA: Raises Going Concern Doubt
MOUNTAIN EXPRESS: Trustee Hires Hughes Watters as Counsel
MOUNTAINEER BRAND: Seeks to Hire Eric Young as CEO
MRH AUTO RENO: Hires Harris Law Practice LLC as Counsel
MRH AUTO WINNEMUCCA: Hires Harris Law Practice LLC as Counsel
MYRTLE THROOP: Case Summary & Nine Unsecured Creditors
NATIONAL VISION: Moody's Cuts CFR to Ba3 & First Lien Loans to Ba2
NCR ATLEOS: Fitch Gives First-Time BB- LongTerm IDR, Outlook Stable
NCR ATLEOS: Moody's Assigns First Time B2 Corporate Family Rating
NCR CORP: Moody's Hikes CFR to B1 & Rates Secured Loans to Ba2
NF INTERNATIONAL: Hires Robert M. Ward as Special Counsel
NFP HOLDINGS: Fitch Gives B First-Time LongTerm IDR, Outlook Stable
NOB HILL INN: Hires Kasolas, BMC Group as Administrative Agents
NOBLE HOUSE: Court OKs $12MM DIP Loan from Wells Fargo
NOVAVAX INC: SK Bioscience, Two Others Report 6.4% Equity Stake
OCEAN POWER: Incurs $7 Million Net Loss in First Quarter
OFF LEASE ONLY: Hits Chapter 11 Bankruptcy Protection
OILFIELD EQUIPMENT: Hires Spector & Cox PLLC as Counsel
PECF USS: S&P Downgrades ICR to 'CCC', Outlook Negative
PEGASUS HOME FASHIONS: U.S. Trustee Appoints Creditors' Committee
PERMIAN RESOURCES: Fitch Rates New Sr. Unsec. Notes Due 2032 'BB-'
PH BEAUTY III: Moody's Raises CFR to Caa1, Outlook Stable
PLATINUM BEAUTY: Files Emergency Bid to Use Cash Collateral
POLARIS OPERATING: Taps Okin Adams Bartlett Curry as Legal Counsel
POLARIS OPERATING: Taps Stout Risius Ross as Restructuring Advisor
PORTUGUESE BEND: Hires Kogan Law Firm APC as Counsel
PRIZE MANAGEMENT: Case Summary & 20 Largest Unsecured Creditors
PROAMPAC PG: Moody's Rates Amended 1st Lien Term Loan 'B3'
PROAMPAC PG: S&P Affirms 'B-' Issuer Credit Rating, Outlook Stable
PROOFPOINT INC: Fitch Affirms LongTerm IDR at 'B', Outlook Stable
PUERTO RICO: Syncora, Goldentree Seek Receiver to Repay Bondholders
R&R PLASTERING: Seeks to Hire Alicia Macias, CPA as Accountant
RIALTO BIOENERGY: Panel Hires Continental Economics as Consultant
ROLL: BICYCLE: Wins Interim Cash Collateral Access
ROYAL CARIBBEAN: Moody's Ups CFR to B1, Alters Outlook to Positive
RVR DEALERSHIP: Moody's Cuts CFR & $800MM Secured Term Loan to B2
S&G HOSPITALITY: Hires Carpenter Lipps LLP as Counsel
S&W BLUE JAY: Hires Elkins Kalt Weintraub Reuben as Counsel
SAM'S PLACE: Amends Unsecureds & Priority Tax Claims Pay
SAND RIDGE: Case Summary & Seven Unsecured Creditors
SEALED AIR: Moody's Affirms 'Ba1' CFR & Alters Outlook to Negative
SKIN LOGIC: Hires VerStandig Law Firm as Bankruptcy Counsel
SONIDA SENIOR: Incurs $12.2 Million Net Loss in Second Quarter
SOUTHFIELD VENTURES: Seeks to Hire Simon PLC as Special Counsel
SPIRIT AEROSYSTEMS: Moody's Confirms 'B2' CFR, Outlook Negative
SPIRIT AIRLINES: Fitch Alters Outlook on 'B+' LongTerm IDR to Neg.
SSG LLC: Seeks Court Nod to Sell Inventory
STAGE LIGHTING: Bid to Use Cash Collateral Denied as Moot
STRUDEL HOLDINGS: Seeks to Hire Yetter Coleman as Special Counsel
SUNOCO LP: Moody's Rates New $500MM Senior Unsecured Notes 'Ba3'
SUNOCO LP: S&P Assigns 'BB' Rating on New Senior Unsecured Notes
SUPERTRANSPORT LLC: Seeks Cash Collateral Access
TAHOE LAKE: Unsecured Creditors to Recover 5% over 60 Months
TPT GLOBAL: Unit Signs Settlement Deal With Information Security
UETEK: Case Summary & 20 Largest Unsecured Creditors
US FOODS: Moody's Rates New 2028/2032 Unsecured Notes 'B2
VALLEY PORK: Hires Cutler Law Firm P.C. as Counsel
VALLEY PORK: Hires Ms. Westphalen of Nutriquest Business as CRO
VANTAGE TRAVEL: Committee Seeks to Hire Dentons as Counsel
VIASAT INC: Moody's Rates New Secured 1st Lien Term Loan 'Ba3'
VIASAT INC: S&P Assigns 'BB' Rating on $617MM Term Loan B
VIAVI SOLUTIONS: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
VISTRA OPERATIONS: Fitch Rates $1BB Unsec. Notes Due 2031 'BB'
WATAUGA FAMILY: Seeks to Tap Helms Tax Strategy as Accountant
WATAUGA FAMILY: Taps The Lane Law Firm as Bankruptcy Counsel
WAYFORTH LLC: Court OKs Interim Cash Collateral Access
WESTERN GLOBAL: $75MM DIP Loan from DKB Partners Has Final OK
WEWORK INC: Completes 1-for-40 Reverse Stock Split
WHEELS UP: Gets Additional $15M Under Amended Promissory Note
WILLIAMS INDUSTRIAL: Chapter 11 Sale to Energy Solutions Okayed
WORLDPAY: Fitch Puts BB First-Time LongTerm IDR, Outlook Stable
YAK TIMBER: Seeks Cash Collateral Access Thru Oct 29
YELLOW CORP: Hires Alvarez & Marsal as Financial Advisors
YELLOW CORP: Hires Ducera Partners as Investment Banker
YELLOW CORP: Hires Epiq as Administrative Advisor
YELLOW CORP: Hires Ernst & Young as Tax Services Provider
YELLOW CORP: Hires Pachulski Stang Ziehl as Co-Counsel
[^] BOOK REVIEW: The Phoenix Effect
*********
140 WEST 121: Hires Kirby Aisner& Curley LLP as Counsel
-------------------------------------------------------
140 West 121 LLC seeks approval from the U.S. Bankruptcy Court for
the Southern District of New York to employ Kirby Aisner & Curley,
LLP as counsel.
The firm will provide these services:
a. give advice to the Debtor with respect to its powers and
duties as a Debtor-in-Possession and the continued management of
its property and affairs;
b. negotiate with creditors of the Debtor and work out a plan of
reorganization and take the necessary legal steps in order to
effectuate such a plan including, if need be, negotiations with the
creditors and other parties in interest;
c. prepare the necessary legal papers required for Debtor who
seeks protection from its creditors under Chapter 11 of the
Bankruptcy Code;
d. appear before the Bankruptcy Court to protect the interest of
the Debtor and to represent the Debtor in all matters pending
before the Court;
e. attend meetings and negotiate with representatives of
creditors and other parties in interest;
f. advise the Debtor in connection with any potential
refinancing of secured debt, sale or other strategic transaction
involving its assets;
g. represent the Debtor in connection with obtaining
post-petition (DIP)
financing;
h. take any necessary action to obtain approval of a disclosure
statement and confirmation of a plan of reorganization; and
i. perform all other legal services for the Debtor which may be
necessary for the preservation of the Debtor's estate and to
promote the best interests of the Debtor, its creditors and its
estate.
The firm will be paid at these rates:
Partners $475 to $575 per hour
Of Counsel $575 to $625 per hour
Associates $295 to $325 per hour
Paraprofessionals $150 per hour
The firm received a retainer in the amount of $21,738.
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Erica R. Aisner, a partner at Kirby Aisner& Curley LLP, 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:
Erica R. Aisner, Esq.
KIRBY AISNER & CURLEY LLP
700 Post Road, Suite 237
Scarsdale, NY 10583
Tel: (914) 401-9500
Email: eaisner@kacllp.com
About 140 West 121 LLC
140 West 121 LLC in New York, NY, filed its voluntary petition for
Chapter 11 protection (Bankr. S.D.N.Y. Case No. 23-11301) on August
14, 2023, listing as much as $1 million to $10 million in both
assets and liabilities. Beatrice O. Sibblies as sole member, signed
the petition.
KIRBY AISNER & CURLEY LLP serve as the Debtor's legal counsel.
1778 DEAN ST: Case Summary & One Unsecured Creditor
---------------------------------------------------
Debtor: 1778 Dean St LLC
1778 Dean Street
Brooklyn, NY 11233
Business Description: The Debtor owns a three family house
located at 1778 Dean Street, Brooklyn, NY
valued at $1.13 million.
Chapter 11 Petition Date: September 13, 2023
Court: United States Bankruptcy Court
Eastern District of New York
Case No.: 23-43261
Judge: Hon. Elizabeth S. Stong
Debtor's Counsel: Narissa A. Joseph, Esq.
LAW OFFICE OF NARISSA A. JOSEPH
305 Broadway
Suite 1001
New York, NY 10007
Tel: 212-233-3060
Fax: 646-607-3335
Email: njosephlaw@aol.com
Total Assets: $1,128,600
Total Liabilities: $699,121
The petition was signed by Morias Dicks as president.
The Debtor listed DEP located at 59-17 Junction Boulevard,
13th Floor Elmhurst, NY as its only unsecured creditor holding a
claim of $16,000.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/TDJOXFA/1778_Dean_St_LLC__nyebke-23-43261__0001.0.pdf?mcid=tGE4TAMA
1982 INVESTMENT: Court Approves Disclosure Statement
----------------------------------------------------
Judge Magdeline D. Coleman has entered an order granting 1982
Investment LLC's motion for approval of the Disclosure Statement
and for the fixing of dates for the filing of acceptances,
rejections or objections to the plan.
The First Amended Disclosure Statement filed is approved.
October 6, 2023, at 5:00 p.m., is fixed as the deadline by which
ballots must be received in order to be considered as acceptances
or rejections of the Plan.
Oct. 13, 2023, is fixed as the date by which the Debtor must file
the Report of Plan Voting.
Oct. 13, 2023, is fixed as the deadline for filing and serving
written objections to the confirmation of the Plan.
Oct. 18, 2023, at 11:30 a.m., is fixed as the date and time for the
hearing on confirmation of the Plan, to be held remotely by video
conference.
About 1982 Investment
1982 Investment LLC is a Single Asset Real Estate (as defined in 11
U.S.C. Sec. 101(518)).
1982 Investment filed a petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. E.D. Pa. Case No. 22-13397) on Dec. 21,
2022. In the petition filed by Mark Allen, as manager, the Debtor
reported assets between $1 million and $10 million and liabilities
between $100,000 and $500,000.
The Debtor is represented by Michael A. Cibik, Esq. of Cibik Law,
P.C.
2125 FLATBUSH: Hires Rachel S. Blumenfeld PLLC as Counsel
---------------------------------------------------------
2125 Flatbush Ave., Inc. seeks approval from the U.S. Bankruptcy
Court for the Eastern District of New York to employ The Law Office
of Rachel S. Blumenfeld PLLC as counsel.
a. give advice with respect to the powers and duties of the
Debtor and the continued management of its property and affairs;
b. negotiate with creditors, work out a plan of
reorganization, and take the necessary legal steps in order to
effectuate such a plan;
c. prepare legal papers;
d. appear before the bankruptcy court and represent the Debtor
in all matters pending before the court, including dischargeability
actions, judicial lien avoidance, relief from stay actions, or any
other adversary proceedings;
e. represent the Debtor, if need be, in connection with
obtaining post-petition financing;
f. take any necessary action to obtain approval of a
disclosure statement and confirmation of a plan of reorganization;
and
g. perform other legal services.
The firm will be paid at these rates:
Rachel S. Blumenfeld, Esq. $525 per hour
Of counsel $450 per hour
Paraprofessional $150 per hour
The firm received from the Debtor a retainer of $9,238.
Rachel Blumenfeld, Esq., disclosed in a court filing that her firm
is a "disinterested person" pursuant to Section 101(14) of the
Bankruptcy Code.
The firm can be reached at:
Rachel S. Blumenfeld, Esq.
LAW OFFICE OF RACHEL S. BLUMENFELD
26 Court Street, Suite 2220
Brooklyn, NY 11242
Tel: (718) 858-9600
Fax: (718) 858-9601
About 2125 Flatbush Ave., Inc.
2125 Flatbush Ave, Inc., filed a voluntary Chapter 11 petition
(Bankr. E.D.N.Y. Case No. 19-47277) on December 3, 2019, and is
represented by Bruce Weiner, Esq., at Rosenberg Musso & Weiner,
LLP.
2127 FLATBUSH: Hires Rachel S. Blumenfeld PLLC as Counsel
---------------------------------------------------------
2127 Flatbush Ave., Inc. seeks approval from the U.S. Bankruptcy
Court for the Eastern District of New York to employ The Law Office
of Rachel S. Blumenfeld PLLC as counsel.
a. give advice with respect to the powers and duties of the
Debtor and the continued management of its property and affairs;
b. negotiate with creditors, work out a plan of
reorganization, and take the necessary legal steps in order to
effectuate such a plan;
c. prepare legal papers;
d. appear before the bankruptcy court and represent the Debtor
in all matters pending before the court, including dischargeability
actions, judicial lien avoidance, relief from stay actions, or any
other adversary proceedings;
e. represent the Debtor, if need be, in connection with
obtaining post-petition financing;
f. take any necessary action to obtain approval of a
disclosure statement and confirmation of a plan of reorganization;
and
g. perform other legal services.
The firm will be paid at these rates:
Rachel S. Blumenfeld, Esq. $525 per hour
Of counsel $450 per hour
Paraprofessional $150 per hour
The firm received from the Debtor a retainer of $9,238.
Rachel Blumenfeld, Esq., disclosed in a court filing that her firm
is a "disinterested person" pursuant to Section 101(14) of the
Bankruptcy Code.
The firm can be reached at:
Rachel S. Blumenfeld, Esq.
LAW OFFICE OF RACHEL S. BLUMENFELD
26 Court Street, Suite 2220
Brooklyn, NY 11242
Tel: (718) 858-9600
Fax: (718) 858-9601
About 2127 Flatbush Ave., Inc.
The Debtor is a Single Asset Real Estate (as defined in 11 U.S.C.
Section 101(51B)). The Debtor is the owner of real property located
at 2127 Flatbush Avenue, Brooklyn, New York valued at $374,000.
2127 Flatbush Ave Inc. in Brooklyn, NY, filed its voluntary
petition for Chapter 11 protection (Bankr. E.D.N.Y. Case No.
23-42884) on August 13, 2023, listing $374,000 in assets and
$1,331,658 in liabilities. Gene Burshtein as owner, signed the
petition.
Judge Elizabeth S. Stong oversees the case.
LAW OFFICE OF RACHEL S. BLUMENFELD PLLC serve as the Debtor's legal
counsel.
2M RESEARCH: Claims to be Paid From Available Cash and Income
-------------------------------------------------------------
2M Research Services LLC and Marcus E. Martin submitted a First
Amended Joint Plan of Reorganization.
The Plan is a joint plan of reorganization filed by the Debtors to
provide for the reorganization of both Debtors. The Debtors intend
to continue their businesses after the Confirmation Date. Marcus
Martin ("Martin") founded 2M Research Services, LLC ("2M") in 2011
as a Texas limited liability company. 2M is in the business of
contracting with agencies of the United States to provide services
related to (a) technical assistance, (b) policy evaluation and
research, and (c) health information technology and advanced
analytics.
This Plan is intended to resolve all Claims against the Debtors
and/or property of the Debtors of whatever character, whether
contingent or liquidated, or whether allowed by the Bankruptcy
Court pursuant to Bankruptcy Code Section 502(a).
Only Allowed Claims (as defined above) will receive treatment
afforded by the Plan. Allowed Secured Claims will be paid in full
with interest over the term of the Plan, with the exception of a
home mortgage Claim against Marcus E. Martin, which will be paid
according to its pre-Petition Date terms. Unsecured Claimants of 2M
will receive a pro rata share of a pool of cash totaling $10,000.00
over five years while Unsecured Claimants of Martin will receive a
pro rata share of a pool of cash totaling $2,500.00.
Claims against 2M Research Services, LLC, Case No. 23-40271
Under the Plan, Class 2M 14 Allowed General Unsecured Claims will
be paid monthly over 60 months on a Pro Rata basis out of
$10,000.00 per month, commencing on the first day of the first
month following the Effective Date and continuing on the first day
of each month thereafter until the expiration of 60 months.
Claims against Marcus E. Martin, Case No. 23-40272
Under the Plan, Class MARTIN 9 Allowed General Unsecured Claims
will be paid monthly over 60 months on a Pro Rata basis out of
$2,500.00 per month, commencing on the first day of the first month
following the Effective Date and continuing on the first day of
each month thereafter until the expiration of 60 months.
The Debtors will make all payments required under the Plan from
available cash and income from the business operations of 2M and
Martin.
Proposed Attorneys for the Debtors:
Joyce W. Lindauer, Esq.
Joyce W. Lindauer Attorney, PLLC
1412 Main Street, Suite 500
Dallas, TX 75202
Telephone: (972) 503-4033
Facsimile: (972) 503-4034
A copy of the Plan of Reorganization dated September 6, 2023, is
available at https://tinyurl.ph/ddnGF from PacerMonitor.com.
About 2M Research Services
2M Research Services, LLC, a company in Mansfield, Texas, sought
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr.
N.D. Tex. Case No. 23-40271) on Jan. 30, 2023. In the petition
signed by Marcus Martin, manager and member, the Debtor disclosed
up to $10 million in both assets and liabilities.
Judge Mark X. Mullin oversees the case.
The Debtor tapped Roquemore Skierski, PLLC, and Joyce W. Lindauer
Attorney, PLLC, as legal counsel.
5200 SAMPLE: Wins Interim Cash Collateral Access
------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida,
West Palm Beach Division, authorized 5200 Sample Road, LLC to use
cash collateral on an interim basis in accordance with the budget,
with a 10% variance.
The Debtor is a party to a UCC-1 with ODK Capital, LLC in which ODK
may purport to have a security interest in the secured assets
including any and all assets of the Debtor whether now owned or
hereafter acquired or arising. In support of the agreement and as
perfection of the purported lien thereunder, the Court finds that a
UCC-1 Financing Statement was filed on July 9, 2022, in which ODK
claims a security interest in the collateral.
The Debtor is a party to a UCC-1 with IOU Funding, LLC in which IOU
may purport to have a security interest in the secured assets
including any and all assets of the debtor whether now owned or
hereafter acquired or arising.
The Debtor is a party to a UCC-1 with Fundamental Capital, LLC in
which Fundamental may purport to have a security interest in
accounts and accounts receivable of the Debtor. In support of the
agreement and as perfection of the purported lien thereunder, the
Court finds that a UCC-1 Financing Statement was filed on October
26, 2022, in which Fundamental claims a security interest in the
collateral.
The Debtor is a party to a UCC-1 with the U.S. Small Business
Administration in which the SBA may purport to have a security
interest secured assets including accounts, receivables, and
deposit accounts of Debtor. In support of the foregoing agreement
and as perfection of the purported lien thereunder, the Court finds
that a UCC-1 Financing Statement was filed on August 20, 2020, in
which the SBA claims a security interest in the collateral.
During the pendency of the bankruptcy and until further Court
Order, all pre-petition and post-petition income will be turned
over and paid to the Debtor for deposit into the Debtor in
Possession bank accounts.
As adequate protection for and to the extent of the Debtor's use of
"cash collateral" pursuant to the Order, ODK, IOU, Fundamental and
SBA, are granted, as of the Petition Date, a replacement lien to
the same extent as any pre-petition lien, pursuant to 11 U.S.C.
section 361(2) on the property set forth in its security
agreements, on an interim basis, without any prejudice to any
rights of the Debtor to seek to void the lien as to the extent,
validity, or priority of said liens.
A further interim hearing on the matter is set for October 31, 2023
at 1:30 p.m.
A copy of the court's order is available at
https://urlcurt.com/u?l=HH0SDl from PacerMonitor.com.
About 5200 Sample Road, LLC
5200 Sample Road, LLC sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. S.D. Cal. Case No. 23-13723) on May
12, 2023.
In the petition signed by Mark Alsentzer, manager, the Debtor
disclosed up to $100,000 in assets and up to $50,000 in
liabilities.
Judge Mindy A. Mora oversees the case.
Craig I. Kelley, Esq., at Kelley, Fulton & Kaplan, P.L., represents
the Debtor as legal counsel.
560 SEVENTH AVENUE: Court OKs Cash Collateral Access Thru Oct 16
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized 560 Seventh Avenue Owner Primary LLC to use cash
collateral on an interim basis in accordance with the budget, with
a 5% variance, through the date that is the earliest to occur of,
(a) a Cash Collateral Termination Event, (b) any Mezz Borrower Lift
Stay Termination Event , (c) the Final Hearing Date, or (d) October
16, 2023.
These events that constitute a "Cash Collateral Termination" event
include:
(i) the failure of the Debtor to make any payment under the
Interim Order to the Prepetition Senior Mortgage Lender within two
business days after such payment becomes due;
(ii)(A) the Second Interim Order or the Final Order (if
entered) ceases, for any reason (other than by reason of the
express written agreement by the Prepetition Senior Mortgage
Lender), to be in full force and effect in any material respect, or
(B) entry by the Court or any other court of an order vacating or
modifying the Interim Order or any final Order authorizing the use
of cash collateral in the case;
(iii) the Debtor supports in writing an action commenced by any
person against the Prepetition Senior Mortgage Lender with respect
to the Prepetition Loan Documents;
(iv) the Court will have entered an order granting relief from
the automatic stay to the holder or holders of any security
interest to permit foreclosure (or the granting of a deed in lieu
of foreclosure or the like) on any of the Debtor's assets which
have an aggregate value in excess of $100,000;
(v) the filing of any pleading by the Debtor in support of any
other person or entity's opposition to any motion filed in the
Court by the Prepetition Senior Mortgage Lender seeking
confirmation of the amount of its claims or the validity or
enforceability of the Prepetition Liens, except with regard to good
faith disputes over the payment of fees and expenses;
(vi) the failure of the Debtor to comply with any of the
material terms, provisions, conditions, covenants, or obligations
under the Interim Order;
(vii) the cash collateral is used other than for the purposes
set forth in the Second Interim Order and/or in accordance with the
Approved Budget (subject to any Variance);
(viii) any failure by the Debtor to obtain approval on any
Variance as required be paragraph 4 of the Second Interim Order;
(ix) any failure by the Debtor to pay any invoices issued by
the Prepetition Senior Mortgage Lender as and when due;
(x) unless otherwise agreed to in writing by the Prepetition
Senior Mortgage Lender in its sole discretion, the Debtor seeks
entry of an order authorizing the Debtor to obtain postpetition
secured financing secured by any liens priming or senior to those
of the Prepetition Senior Mortgage Lender pursuant to 11 U.S.C.
Section 364(d)(1); and
(xi) the dismissal of the Debtor's bankruptcy case or the
conversion of the case to a case under chapter 7 of the Bankruptcy
Code.
The assets of the Margaritaville Resort Times Square Hotel are
subject to a first mortgage lien held by OWS CRE Funding I, LLC,
the Prepetition Senior Mortgage Lender, to secure a loan issued in
2021 by the Original Lender in the total sum of $167 million, since
reduced to a current balance of $156.652 million, plus accrued and
unpaid interest thereon and fees, expenses, charges, indemnities,
and other costs and obligations incurred in connection therewith.
As more fully set forth in the Prepetition Loan Documents, the
Prepetition Senior Mortgage Lender holds first priority liens on
and security interests in the "Collateral" under and as defined in
the Prepetition Mortgage Loan Agreement.
To secure the Diminution Claim, the Prepetition Senior Mortgage
Lender, is, solely to the extent of the Diminution Claim, granted
valid, perfected, postpetition security interests and liens in and
on (a) all of the Prepetition Collateral, (b) the DIP Account, and
(c) the Existing Accounts, provided, however, the Replacement Liens
(x) will only be and remain subject and subordinate to the
Carve-Out; and (y) will not apply to any claims or causes of action
arising under Sections 544, 545, 547, 548, 49, an 550 of the
Bankruptcy Code or any other similar state or federal law or the
proceeds thereof.
As further adequate protection for and solely to the extent of the
Diminution Claim, the Prepetition Senior Mortgage Lender is granted
(effective upon the date of this Interim Order) a superpriority
claim with priority over all administrative expense claims and
unsecured claims against the Debtor or its estate, now existing or
hereafter arising, of any kind or nature whatsoever.
A final hearing on the matter is set for October 5, 2023 at 2 p.m.
A copy of the order is available at https://urlcurt.com/u?l=iovsTN
from PacerMonitor.com.
About 560 Seventh Avenue Owner Primary
560 Seventh Avenue Owner Primary LLC wns and operates the
Margaritaville Resort Times Square Hotel located at 560 Seventh
Avenue, New York, NY.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. N.Y. Case No. 23-11289) on August 12,
2023. In the petition signed by Stehian Pomerantz, president, the
Debtor disclosed up to $500 million in both assets and
liabilities.
Judge Philip Bentley oversees the case.
Kevin J. Nash, Esq., at GOLDBERG WEPRIN FINKEL GOLDSTEIN LLP,
represents the Debtor as legal counsel.
8300 HOLDING: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: 8300 Holding Group, LLC
f/k/a Webster Real Estate Holding Group, LLC
8300 Highway 19 North
Collinsville, MS 39325
Chapter 11 Petition Date: September 14, 2023
Court: United States Bankruptcy Court
Southern District of Mississippi
Case No.: 23-02116
Judge: Hon. Katharine M. Samson
Debtor's Counsel: Craig M. Geno, Esq.
LAW OFFICES OF CRAIG M. GENO, PLLC
587 Highland Colony Parkway
Ridgeland, MS 39157
Tel: 601-427-0048
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Robert M. Manners, President of
Providence Management, Inc., Manager of Meridian Holding Group,
LLC.
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/RMAZJNY/8300_Holding_Group_LLC__mssbke-23-02116__0001.0.pdf?mcid=tGE4TAMA
AKUMIN INC: Signs Separation Agreement With Former CCAO
-------------------------------------------------------
Rohit Navani, the chief corporate affairs officer of Akumin Inc.,
entered into a separation agreement and general release on Sept. 7,
2023, with the Company. Under the terms of the Separation
Agreement, Mr. Navani submitted to the Company a Notice of
Resignation pursuant to section 2.1(1) of the Employment Agreement
between him and the Company dated Nov. 15, 2017, as amended. The
Notice of Resignation became effective on Sept. 7, 2023.
Pursuant to the terms of the Separation Agreement, and subject to
Mr. Navani's compliance with his continuing obligations under the
Employment Agreement and the Severance Agreement, the Company
agreed to (i) waive the Resignation Notice Period required by
section 2.1(1) of the Employment Agreement; (ii) waive any
entitlement to recover Mr. Navani's residential relocation
expenses; and (iii) pay Mr. Navani the gross amount of $450,000,
minus legally required withholdings, in equal bi-weekly
installments over a 12-month period, provided that if Mr. Navani
commences any employment, consultancy, or other arrangement
resulting in compensation for his services by a counterparty, he
will immediately notify the Company of the date of commencement of
the engagement. Upon receipt of such notice, (A) if the Company
determines that the business of the Counterparty is competitive to
the business of the Company, then as of the Commencement Date, Mr.
Navani's non-competition obligations to the Company under the
Employment Agreement will end and Company shall have no obligation
to pay any remaining Consideration Installments, or (B) if the
Company determines that the business of the Counterparty is not
competitive to the business of the Company, and the remuneration
paid by the Counterparty to Mr. Navani is less than the remaining
Consideration Installments, then as of the Commencement date, the
Company will pay Mr. Navani the difference between such
remuneration and the remaining Consideration Installments. If such
remuneration exceeds the remaining Consideration Installments, then
the Company shall have no obligation to pay any remaining
Consideration Installments.
In addition, Mr. Navani will continue to receive his current health
and insurance benefits for one year after the Separation Date, or
the Commencement Date, whichever is earlier.
All Stock Options held by Mr. Navani that were outstanding but
unvested as of the Separation Date became null, void and of no
effect on such date. The Expiry Date (as defined in the Stock
Option Plan) of all Stock Options held by Mr. Navani that were
vested as of the Separation Date will be the earlier of the Expiry
Date shown on the relevant Notice of Grant (as defined in the Stock
Option Plan) and the date 30 days following the Separation Date.
All Restricted Share Units held by Mr. Navani that were unvested as
of the Separation Date vested on the Separation Date and will be
settled in accordance with Section 4.1 of the RSU Plan.
Under the terms of the Separation Agreement, Mr. Navani may revoke
the Separation Agreement on or before the seventh day after its
execution on Sept. 7, 2023.
About Akumin
Akumin Inc. -- www.akumin.com -- provides fixed-site outpatient
diagnostic imaging services through a network of owned and/or
operated imaging locations; and outpatient radiology and oncology
services and solutions to approximately 1,000 hospitals and health
systems across 48 states. Its imaging procedures include magnetic
resonance imaging ("MRI"), computerized tomography ("CT"), positron
emission tomography, ultrasound, diagnostic radiology (X-ray),
mammography, and other related procedures. Akumin's cancer care
services include a full suite of radiation therapy and related
offerings.
Akumin reported a net loss of $151.58 million for the year ended
Dec. 31, 2022, compared to a net loss of $34.81 million for the
year ended Dec. 31, 2021.
* * *
As reported by the TCR on Aug. 22, 2023, S&P Global Ratings lowered
all of its ratings on Akumin Inc., including its issuer credit
rating on the company to 'CCC' from 'B-'. S&P said the negative
outlook reflects the risk that, absent a significant operating
improvement, the Company's debt might not be sustainable.
ALCOA CORP: S&P Affirms 'BB+' Issuer Credit Rating, Outlook Pos.
----------------------------------------------------------------
S&P Global Ratings affirmed all its ratings on Alcoa Corp.,
including the 'BB+' issuer credit rating.
The positive outlook reflects S&P's view that it expects leverage
to trend back toward 2x in the second half of 2024 as the company's
bauxite mine plan is approved in the coming quarters.
S&P expects debt to EBITDA to be above 3x this year, driven by
weaker metal prices and elevated costs, particularly in the alumina
business. Challenging market conditions led to a sharp decline in
earnings as realized aluminum and alumina prices declined, high
energy prices curtailed capacity, and high-cost raw materials (such
as coke and pitch) are still working through the system.
While declining raw material prices should provide some relief in
the second half of the year, the delay in the approval of the
company's Western Australia mine plan will continue to impair the
company's production costs and profitability over the next 12
months. S&P anticipates Alcoa will generate EBITDA of about $600
million-$700 million in 2023 before recovering to about $1.2
billion-$1.5 billion in 2024. As a result, S&P expects debt to
EBITDA to peak above 3x by the end of 2023 then recover to 2x in
2024 once the bauxite issue is resolved and operations can resume
mining higher grades.
S&P is uncertain about the timing for approving the new mine plan
to maintain operations at the Huntly and Willowdale bauxite mines.
In addition to the Western Australian government's statutory annual
mine approval process, a third party has referred the company's
mine plans to the Western Australian Environmental Protection
Authority (WA EPA) for assessment. This has further delayed the
approval process and deviates from previous approval processes.
Concurrently, the company shifted to mining lower bauxite grades
under areas approved in the existing plan. One of its five
digesters at Kwinana will remain curtailed during this time. It was
taken offline following a gas shortage in January 2023. These
actions increase costs because the company needs more bauxite and
caustic soda than typical to produce the alumina grades required
from the lower-grade bauxite. This burden of heavier processing
comes when raw materials, particularly caustic soda, are at high
prices. The timing to resolve the mine approval process is unclear,
but the company does not expect the unfavorable impact from lower
bauxite grades to be resolved until at least mid-2024.
The recent improvement in the company's balance sheet provides
cushion following recent weak earnings. While credit cushion has
declined and EBITDA has dropped about 80% compared to a year ago,
S&P expects debt to EBITDA to peak at about 3.5x. This compares
similarly to the previous downturn in 2020, when leverage rose to
3.2x, but the company had $3.7 billion of debt compared to $2.1
billion currently. The bauxite issue and weaker market conditions
have resulted in four successive quarters of pressured EBITDA
generation, with S&P Global Ratings-adjusted EBITDA of $615 million
as of June 2023, compared to $3.6 billion for the same period a
year ago. The company holds a large cash balance of $1 billion as
of the end of the second quarter, and S&P expects its liquidity
position to stay solid.
Since separating from Arconic Corp. in late 2016, Alcoa has used
its cash flow to restructure its operations, contribute to and
freeze some pension obligations, and build large cash balances. In
the last 2 years, the company improved its balance sheet and built
a buffer, sustaining leverage below 1x primarily by reducing
pension obligations, maintaining high cash balance and stronger
earnings. This buffer provides cushion to absorb ongoing headwinds
the company is facing.
The positive outlook reflects S&P's view that leverage should trend
back toward 2x in the second half of 2024 as the company's bauxite
mine plan is approved in the coming quarters.
S&P said, "While Alcoa's credit metrics are currently under
pressure and a higher rating could take longer to achieve, our
outlook reflects a multiyear view that incorporates metal price
volatility and the cyclicality of the aluminum industry. The
positive outlook is based on our assessment that the company's
credit profile has strengthened to withstand a cyclical downturn or
period of depressed earnings."
S&P could revise its outlook on Alcoa to stable in the next 12
months if:
-- Its S&P Global Ratings-adjusted debt to EBITDA remains above 3x
for another year, which S&P believes could occur if there is no
resolution for the company's mine plan or the realization of a
large Australian tax liability; and
-- The company sustains negative free operating cash flow in 2024
due to lower EBITDA, and it incurs additional debt because of
unexpectedly weak market conditions.
S&P could raise its ratings on Alcoa in the next 12 months if:
-- It improves debt to EBITDA to about 2x or less, providing it
with a sufficient cushion to absorb various headwinds like earnings
swings, high capital intensity, or any Australian tax liability;
and
-- It sustains EBITDA margins above 15% and generates a return on
capital approaching a double-digit percent, indicating good
profitability from its world-class upstream bauxite and alumina
assets and improved returns from its large fleet of smelters.
AMYRIS INC: Hires Stretto Inc. as Administrative Advisor
--------------------------------------------------------
Amyris, Inc. and its affiliates seek approval from the U.S.
Bankruptcy Court for the District of Delaware to employ Stretto,
Inc. as administrative advisor.
The firm will provide these services:
a. assist with, among other things, solicitation, balloting
and tabulation of votes, and prepare any related reports in support
of confirmation of a Chapter 11 plan;
b. prepare an official ballot certification and, if necessary,
testify in support of the ballot tabulation results;
c. assist with the preparation of the Debtor's schedules of
assets and liabilities and statements of financial affairs and
gather data in conjunction therewith;
d. provide a confidential data room;
e. manage and coordinate any distributions pursuant to a
Chapter 11 plan if designated as distribution agent under such
plan; and
f. provide claims analysis and reconciliation, case research,
depository management, treasury services, confidential online
workspaces or data rooms, and any related services otherwise
required by applicable law, governmental regulations, or court
rules or orders in connection with the Debtor's Chapter 11 case.
The firm received an advance retainer in the amount of $25,000.
Sheryl Betance, a senior managing director at Stretto, disclosed in
a court filing that her firm is a "disinterested person" pursuant
to Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Sheryl Betance
Stretto, Inc.
410 Exchange, Ste. 100
Irvine, CA 92602
Tel: (714) 716-1872
Email: sheryl.betance@stretto.com
About Amyris, Inc.
Amyris (Nasdaq: AMRS) -- http://www.amyris.com/-- is a leading
synthetic biotechnology company, transitioning the Clean Health &
Beauty and Flavors & Fragrances markets to sustainable ingredients
through fermentation and the company's proprietary
Lab-to-Market(TM) technology platform. This Amyris platform
leverages state-of-the-art machine learning, robotics and
artificial intelligence, enabling the company to rapidly bring new
innovation to market at commercial scale. Amyris ingredients are
included in over 20,000 products from the worldps top brands,
reaching more than 300 million consumers. Amyris also owns and
operates a family of consumer brands that is constantly evolving to
meet the growing demand for sustainable, effective and accessible
products.
Amyris, Inc, et al. sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Del. Lead Case No. 23-11131) on Aug. 9,
2023. The petitions were signed by Han Kieftenbeld as interim chief
executive officer & chief financial officer.
In the petition, Amyris disclosed $679,679,000 in assets and
$1,327,747,000 in liabilities.
Pachulski Stang Ziehl & Jones LLp serves as the Debtors' bankruptcy
counsel. Fenwick & West, LLP is the Debtorps corporate counsel. The
Debtors tapped PricewaterhouseCoopers LLP as their financial
advisor, while Intrepid Investment Bankers LLC serves as the
Debtorsp investment banker. Stretto, Inc. is the Debtors' claims,
noticing, solicitation agent and administrative adviser.
AMYRIS INC: Will Pay Creditor Group Attorney Fees Up to $750,000
----------------------------------------------------------------
Emily Lever of Law360 reports that biochemical company Amyris Inc.
Thursday, September 8, 2023, received the go-ahead from a Delaware
bankruptcy judge to reimburse up to $750,000 in attorney fees for
an ad hoc group of creditors who hold nearly $450 million of
Amyris' unsecured debt.
About Amyris
Amyris (Nasdaq: AMRS) -- http://www.amyris.com/-- is a leading
synthetic biotechnology company, transitioning the Clean Health &
Beauty and Flavors & Fragrances markets to sustainable ingredients
through fermentation and the company's proprietary
Lab-to-Market(TM) technology platform. This Amyris platform
leverages state-of-the-art machine learning, robotics and
artificial intelligence, enabling the company to rapidly bring new
innovation to market at commercial scale. Amyris ingredients are
included in over 20,000 products from the worldps top brands,
reaching more than 300 million consumers. Amyris also owns and
operates a family of consumer brands that is constantly evolving
to
meet the growing demand for sustainable, effective and accessible
products.
Amyris, Inc, et al. sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Del. Lead Case No. 23-11131) on Aug. 9,
2023. The petitions were signed by Han Kieftenbeld as interim
chief executive officer & chief financial officer.
In the petition, Amyris disclosed $679,679,000 in assets and
$1,327,747,000 in liabilities.
Pachulski Stang Ziehl & Jones LLp serves as the Debtors' bankruptcy
counsel. Fenwick & West, LLP is the Debtorps corporate counsel.
The Debtors tapped PricewaterhouseCoopers LLP as their financial
advisor, while Intrepid Investment Bankers LLC serves as the
Debtors' investment banker. Stretto, Inc., is the Debtors' claims,
noticing, solicitation agent and administrative adviser.
APPHARVEST PRODUCTS: Chapter 11 Asset Sale Approved
---------------------------------------------------
Alex Wittenberg of Law360 reports that Greenhouse agriculture
company AppHarvest Products LLC on Wednesday, September 7, 2023,
got conditional approval from a Texas bankruptcy judge to sell
three of its facilities to two separate bidders as part of a
Chapter 11 liquidation plan set for confirmation.
About AppHarvest Products
AppHarvest Products, LLC, and affiliates are a sustainable food
company founded as a public benefits corporation and based in
Appalachia that develop and operate some of the world's largest
high-tech indoor farms, all of which use robotics and artificial
intelligence to build a reliable, climate-resilient food system.
AppHarvest Products and its affiliates sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Texas Lead Case
No. 23-90745) on July 23, 2023. In the petition signed by Gary
Broadbent, chief restructuring officer, AppHarvest, Inc. disclosed
$609,804,000 in assets and $341,060,000 in liabilities.
Judge David R. Jones oversees the case.
The Debtors tapped Sidley Austin, LLP as general bankruptcy
counsel; Jackson Walker, LLP as local bankruptcy counsel and
conflicts counsel; Triple P RTS, LLC as financial advisor;
Jefferies, LLC as investment banker, and Stretto, Inc. as claims
agent.
The DIP Lender is represented by Rusty Brewer, Esq., at Amis, Patel
& Brewer, LLP.
ARCHDIOCESE OF NEW ORLEANS: Hires TMC Realty LLC as Broker
----------------------------------------------------------
Roman Catholic Church of The Archdiocese Of New Orleans seeks
approval from the U.S. Bankruptcy Court for the Eastern District of
Louisiana to employ TMC Realty, LLC d/b/a The Mcenery Company as
real estate broker.
The firm will market and sell the following Debtor's real
properties:
i. 400 N. Rampart St., New Orleans, LA 70112 (also known as 1043
Conti St., New Orleans, LA 70112) ("St. Jude Community Center");
ii. 1941 Dauphine St., New Orleans, LA 70116 ("Bishop Perry
Center");
iii. 2908 S. Carrollton Ave., New Orleans, LA 70118 ("Vacant
Lots Adjacent to Archbishop's Residence");
iv. 3003-3009 S. Carrollton Ave., New Orleans, LA 70118
("Catholic Bookstore");
v. 3017-3019 S. Carrollton Ave., New Orleans, LA 70118 ("Vacant
Lots Adjacent to Catholic Bookstore");
vi. 3200 Canal St., New Orleans, LA 70119 ("Sacred Heart of
Jesus Church"); and
vii. 1032 and 1042 S. Rampart St., New Orleans, LA 70113 (also
known as 1032 and 1042 Loyola Ave., New Orleans, LA 70113) (the
"Parking Lot").
The firm will be paid a commission of 5 percent to 6 percent of the
sales price.
S. Parkerson McEnery, a partner at TMC Realty, LLC d/b/a The
Mcenery Company, 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:
S. Parkerson McEnery, MAI
TMC Realty, LLC
d/b/a The McEnery Company
810 Union St., Fourth Floor
New Orleans, LA 70112
Phone: (504) 274-2664
Email: parke@mceneryco.com
About Roman Catholic Church of
The Archdiocese Of New Orleans
The Roman Catholic Church of the Archdiocese of New Orleans --
https://www.nolacatholic.org/ -- is a non-profit religious
corporation incorporated under the laws of the State of Louisiana.
Created as a diocese in 1793, and established as an archdiocese in
1850, the Archdiocese of New Orleans has educated hundreds of
thousands in its schools, provided religious services to its
churches and provided charitable assistance to individuals in need,
including those affected by hurricanes, floods, natural disasters,
war, civil unrest, plagues, epidemics, and illness. Currently, the
archdiocese's geographic footprint occupies over 4,200 square miles
in southeast Louisiana and includes eight civil parishes:
Jefferson, Orleans, Plaquemines, St. Bernard, St. Charles, St. John
the Baptist, St. Tammany, and Washington.
The Roman Catholic Church for the Archdiocese of New Orleans sought
Chapter 11 protection (Bankr. E.D. La. Case No. 20-10846) on May 1,
2020. The archdiocese was estimated to have $100 million to $500
million in assets and liabilities as of the bankruptcy filing.
Judge Meredith S. Grabill oversees the case.
Jones Walker, LLP and Blank Rome, LLP, serve as the archdiocese's
bankruptcy counsel and special counsel, respectively. Donlin,
Recano& Company, Inc., is the claims agent.
The U.S. Trustee for Region 5 appointed an official committee of
unsecured creditors on May 20, 2020. The committee is represented
by the law firms of PachulskiStangZiehl& Jones, LLP and Locke Lord,
LLP. Berkeley Research Group, LLC is the committee's financial
advisor.
ARCIMOTO INC: Agrees to Terminate President
-------------------------------------------
Arcimoto, Inc. and Jesse A. Fittipaldi, president, have mutually
agreed that Mr. Fittipaldi would separate from the Company
effective as of Sept. 1, 2023, as disclosed in a Form 8-K filed by
the Company with the Securities and Exchange Commission.
About Arcimoto
Arcimoto, Inc. was incorporated in the State of Oregon on Nov. 21,
2007. Over the past 16 years, the Company has developed
technologies, platforms, and vehicles aimed squarely at rightsizing
daily mobility. To date, the Company has introduced six vehicle
products built on the first Arcimoto platform that target specific
niches in the vehicle market: its flagship product, the Fun Utility
Vehicle, for everyday consumer trips; the Deliverator for last-mile
delivery and general fleet utility, the Flatbed, Arcimoto's
solution for a rightsized pickup truck, and the Rapid Responder for
emergency services and security.
Arcimoto reported a net loss of $62.88 million in 2022 following a
net loss of $47.56 million in 2021.
Portland, Oregon-based Deloitte & Touche LLP, the Company's auditor
since 2022, issued a "going concern" qualification in its report
dated April 14, 2023, citing that the Company has incurred
significant losses and does not have sufficient cash on hand to
meet its obligations as they come due, which raises substantial
doubt about its ability to continue as a going concern.
ASPIRA WOMEN'S: Regains Compliance With Nasdaq Listing Requirement
------------------------------------------------------------------
Aspira Women's Health Inc. received written notice from the Listing
Qualifications Staff of the Nasdaq Stock Market, LLC on Sept. 12,
2023, that the Company has regained compliance with the minimum
Market Value of Listed Securities of $35 million required for
continued listing on the Nasdaq Capital Market pursuant to Nasdaq
Listing Rule 5550(b)(2), based on achieving a market value of at
least $35 million from Aug. 25 to Sept. 11, 2023. The Notice also
indicated that because the Company is now in compliance with the
MVLS Requirement, Nasdaq considers the matter close.
As the Company previously reported on that certain Current Report
on Form 8-K filed on July 14, 2023 with the U.S. Securities and
Exchange Commission, the Company received on July 11, 2023, a
deficiency letter from the Staff notifying the Company that, for
the preceding 30 consecutive business days, the Company had not
been in compliance with the MVLS Requirement.
The Company said there can be no assurance that it will be
successful in maintaining its listing of its common stock on the
Nasdaq Capital Market.
About Aspira Women's Health
Formerly known as Vermillion, Inc., Aspira Women's Health Inc. --
http://www.aspirawh.com-- is transforming women's health with the
discovery, development and commercialization of innovative testing
options and bio-analytical solutions that help physicians assess
risk, optimize patient management and improve gynecologic health
outcomes for women. OVA1 plus combines its FDA-cleared products
OVA1 and OVERA to detect risk of ovarian malignancy in women with
adnexal masses. ASPiRA GenetiXSM testing offers both targeted and
comprehensive genetic testing options with a gynecologic focus.
With over 10 years of expertise in ovarian cancer risk assessment
ASPIRA has expertise in cutting-edge research to inform its next
generation of products. Its focus is on delivering products that
allow healthcare providers to stratify risk, facilitate early
detection and optimize treatment plans.
Aspira Women's reported a net loss of $27.17 million for the year
ended Dec. 31, 2022, compared to a net loss of $31.66 million for
the year ended Dec. 31, 2021. As of Dec. 31, 2022, the Company had
$17.37 million in total assets, $10.64 million in total
liabilities, and $6.73 million in total stockholders' equity.
Woodbridge, New Jersey-based BDO USA, LLP, the Company's auditor
since 2012, issued a "going concern" qualification in its report
dated March 30, 2023, citing that the Company has suffered
recurring losses from operations and expects to continue to incur
substantial losses in the future, which raise substantial doubt
about its ability to continue as a going concern.
ASPIRA WOMEN'S: Signs Consulting Agreement With Dr. Ryan Phan
-------------------------------------------------------------
Dr. Ryan Phan, the chief scientific and operating officer of Aspira
Women's Health Inc., previously notified the Company that he will
resign from these roles with the Company effective Sept. 15, 2023.
Effective Sept. 16, 2023, Dr. Phan will transition to an advisory
role at the Company, pursuant to an amended consulting agreement,
dated Sept. 7, 2023, between Dr. Phan and the Company.
Under the Agreement, Dr. Phan will provide the Company with advice
on clinical and scientific programs, as well as on regulatory
requirements for clinical lab regulations. He will also continue
to serve as the Company's lab medical director through Jan. 15,
2024. Under the Consulting Agreement, Dr. Phan will be entitled to
receive $20,000 per month, prorated for partial months.
In addition, the Consulting agreement also provides that (i)
options granted during Dr. Phan's service to the Company, including
during the time period during which he is performing services for
the Company under the Consulting Agreement, will accrue and vest
through Jan. 15, 2024 and (ii) Dr. Phan will have until Sept. 15,
2025 to exercise any vested options.
About Aspira Women's Health
Formerly known as Vermillion, Inc., Aspira Women's Health Inc. --
http://www.aspirawh.com-- is transforming women's health with the
discovery, development and commercialization of innovative testing
options and bio-analytical solutions that help physicians assess
risk, optimize patient management and improve gynecologic health
outcomes for women. OVA1 plus combines its FDA-cleared products
OVA1 and OVERA to detect risk of ovarian malignancy in women with
adnexal masses. ASPiRA GenetiXSM testing offers both targeted and
comprehensive genetic testing options with a gynecologic focus.
With over 10 years of expertise in ovarian cancer risk assessment
ASPIRA has expertise in cutting-edge research to inform its next
generation of products. Its focus is on delivering products that
allow healthcare providers to stratify risk, facilitate early
detection and optimize treatment plans.
Aspira Women's reported a net loss of $27.17 million for the year
ended Dec. 31, 2022, compared to a net loss of $31.66 million for
the year ended Dec. 31, 2021. As of Dec. 31, 2022, the Company had
$17.37 million in total assets, $10.64 million in total
liabilities, and $6.73 million in total stockholders' equity.
Woodbridge, New Jersey-based BDO USA, LLP, the Company's auditor
since 2012, issued a "going concern" qualification in its report
dated March 30, 2023, citing that the Company has suffered
recurring losses from operations and expects to continue to incur
substantial losses in the future, which raise substantial doubt
about its ability to continue as a going concern.
AULT ALLIANCE: Issues $2.2 Million Term Note to Investor
--------------------------------------------------------
Effective Sept. 8, 2023, Ault Alliance, Inc., issued to an
accredited investor a term note with a principal face amount of
$2,200,000.
The Note does not bear interest unless an event of default occurs
under the Note, as the Note was issued with an original issuance
discount. The maturity date of the Note is Sept. 25, 2023. The
Note contains a standard and customary event of default for failure
to make payments when due under the Note. The purchase price for
the Note was $2 million.
Repayment of the Note was secured by a guaranty provided by Ault &
Company, Inc., a related party, as well as by Milton C. Ault, the
executive chairman of the Company and the chief executive officer
of A&C.
About Ault Alliance Inc.
Ault Alliance, Inc. (formerly, BitNile Holdings, Inc.) is a
diversified holding company pursuing growth by acquiring
undervalued businesses and disruptive technologies with a global
impact. Through its wholly and majority-owned subsidiaries and
strategic investments, Ault Alliance owns and operates a data
center at which it mines Bitcoin and provides mission-critical
products that support a diverse range of industries, including oil
exploration, crane services, defense/aerospace, industrial,
automotive, medical/biopharma, consumer electronics, hotel
operations and textiles. In addition, Ault Alliance extends credit
to select entrepreneurial businesses through a licensed lending
subsidiary. Ault Alliance's headquarters are located at 11411
Southern Highlands Parkway, Suite 240, Las Vegas, NV 89141;
www.Ault.com.
Ault Alliance reported a net loss of $189.83 million for the year
ended Dec. 31, 2022, compared to a net loss of $23.04 million for
the year ended Dec. 31, 2021. As of March 31, 2023, the Company had
$526.91 million in total assets, $336.56 million in total
liabilities, and $190.34 million in total stockholders' equity.
New York, New York-based Marcum LLP, the Company's auditor since
2016, issued a "going concern" qualification in its report dated
April 17, 2023, citing that the Company has a working capital
deficiency, has incurred net 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.
AVANT DIAGNOSTICS: Hires Verstandig Law Firm as Counsel
-------------------------------------------------------
Avant Diagnostics, Inc. seeks approval from the U.S. Bankruptcy
Court for the District of Columbia to employ Verstandig Law Firm as
counsel.
The firm will provide these services:
a. prepare and file all necessary pleadings, motions, and other
court papers, on behalf of the Alleged Debtor;
b. negotiate with creditors, equity holders, and other
interested parties;
c. represent the Alleged Debtor in any adversary proceedings,
contested
matters, and other proceedings before this Honorable Court;
d. prepare a plan of reorganization on behalf of the Alleged
Debtor; and
e. tend to such other and further matters as are necessary and
appropriate in the prism of this case.
The firm will be paid at these rates:
Attorney $495 per hour
Paralegal $100 per hour
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Maurice B. VerStandig, Esq. at The Verstandig Law Firm, 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:
Maurice B. VerStandig, Esq.
THE VERSTANDIG LAW FIRM
1050 Connecticut Ave., NW Suite 500
Washington, D.C. 20036
Telephone: (301) 444-4600
Email: mac@mbvesq.com
About Avant Diagnostics, Inc.
Avant Diagnostics, Inc. in Washington DC, filed its voluntary
petition for Chapter 11 protection (Bankr. D. Colo. Case No.
23-00243) on August 29, 2023. MCNAMEE HOSEA, P.A. serve as the
Debtor's legal counsel. The Debtor hires The Verstandig Law Firm as
counsel.
AVENTURA PHASE: Obtains Court's CCAA Initial Stay Order
-------------------------------------------------------
The Superior Court of Justice (Commercial List) ("Court") made an
order granting Aventura Phase VII Inc. and its affiliates
protection pursuant to the Companies' Creditors Arrangement Act
("CCAA"). Pursuant to the Initial Order and the CCAA, Raymond
Chabot Inc. was appointed as a monitor for the Companies.
The initial order is available on the monitor's website at
https://www.raymondchabot.com/en/companies/public-records/aventura-phase-vii-inc-et-al/.
The Debtors may submit a plan of arrangement shortly or petition
the Court for an additional delay to submit a plan to their
creditors.
The Monitor can be reached at:
Raymond Chabot Inc.
Monitor
National Bank Tower
600 de La Gauchetiere Street West
Suite 2000
Montreal, Quebec H3B 4L8
Tel: 514-879-1385
Email: loiselle.mathieu@rcgt.com
Aventura Phase VII Inc. is a major housing complex in the City of
Quebec.
AVERY ASPHALT: Unsecureds Get Remaining Amount of Unsecured Fund
----------------------------------------------------------------
Avery Asphalt, Inc., et al., submitted a Disclosure Statement for
Debtors' First Amended Joint Plan of Liquidation dated September 5,
2023.
During the pendency of this case substantially all assets of the
Debtors, including the business of Avery Asphalt, were sold
pursuant to Bankruptcy Court order. Where there was no dispute
regarding the first position Secured status of the Claim of
Sunflower Bank, N.A. ("Sunflower"), certain sale proceeds were
distributed to Sunflower with Bankruptcy Court approval. The only
assets of the Debtors' bankruptcy estates that remain to be
liquidated are certain Causes of Action. The Agreed Order Granting
Application for an Order Authorizing Employment of R2 Advisors LLC
as Chief Restructuring Officer for the Debtors' Estates entered on
May 9, 2022. The company of R2 Advisors LLC remains employed as
Chief Restructuring Officer ("CRO") of the Debtors.
The Plan provides for the creation of two main pools of money: the
"Liquidation Proceeds" and the "Unsecured Creditor Fund." The
Liquidation Proceeds consist of all moneys, except for those
amounts in the Unsecured Creditor Fund. The Unsecured Creditor Fund
consists of $100,000.00 set-aside for the payment of general
Unsecured Claims pursuant to Bankruptcy Court order, any litigation
proceeds that the Debtors become entitled to, plus any additional
funds allocated to the Unsecured Creditor Fund by settlement and/or
Bankruptcy Court order from those moneys defined as the Disputed
Funds in the Plan. The Disputed Funds consist of moneys held in
trust by the Debtors pursuant to previous Bankruptcy Court orders,
including, but not limited to $6,000.00 from the sale of a 2013
Ford Explorer {docket no. 61), $7,745.00 from the sale of a 1990
Chevrolet pickup truck (docket no. 52), $120,000.00 from the Van
Buren Project Funds (as defined in the Plan), $123,543.81 from the
sale of titled vehicles in 2021, $260,000.00 from the sale of
titled vehicles in 2022, and any proceeds of sale from vehicles and
equipment which are the subject of any pending adversary
proceedings.
Under the Plan:
* Any Allowed Administrative Claims are to be paid first out of any
amount in the Unsecured Creditor Fund in excess of $100,000.00 and
then from the Liquidation Proceeds;
* Any Allowed Secured Tax Claims are to be paid out of the
Liquidation Proceeds;
* Any Allowed Priority Claims are to be paid pro-rata out of the
Unsecured Creditor Fund after payment of any Allowed Administrative
Claims.
* The Colorado Department of Labor and Employment's Allowed Secured
Claim against Avery Asphalt is to be paid out of the Liquidation
Proceeds;
* Sunflower's Claims are to be settled for $450,000.00 (the
"Sunflower Settlement Amount") which is to be paid first out of any
Liquidation Proceeds remaining after payment to any Allowed
Administrative Claims and senior Allowed Secured Claims and then
from any remaining portion of the Unsecured Creditor Fund in excess
of $100,000.00;
* The Allowed Secured Claim of Greenline CDF Subfund XXIII, LLC
("Greenline") is to be paid out of any Liquidation Proceeds
remaining after payments to any Allowed Administrative Claims, the
Sunflower Settlement Amount, and senior Secured Claims (with the
remaining amount of Greenline's Claim treated as an Unsecured Claim
under Class 7 of the Plan);
* The Allowed Claim of Nationwide Mutual Insurance Company
("Nationwide") will be paid first out of any Disputed Funds the
Bankruptcy Court may award to Nationwide with the remaining amount
of Nationwide's Allowed Claim treated as an Unsecured Claim;
* The remaining amount of the Unsecured Creditor Fund is to be
distributed on a pro-rata basis to any parties holding Allowed
Unsecured Claims against any of the Debtors.
Under the Plan, Class 4 consists of the Unsecured Claim of
Nationwide Mutual Insurance Company. Nationwide is the surety for
Avery Asphalt and issued pre-petition performance and payment bonds
on behalf of Avery Asphalt on the following construction projects:
(a) Contract #20-026 between Avery Asphalt and El Paso County,
Colorado (Bond No. 7901035077); (b) Contract #989-1909-001 between
Regional and USDOT, Federal Highways Administration, Eastern
Federal Lands High Division {Bond #BD7658 10); (c) Project No.
2020-PW-01, Saguaro West Phase 2 Mill and Pave between Regional and
Town of Cave Creek, County of Maricopa, State of Arizona (Bond
#BD765819); (d) Project No. 202-PW-02, Willow Springs Loop Pavement
Replacement between Regional and the Town of Cave Creek, County of
Maricopa, State of Arizona (Bond #70901034741); (e) Contract
#C009658, RAC Parking Lots Rehabilitation between Avery Asphalt
and the City of Colorado Springs, Colorado (Bond #BD7625 12); and
(f) Contract #T009736, Van Buren Safe Routes to School Pedestrian
and Bicycle Improvements (Bond #BD765808). Nationwide filed a Proof
of Claim on May 10, 2021 (claim no. 29) asserting an unsecured
contingent claim in the amount of $5,901, 161.30 in connection with
Bond 077, Bond 810, Bond 819, Bond 741, Bond 512, and Bond 736. The
amount of Nationwide's Claim is disputed. Other than the proceeds
of the projects set forth above, no estate property remains as
collateral or security for Nationwide's contingent claim.
Nationwide will be paid $85,000 out of the Disputed Funds pursuant
to settlement and/or as ordered by the Bankruptcy Court in full and
final satisfaction of its Allowed Secured Claim, if any. The
remaining amount of Nationwide's Allowed Claim, if any, will be
treated as an Unsecured Claim under Class 7 of this Plan, in full
and final satisfaction of its Claim. The Debtors reserve all rights
to dispute the validity and amount of any portion of Nationwide's
Claim. Class 4 is impaired.
Class 7 is comprised of creditors holding Allowed Unsecured Claims
against the Debtors including any allowed penalty Claims held by
any taxing authority which are not related to actual pecuniary
loss. Allowed Class 7 Claims will receive their pro rata share of
the remaining amount of the Unsecured Creditor Fund after payment
of any Allowed Administrative Claims in full and final satisfaction
of their Claims. The Debtor may file motions to disallow any
Unsecured Claims listed as "Disputed" or Contested and for which a
proof of claim has been filed and shall treat such Claims in
accordance with the Bankruptcy Court's ruling on such motions and
subject to the provisions of this Plan. Class 7 is impaired.
Implementation and execution of the Plan is straightforward. The
Plan provides for the Liquidation Proceeds and the Unsecured
Creditor Fund to be distributed to creditors. The Liquidating
Trustee will also pursue any Causes of Action and distribute any
Litigation Proceeds to creditors as well. Pursuant to 11 U.S.C. s
1123(a)(5)(C) this Plan provides means for the Plan's
implementation through merger or consolidation of the Debtors which
will result in pooling of the assets of, and claims against,
Debtors; satisfying liabilities from the resultant common fund;
eliminating inter-company claims; and combining the creditors the
Debtors for purposes of voting on this Plan.
The Court's approval of this Disclosure Statement does not
constitute a decision on the merits of the Debtors' Plan. Issues
related to the merits of the Plan and its confirmation will be the
subject of a confirmation hearing, which has been scheduled for
October 25, 2023 at 1:30 pm prevailing Mountain Time before the
Honorable Michael E. Romero, United States Bankruptcy Court,
Courtroom C, 721 19th St., Denver, CO 80202, to determine whether
the Bankruptcy Court will confirm the Plan.
Any party that objects to confirmation of the Plan must file and
serve its objection and evidence in support thereof by October 4,
2023.
Attorneys for the Debtors:
David J. Warner, Esq.
WADSWORTH GARBER WARNER CONRARDY, P.C.
2580 West Main Street, Suite 200
Littleton, CO 80120
Tel: (303) 2 96-1999
A copy of the Disclosure Statement dated September 6, 2023, is
available at https://tinyurl.ph/BCxwB from PacerMonitor.com.
About Avery Asphalt
Avery Asphalt, Inc. is the main operating company and installs,
maintains, and improves roadways, parking lots, and other outdoor
surfaces. Its affiliates, Avery Equipment, LLC and Avery Holdings,
LLC, own the equipment and real estate used in its business,
respectively. Another affiliate, LBLA Ventures, Inc. is the
holding company for a non-operating Arizona asphalt company while
1401 S.
22nd Ave., LLC owns the real estate that was formerly used by
Regional Pavement Maintenance of Arizona, Inc. in its business.
The Debtors sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Colo. Lead Case No. 21-10799) on Feb.
19, 2021, with up to $50,000 in assets and up to $10 million in
liabilities. The bankruptcy was filed after a receiver was
appointed for all the Debtors. The receivership hampered Avery
Asphalt's ability to operate profitably.
Judge Michael E. Romero oversees the cases.
David J. Warner, Esq., at Wadsworth Garber Warner Conrardy, P.C.
and the Law Offices of Lars Fuller, PC serve as the Debtor's
bankruptcy counsel and special counsel, respectively.
AVIENT CORP: Moody's Rates New $732MM First Lien Term Loan 'Ba1'
----------------------------------------------------------------
Moody's Investors Service assigned a Ba1 rating to Avient
Corporation's $732 million senior secured first lien term loan
refinancing due 2029. Proceeds will be used to refinance the
company's existing balances on the $632.6 million ($427
outstanding) senior secured first lien term loan due 2026 and $575
million ($405 million outstanding) senior secured first lien term
loan due 2029. Avient also applied $100 million of cash from the
balance sheet to reduce the amount outstanding on the term loans.
The Ba2 Corporate Family Rating, Ba2-PD Probability of Default
Rating and Ba3 rating on the existing senior unsecured notes are
unchanged. The Speculative Grade Liquidity Rating (SGL) SGL-2 is
maintained. The outlook is stable.
"The proposed refinancing, debt reduction and extension of the 2026
maturity are credit positive as the transaction will result in
lower interest expense and extends the company's maturity profile,"
said Domenick R. Fumai, Moody's Vice President and lead analyst for
Avient Corporation.
Assignments:
Issuer: Avient Corporation
Senior Secured Term Loan B, Assigned Ba1
RATINGS RATIONALE
Avient Corporation's Ba2 rating incorporates the company's enhanced
scale, geographic reach and improved business profile following its
portfolio repositioning after the acquisitions of the Clariant
Masterbatch business and Dyneema, as well as divestitures of its
Performance Products and Solutions and Distribution businesses.
Avient has greatly reduced exposure to highly cyclical end markets
such as building and construction and substantially expanded its
presence in higher growth, less economically sensitive markets such
as packaging, healthcare and consumer with EBITDA now generated
entirely from specialty solutions. The credit profile reflects
metrics that are returning to levels more consistent with the
current rating and is further supported by the company's liquidity,
solid free cash flow generation and strong performance during a
challenging business environment.
Avient's rating is constrained by an acquisitive financial policy
that has led to significantly higher levels of absolute debt on the
balance sheet. Avient's capital allocation policy is expected to
focus on shareholder returns rather than debt reduction. The credit
profile is further limited by Avient's exposure to several end
markets that are highly cyclical including industrial, building and
construction and transportation, of which autos is the largest
concentration.
The stable outlook reflects Moody's expectations that the company
will execute on deleveraging, and that adjusted financial leverage
(Debt/EBITDA) returns towards 3.5x within 24 months from the close
of the transaction. Moody's also expects Avient to continue
generating solid free cash flow and maintain good liquidity,
including balance sheet cash and revolving credit availability, to
support operations. The stable outlook further assumes that the
Dyneema acquisition is successfully integrated.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Moody's could upgrade the rating with expectations for retained
cash flow-to-debt (RCF/Debt) sustained above 20% and adjusted
financial leverage sustained below 3.0x. An upgrade would also
require a commitment to more conservative financial policies.
The ratings could be downgraded with expectations for retained cash
flow-to-debt (RCF/Debt) sustained below 15%, adjusted financial
leverage sustained above 4.0x, or available liquidity below $500
million. Additionally, Moody's could downgrade the rating if there
is a significant debt-funded acquisition or failure to obtain the
targeted cost synergies.
Avient has good liquidity with pro forma cash of $429 million as
well as $227 million of availability under its revolving credit
facility (unrated) as of June 30, 2023. Moody's expects the company
to generate free cash flow of $110 million in 2023 and maintain a
minimum of $750 million in liquidity over the next 12 months.
The principal methodology used in this rating was Chemicals
published in June 2022.
Avient Corporation, headquartered in Avon Lake, Ohio, is a global
provider of customized polymers and services. Avient develops
performance enhancing additives, as well as liquid, fluoropolymer,
and silicone colorants. The company operates in two business
segments: 1) Color Additives & Inks and 2) Specialty Engineered
Materials. Avient participates in a diverse number of end markets
including transportation, industrial, healthcare, consumer and
building & construction. Avient reported revenue of $3.35 billion
for the last twelve months March 31, 2023.
AVINGER INC: Effects a 1-for-15 Reverse Common Stock Split
----------------------------------------------------------
The Board of Directors of Avinger, Inc. has determined to set the
reverse stock split ratio at 1-for-15. The Reverse Stock Split
became effective as of 5:00 p.m., Eastern Time on Sept. 11, 2023,
pursuant to a Certificate of Amendment to the Company's Amended and
Restated Certificate of Incorporation filed with the Secretary of
State of the State of Delaware on Sept. 11, 2023.
In connection with the Reverse Stock Split, the CUSIP number of the
Common Stock will be changed to 053734877. The Common Stock began
trading on The Nasdaq Capital Market on a reverse split-adjusted
basis on Sept. 13, 2023.
As previously disclosed, on Sept. 8, 2023, at a special meeting of
the stockholders of Avinger, Inc., the Company's stockholders
approved an amendment to the Company's Amended and Restated
Certificate of Incorporation to effect a reverse split of the
Company's common stock, par value $0.001 and authorized the Board
of Directors to, at their sole discretion, select a ratio of
between 1-for-5 and 1-for-20, inclusive.
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. As
of June 30, 2023, the Company had $16.94 million in total assets,
$23.53 million in total liabilities, and a total stockholders'
deficit of $6.59 million.
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.
B&B BUILDERS: Oct. 17 Hearing on Final Approval of Disclosures
--------------------------------------------------------------
Judge John W. Kolwe has entered an order conditionally approving
the Disclosure Statement of B&B Builders & Investors, LLC.
Oct. 10, 2023, is fixed as the last day for filing written
acceptances or rejections of the Plan.
Oct. 17, 2023, at 2:30 pm at 800 Lafayette Street, 3rd Floor,
Courtroom Five, Lafayette, Louisiana is fixed for the hearing on
final approval of the Disclosure (if a written objection has been
timely filed) and for the hearing on confirmation of the Plan.
Oct. 10, 2023 is fixed as the last day for filing and serving
written objections to the Disclosure Statement and confirmation of
the Plan.
About B&B Builders & Investors
B&B Builders & Investors, LLC, a company in Opelousas, La., filed
its voluntary petition for Chapter 11 protection (Bankr. W.D. La.
Case No. 23-50155) on March 9, 2023, with $500,000 to $1 million in
assets and $1 million to $10 million in liabilities. James W.
Bellard, managing member, signed the petition.
Judge John W. Kolwe oversees the case.
Tom St. Germain, Esq., at Weinstein & St. Germain, is the Debtor's
legal counsel.
B&E TRANSPORT: Hires Eric A. Liepins PC as Counsel
--------------------------------------------------
B&E Transport, LLC seeks approval from the U.S. Bankruptcy Court
for the Northern District of Texas to employ Eric A. Liepins, PC as
its bankruptcy counsel.
The firm will assist the Debtor in the orderly liquidating of
assets, reorganizing the claims of the estate, and determining the
validity of claims asserted in the estate.
The firm will be paid at these rates:
Eric A. Liepins $275 per hour
Paralegals and Legal Assistants $30 to $50 per hour
In addition, the firm will seek reimbursement for expenses
incurred.
The firm has been paid a retainer of $5,000 plus filing fee.
Eric A. Liepins, Esq., the sole shareholder of Eric A. Liepins, PC,
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:
Eric A. Liepins, Esq.
ERIC A. LIEPINS, PC
12770 Coit Road, Suite 850
Dallas, TX 75251
Tel: (972) 991-5591
Fax: (972) 991-5788
Email: eric@ealpc.com
About B&E Transport, LLC
B&E Transport LLC, filed a Chapter 11 bankruptcy petition (Bankr.
N.D. Tex. Case No. 23-20167) on August 24, 2023, disclosing under
$1 million in both assets and liabilities. The Debtor is
represented by Eric A. Liepins, PC.
B&G FOODS: Moody's Affirms B3 CFR & Rates New $500MM Unsec Notes B1
-------------------------------------------------------------------
Moody's Investors Service affirmed B&G Foods, Inc.'s B3 Corporate
Family Rating and B3-PD Probability of Default Rating. Moody's
downgraded the senior secured first lien revolving credit facility
and the senior secured first lien term loan ratings to B1 from Ba3,
and the unsecured notes ratings to Caa2 from Caa1. Moody's also
assigned a B1 rating to the proposed $500 million five year senior
secured notes. The outlook remains stable. The Speculative Grade
Liquidity rating remains SGL-3.
The $500 million senior secured notes offering is part of a partial
refinancing of the company's outstanding senior unsecured notes due
April 2025, with an expected remaining balance of $300 million on
the 2025 notes after the transaction is completed. The $300 million
remaining balance is pro forma for approximately $20 million of
open market repurchases of the 2025 unsecured notes after the end
of the second quarter. The pro forma remaining balance also
reflects an anticipated $555 million partial redemption of the 2025
unsecured notes funded with proceeds from the proposed $500 million
senior secured notes and cash on hand. Since the end of the second
quarter, B&G has sold shares through its "at-the-market" equity
offering program that has generated proceeds of approximately $74
million, adding additional cash to the balance sheet. The $555
million partial redemption of the 2025 unsecured notes is
conditional on the secured notes offering. The refinancing is
credit positive because it better positions the company to fully
refinance the remaining balance over the next 12 months. Moody's
expects the company to address the remaining balance by early to
mid 2024 as the revolving credit facility maturity springs forward
to January 2025 if the 2025 unsecured notes are not addressed by
then. B&G will likely do this with a combination of cash on hand,
cash generation, and revolver capacity. Additional equity issuance
and asset sales are also potential cash sources. The company could
also pursue a refinancing of the unsecured notes or the entire
capital structure that would improve the maturity profile, but it
would lead to higher interest bearing debt in the capital structure
given the company has relatively low interest rates on its
unsecured debt.
The B3 CFR rating affirmation reflects Moody's expectation of B&G's
debt/EBITDA leverage remaining elevated over the next 12-18 months.
The affirmation also reflects the challenging macro environment
that could continue to adversely affect volumes. However, B&G is
making deleveraging progress as debt/EBITDA (on a Moody's adjusted
basis) has decreased to 6.9x for the 12 month period ended July 1,
2023 (6.7x pro forma for the refinancing transaction and
aforementioned open market repurchases since the end of 2Q23), from
8.2x as of October 1, 2022. This deleveraging is being driven by
EBITDA growth, as pricing actions began to align with higher costs
in the fourth quarter of 2022, and supply chain performance is
normalizing this year. Debt reduction is also contributing to
deleveraging supported by free cash flow and the sale of Back to
Nature in January 2023, which generated $51 million of proceeds.
Despite these positive developments, the company is experiencing
top-line pressure, with volumes in the first half of fiscal 2023
declining at a low double-digit rate compared to the previous year.
These volume declines primarily reflect price elasticity,
particularly for Crisco and Green Giant, with relatively modest
price elasticity observed across the rest of the portfolio. They
also reflect the discontinuation and rationalization of
lower-margin products within the Green Giant frozen portfolio.
Moody's expects volume declines to moderate in the second half of
fiscal 2023 as the company aims to reduce pricing on Crisco
products during the fall baking season as commodity prices have
declined. This should result in less trade-down behavior as prices
will be set at lower price points. Additionally, the company will
begin to lap the Green Giant SKU rationalization by the end of the
3Q23. Moody's projects a 2-3% decline in revenues for 2023, with a
0-1% growth rate expected for 2024. Revenues could be lower than
projected as B&G's portfolio has high private label penetration and
B&G could face more volume pressure if consumer budgets tighten
further. EBITDA (on a Moody's adjusted basis) is projected to grow
at a low to mid-single-digit rate in 2023 and 2024. Moody's
anticipates modest deleveraging, with debt/EBITDA leverage
decreasing to a low to mid 6x range by the end of fiscal 2024. The
main driver behind this deleveraging will be the reduction of debt,
which will be supported by positive free cash flow.
The existing senior secured first lien debt and the existing senior
unsecured notes were both downgraded by one notch because of the
shift in the capital structure to more first lien debt as a result
of the proposed refinancing transaction. The mix shift weakens
recovery prospects for the first lien debt and senior unsecured
notes in the event of a default. The senior secured first lien debt
is rated B1, two notches above the B3 CFR, supported by the
effective priority relative to unsecured debt in the company's
capital structure. The secured credit facility and notes have a
first-lien security interest in substantially all assets of the
company and guarantees from all present and future domestic
subsidiaries. The Caa2 ratings for the company's senior unsecured
notes reflect their effective subordination relative to the
aforementioned first-lien debt.
Affirmations:
Issuer: B&G Foods, Inc.
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Assignments:
Issuer: B&G Foods, Inc.
Senior Secured Notes, Assigned B1
Downgrades:
Issuer: B&G Foods, Inc.
Senior Secured 1st Lien Revolving Credit Facility, Downgraded to
B1 from Ba3
Senior Secured 1st Lien Term Loan, Downgraded to B1 from Ba3
Senior Unsecured Notes, Downgraded to Caa2 from Caa1
Outlook Actions:
Issuer: B&G Foods, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
B&G's B3 CFR reflects the company's high financial leverage and
relatively aggressive financial policies, highlighted by large
dividend payments and the periodic use of debt to fund potentially
large acquisitions. B&G's willingness to pay a significant dividend
limits the company's ability to reduce debt and leverage with
internal cash flow generation. The rating also reflects B&G's small
scale relative to more highly rated industry peers, its acquisitive
growth strategy, and earnings vulnerability to inflationary and
volume pressures. B&G's debt/EBITDA leverage remains elevated at
6.9x for the LTM period ended July 1, 2023 as the company's
earnings are still recovering from the inflationary and supply
chain headwinds faced in 2021 and 2022. B&G's credit profile
benefits from relatively high margins, a broad food product
portfolio with low cyclical demand volatility, and a largely
successful track record of integrating acquisitions.
B&G's SGL-3 speculative grade liquidity rating reflects Moody's
expectation that the company will maintain adequate liquidity over
the next twelve months. Moody's projects positive free cash flow
(net of dividends) of $110-130 million in fiscal 2023, which
reflects a significant improvement compared to the $150 million of
negative free cash flow in fiscal 2022. The more than $250 million
increase will be primarily driven by a significant swing in working
capital, resulting from reduced costs and lower inventory levels.
The improved free cash flow also reflects lower cash dividends and
a modest EBITDA improvement, partially offset by the impact of
higher floating interest rates on its outstanding loans. Moody's
expects free cash flow to decline to $60-$80 million in fiscal 2024
as working capital is projected to be less of a positive cash flow
driver. Moody's 2024 free cash flow projection reflects the higher
interest burden associated with the $500 million proposed
refinancing (roughly $14 million of incremental interest expense
annualized). If B&G refinances the remaining debt in the capital
structure in 2024, it will likely face a higher interest burden
that would reduce free cash flow to less than $50 million absent
material earnings growth or debt reduction.
The company's liquidity is supported by $515 million of
availability on its $800 million revolving credit facility and $43
million of cash on the balance sheet as of July 1, 2023. Limited
covenant headroom negatively limits revolver availability to an
estimated $400-425 million (based on the current 8.0x net leverage
covenant). While there are no financial maintenance covenants under
the term loan, the revolving credit facility has financial
maintenance covenants, including a minimum consolidated interest
coverage ratio (EBITDA-to-interest) of 1.75x throughout the life of
the agreement and a maximum consolidated net leverage ratio test
(net debt-to-EBITDA as defined by the lenders). B&G amended the net
leverage covenant in the second quarter of 2022, increasing the
maximum net leverage to 8.0x for the quarter ending October 1,
2022, through the quarter ending September 30, 2023, then
decreasing to 7.5x for the quarter ending December 30, 2023, before
returning to 7.0x thereafter. Headroom under the net leverage
covenant was approximately 1.3x (per the credit agreement defined
calculation) at the end of the second quarter ended July 1, 2023
but Moody's projects headroom to be more limited in early 2024 when
the covenant steps down to 7.0x.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectation that B&G will
maintain debt-to-EBITDA leverage in the low to mid 6x range (on a
Moody's adjusted basis) over the next 12-18 months. The stable
outlook also reflects the expectation that the company will
maintain at least adequate liquidity over the next 12 months,
supported by projected positive free cash flow. Moody's also
assumes in the stable outlook that the company would obtain a
covenant amendment if necessary.
A rating upgrade could occur if B&G is able to improve operating
performance, including sustained organic revenue growth, higher
profitability, and improved liquidity, highlighted by increased
covenant headroom and a successful refinancing of its upcoming
maturities that would allow for consistent and comfortably positive
free cash flow. B&G would also need to sustain debt/EBITDA below
6.5x.
A rating downgrade could occur if cost pressures or volume declines
reduce earnings, liquidity deteriorates, refinancing risk
increases, or the financial policy becomes more aggressive. A
downgrade could also occur if EBITDA less capital
spending-to-interest is sustained below 1.5x, or free cash flow
deteriorates.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Consumer
Packaged Goods published in June 2022.
COMPANY PROFILE
B&G Foods, Inc. ("B&G", NYSE: BGS) based in Parsippany, New Jersey,
is a publicly traded manufacturer and distributor of a diverse
portfolio of largely branded, shelf-stable food products, many of
which have leading regional or national market shares in niche
categories. The company also has a significant presence in frozen
food following the 2015 acquisition of Green Giant and maintains a
small presence in household products. B&G Foods, Inc.'s brands
include Green Giant, Le Sueur, Crisco, Ortega, Clabber Girl, Maple
Grove Farms of Vermont, Cream of Wheat, Dash, Victoria, B&G, among
others. B&G Foods, Inc. sells to a diversified customer base
including grocery stores, mass merchants, warehouse clubs, dollar
stores, drug stores, the military and other foodservice outlets.
B&G Foods, Inc. generated net sales for the twelve months ended
July 1, 2023, of approximately $2.1 billion.
BAUSCH + LOMB CORP: Fitch Assigns 'BB-' Rating on Secured Term Loan
-------------------------------------------------------------------
Fitch Ratings has assigned 'BB-'/'RR1' ratings to Bausch + Lomb
Corporation's (BLCO) secured term loan and 'BB-'/'RR1' ratings to
its secured bonds. The net proceeds of which will be used to fund
BLCO's proposed $1.75 billion acquisition of Novartis' ocular
surface pharmaceuticals portfolio.
The Rating Watch is Evolving and may take longer than six months to
resolve.
KEY RATING DRIVERS
Acquisition to Increase Leverage: BLCO has announced that it plans
to acquire Novartis' ocular surface pharmaceuticals portfolio,
which includes Xiidra. This is a growing product for the treatment
of Dry Eye Disease. The acquisition will also include a mid-stage
developmental pharmaceutical product and AcuStream (an
investigational device intended to facilitate precise dosing and
accurate delivery of certain topical ophthalmic medications). Fitch
views the acquisition as strategically sound, as it increases the
company's presence in the ophthalmic pharmaceutical market.
However, it will increase leverage in the intermediate term.
BLCO's Ratings Tied to BHC's: The primary driver of BLCO's ratings
is Bausch Health Companies Inc. (BHC) 'CCC' Issuer Default Rating
(IDR) until the separation is finalized. Fitch views the
ringfencing and access and control factors to be porous, thereby
allowing BHC's credit profile to influence BLCO's. Until
separation, any changes in the linkage could lower BLCO's ratings.
Supply Chain/Inflation: Supply chain constraints and inflationary
pressures are moderating for many firms in the healthcare sector.
BLCO is generally managing these issues through building stocks of
raw materials and active pharmaceutical ingredients. In addition,
the company is adding redundancies in its suppliers.
Reliably Increasing Demand: Aging demographics, improved income
demographics in emerging markets, increasing digital screen times
and the ongoing increase in the incidence of diabetes will likely
drive low- to mid-single-digit growth in the demand for eye health
products and services during the intermediate term. A significant
number of BLCO's products enjoy leading market positions and strong
brand recognition. Consumables and contracted services account for
roughly 78% of BLCO's revenues, and the company's product portfolio
has only limited exposure to market exclusivity losses.
Pipeline to Support Growth: Innovation is important to remain
competitive in the eye health market. Fitch believes the company's
R&D efforts will help to drive intermediate- and long-term revenue
growth while also supporting margins. BLCO makes consistent and
significant investments in new product development. Its R&D efforts
span all three businesses with intensity geared more toward
surgical and ophthalmic pharmaceuticals. Fitch expects the company
will also continue to pursue innovation in its Vision Care business
with technological advancements being more incremental in nature.
Margin Expansion: Fitch assumes that margins will improve over the
forecast period. Improving sales mix and manufacturing efficiency
gains should increase gross margins. SG&A as a percent of sales are
forecast to decline, owing to strong management of other operating
costs. Increasing revenue should provide additional operating
leverage. In addition, less than 15% of BLCO's revenues are exposed
to branded pharmaceuticals pricing issues in the U.S.
Consistently Positive FCF: Advancing sales, improving margins,
solid working capital management and moderate capex requirements
should support consistently positive and increasing FCF. Fitch does
not expect that BLCO will pay dividends or engage in share
repurchases during the near term. Capital deployment will focus on
internal investment, external collaborations and targeted
acquisitions.
For a leading global eye health company, Fitch believes BLCO has
relatively minimal contingent liability risk regarding product
liability, intellectual property and other regulatory issues. Fitch
expects the company to reduce leverage primarily through debt
reduction and EBITDA growth.
DERIVATION SUMMARY
BLCO's 'B-'/Rating Watch Evolving rating is based on it being a
majority-owned subsidiary of Bausch Health until the separation.
Fitch views BLCO as a stronger subsidiary than the weaker parent
and notches BLCO's ratings by up by two from the consolidated
parent's IDR. The notching is based on Fitch's assessment of the
ringfencing as porous due to the lack of significant restrictive
investment or dividend covenants. Fitch also views access and
control as porous due to some overlapping Board of Directors
members. Until separation, BLCO's ratings will be influenced by
BHC's whose Rating Derivation is described in Fitch's release
"Fitch Downgrades Bausch Health to 'RD' and Subsequently Upgrades
to 'CCC' Post Distressed Exchange," dated Oct. 6, 2022.
BLCO is significantly smaller than Boston Scientific Corp.
(BBB+/Stable), Baxter International (BBB/Negative), Becton,
Dickinson & Company (BBB/Stable) and Zimmer Biomet Holdings, Inc.
(BBB/Stable). BLCO also operates in consumer health and
prescription pharmaceuticals, providing some additional sector
diversification compared with Boston Scientific and Zimmer Biomet.
It also presents a moderate degree of regulatory risk regarding
drug pricing. BLCO is somewhat less diversified than Becton,
Dickinson and Baxter. In addition, BLCO is solely focused on eye
health, while all of its peers address a number of disease markets,
with Zimmer Biomet also being somewhat less diversified than the
others. Zimmer Biomet and Becton, Dickinson have lower EBITDA
leverage than BLCO.
Parent-Subsidiary Linkage
The approach taken is a weak parent (BHC)/strong subsidiary (BLCO).
Using Fitch's PSL criteria, the agency concludes there is porous
ring fencing and porous access & control. As such, Fitch rates the
parent and subsidiary at the consolidated level while notching the
subsidiary's rating two notches above BHC's IDR.
KEY ASSUMPTIONS
- Mid- to high-single-digit organic revenue growth driven by the
uptake of new product commercialization moderate offset by
increased competitive pressure for some established products;
- Annual FCF generation greater than $400 million during the
forecast period with moderately improving operating EBITDA
margins;
- Dividends are not included in the forecast, but if instituted
would decrease FCF by the same amount as Fitch defines as cash flow
from operations-capex-dividends;
- Novartis portfolio acquisition increases EBITDA leverage.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Fitch viewing BLCO on a standalone basis;
- An upgrade at BHC.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Evidence of factors related to ring-fencing and access and
control that would lead Fitch to rate BLCO on a consolidated basis
with BHC or with a one notch uplift rather than two notches;
- A downgrade at BHC.
LIQUIDITY AND DEBT STRUCTURE
BLCO Liquidity: Fitch expects BLCO will have sufficient liquidity
in the near term with a $200 million draw on its $500 million,
five-year secured revolving credit facility and no near-term debt
maturities given a roughly $2.5 billion secured five-year term
loan. The company has mandatory annual amortization on its term
loan of $25 million. At June 30, 2023, the company had $384 million
of cash on hand.
Recovery and Notching Assumptions
The recovery analysis assumes that BLCO would be considered a going
concern in bankruptcy and that the company would be reorganized
rather than liquidated. Fitch estimates a going concern enterprise
value (EV) of $4.9 billion for BLCO and assumes that administrative
claims consume 10% of this value in the recovery analysis.
The going concern EV is based upon estimates of post-reorganization
EBITDA and the assignment of an EBITDA multiple. Fitch's estimate
of BLCO's going concern EBITDA at $700 million. The assumed going
concern EBITDA reflects Fitch's expectation of Xiidra's
contribution and the company experiences some shortfalls in
commercializing the R&D pipeline, thereby resulting in a
restructuring or default.
Fitch assumes a recovery EV/EBITDA multiple of 7.0x for BLCO. This
is generally in-line with the 6.0x-7.0x Fitch typically assigns to
medical device/specialty pharmaceutical manufacturers. In Fitch's
view, BLCO's operating environment does not face many of the
challenges that pure pharmaceutical companies often face.
Fitch applies a waterfall analysis to the going concern EV based on
the relative claims of the debt in the capital structure, and
assumes that the company would fully draw the revolvers in a
bankruptcy scenario. The senior secured credit facility, including
the term loans and revolver and the secured bonds, have outstanding
recovery prospects in a reorganization scenario and are rated
'BB-'/'RR1'/Rating Watch Evolving.
ISSUER PROFILE
BLCO is currently a majority-owned subsidiary of BHC and a leading
global eye health company with a portfolio of over 400 products.
The company has a global research, development, manufacturing and
commercial footprint of approximately 12,000 employees and a
presence in approximately 90 countries.
ESG Considerations
Bausch + Lomb Corporation has an ESG Relevance Score of '4' for
Exposure to Social Impacts due to pressure to contain health care
spending growth, highly sensitive political environment, and social
pressure to contain costs or restrict pricing, which has a negative
impact on the credit profile, and is relevant to the ratings in
conjunction with other factors. Pharmaceuticals account for less
than 15% of the firm's total sales.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery
----------- ------ --------
Bausch + Lomb
Corporation
senior secured LT BB- New Rating RR1
BCPE GRILL: Moody's Assigns First Time B3 Corporate Family Rating
-----------------------------------------------------------------
Moody's Investors Service assigned first time ratings to BCPE Grill
Parent, Inc. (" Fogo De Chao"), including a B3 corporate family
rating, B3-PD probability of default rating, B3 senior secured
first lien revolving credit facility rating and senior secured
first lien term loan B rating. The outlook is stable. Ratings are
subject to final review of documentation.
Fogo De Chao's proposed $550 million 7-year senior secured first
lien term loan B will be used toward the $1.1 billion purchase by
Bain Capital Private Equity (Bain Capital). Additional net proceeds
will come from issuance of $100 million perpetual preferred stock
and approximately $509 million of sponsor and management equity.
Pro forma for the transaction, Moody's adjusted last twelve-month
(LTM) debt/EBITDA is 5.8x. The ratings at Fogo De Chao, Inc. (Caa1
stable), a subsidiary of BCPE Grill Parent, Inc. will be withdrawn
upon closing of the transaction and repayment of its existing debt
instruments.
The B3 corporate family rating assignment reflects governance
considerations, including Fogo De Chao's new private equity
ownership upon closing of the proposed transaction with Bain
Capital. The company was assigned a CIS-4 reflecting the increased
duration of its debt maturities while its financial and liquidity
management strategies will be controlled by its new owners. Moody's
expects that Fogo De Chao's leverage will improve through earnings
growth driven by organic and new store additions over the next year
resulting in Moody's debt/EBITDA approaching 5.3x in 2024.
Assignments:
Issuer: BCPE Grill Parent, Inc.
Corporate Family Rating, Assigned B3
Probability of Default Rating, Assigned B3-PD
Senior Secured 1st Lien Term Loan, Assigned B3
Senior Secured 1st Lien Revolving Credit Facility, Assigned B3
Outlook Actions:
Issuer: BCPE Grill Parent, Inc.
Outlook, Assigned Stable
RATINGS RATIONALE
Fogo De Chao's B3 CFR reflects its weak interest coverage and high
leverage, pro forma for its acquisition by Bain Capital, of 1.2x
and 5.8x, respectively, due mainly to the $200 million increase in
debt to fund the transaction. The B3 CFR also reflects the
company's relatively small size and limited product diversity
relative to other rated restaurant chains. Fogo De Chao is also
subject to earnings volatility because of its high exposure to
commodities such as beef and other proteins. Nonetheless, the
ratings are supported by Fogo De Chao's strong operating margins,
which are attributable to its continuous service model (gaucho
chefs serving tableside) and churrasco style food preparation that
support lower operating costs relative to peers. Fogo De Chao
unique Brazilian steakhouse customer experience has created good
brand awareness within its core markets which are well spread
across the continental US and Brazil.
The stable outlook reflects that, despite potential pressures in
the casual dining segment which could lead to weaker consumer
demand, Fogo De Chao will maintain adequate liquidity, and
improving operating results that support deleveraging driven by
organic revenue growth and the contribution from new restaurants.
The company's adequate liquidity reflects Moody's expectation for
positive free cash flow after funding $55-$60 million of capex, and
its access to a $75 million secured revolver expiring in 2028 which
will be undrawn at close and not expected to be utilized.
The proposed term loan does not contain financial maintenance
covenants. In addition, it contains incremental facility capacity
up 100% of pro forma consolidated EBITDA (as bank defined), plus
voluntary prepayments, and unlimited amounts subject to 4.0x
additional first lien net leverage for pari debt, either 5.0x
secured net leverage or a 2.0x interest coverage ratio for junior
lien debt, or either 5.35x total net leverage or a 2.0x interest
coverage ratio for unsecured debt, third lien debt or debt secured
by non-Collateral. The credit agreement permits the transfer of
assets to unrestricted subsidiaries, to the extent permitted under
the carve-outs, subject to customary provisions with respect to
transfers of material intellectual property. The company has
limitations on restricted payments with exceptions including
amounts not exceeding 50% of EBITDA on a pro forma basis for the
most recently ended four fiscal quarter period. Any additional
restricted payments can be made so long as the net total net
leverage ratio on a pro forma basis is not greater than 3.1x.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could result in an upgrade include sustained
improvement in credit metrics and increased size, scale, and
geographic diversification. A higher rating would require
debt/EBITDA sustained under 5.5x and EBIT/interest expense near
1.75x. An upgrade would also require at least good liquidity and
positive free cash flow.
A downgrade could occur if operating performance sustainably
weakens or if financial strategies become aggressive, such as debt
financed dividends or leveraging the company to fund growth.
Specifically, debt/EBITDA sustained above 6.5x or EBIT/interest
expense below 1.25x.
Based in Plano, TX, BCPE Grill Parent, Inc. (dba "Fogo De Chao")
operates a Brazilian steakhouse ("Churrascaria") restaurant chain
with 60 restaurants in the U.S., 8 in Brazil, and 9 internationally
franchised restaurants in Mexico, Middle East and Equador. Revenue
for the LTM period ending July 2, 2023 was $595 million. Fogo De
Chao will be owned by Bain Capital Private Equity following the
transaction close.
The principal methodology used in these ratings was Restaurants
published in August 2021.
BIG BOY TOYS: Hires Emmett L. Goodman Jr. LLC as Counsel
--------------------------------------------------------
Big Boy Toys II, LLC seeks approval from the U.S. Bankruptcy Court
for the Middle District of Georgia to employ Law Office of Emmett
L. Goodman, Jr., LLC as counsel.
The firm will provide these services:
a. give the Debtor legal advice with respect to its powers and
duties as Debtor-in-Possession in the continued operation of its
business and management of its property;
b. prepare on behalf of the Debtor, as Debtor-in-Possession,
necessary applications, answers, reports, and other legal papers;
c. prepare motions, pleadings and applications, and to conduct
examinations incidental to the administration of the Debtor's
estate.
d. take any and all necessary action instant to the proper
preservation and administration of the estate;
e. assist the Debtor-in-Possession with the preparation and
filing of supplemental Schedules and Lists as may be appropriate;
f. take whatever action is necessary with reference to the use
by the Debtor of its property pledged as collateral, including cash
collateral, to preserve the same for the benefit of Debtor;
g. assert, as directed by Debtor, all claims Debtor has
against others; and
h. perform all other legal services for the Debtor as
Debtor-in-Possession which may be necessary; and it is necessary
for Debtor-in-Possession to employ attorneys for such professional
services.
The firm will be paid at the rate of $350 per hour, and will also
be reimbursed for reasonable out-of-pocket expenses incurred.
The firm was paid by the Debtor a retainer in the amount of
$6,000.
Daniel L. Wilder, Esq., a partner at Law Offices of Emmett L.
Goodman, Ir., LLC, 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:
Daniel L. Wilder, Esq.
LAW OFFICES OF EMMETT L. GOODMAN, IR., LLC
544 Mulberry Street, Suite 800
Macon, GA 31201-2776
Tel: (478) 745-5415
Fax: (478) 746-8655
Email: dwilder@goodmanlaw.org
About Big Boy Toys II, LLC
Big Boy Toys II, LLC is the owner of real estate property located
at 3050 N. Columbia St., Milledgeville, Ga., valued at $275,000.
The Debtor filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. M.D. Ga. Case No. 23-51073) on Aug. 9,
2023, with $1,811,500 in assets and $1,743,250 in liabilities. John
T. Stevens, IV, sole member, signed the petition.
Judge James P. Smith oversees the case.
Daniel L. Wilder, Esq., at Emmett L Goodman Jr. LLC represents the
Debtor as legal counsel.
BIO365 LLC: Unsecureds to Get $700K Over 5-Year Period
------------------------------------------------------
Bio365 LLC submitted a First Amended Plan of Reorganization.
Through the Plan, the Debtor proposes to continue operating its
business and, over time beginning on the Effective Date, make
Distributions to its Creditors from Exit Financing provided from
its current Chief Executive Officer Michael Klein, cash-on-hand,
Litigation Recoveries, and future operating revenue. The Plan
provides for three classes of claims and one class of interests.
The first class consists of the secured claim of the Northview
Capital, which the Debtor proposes to pay in full, upon the
Effective Date. The second class of claims consists of all priority
unsecured claims, which the Debtor proposes to pay in full, upon
the Effective Date. The third class consists of all general
unsecured claims, which the Debtor proposes through a consensual
plan to pay pro-rata a total of $700,000 over a 5-year period. The
sole class of interests consists of the same Interest Holders as
they existed on the Petition Date. The Plan proposes to allow
Interest Holders to retain their equity interests and, upon
confirmation of the Plan, retain such Allowed Interests in the
Reorganized Debtor.
Under the Plan, Class 3 consists of all Allowed General Unsecured
Claims not otherwise classified. Except as set forth in Section
10.01 of this Plan, the GUC Distribution of $700,000, in aggregate,
shall be paid to Holders of Allowed Class 3 Claims on a Pro Rata
basis at the beginning of each annual quarter commencing January
2025, and then on the first month of each subsequent quarter
thereafter through 2027. The Debtor shall pay the GUC Distribution
quarterly as follows: (A) $200,000 in 2025; (B) $200,000 in 2026;
and (C) $300,000 in 2027.
The liquidation analysis, demonstrates that if the Bankruptcy Case
was converted to a case under Chapter 7 of the Bankruptcy Code, the
Holders of Allowed Class 3 Claims would receive, at most, an 11%
Distribution. A conversion to Chapter 7 would cause the immediate
cessation of business operations, loss of dozens of jobs,
diminution of nearly all value, and inability to pay creditors
anything. The Debtor's Plan proposes to pay the general unsecured
creditors $700,000 over a 5-year period. Class 3 are impaired.
The Plan will be funded with cash on hand, future operating
revenue, and the Exit Financing. The Plan is feasible, pursuant to
s 1129(a)(11) of the Bankruptcy Code, based on the projected income
of the Debtor over the term of the Plan. Klein will make the Exit
Financing available on the Effective Date for the Debtor to
utilize, as necessary, to warrant the feasibility of the Plan and
in exchange for the injunction set forth in s 9.05 of the Plan
Counsel for the Debtor-in-Possession BIO365 LLC:
Kevin H. Morse, Esq.
CLARK HILL PLC
130 E. Randolph Street, Suite 3900
Chicago, IL 60601
Telephone: (312) 985-5556
Facsimile: (312) 517-7593
E-mail: kmorse@clarkhill.com
A copy of the Plan of Reorganization dated September 6, 2023, is
available at https://tinyurl.ph/GQKxL from PacerMonitor.com.
About Bio365 LLC
Bio365, LLC produces biologically activated and nutrient dense
biochar soils for professional cultivation. The company is based
in Santa Rosa, Calif.
Bio365 filed a petition for relief under Subchapter V of Chapter 11
of the Bankruptcy Code (Bankr. N.D. Cal. Case No. 23-10180) on
April 12, 2023, with $1 million to $10 million in both assets and
liabilities. Christopher Hayes has been appointed as Subchapter V
trustee.
Judge William J. Lafferty oversees the case.
The Debtor tapped Kevin Harvey Morse, Esq., at Clark Hill, PLC as
bankruptcy counsel; Klausner Cook, PLLC and Husch Blackwell, LLP,
as special counsels; KRD, Ltd. as accountant; and Kander, LLC as
financial advisor. Robert Marcus, managing director at Kander,
serves as the Debtor's chief restructuring officer.
BLUE LIGHTNING: Files Emergency Bid to Use Cash Collateral
----------------------------------------------------------
Blue Lightning Holdings, Inc., Blue Lightning Transportation
Solutions, Inc., and Truckers Pipeline, Inc. ask the U.S.
Bankruptcy Court for the Northern District of Texas, Fort Worth
Division, for authority to use cash collateral to increase
operations.
The cash collateral at issue amounts to $136,000 in sale proceeds
from vehicles sold at auction by Ritchie Bros. Auctioneers
(America) Inc., and Ironplanet, Inc. The said sale proceeds are
directly traceable to vehicles on which certain ad valorem taxing
authorities and Centerstone SBA Lending, Inc. held first liens and
first priority security interests, respectively.
The proposed use is the purchase of two replacement vehicles that
can be used in the operation of the Debtors' business to generate
income for the Debtors.
The Debtors can adequately protect the interests of the ad valorem
taxing authorities and Centerstone by providing such parties with
post-petition liens on the replacement collateral in the same
priority and to the same extent that such liens exist on the Sale
Proceeds. To the extent that any other party holds a junior
security interest on the Sale Proceeds, that interest too can be
adequately protected by a junior lien on the replacement
collateral.
A copy of the motion is available at https://urlcurt.com/u?l=df8b36
from PacerMonitor.com.
About Blue Lightning Holdings
Blue Lightning Holdings, Inc. and its affiliates filed voluntary
petitions for Chapter 11 protection (Bankr. N.D. Texas Lead Case
No. 23-41064) on April 15, 2023. At the time of the filing, Blue
Lightning Holdings reported as much as $50,000 in assets and $1
million to $10 million in liabilities.
Judge Mark X. Mullin oversees the cases.
The Debtors tapped Howard Marc Spector, Esq., at Spector & Cox,
PLLC as legal counsel and Sabrina Hill, CPA, PLLC as accountant.
BLUE STAR: Closes $5 Million Public Common Stock Offering
---------------------------------------------------------
Blue Star Foods Corp. announced the closing of its public offering
of an aggregate of 10,741,139 shares of its common stock (or common
stock equivalents), together with accompanying common stock
warrants, at a public offering price of $0.4655 per share (or
common stock equivalent) and accompanying warrants.
Each share of common stock (or common stock equivalent) was offered
in the offering together with a Series A-1 warrant to purchase one
share of common stock at an exercise price of $0.4655 per share and
a Series A-2 warrant to purchase one share of common stock at an
exercise price of $0.4655 per share. The Series A-1 warrants will
be exercisable beginning on the effective date of stockholder
approval of the issuance of the shares issuable upon exercise of
the warrants and will expire five years thereafter, and the Series
A-2 warrants will be exercisable beginning on the effective date of
stockholder approval of the issuance of the shares issuable upon
exercise of the warrants and will expire eighteen months
thereafter. Total gross proceeds from the offering, before
deducting the placement agent's fees and other offering expenses,
were approximately $5 million.
H.C. Wainwright & Co. acted as the exclusive placement agent for
the offering.
The Company intends to use the net proceeds from this offering for
general corporate purposes and repayment of certain outstanding
debt.
The securities were offered pursuant to a registration statement on
Form S-1 (File No. 333-273525), which was declared effective by the
Securities and Exchange Commission on Sept. 7, 2023. The offering
was made only by means of a prospectus forming part of the
effective registration statement relating to the offering. A
preliminary prospectus relating to the offering has been filed with
the SEC and is available on the SEC's website at
http://www.sec.gov. Electronic copies of the final prospectus may
be obtained on the SEC's website at http://www.sec.govand may also
be obtained by contacting H.C. Wainwright & Co., LLC at 430 Park
Avenue, 3rd Floor, New York, NY 10022, by phone at (212) 856-5711
or e-mail at placements@hcwco.com.
About Blue Star Foods
Based in Miami, Florida, Blue Star Foods Corp.
--https://bluestarfoods.com -- is an international sustainable
marine protein company based in Miami, Florida that imports,
packages and sells refrigerated pasteurized crab meat, and other
premium seafood products. The Company's main operating business,
John Keeler & Co., Inc. was incorporated in the State of Florida in
May 1995. The Company's current source of revenue is importing
blue and red swimming crab meat primarily from Indonesia,
Philippines and China and distributing it in the United States and
Canada under several brand names such as Blue Star, Oceanica,
Pacifika, Crab & Go, First Choice, Good Stuff and Coastal Pride
Fresh, and steelhead salmon and rainbow trout fingerlings produced
under the brand name Little Cedar Farms for distribution in
Canada.
Blue Star reported a net loss of $13.19 million for the year ended
Dec. 31, 2022, compared to a net loss of $2.61 million for the year
ended Dec. 31, 2021. As of Dec. 31, 2022, the Company had $8.68
million in total assets, $9.92 million in total liabilities, and a
total stockholders' deficit of $1.24 million.
Houston, Texas-based MaloneBailey, LLP, the Company's auditor since
2014, issued a "going concern" qualification in its report dated
April 17, 2023, citing that the Company has suffered recurring
losses from operations and has a net capital deficiency that raises
substantial doubt about its ability to continue as a going concern.
BOOST NEWCO: Moody's Assigns 'Ba3' CFR, Outlook Stable
------------------------------------------------------
Moody's Investors Service assigned to Boost Newco Borrower, LLC
(dba Worldpay) a Ba3 Corporate Family Rating and Ba3-PD Probability
of Default Rating. Concurrently, Moody's assigned a Ba3 rating to
Worldpay's senior secured first lien credit facilities consisting
of a revolver, US dollar term loan B, and euro term loan B. The
outlook is stable.
Net proceeds from the term loans, other secured debt, and new cash
equity will be used by GTCR to acquire a 55% stake in Worldpay from
Fidelity National Information Services, Inc. (FIS). FIS will retain
a non-controlling 45% ownership in Worldpay.
Assignments:
Issuer: Boost Newco Borrower, LLC (dba Worldpay)
Corporate Family Rating, Assigned Ba3
Probability of Default Rating, Assigned Ba3-PD
Senior Secured 1st Lien Bank Credit Facility, Assigned Ba3
Outlook Actions:
Issuer: Boost Newco Borrower, LLC (dba Worldpay)
Outlook, Assigned Stable
RATINGS RATIONALE
Worldpay' Ba3 CFR reflects the company's significant scale and a
leading position as a global merchant acquirer and payment
processor. The company benefits from re-occuring, transaction-based
revenue, which in combination with strong retention rates, support
good future revenue visibility. Ongoing secular trends such as the
growth of electronic payments and cash displacement underpin
Worldpay's long term growth potential. However, the merchant
acquiring market is highly competitive with several established
legacy players and newer entrants that continue to gain market
share and increasingly target larger clients. As a result, Moody's
expects that Worldpay will invest significantly and engage in a
roll-up M&A strategy to enhance growth rates and strengthen its
competitive position. The execution risks associated with the
carve-out also pose constraints on the rating.
Worldpay's leverage pro forma for the transaction is estimated at
4.6x debt/EBITDA (Moody's adjusted, including corporate allocations
and future standalone costs as well as the anticipated headwind
from the ISV business) as of 2023E. Moody's expects low to
mid-single digit growth for Worldpay in 2024 driven by e-commerce,
which remains the company's fastest growth segment, continued
strong growth of the Payrix solution, and some improvement in the
enterprise segment. Worldpay's growth slowed in 2022 and 2023,
partially due to negative foreign exchange impact, lower crypto
volumes, and the weak economy in the UK. Furthermore, approximately
one-third of the company's revenue is derived from the card-present
small and medium-sized business (SMB) sector. This business will
likely maintain slow growth rates due to high merchant attrition as
the market is transitioning toward embedded payments. The
software-integrated SMB segment, which accounts for about a quarter
of the business, exhibits strong growth potential, however, it
faces fierce competition. Moody's anticipates that Worldpay will
adopt a more proactive M&A strategy to enhance its competitive
position and bolster growth prospects. This strategy will entail
introducing new product capabilities and expanding Worldpay's
presence in high-growth market segments. Consequently, Moody's
foresees that periods of deleveraging will be followed by
intermittent increases in leverage as the company pursues strategic
acquisitions.
Governance is a key consideration for the rating. Governance risks
include the execution risk associated with Worldpay's separation
from FIS, lack of public leverage targets, and majority ownership
by a private equity firm. The controlled ownership raises concerns
about the potential for shareholder friendly policies and an active
M&A strategy. However, these risks are mitigated to some extent by
the minority ownership of FIS, a public company, and its approval
rights concerning debt incurrence. Despite the presence of some
independent board members, Worldpay will be a controlled company.
Given the focus on the growth of the business, Moody's expects that
generated cash will be reinvested or applied towards acquisition
activity. In the event that M&A transactions are financed through
debt, resulting in increased leverage, Moody's expects the company
to reduce leverage to pre-acquisition levels within a 1 to 2 year
timeframe.
The stable outlook reflects Moody's expectation that Worldpay's
organic revenue grows in the low to mid-single digits while
leverage remains in the mid-4x range. The stable outlook also
considers Moody's expectation that the separation from FIS will be
carried out according to the planned timeline and budget.
Worldpay's liquidity is good, supported by expected available cash
of $381 million at the close of the transaction and an undrawn $1
billion revolver. Free cash flow will be burdened by estimated $300
million of transition costs in 2024, resulting in projected free
cash flow generation of about $150 million. The revolver is
expected to contain a springing first lien net leverage ratio of
7.5x that will be tested if borrowings exceed 40%. Letters of
credit are excluded from the calculation of outstanding borrowings.
Moody's does not anticipate the covenant will be tested over the
next 12-18 months and the company will have ample cushion if
tested. The term loans do not contain financial covenants.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Worldpay achieves at least
mid-single digit revenue and profit growth on a sustained basis and
Moody's expects adjusted debt/EBITDA will be maintained in the low
4x range.
The ratings could be downgraded if Worldpay's revenue and profit
decline, or leverage is expected to sustain above 5x. Weaker free
cash flow generation or liquidity could also result in a negative
rating action.
The Ba3 rating on the senior secured first lien credit facilities
is the same as the Ba3 CFR reflecting the pari passu ranking with
the other secured debt and minimal other liabilities in the
company's capital structure.
As proposed, the new credit facilities are expected to provide
covenant flexibility that if utilized could negatively impact
creditors. Notable terms include the following:
Incremental debt capacity up to the greater of $1,864 million and
100% of pro forma consolidated EBITDA, plus unused capacity
reallocated from the general debt basket, plus unlimited amounts
subject to 4.75x net First Lien Leverage Ratio (if pari passu
secured). Amounts up to the greater of $1,864 and 100% of TTM
EBITDA may be incurred with an earlier maturity date than the
initial term loans.
There are no express "blocker" provisions which prohibit the
transfer of specified assets to unrestricted subsidiaries; such
transfers are permitted subject to carve-out capacity and other
conditions.
Non-wholly-owned subsidiaries are not required to provide
guarantees; dividends or transfers resulting in partial ownership
of subsidiary guarantors could jeopardize guarantees, subject to
protective provisions which only permit releases in transactions
with non-affiliates or for bona fide business purposes.
The credit agreement provides some limitations on up-tiering
transactions, including the consent of each First Lien Lender
directly and adversely affected shall be required with respect any
payment subordination and/or lien subordination on all or
substantially all of the Collateral unless the opportunity to
participate in the priming debt is offered to the Lenders on a pro
rata basis, subject to exceptions to be set forth in the First Lien
Facilities Documentation.
The credit agreement allows the borrower to reallocate certain
dividend capacity to debt incurrence capacity.
The proposed terms and the final terms of the credit agreement may
be materially different.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
Worldpay is a leading global merchant acquirer with a highly
diversified customer base including e-commerce merchants, large
multi-lane retailers and SMB merchants. Upon the close of
transaction, Worldpay will be majority owned by GTCR with minority
ownership maintained by FIS. In the LTM ended June 30, 2023
Worldpay generated $4.8 billion of revenue.
C&S GROUP: S&P Places 'BB-' ICR on Watch Negative on High Leverage
------------------------------------------------------------------
S&P Global Ratings placed all its ratings on C&S Group Enterprises
LLC (C&S), including its 'BB-' issuer credit rating and 'B'
issue-level rating, on CreditWatch with negative implications.
S&P expects to resolve the CreditWatch placement as details around
the anticipated capital structure become available, in conjunction
with an assessment of the company's pro forma store base, operating
forecasts, and associated execution risks. S&P will also monitor
underlying performance and credit measures given recent
deterioration which could separately prompt a downgrade.
C&S Wholesale Grocers, parent of C&S Group Enterprises LLC (C&S)
announced it had entered into a definitive agreement to purchase,
for $1.9 billion, 413 stores, eight distribution centers, and two
offices that have become available due to the Kroger and Albertsons
merger.
The likely addition of debt to finance the proposed purchase
increases C&S' financial risk, at a time when leverage is stretched
relative to the rating level. S&P said, "Details related to
transaction financing are not available, but we expect a
significant portion of the $1.9 billion purchase price to be
financed with debt. We believe the additional interest burden will
significantly increase financial risk for C&S. Further, as
inflation moderates in 2023 and lucrative forward-buy opportunities
are less abundant, EBITDA generation has led S&P Global
Ratings-adjusted leverage to deteriorate to 3.9x as of the quarter
ended June 24, 2023. While the vast majority of the Ahold
transition is behind C&S, we expect sales to be pressured through
2024, an additional risk that the company is partially mitigating
through acquiring new distribution customers to bolster free
operating cash flow prospects for the company. Finally, we consider
a degree of execution and integration risk related to the proposed
transaction given the drastic increase in retail operations it
would result in, more than doubling C&S' store count."
The proposed transaction increases C&S's retail grocery presence
and enhances efficiencies. C&S' proposed purchase of up to 413
stores--with the potential for up to an additional 237 stores
pending FTC clearance--from Kroger Co. significantly boosts its
store count, as it currently owns or operates 160 stores, primarily
under the Piggly Wiggly banner. The acquisition opens up C&S'
retail presence in the west and southwest, where it already has
distribution centers in Texas, California, and Oregon. The region
is also fertile ground for independent grocers, a key and growing
customer base for C&S. S&P expects the company's enhanced vertical
integration would likely increase distribution center throughput
and provide cost-saving opportunities.
The broadening of C&S' retail grocery presence mitigates large
chain customer exposure. C&S' retail ambitions are not surprising
considering the grocery landscape. The industry's consolidation
aims have been highlighted recently by Kroger's announced
acquisition of Albertsons almost a year ago and Aldi's announced
acquisition of nearly all of Southeastern Grocers' stores just last
month. Following the 2019 decision by Ahold Delhaize--C&S' largest
customer at the time--to not renew its contracts and
self-distribute, C&S has attempted to replace much of those sales
with multiple smaller independent grocers, a margin-enhancing
trade-off , despite lost sales. As a result, despite a 15% decline
in sales between the fiscal years ended September 2019 and 2022,
S&P Global Ratings-adjusted EBITDA declined just 4% over the same
period. C&S' leaning into retail will help blunt the effect of
further industry consolidation and the potential of large chains
self-distributing.
S&P said, "We expect to resolve the CreditWatch placement as
details around the anticipated capital structure become available,
in conjunction with an assessment of the company's pro forma store
base, operating forecasts, and associated execution risks. The
transaction is targeted to close in the first half of 2024. In
addition, we will monitor underlying performance given recent
credit measure deterioration and could lower the rating if we
expected leverage would remain close to 4x or if we believe
prospects for improving free operating cash flow generation become
less likely."
C.W. KELLER: Hires Madoff & Khoury LLP as Counsel
-------------------------------------------------
C.W. Keller & Associates, LLC seeks approval from the U.S.
Bankruptcy Court for the District of Massachusetts to employ Madoff
& Khoury, LLP to handle its Chapter 11 case.
The firm will be paid at these rates:
Partners $450 per hour
Associates $350 per hour
Paralegals $160 per hour
The firm received a retainer in the amount of $46,738, of which
$16,000 was used to pay for the firm's pre-bankruptcy services.
David Madoff, Esq., a partner at Madoff & Khoury, LLP, disclosed in
a court filing that his firm is a "disinterested person" as that
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
David B. Madoff, Esq.
MADOFF & KHOURY, LLP
124 Washington Street, Suite 202
Foxborough, MA 02035
Tel: (508) 543-0040
Fax: (508) 543-0020
Email: madoff@mandkllp.com
About C.W. Keller & Associates, LLC
C.W. Keller & Associates, LLC is a fabrication and design
engineering firm in Newburyport, Mass., specializing in custom
millwork, composites and concrete form systems.
C.W. Keller & Associates and C.W. Keller Holding Company, Inc.
filed Chapter 11 petitions (Bankr. D. Mass. Lead Case No. 23-11357)
on Aug. 24, 2023. At the time of the filing, C.W. Keller &
Associates reported $1 million to $10 million in assets and $10
million to $50 million in liabilities while C.W. Keller Holding
Company, Inc. reported as much as $50,000 in assets and $1 million
to $10 million in liabilities.
Judge Christopher J. Panos oversees the case.
David B. Madoff, Esq., at Madoff & Khoury LLP, represents the
Debtors as legal counsel.
CALAMP CORP: Interim CEO to Receive $13K Monthly Stipend
--------------------------------------------------------
The Board of Directors of CalAmp Corp. approved a compensation
package for Jason Cohenour, interim chief executive officer of the
Company.
Pursuant to the Compensation Package, Mr. Cohenour will be paid a
monthly stipend of $13,000. Additionally, the Board approved a
grant of 180,000 restricted stock units to Mr. Cohenour, which will
vest on the first anniversary of the grant date in an amount equal
to (i) 30,000 shares, multiplied by (ii) the number of full months
Mr. Cohenour serves as interim chief executive officer.
Mr. Cohenour will continue to receive compensation for his services
as a member of the Board while he serves as interim chief executive
officer.
About CalAmp
CalAmp Corp. is a connected intelligence company that leverages a
data-driven solutions ecosystem to help people and organizations
improve operational performance. The Company solves complex
problems for customers within the market verticals of
transportation and logistics, commercial and government fleets,
industrial equipment, K12 fleets, and consumer vehicles by
providing solutions that track, monitor, and protect their vital
assets.
CalAmp Corp. reported a net loss of $32.49 million for the year
ended Feb. 28, 2023, a net loss of $27.99 million for the year
ended Feb. 28, 2022, a net loss of $56.31 million for the year
ended Feb. 28, 2021, and a net loss of $79.30 million for the year
ended Feb. 29, 2020.
CANO HEALTH: Falls Short of NYSE Stock Bid Price Requirement
------------------------------------------------------------
Cano Health, Inc. announced that on Sept. 5, 2023, it was notified
by NYSE Regulation Inc. that it is not in compliance with Section
802.01C of the NYSE Listed Company Manual because the average
closing stock price of a share of the Company's Class A common
stock was less than $1.00 per share over a consecutive 30
trading-day period.
Pursuant to the Listing Rule, the Company has six months following
the NYSE notification to regain compliance with the Listing Rule,
during which time the Company's Class A common stock will continue
to be listed on the NYSE. If the Company determines that it will
cure the price condition by taking an action requiring stockholder
approval, such as a reverse stock split, the six-month window may
be extended if the Company obtains stockholder approval by no later
than its next annual stockholders' meeting and implements the
action promptly thereafter.
The Company immediately notified the NYSE that to regain compliance
with the Listing Rule, the Company intends to take steps to
increase the value of shares of its Class A common stock through
executing its previously-announced business strategy and is
considering other options for regaining compliance with the Listing
Rule, including effecting a reverse stock split, subject to
stockholder approval, which it would seek to obtain no later than
at the Company's next annual stockholders' meeting.
"We believe that executing our previously-announced business
strategy will increase the value of shares of our Class A common
stock in a manner sufficient to regain compliance with the Listing
Rule," said Mark Kent, chief executive officer of Cano Health.
"However, we are prepared to pursue a reverse stock split, which
would allow our stock to be more attractive to a broader range of
investors, and I am pleased that InTandem Capital Partners, LLC,
which controls ITC Rumba, LLC, our largest stockholder, has advised
us that it intends to vote in favor of a reverse stock split should
we pursue that path. We remain committed to our focus on
increasing the value of our Company by driving our strategy, while
at the same time continuing to evaluate strategic interest in the
Company, as previously announced."
About Cano Health
Cano Health, Inc. (NYSE: CANO) -- canohealth.com -- is a primary
care-centric, technology-powered healthcare delivery and population
health management platform. Founded in 2009, with its headquarters
in Miami, Florida, Cano Health is transforming healthcare by
delivering primary care that measurably improves the health,
wellness, and quality of life of its patients and the communities
it serves through its primary care medical centers and supporting
affiliated providers.
Cano Health reported a net loss of $428.39 million in 2022, a net
loss of $116.74 million in 2021, a net loss of $71.06 million in
2020, and a net loss of $19.78 million in 2019.
* * *
As reported by the TCR on Aug. 17, 2023, S&P Global Ratings lowered
its issuer credit rating on Medicare Advantage-focused primary care
service provider Cano Health Inc. to 'CCC-' from 'B-'. S&P said,
"We based our negative outlook on our expectation for continued
weak operating performance and cash flow deficits. Given the
company's current liquidity position, we believe there is
heightened risk of a near-term default such as a bankruptcy filing,
debt restructuring, or missed interest payment."
CARBON CONSULTANTS: Court OKs Cash Collateral Access Thru Oct 5
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Washington
authorized Carbon Consultants, LLC to use cash collateral on an
interim basis in accordance with the budget, with a 10% variance,
through October 5, 2023.
The Debtor requires the immediate and continued use of cash
collateral to pay its budgeted expenses, including, wages and other
payroll expenses, rents, utilities, insurance, and taxes.
KeyBank National Association asserts liens in certain of the
Debtor's assets pursuant to various loan agreements, notes,
security agreements, and other documents, to secure obligations in
the aggregate principal amount of approximately $2.4 million as of
the Petition Date. KeyBank's security interests were perfected by a
UCC financing statement filed on December 28, 2020 with the Nevada
Secretary of State. The UCC Statement provides that KeyBank is
secured by certain assets.
The estimated value of the KeyBank Collateral is approximately
$3.615 million as of the Petition Date.
Andrew and Jaime Mack also assert liens in certain of the Debtor's
assets pursuant to various loan agreements, notes, security
agreements, and other documents, to secure obligations in the
aggregate principal amount of approximately $793,000 as of the
Petition Date. Macks' security interests were perfected by a UCC
financing statement filed on July 14, 2023 with the Nevada
Secretary of State. The Macks' UCC Statement provides that Macks
are secured by the all of the Debtor's assets.
As a whole, the current estimated value of the Mack Collateral is
unknown, but is believed to be approximately $1.3M due to the
Macks' junior lien position relative to KeyBank.
As adequate protection of KeyBank's and Macks' prepetition
interests, the Debtor will make a monthly adequate protection
payments of principal and interest to KeyBank in the amounts listed
in the Budget, which payments will commence on Friday for the week
ending October 6, 2023, and will thereafter will be paid on each
Friday for which such payments are listed in the Budget.
As further adequate protection of KeyBank and Macks against any
diminution in the value of their interests in such property
resulting from the Debtor's use of cash collateral, KeyBank and
Macks are granted continuing valid, binding, enforceable, and
perfected postpetition liens on all property of the Debtor of the
same type and category in which they held prepetition liens, with
the same priority as their prepetition liens had in such property
on the Petition Date.
As further adequate protection of any diminution in the value of
their interests in such property resulting from the Debtor's use of
cash collateral, KeyBank and Macks will have administrative expense
claims under 11 U.S.C. Section 503(b).
A final hearing on the matter is set for October 5 at 1 p.m.
A copy of the order is available at https://urlcurt.com/u?l=B8BywQ
from PacerMonitor.com.
About Carbon Consultants, LLC
Carbon Consultants, LLC provides architectural, engineering, and
related services.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Wash. Case No. 23-01100) on August 30,
2023. In the petition signed by Jaime K. Mack, manager, the Debtor
disclosed up to $10 million in both assets and liabilities.
Judge Whitman L Holt oversees the case.
Thomas W. Stilley, Esq., at Sussman Shank LLP, represents the
Debtor as legal counsel.
CENTERPOINT PRODUCTIONS: Hires Jones & Jones CPA as Accountant
--------------------------------------------------------------
Centerpoint Productions, Inc. seeks approval from the U.S.
Bankruptcy Court for the Northern District of Texas to employ Jones
& Jones, CPA as accountant.
The firm will provide accounting services to the Debtor in the
Chapter 11 bankruptcy case.
The firm will be paid at the rates of $200 per hour.
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Larry Jones, a partner at Jones & Jones, 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:
Larry Jones, CPA
Jones & Jones
12770 Coit Road, Suite 850
Tel: (972) 991-5591
Fax: (972) 991-5788
About Centerpoint Productions, Inc.
Centerpoint Productions, Inc. is a manufacturer of commercial
cabinetry. The Debtor sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. N.D. Tex. Case No. 23-31716-sgj11) on
August 10, 2023.
In the petition signed by David Horowitz, president, the Debtor
disclosed up to $50,000 in assets and up to $10 million in
liabilities.
Eric A. Liepins, Esq. represents the Debtor as legal counsel.
CITGO HOLDING: S&P Affirms 'B-' Long-Term ICR, Outlook Stable
-------------------------------------------------------------
S&P Global Ratings affirmed our 'B-' long-term issuer credit
ratings on CITGO Holding Inc. (Holding) and its subsidiary CITGO
Petroleum Corp. (CITGO Petroleum). The outlook is stable.
S&P also assigned its 'B+' issue-level rating on the $1.1 billion
of senior secured notes. The recovery rating is '1'.
The '1' recovery rating on CITGO Petroleum's debt indicates the
likelihood of very high (90%-100%; rounded estimate: 95%) recovery
following a default.
The stable outlook reflects S&P's expectation that Petroleos de
Venezuela (PDVSA) will retain its controlling ownership of the
CITGO enterprise, which will continue to constrain CITGO's rating.
It expects the refineries to continue to run at high utilization
and the company to maintain consolidated leverage below 1x through
2024.
CITGO Petroleum is issuing $1.1 billion of senior secured notes and
will use cash on hand to fully repay Holding approximate $1.286
billion 2024 senior secured debt maturity. CITGO Petroleum
continues to have excess liquidity and a robust cash balance
leading to low net leverage.
CITGO's structural complexity will improve with its planned
refinancing. The company is refinancing Holding's debt at CITGO
Petroleum, eliminating structurally subordinated debt and reducing
organizational complexity. CITGO Petroleum is issuing $1.1 billion
of senior secured notes and will use cash on hand at Holding to
fully repay all fixed debt at Holding. S&P said, "Consolidated debt
marginally improves but does not affect our view of credit quality
as we fully consolidate Holding's credit measures. That said, we
note that the structural complexity improves as now all debt will
be at CITGO Petroleum."
S&P said, "We believe the company's near-term debt maturities are
manageable. Once the company executes the proposed offering, its
next near-term maturity is the $1.125 billion of senior secured
notes coming due in June 2025. We believe the company is well
positioned to deal with its upcoming maturities as it has excess
liquidity of approximately $3.8 billion, including full
availability under the $500 million accounts receivable (AR)
securitization facility, as of June 30, 2023. Although the AR
facility matures in 2024, we expect it to have additional financing
in place to meet its working capital needs.
"We expect CITGO to benefit from above-average refining margins in
2023. We forecast S&P Global Ratings-adjusted EBITDA of $2.7
billion-$2.9 billion in 2023. Although this is lower than in 2022,
it still reflects an above-average refining margin environment.
Given the above-average margins, the company continues to generate
meaningful surplus cash, which we believe will continue to build
through 2023. We forecast crude refining margins to return to
midcycle levels in 2024 and forecast cash to remain at
approximately $3 billion. Our forecast assumes a gross margin per
barrel (/bbl) of approximately $11 and average utilization rates of
mid- to upper-90%. This leads us to an S&P Global Ratings-adjusted
debt to EBITDA below 1x through 2024.
"Our base case assumes indirect parent company PDVSA retains
control of the CITGO enterprise, which will continue to constrain
the rating. In 2019, PDVSA defaulted on its 8.5% senior bond due in
2020, which was secured by 50.1% of owner PDV Holding Inc.'s
ownership interest in Holding. A U.S. court date is set for October
to begin the process to auction off shares of Holding to pay
creditors with judgments against Venezuela. While new stable
ownership would likely improve the rating on CITGO, uncertainty
relating to a possible change of control in the near term remains.
Therefore, despite numerous ongoing legal proceedings with PDVSA
creditors, PDVSA's credit quality continues to constrain the rating
of CITGO. A change of control will only be triggered if PDVSA
ceases to own more than 50% of the ownership interest of CITGO
Petroleum or Holding and the rating is downgraded within 90 days.
This prevents immediate prepayment or default in a short period. We
will continue to monitor the proceedings and believe any initial
decision could be subject to further litigation.
"The stable outlook reflects our view that PDVSA will retain its
controlling ownership of CITGO, which continues to constrain the
rating. We do not believe the Venezuelan government will take any
action that harms the operational capability of CITGO's refineries.
We expect the refineries to continue to run at high utilization and
expect the company to maintain strong liquidity, leading to
consolidated leverage below 1x through 2024."
While S&P considers it unlikely, it could lower the rating if:
-- A PDVSA bankruptcy proceeding includes Holding, such that its
assets could be sold to cover PDVSA's debts; or
-- S&P views its capital structure to be unsustainable.
Higher ratings are unlikely given the controlling ownership by
PDVSA. S&P could, however, raise the rating possibly by multiple
notches, if CITGO is sold to a company with stronger
creditworthiness than PDVSA.
CITGO PETROLEUM: Moody's Rates $1.1BB Secured Notes 'B3'
--------------------------------------------------------
Moody's Investors Service affirmed CITGO Petroleum Corporation's
(CITGO Petroleum) B3 Corporate Family Rating and Senior Secured
Ratings. At the same time, Moody's assigned a B3 Senior Secured
Rating to CITGO Petroleum up to $1.1 billion 5.3-year Senior
Secured Notes. The outlook is stable.
CITGO Petroleum will use the proceeds of the proposed notes for
general corporate purposes. Additionally, CITGO Petroleum intends
to pay a dividend of approximately $1.1 billion to CITGO Holding,
Inc. (CITGO Holding) to fund the pending redemption of the
aggregate principal outstanding under the CITGO Holding Secured
Notes due 2024. The rating of the proposed notes assumes that the
final transaction documents will not be materially different from
draft legal documentation reviewed by Moody's to date and that
these agreements are legally valid, binding and enforceable.
Assignments:
Issuer: CITGO Petroleum Corporation
Senior Secured Regular Bond/Debenture, Assigned B3
Affirmations:
Issuer: CITGO Petroleum Corporation
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Senior Secured Regular Bond/Debenture, Affirmed B3
Issuer: Gulf Coast Industrial Development Authority
Senior Unsecured Revenue Bonds, Affirmed B3
Issuer: Illinois Development Finance Authority
Senior Unsecured Revenue Bonds, Affirmed B3
Outlook Actions:
Issuer: CITGO Petroleum Corporation
Outlook, Remains Stable
RATINGS RATIONALE
The B3 ratings affirmation and the assigned B3 rating of the
proposed notes reflect CITGO Petroleum's large scale, complex
refining system, historic solid credit metrics for its rating
category, and the location of its assets in the Government of
United States of America (Aaa stable). The ratings also take into
account that the company's notes have certain protections to that
are in place to ring-fence the company from its ultimate owner,
Petroleos de Venezuela, S.A. (PDVSA), with clauses for limitations
on increase in debt leverage, payment of dividends, change of
control and use of proceeds from asset sales.
Moody's expects CITGO Petroleum to continue posting positive EBITDA
in 2023 and 2024 equivalent to $1.8 billion, on average, supported
by gasoline and distillate crack spreads. Moody's also estimates
leverage to increase as cash flow generation in 2022 allowed CITGO
Petroleum to repay $1.6 billion of financial debt. Moody's
estimates leverage will be around 1.3x (debt to EBITDA) at the end
of 2023, compared to the 0.5x registered as of December 2022.
However, it will remain lower than the 4.6x registered in 2021,
reflecting a stronger EBITDA generation and debt repayment.
Currently, CITGO Petroleum registers a solid liquidity with roughly
$3 billion of cash as of June 2023.
CITGO Petroleum's refineries have high conversion capacity that
provides flexibility to adjust crude slate and to optimize
operations based on market dynamics; the company also has
significant export capability that supports sales. However, Moody's
notes that CITGO Holding remains vulnerable to US actions against
Venezuela and the political situation in that country, which could
affect the company's operating and financial activities.
CITGO Petroleum's rating outlook is stable, given its adequate
credit metrics for the rating category and Moody's expectation that
its financial situation and credit risk will not change
significantly in the next 12-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
CITGO Petroleum's ratings could be upgraded if the risk arising
from PDVSA's ownership, mostly related to legal procedures that
could derive in change of control or asset sales, declines.
CITGO Petroleum's ratings could be downgraded if the company lacks
access to capital markets for refinancing debt, its margins decline
because of its lack of access to an optimum mix of crudes or
operating inefficiencies, or PDVSA exerts negative influence on
management's decisions, increasing CITGO Petroleum's credit risk.
Profile
CITGO Petroleum Corporation, based in Delaware, US, is an
independent refining company with a capacity of 807,000 barrels per
day (bpd) across three large refineries that have good logistical
and market positions in the US, specifically in the East Coast,
Midwest and Gulf Coast markets. The company is a wholesale refiner
that sells a large portion of its refined products under the CITGO
brand through around 4,200 independently owned and operated service
stations. CITGO Petroleum is a wholly owned subsidiary of PDVSA,
the state oil company of Venezuela. As of December 31, 2022, CITGO
Petroleum reported assets and Moody's-adjusted EBITDA of $10.2
billion and $4.5 billion, respectively.
The principal methodology used in these ratings was Refining and
Marketing published in August 2021.
CLUE OPCO: Moody's Assigns First Time Ba3 Corporate Family Rating
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Moody's Investors Service assigned first-time ratings to Clue OpCo
LLC (a wholly owned subsidiary of Forward Air Corporation)
(collectively "Forward Air") including a Ba3 corporate family
rating and Ba3-PD probability of default rating.
Concurrently, Moody's assigned a Ba3 rating to each of the
company's proposed $925 million senior secured first lien term
loan, $400 million senior secured revolver and $925 million senior
secured notes. Moody's assigned a stable outlook. Finally, Moody's
also assigned an SGL-2 speculative grade liquidity rating.
Proceeds from the term loan and secured notes will be used in
conjunction with about $1.2 billion in perpetual preferred shares,
$565 million in common equity and about $150 million of cash to
purchase Omni Logistics, LLC (Omni) for $3.2 billion and refinance
existing debt at Forward Air.
Assignments:
Issuer: Clue OpCo LLC
Corporate Family Rating, Assigned Ba3
Probability of Default Rating, Assigned Ba3-PD
Speculative Grade Liquidity Rating, Assigned SGL-2
Senior Secured First Lien Term Loan B, Assigned Ba3
Senior Secured First Lien Revolving Credit Facility, Assigned Ba3
Senior Secured Regular Bond/Debenture, Assigned Ba3
Outlook Actions:
Issuer: Clue OpCo LLC
Outlook, Assigned Stable
RATINGS RATIONALE
The rating reflects the elevated leverage associated with the
planned acquisition of asset-light transportation operator Omni.
The initial debt burden is moderately high for the company's
business risk, given its direct exposure to the highly cyclical
transportation sector, competitive pressures within the
less-than-truckload ("LTL") industry and the need for consistent
capital investment on new equipment necessary to keep maintenance
costs down, yet modest given the company's strategy of outsourcing
to 3PL providers. The rating reflects the benefit of Forward Air's
solid operating margin that Moody's expects will continue as the
company focuses on the integration and build-out of its
infrastructure to sustain its growth projections. The rating also
reflects the company's national leading position in the LTL market,
with particular strength in premier high-value transportation.
Forward Air has set clear public financial policies that include
targeted leverage around 2.0x over most of the cycle. Moody's
therefore expects credit quality to improve over the next 12-18
months. Moody's expects a reduction in leverage through a
combination of organic revenue growth, topline revenue synergies
associated with the Omni acquisition and expanded margins post
acquisition closing. Moody's expects debt-to-EBITDA (including
Moody's standard adjustments) to be about 5.0x at close and decline
meaningfully to about 3.3x by the end of 2024.
Forward Air's credit impact score of CIS-3 indicates that ESG
considerations have limited impact on the credit rating with a
potential for greater negative impact over time. Forward Air has
some exposure to environmental risk factors, such as carbon
transition risk arising from its reliance on heavy duty trucks,
that will pressure the rating. The impact will primarily depend on
how effectively the company navigates the industry's transition
from internal combustion engine vehicle platforms to alternative
propulsion vehicle platforms. These risks are offset by a financial
strategy that weighs the interests of its stakeholders and includes
a publicly stated target for moderate leverage.
The stable outlook reflects Moody's expectation that Forward Air
will maintain EBITDA margin around 17.0%. Moody's also expects that
the company will grow its top line organically and maintain good
liquidity.
The SGL-2 speculative grade liquidity rating reflects Moody's
expectations of good liquidity over the next twelve months. The
cash balance at close is expected to be $117 million and Moody's
anticipates adjusted free cash flow to be about $230 million over
the next 18-months as the company has modest capital expenditure
requirements due to its asset-light business model. External
liquidity is provided by an undrawn $400 million revolving credit
facility that expires in 2028.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded with the maintenance of good
liquidity, debt-to-EBITDA sustained below 3.0x, and operating
margin improvement that evidences revenue synergies from the merger
with Omni Logistics. Lastly, Forward Air will need to maintain
conservative financial policies, including a measured approach to
additional debt financed acquisitions, dividends and share
repurchases.
The ratings could be downgraded if Forward Air's debt-to-EBITDA is
sustained above 4.0x. Additionally, should weakness in end markets
be experienced that result in revenue and operating margin declines
or if the company experiences difficulty in integrating Omni
Logistics that impacts financial performance. Ratings could also be
downgraded if the company adopts a more aggressive financial
policy, including large debt financed acquisitions or shareholder
distributions.
The following are some of the preliminary terms in the marketing
term sheet that are subject to change during syndication. As
proposed, the new credit facilities are expected to provide
covenant flexibility that if utilized could negatively impact
creditors. Notable terms include the following:
Incremental debt capacity up to the greater of a fixed amount, to
be disclosed, and 30% of the Consolidated EBITDA, plus
unlimited amounts of pari passu secured debt subject to closing
date first lien net leverage ratio. No portion of the incremental
may be incurred with an earlier maturity than the initial term
loans.
The credit agreement permits the transfer of assets to unrestricted
subsidiaries, up to the carve-out capacities, subject to "blocker"
provisions which prohibit the transfer to or ownership by an
unrestricted subsidiary of any intellectual property that is
material to the company and its subsidiaries, taken as a whole
(including exclusive licenses), or the designation of a restricted
subsidiary as an unrestricted subsidiary if it owns such material
intellectual property.
Non-wholly-owned subsidiaries are not required to provide
guarantees; dividends or transfers resulting in partial ownership
of subsidiary guarantors could jeopardize guarantees subject to
protective provisions, which prohibit guarantee releases unless
either: (i) the subsidiary is no longer a direct or indirect
subsidiary of the company, or (ii) such transfers are good faith
dispositions to a bona fide unaffiliated third party (as determined
by the company in good faith) for fair market value and for a bona
fide business purpose (as determined by the company in good
faith).
The credit agreement provides some limitations on up-tiering
transactions, including the requirement that 100% of the lenders
consent to subordinate, or have the effect of subordinating (i) the
obligations to any other indebtedness, or (ii) the liens securing
the obligations to liens securing any other indebtedness. The above
are proposed terms and the final terms of the credit agreement may
be materially different.
The principal methodology used in these ratings was Surface
Transportation and Logistics published in December 2021.
Forward Air is a leading asset-light provider of transportation
services across the United States, Canada and Mexico. The company
provides expedited less-than-truckload ("LTL") services, including
local pick-up and delivery, shipment consolidation/deconsolidation,
warehousing, and customs brokerage by utilizing a comprehensive
national network of terminals. Revenue for the twelve months ended
June 30, 2023 was approximately $1.8 billion.
COGECO COMMUNICATIONS: Moody's Rates New $1.55BB Secured Loans 'B1'
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Moody's Investors Service assigned a B1 rating to a new $1.55
billion senior secured credit facility, including a 7-year, $900
million first-lien secured term loan due 2030, a 5-year, $400
million first-lien secured term loan due 2028, and a 5-year, $250
million first-lien secured revolving credit facility (RCF) due
2028. The terms loans will be issued at Cogeco Communications
Finance (USA), LP; the RCF will be issued at Cogeco US Finance, LLC
(formally Atlantic Broadband Finance, LLC). Both borrowers are
affiliates of the ultimate parent, Cogeco Communications (USA) Inc.
("Cogeco"). The B1 CFR and other credit ratings are unchanged. The
rating outlook is stable.
The proceeds from the new term loans, plus cash and revolver draw
and net of transaction fees and expenses, will be used to fully
repay the existing term loan maturing 2025. The transaction will
improve the debt maturity profile, reduce leverage (by
approximately .3x, to approximately 4.7x pro forma for the
transaction, down from 5.0x LTM, Moody's adjusted), and increase
the RCF by about $100 million, all positive credit factors – only
offset by marginally higher borrowing costs and a more significant
draw on the RCF. Moody's expects the terms and conditions of the
new facility to be same or materially similar to existing
agreements and the proportional mix and priority of claims in the
pro forma capital structure to be essentially unchanged.
Assignments:
Issuer: Cogeco US Finance, LLC
Senior Secured Revolving Credit Facility, Assigned B1
Issuer: Cogeco Communications Finance (USA), LP
Senior Secured Term Loan, Assigned B1
Senior Secured Term Loan B, Assigned B1
RATINGS RATIONALE
Cogeco's credit profile is supported by a very competitive,
fiber-rich, high-speed network. High profitability in broadband
services is supportive, with consolidated EBITDA margins expected
to remain in mid-40% range with a continued mix shift away from
less profitable services including video. Implicit support from its
much larger investment grade parent and other cash-rich equity
partner are also positive credit factors, as is the Company's good
liquidity profile. The primary rating constraints include the
Company's relatively small scale, declining video business, and a
less than conservative financial policy that periodically tolerates
elevated leverage when executing M&A transactions.
Cogeco has a good liquidity profile supported by positive operating
and free cash flow, a new $250 million revolver expiring 2028 (but
partially drawn pro forma for the refinancing), and covenant-lite
loan terms (only maintenance is 8.5x senior secured leverage on RCF
at 30% utilization). Alternate liquidity is limited with a fully
secured capital structure.
The secured credit facility is rated B1, the same as the CFR, with
no significant rated junior debt. The instrument ratings reflect
the probability of default of the Company, as reflected in the
B1-PD probability of default rating, an average expected family
recovery rate of 50% at default given the covenant-lite nature of
the secured term loans, and the instruments' ranking in the capital
structure.
The stable outlook incorporates Moody's view that the Company will
maintain strong profitability, with EBITDA margins in the mid 40%
range. However, revenues could fall with declines in video, voice,
and or HSD subs due to more intense competition, only partially
offset by higher pricing. As a result, EBITDA and free cash flows
are likely to remain under pressure. FCF/debt, a key credit metric,
is currently outside Moody's tolerance and could remain under
pressure despite deleveraging. Moody's stable outlook incorporates
an expectation that the company will manage through the pressure
with support from its parent or equity sponsor if necessary and
maintain or return key credit metrics near or inside Moody's
tolerances. If the operating trends do not improve organically or
through support, the stable outlook or ratings could be pressured.
Note: all figures are Moody's adjusted projection over the next
12-18 unless otherwise noted.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could consider a positive rating action if leverage
(Moody's adjusted debt-to-EBITDA) is sustained below 4x, and Free
Cash Flow to debt (Moody's adjusted) is sustained above high
single-digit percent. A positive rating action could also be
considered with growth in the scale and or diversity of the
business, greater stability in the video business, and or a more
conservative financial policy.
Moody's could consider a negative rating action if leverage
(Moody's adjusted debt-to-EBITDA) is sustained above 5.5x, or Free
Cash Flow to debt (Moody's adjusted) is sustained below 5%. A
negative rating action could also be considered if liquidity
deteriorated, company scale declined, financial policy turned more
aggressive, or there was a material and unfavorable change in the
operating trends or position of the broadband business.
Headquartered in Quincy, Massachusetts, Cogeco Communications (USA)
Inc., doing business as Breezeline, is a private company with a
footprint that passes about 1.7 million homes, and currently serves
approximately 1.1 million primary service units (297 thousand basic
video, 681 thousand high speed data and 143 thousand phone) across
500+ communities in 13 states including Western Pennsylvania,
Maryland, Delaware, Florida, Eastern Connecticut, New York, West
Virginia, South Carolina, Maine, New Hampshire, Virginia and Ohio.
The company is an operating subsidiary, and majority owned and
controlled by Cogeco Communications Inc, a public company in
Canada. Caisse de depot et placement du Quebec ("CDPQ") holds a 21%
minority interest. Revenue for the last twelve months ended May 31,
2023 was approximately $1.1 billion.
The principal methodology used in these ratings was Pay TV
published in October 2021.
COTTLE CHRISTI: Seeks to Hire Lorie Meadows as Accountant
---------------------------------------------------------
Cottle Christi L, LLC seeks approval from the U.S. Bankruptcy Court
for the Northern District of West Virginia to employ Lorie Meadows,
a practicing accountant in Winfield, W.Va.
The Debtor requires an accountant to prepare its monthly operating
reports; file all payroll and corporate tax returns; and assist its
legal counsel in the preparation of financial projections.
Ms. Meadows will be compensated at $150 per hour for her services.
The retainer fee is $2,000.
As disclosed in court filings, Ms. Meadows neither holds nor
represents any interest adverse to the Debtor and its estate.
Ms. Meadows can be reached at:
Lorie Meadows
Lorie Smith Meadows, PLLC
13059 Winfield Road
Winfield, WV 25213
Phone: (304) 586-9677
Email: lsmpllc@frontier.com
About Cottle Christi L, LLC
Cottle Christi L, LLC filed a petition under Chapter 11, Subchapter
V of the Bankruptcy Code (Bankr. N.D. W.Va. Case No. 23-00295) on
June 16, 2023, with $1 million to $10 million in both assets and
liabilities. Christi L. Walls, owner and managing member, signed
the petition.
Joseph W. Caldwell, Esq., at Caldwell & Riffee is the Debtor's
legal counsel.
COTTLE LLC: Hires Seeks to Hire Lorie Meadows as Accountant
-----------------------------------------------------------
Cottle, LLC seeks approval from the U.S. Bankruptcy Court for the
Northern District of West Virginia to employ Lorie Meadows, a
practicing accountant in Winfield, W.Va.
The Debtor requires an accountant to prepare its monthly operating
reports; file all payroll and corporate tax returns; and assist its
legal counsel in the preparation of financial projections.
Ms. Meadows will be compensated at $150 per hour for her services.
The retainer fee is $2,000.
As disclosed in court filings, Ms. Meadows neither holds nor
represents any interest adverse to the Debtor and its estate.
Ms. Meadows can be reached at:
Lorie Meadows
Lorie Smith Meadows, PLLC
13059 Winfield Road
Winfield, WV 25213
Phone: 304.586.9677
Email: lsmpllc@frontier.com
About Cottle, LLC
Cottle, LLC filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. N.D. W.Va. Case No. 23-00296) on June 16,
2023, with $1 million to $10 million in both assets and
liabilities. Larry D. Cottle, owner and managing member, signed the
petition.
Joseph W. Caldwell, Esq., at Caldwell & Riffee is the Debtor's
legal counsel.
COTY INC: Fitch Gives 'BB' FirstTime LongTerm IDR, Outlook Positive
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Fitch Ratings has assigned first-time Long-Term Issuer Default
Ratings (IDR) of 'BB' to Coty Inc. and Coty B.V. with a Positive
Rating Outlook. Fitch has assigned instrument ratings of
'BB+'/'RR2' to the senior secured credit facilities and senior
secured notes, 'BB/RR4' to the senior unsecured notes and 'B+/RR6'
to the Series B preferred stock.
Coty's ratings and Positive Outlook reflect its leading market
position as one of the world's largest beauty companies with a
recently improved product mix aiming toward higher growth and
higher margined prestige fragrance and skincare, and its improving
EBITDA leverage (gross debt/EBITDA), which could trend below 4x in
the next 12-24 months versus 4.6x as of June 30, 2023.
The ratings also consider the challenges in stabilizing and growing
its market share following pre-pandemic declines across some key
brands given its exposure to a rapidly changing and competitive
marketing landscape with constant shifts in consumer tastes and
preferences.
KEY RATING DRIVERS
Improved Business Profile: The company's operating performance and
financial profile have improved meaningfully since the pandemic,
with reported FY23 (ending June 2023) revenue of USD5.6 billion and
EBITDA of USD973 million, returning close to 2019 proforma levels
after adjusting for the sale of a majority stake in Wella and a
USD300 million reduction in revenue resulting from a rationalized
distributor network.
The company, under the leadership of Sue Nabi, a L'Oreal veteran
who became CEO effective September 2020, detailed its strategic
initiatives in early 2021 to drive medium-term revenue growth of
6%-8% and has taken significant steps to invest both in existing
categories as well as new adjacencies like skincare and body care.
The company's portfolio has improved with its prestige segment
driving 62% (with fragrances at around 56%, cosmetics around 3% and
skincare at around 4%) of fiscal 2023 revenue versus 56% in fiscal
2019. The prestige business carries close to 22% EBITDA margins and
now drives over 75% of EBITDA. The consumer beauty business, which
is inclusive of its mass segment color cosmetics (25% of total
revenue), body care (9%) and mass fragrances (6%) has sub-11%
EBITDA margin. The company has seen some positive momentum in the
consumer beauty business following recent investments, including
indications of market share stabilization, albeit in a somewhat
volatile post-pandemic spending environment.
Favorable Mix Shift Supports Revenue Growth: Between 2016, when
Coty acquired P&G's beauty business, and 2020, Coty consistently
lost market share given a lack of innovation around its key
consumer brands including Covergirl, Rimmel, Max Factor and Sally
Hansen, which was further exacerbated by a shift in beauty sales
from the drugstore and mass channels to specialty retailers like
Sephora and Ulta.
Coty has taken meaningful steps to fill gaps in its portfolio to
stem share losses. Coty is investing heavily in skincare and
natural products across legacy and newer brands. Its investment in
innovation, new product launches and marketing have appeared to
stabilize its shares in the consumer beauty business after five
years of declines.
Fitch believes Coty could achieve 2%-4% top line growth over the
next 2-3 years with prestige fragrances to be the main contributor
to top line growth. The consumer beauty business could be flattish,
given ongoing repositioning efforts across key brands and overall
challenges in the mass market beauty space. Coty's emerging
presence in prestige makeup, skincare and markets like China
provide medium-term growth opportunities.
Exposure to Dynamic Industry and Evolving Marketing Landscape: The
fragrance and color cosmetics industries have demonstrated some
positive long-term characteristics, including mid-single-digit
annual growth and relatively high margins. However, the industry --
and some of its most venerable brands -- have been disrupted by new
marketing and retail channels.
Consumers are building brand awareness and affinity and product
knowledge through preferred online sites and social influencers, as
well as through specialty channels such as Ulta and Sephora. The
global beauty business is expected to continue to benefit from a
rising middle class, premiumization of fragrances and skincare, and
focus on wellness. Coty's global exposure could help the company
take advantage of faster growth in emerging markets and outsized
growth in places like China, which currently accounts for 4% of
consolidated revenue.
Improved Credit Profile: Coty ended fiscal 2023 with around USD4.4
billion in debt, down from nearly USD9 billion of debt at the end
of fiscal 2020. The company paid down debt using FCF, asset sale
proceeds -- including USD2.5 billion received from its sale of a
stake in its Wella hair care business to KKR--and the equitization
and share exchange of most of the USD1 billion preferred stake held
by KKR.
Coty has a public goal of reducing net leverage towards 3.0x
exiting calendar 2023, 2.5x exiting calendar 2024 and 2.0x exiting
calendar 2025 (assuming the sale of its remaining Wella stake).
Company-calculated net leverage was 4.1x as of June 2023, which
equates to Fitch-calculated gross EBITDA leverage of 4.6x. Fitch
expects EBITDA leverage could decline to around 4x in fiscal 2024
and to the high 3x range thereafter, assuming Coty uses FCF toward
debt reduction. Fitch has not contemplated any additional proceeds
from its Wella stake beyond the USD150 million from the July 2023
announced sale of a 3.6% stake to IGF Wealth management.
Parent Subsidiary Linkage: Fitch's analysis includes a weak
parent/strong subsidiary approach between the parent, Coty, Inc.,
and its subsidiary, Coty B.V. Fitch assesses the quality of the
overall linkage as high, which results in an equalization of IDRs
across the corporate structure.
DERIVATION SUMMARY
Coty's 'BB' ratings and Positive Outlook reflect its leading market
position as one of the world's largest beauty companies with a
recently improved mix toward higher growth and higher margined
prestige fragrance and skincare, and its significantly improved
EBITDA leverage, which could trend below 4x in the next 12-24
months versus 4.6x as of June 30, 2023. The ratings also consider
the challenges in stabilizing and growing its market share
following pre-pandemic declines across some key brands given its
exposure to a rapidly changing and competitive marketing landscape
with constant shifts in consumer tastes and preferences.
An upgrade to 'BB+' would result from increased confidence in the
company's ability to meet Fitch's base case projections, which
include 2%-4% revenue growth, EBITDA in the USD1 billion range and
EBITDA leverage below 4x.
Rated peers in the consumer products space include Hasbro Inc.,
Mattel, Inc., Reynolds Consumer Products Inc, and Newell Brands
Inc.
Hasbro Inc.'s 'BBB-'/Stable ratings reflect its position as one of
the world's largest toy companies, good liquidity and cash flow
profile, and expectations that leverage (gross debt to EBITDA) will
be in the low 3x range in 2024, recognizing that it could be
elevated in the mid 3x range in 2023. The company could also use
asset sales or FCF to support deleveraging.
Mattel, Inc.'s 'BB+'/Positive rating reflects its strong portfolio
of owned brands such as Barbie, Hot Wheels and Fisher Price, which
the company has worked to revitalize and re-energize in recent
years. Together with cost-cutting initiatives, this has supported
strong top-line and EBITDA growth and significantly improved credit
metrics. The Positive Outlook reflects Fitch's view that Mattel's
improved competitive positioning and debt reduction over the past
few years could support its ability to navigate near-term
macroeconomic volatility and eventually support an investment-grade
rating.
Reynolds Consumer Products Inc.'s 'BB+'/Stable rating reflects its
leading market position in the categories in which it participates,
its strong innovation pipeline, and Fitch's expectation that
Reynolds' EBITDA leverage will be in the low to mid-3x range over
the next 24 months versus 3.8x in 2022 driven by EBITDA
improvements and debt repayment. Pricing actions taken in 2022
combined with improved operations in the company's Cooking & Baking
segment should drive improvements in margin and cash flow in 2023,
supporting the company's ability to reduce debt and continue
investing in the business.
Newell Brands Inc.'s 'BB'/Negative Outlook reflects elevated
leverage with material pressure on the top line and EBITDA, given a
significant pullback in retail orders and an overall slowdown in
discretionary consumer spending. In addition to a weakening macro
environment, execution risk is a concern as Newell continues to
realign and restructure its business segments and supply chain
network, which could further disrupt operations. Newell's Outlook
could be stabilized on increased visibility around management's
ability to execute its turnaround strategy and drive top-line and
EBITDA recovery in 2024, which, along with debt reduction, would
bring EBITDA leverage to under 4.5x.
KEY ASSUMPTIONS
- Revenue is expected to grow at approximately 5% in fiscal 2024 on
a fiscal 2023 revenue base of USD5.6 billion, partly due to the
continued recovery from the global pandemic. Fitch expects organic
revenue to grow in the low single digits thereafter, assuming
faster growth in the company's fragrance business and flattish
growth at Coty's consumer beauty (mass market cosmetics) brands;
- EBITDA is expected to increase to just over USD1 billion in
fiscal 2024 from USD973 million in fiscal 2023 on revenue growth,
with EBITDA margins stable around 17.5%. EBITDA is expected to
generally grow in line with revenue growth thereafter;
- FCF is projected to be around USD275 million in fiscal 2024
assuming some cash usage for working capital and around USD400
million annually in fiscal 2025/2026 given EBITDA growth and
assuming neutral working capital. Fitch expects Coty to divert a
portion of this toward debt reduction given USD2.3 billion of debt
due in April 2026. Fitch has not contemplated any additional
proceeds from its Wella stake beyond the USD150 million from the
announced sale of a 3.6% stake to IGF Wealth Management in July
2023. The company maintains an approximate 26% stake in Wella
(inclusive of the 3.6%), which Coty values at USD1.0 billion
according to its recent 10K filing. The company plans to fully
monetize its stake by FY25, adding to potential liquidity sources;
- EBITDA leverage is expected to decline to around 4x in fiscal
2024 and the high 3x in fiscal 2025 from 4.6x in fiscal 2023 on
continued debt reduction and some EBITDA expansion. Fitch's debt
calculations include USD143 million in preferred stock;
- Coty's debt generally has fixed interest rate structures aside
from its USD2 billion revolving credit facility; as such,
borrowings under this facility could be subject to higher interest
rates in the near term. Pricing is SOFR + 150bps for the USD1.67
billion revolver and Euribor +150 bp for the EUR300 million
tranche.
Achievement of the above projections could lead to an upgrade of
Coty's ratings to 'BB+'.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- An upgrade in Coty's ratings to 'BB+' could result from increased
confidence in Fitch's base case projections, including annual
organic top line growth of 2%-4%, EBITDA in the USD1 billion range,
and EBITDA leverage (gross debt/EBITDA) trending below 4x on
continued debt paydown as it tackles around USD2.3 billion in 2026
debt maturities.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- A stabilization in Coty's Outlook would result from a combination
of EBITDA below USD1 billion and lower than expected debt
reduction, resulting in EBITDA leverage above 4x;
- A downgrade to 'BB-' could result from a deceleration in top line
and declining EBITDA margins such that EBITDA leverage sustains
above 4.5x;
- A change in financial policy or debt financed acquisitions that
result in EBITDA leverage sustained above 4.5x could also lead to a
downgrade.
LIQUIDITY AND DEBT STRUCTURE
Coty's liquidity as of June 30, 2023 consisted of USD247 million in
cash and approximately USD1.8 billion of availability under its
USD2 billion revolving credit facility after accounting for USD229
million of outstanding borrowings. Fitch expects the company to
generate USD300 million in FCF in fiscal 2024 and around USD400
million annually thereafter, and expects the company to continue to
pay down debt over the next 24 months. Coty could also use FCF
toward USD400 million in share buybacks over fiscal 2024/2025; in
June and December 2022, Coty entered into certain forward
repurchase contracts to start hedging for two potential USD200
million and USD196 million share buyback programs, in 2024 and
2025, respectively.
In addition, Coty has a 25.9% stake in Wella, and the company has
publicly stated that it expects to fully exit its position by
calendar 2025, with expected proceeds of over USD1 billion. In July
2023, the company announced its intent to sell a 3.6% stake to IGF
Wealth management for USD150 million, subject to certain closing
conditions, including the approval by KKR, the majority
stakeholder. Coty intends to use the net proceeds to pay down a
portion of the outstanding principal on its RCF.
As of June 30, 2023, Coty had USD229 million of borrowings under
its revolver, USD1.2 billion in first lien term loan facility
maturing April 2025, USD2.2 billion of senior secured notes due
2026-2030, USD670 million in senior unsecured notes due April 2026
and USD142 million of convertible Series B preferred stock (which
Fitch treats as debt given what Fitch views as a lack of permanence
in the cap structure given the high coupon).
On July 11, 2023, Coty refinanced its existing USD2 billion credit
facility with two new tranches of senior secured revolving credit
commitments, one in an aggregate principal amount of USD1,670
million available in U.S. dollars and certain other currencies and
the other in an aggregate principal amount of EUR300 million
available in euros, both due to mature on July 11, 2028. The
company issued USD750 million in 6.625% senior secured notes due
2030 in July 2023. Proceeds from the notes issuance and a EUR408
million draw on the new revolver were used to repay the company's
USD1.2 billion term loan.
Coty has significant maturities on April 15, 2026, when
approximately USD1.7 billion of U.S. dollar and Euro senior secured
notes and USD670 senior unsecured notes come due. Fitch expects the
company to address these maturities through a combination of debt
tenders/paydown and refinancing.
Coty's targets of reducing net leverage towards 3.0x exiting
calendar 2023, 2.5x exiting calendar 2024 and 2.0x exiting calendar
2025 imply significant debt reduction over the next two years. The
secured notes contain a provision that the collateral, guarantees
and the majority of the negative covenants will be suspended, so
long as the company maintains an investment-grade rating from two
of three major rating agencies on the notes. The collateral and
guarantees and the majority of the negative covenants will be
suspended for the credit facility, so long as the company maintains
a corporate credit investment grade rating.
Recovery Considerations: Fitch has assigned Recovery Ratings (RRs)
to the various debt tranches in accordance with Fitch criteria,
which allows for the assignment of RRs for issuers with IDRs in the
'BB' category. Given the distance to default, RRs in the 'BB'
category are not computed by bespoke analysis. Instead, they serve
as a label to reflect an estimate of the risk of these instruments
relative to other instruments in the entity's capital structure.
Fitch has assigned the senior secured credit facilities and secured
notes, which are pari passu, 'BB+'/'RR2' ratings, indicating
superior recovery prospects post default.
The senior credit facilities and the secured notes are senior
secured obligations of Coty and are guaranteed on a senior secured
basis by each of Coty's wholly owned domestic subsidiaries. The
revolving credit facilities are co-issued under Coty Inc. and Coty
B.V. Fitch has assigned 'BB'/'RR4' ratings to the unsecured notes,
indicating average recovery prospects and 'B+'/'RR6' ratings to the
Series B Preferred Stock, given their deeply subordinated nature.
These instruments are issued under Coty Inc.
ISSUER PROFILE
Founded in 1904, Coty Inc. is one of the world's largest beauty
companies, manufacturing, marketing and distributing prestige and
mass market products with a top-three global position in both
fragrances and mass color cosmetics, and an emerging presence in
skincare & body care categories.
SUMMARY OF FINANCIAL ADJUSTMENTS
Historical and projected EBITDA is adjusted to add back non-cash
stock-based compensation and exclude non-recurring charges.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery
----------- ------ --------
Coty Inc. LT IDR BB New Rating
senior secured LT BB+ New Rating RR2
senior secured LT BB+ New Rating RR2
senior
unsecured LT BB New Rating RR4
preferred LT B+ New Rating RR6
Coty B.V. LT IDR BB New Rating
senior secured LT BB+ New Rating RR2
COTY INC: Fitch Rates Proposed EUR500MM Sr. Secured Notes 'BB+'
---------------------------------------------------------------
Fitch Ratings has assigned a 'BB+'/'RR2' rating to Coty Inc.'s
proposed five-year EUR500 million senior secured notes. Net
proceeds of the new notes, which will be pari passu to Coty's
existing secured debt, will be used for general corporate purposes,
including paying down revolver borrowings.
Coty's ratings and Positive Outlook reflect its leading market
position as one of the world's largest beauty companies with a
recently improved product mix aiming toward higher growth and
higher margined prestige fragrance and skincare, and its improving
EBITDA leverage (gross debt/EBITDA), which could trend below 4x in
the next 12-24 months versus 4.6x as of June 30, 2023.
The ratings also consider the challenges in stabilizing and growing
its market share following pre-pandemic declines across some key
brands given its exposure to a rapidly changing and competitive
marketing landscape with constant shifts in consumer tastes and
preferences.
KEY RATING DRIVERS
Improved Business Profile: The company's operating performance and
financial profile have improved meaningfully since the pandemic,
with reported FY23 (ending June 2023) revenue of USD5.6 billion and
EBITDA of USD973 million, returning close to 2019 proforma levels
after adjusting for the sale of a majority stake in Wella and a
USD300 million reduction in revenue resulting from a rationalized
distributor network.
The company, under the leadership of Sue Nabi, a L'Oreal veteran
who became CEO effective September 2020, detailed its strategic
initiatives in early 2021 to drive medium-term revenue growth of
6%-8% and has taken significant steps to invest both in existing
categories as well as new adjacencies like skincare and body care.
The company's portfolio has improved with its prestige segment
driving 62% (with fragrances at around 56%, cosmetics around 3% and
skincare at around 4%) of fiscal 2023 revenue versus 56% in fiscal
2019. The prestige business carries close to 22% EBITDA margins and
now drives over 75% of EBITDA. The consumer beauty business, which
is inclusive of its mass segment color cosmetics (25% of total
revenue), body care (9%) and mass fragrances (6%) has sub-11%
EBITDA margin. The company has seen some positive momentum in the
consumer beauty business following recent investments, including
indications of market share stabilization, albeit in a somewhat
volatile post-pandemic spending environment.
Favorable Mix Shift Supports Revenue Growth: Between 2016, when
Coty acquired P&G's beauty business, and 2020, Coty consistently
lost market share given a lack of innovation around its key
consumer brands including Covergirl, Rimmel, Max Factor and Sally
Hansen, which was further exacerbated by a shift in beauty sales
from the drugstore and mass channels to specialty retailers like
Sephora and Ulta.
Coty has taken meaningful steps to fill gaps in its portfolio to
stem share losses. Coty is investing heavily in skincare and
natural products across legacy and newer brands. Its investment in
innovation, new product launches and marketing have appeared to
stabilize its shares in the consumer beauty business after five
years of declines.
Fitch believes Coty could achieve 2%-4% top line growth over the
next 2-3 years with prestige fragrances to be the main contributor
to top line growth. The consumer beauty business could be flattish,
given ongoing repositioning efforts across key brands and overall
challenges in the mass market beauty space. Coty's emerging
presence in prestige makeup, skincare and markets like China
provide medium-term growth opportunities.
Exposure to Dynamic Industry and Evolving Marketing Landscape: The
fragrance and color cosmetics industries have demonstrated some
positive long-term characteristics, including mid-single-digit
annual growth and relatively high margins. However, the industry --
and some of its most venerable brands -- have been disrupted by new
marketing and retail channels.
Consumers are building brand awareness and affinity and product
knowledge through preferred online sites and social influencers, as
well as through specialty channels such as Ulta and Sephora. The
global beauty business is expected to continue to benefit from a
rising middle class, premiumization of fragrances and skincare, and
focus on wellness. Coty's global exposure could help the company
take advantage of faster growth in emerging markets and outsized
growth in places like China, which currently accounts for 4% of
consolidated revenue.
Improved Credit Profile: Coty ended fiscal 2023 with around USD4.4
billion in debt, down from nearly USD9 billion of debt at the end
of fiscal 2020. The company paid down debt using FCF, asset sale
proceeds -- including USD2.5 billion received from its sale of a
stake in its Wella hair care business to KKR--and the equitization
and share exchange of most of the USD1 billion preferred stake held
by KKR.
Coty has a public goal of reducing net leverage towards 3.0x
exiting calendar 2023, 2.5x exiting calendar 2024 and 2.0x exiting
calendar 2025 (assuming the sale of its remaining Wella stake).
Company-calculated net leverage was 4.1x as of June 2023, which
equates to Fitch-calculated gross EBITDA leverage of 4.6x. Fitch
expects EBITDA leverage could decline to around 4x in fiscal 2024
and to the high 3x range thereafter, assuming Coty uses FCF toward
debt reduction. Fitch has not projected any proceeds from
additional sales in its Wella stake beyond the USD150 million from
the July 2023 announced sale of a 3.6% stake to IGF Wealth
management.
Parent Subsidiary Linkage: Fitch's analysis includes a weak
parent/strong subsidiary approach between the parent, Coty, Inc.,
and its subsidiary, Coty B.V. Fitch assesses the quality of the
overall linkage as high, which results in an equalization of IDRs
across the corporate structure.
DERIVATION SUMMARY
Coty's 'BB' ratings and Positive Outlook reflect its leading market
position as one of the world's largest beauty companies with a
recently improved mix toward higher growth and higher margined
prestige fragrance and skincare, and its significantly improved
EBITDA leverage, which could trend below 4x in the next 12-24
months versus 4.6x as of June 30, 2023.
An upgrade to 'BB+' would result from increased confidence in the
company's ability to meet Fitch's base case projections, which
include 2%-4% revenue growth, EBITDA in the USD1 billion range and
EBITDA leverage below 4x.
Rated peers in the consumer products space include Hasbro Inc.,
Mattel, Inc., Reynolds Consumer Products Inc, and Newell Brands
Inc.
Hasbro Inc.'s 'BBB-'/Stable ratings reflect its position as one of
the world's largest toy companies, good liquidity and cash flow
profile, and expectations that leverage (gross debt to EBITDA) will
be in the low 3x range in 2024, recognizing that it could be
elevated in the mid 3x range in 2023. The company could also use
asset sales or FCF to support deleveraging.
Mattel, Inc.'s 'BB+'/Positive rating reflects its strong portfolio
of owned brands such as Barbie, Hot Wheels and Fisher Price, which
the company has worked to revitalize and re-energize in recent
years. Together with cost-cutting initiatives, this has supported
strong top-line and EBITDA growth and significantly improved credit
metrics. The Positive Outlook reflects Fitch's view that Mattel's
improved competitive positioning and debt reduction over the past
few years could support its ability to navigate near-term
macroeconomic volatility and eventually support an investment-grade
rating.
Reynolds Consumer Products Inc.'s 'BB+'/Stable rating reflects its
leading market position in the categories in which it participates,
its strong innovation pipeline, and Fitch's expectation that
Reynolds' EBITDA leverage will be in the low to mid-3x range over
the next 24 months versus 3.8x in 2022 driven by EBITDA
improvements and debt repayment. Pricing actions taken in 2022
combined with improved operations in the company's Cooking & Baking
segment should drive improvements in margin and cash flow in 2023,
supporting the company's ability to reduce debt and continue
investing in the business.
Newell Brands Inc.'s 'BB'/Negative Outlook reflects elevated
leverage with material pressure on the top line and EBITDA, given a
significant pullback in retail orders and an overall slowdown in
discretionary consumer spending. In addition to a weakening macro
environment, execution risk is a concern as Newell continues to
realign and restructure its business segments and supply chain
network, which could further disrupt operations. Newell's Outlook
could be stabilized on increased visibility around management's
ability to execute its turnaround strategy and drive top-line and
EBITDA recovery in 2024, which, along with debt reduction, would
bring EBITDA leverage to under 4.5x.
KEY ASSUMPTIONS
- Revenue is expected to grow at approximately 5% in fiscal 2024 on
a fiscal 2023 revenue base of USD5.6 billion, partly due to the
continued recovery from the global pandemic. Fitch expects organic
revenue to grow in the low single digits thereafter, assuming
faster growth in the company's fragrance business and flattish
growth at Coty's consumer beauty (mass market cosmetics) brands;
- EBITDA is expected to increase to just over USD1 billion in
fiscal 2024 from USD973 million in fiscal 2023 on revenue growth,
with EBITDA margins stable around 17.5%. EBITDA is expected to
generally grow in line with revenue growth thereafter;
- FCF is projected to be around USD275 million in fiscal 2024
assuming some cash usage for working capital and around USD400
million annually in fiscal 2025/2026 given EBITDA growth and
assuming neutral working capital. Fitch expects Coty to divert a
portion of this toward debt reduction given USD2.3 billion of debt
due in April 2026. Fitch has not projected any proceeds from
additional sales in its Wella stake beyond the USD150 million from
the announced sale of a 3.6% stake to IGF Wealth Management in July
2023. The company maintains an approximate 26% stake in Wella
(inclusive of the 3.6%), which Coty values at USD1.0 billion
according to its recent 10K filing. The company plans to fully
monetize its stake by FY25, adding to potential liquidity sources;
- EBITDA leverage is expected to decline to around 4x in fiscal
2024 and the high 3x in fiscal 2025 from 4.6x in fiscal 2023 on
continued debt reduction and some EBITDA expansion. Fitch's debt
calculations include USD143 million in preferred stock;
- Coty's debt generally has fixed interest rate structures aside
from its USD2 billion revolving credit facility; as such,
borrowings under this facility could be subject to higher interest
rates in the near term. Pricing is SOFR + 150bps for the USD1.67
billion revolver and Euribor +150 bp for the EUR300 million
tranche.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- An upgrade in Coty's ratings to 'BB+' could result from increased
confidence in Fitch's base case projections, including annual
organic top line growth of 2%-4%, EBITDA in the USD1 billion range,
and EBITDA leverage (gross debt/EBITDA) trending below 4x on
continued debt paydown as it tackles around USD2.3 billion in 2026
debt maturities.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- A stabilization in Coty's Outlook would result from a combination
of EBITDA below USD1 billion and lower than expected debt
reduction, resulting in EBITDA leverage above 4x;
- A downgrade to 'BB-' could result from a deceleration in top line
and declining EBITDA margins such that EBITDA leverage sustains
above 4.5x;
- A change in financial policy or debt financed acquisitions that
result in EBITDA leverage sustained above 4.5x could also lead to a
downgrade.
LIQUIDITY AND DEBT STRUCTURE
Coty's liquidity as of June 30, 2023 consisted of USD247 million in
cash and approximately USD1.8 billion of availability under its
USD2 billion revolving credit facility after accounting for USD229
million of outstanding borrowings. Fitch expects the company to
generate USD300 million in FCF in fiscal 2024 and around USD400
million annually thereafter, and expects the company to continue to
pay down debt over the next 24 months. Coty could also use FCF
toward USD400 million in share buybacks over fiscal 2024/2025; in
June and December 2022, Coty entered into certain forward
repurchase contracts to start hedging for two potential USD200
million and USD196 million share buyback programs, in 2024 and
2025, respectively.
In addition, Coty has a 25.9% stake in Wella, and the company has
publicly stated that it expects to fully exit its position by
calendar 2025, with expected proceeds of over USD1 billion. In July
2023, the company announced its intent to sell a 3.6% stake to IGF
Wealth management for USD150 million, subject to certain closing
conditions, including the approval by KKR, the majority
stakeholder. Coty intends to use the net proceeds to pay down a
portion of the outstanding principal on its RCF.
As of June 30, 2023, Coty had USD229 million of borrowings under
its revolver, USD1.2 billion in first lien term loan facility
maturing April 2025, USD2.2 billion of senior secured notes due
2026-2030, USD670 million in senior unsecured notes due April 2026
and USD142 million of convertible Series B preferred stock which
Fitch treats as debt.
On July 11, 2023, Coty refinanced its existing USD2 billion credit
facility with two new tranches of senior secured revolving credit
commitments, one in an aggregate principal amount of USD1,670
million available in U.S. dollars and certain other currencies and
the other in an aggregate principal amount of EUR300 million
available in euros, both due to mature on July 11, 2028. The
company issued USD750 million in 6.625% senior secured notes due
2030 in July 2023. Proceeds from the notes issuance and a EUR408
million draw on the new revolver were used to repay the company's
USD1.2 billion term loan.
Coty has significant maturities on April 15, 2026, when
approximately USD1.7 billion of U.S. dollar and Euro senior secured
notes and USD670 senior unsecured notes come due. Fitch expects the
company to address these maturities through a combination of debt
tenders/paydown and refinancing.
Coty's targets of reducing net leverage towards 3.0x exiting
calendar 2023, 2.5x exiting calendar 2024 and 2.0x exiting calendar
2025 imply significant debt reduction over the next two years. The
secured notes contain a provision that the collateral, guarantees
and the majority of the negative covenants will be suspended, so
long as the company maintains an investment-grade rating from two
of three major rating agencies on the notes. The collateral and
guarantees and the majority of the negative covenants will be
suspended for the credit facility, so long as the company maintains
a corporate credit investment grade rating.
Recovery Considerations: Fitch has assigned Recovery Ratings (RRs)
to the various debt tranches in accordance with Fitch criteria,
which allows for the assignment of RRs for issuers with IDRs in the
'BB' category. Given the distance to default, RRs in the 'BB'
category are not computed by bespoke analysis. Instead, they serve
as a label to reflect an estimate of the risk of these instruments
relative to other instruments in the entity's capital structure.
Fitch rates the senior secured credit facilities and secured notes,
which are pari passu, 'BB+'/'RR2', indicating superior recovery
prospects post default.
The senior credit facilities and the secured notes are senior
secured obligations of Coty and are guaranteed on a senior secured
basis by each of Coty's wholly owned domestic subsidiaries. The
revolving credit facilities are co-issued under Coty Inc. and Coty
B.V. Fitch rates the unsecured notes 'BB'/'RR4', indicating average
recovery prospects and rates the the Series B Preferred Stock
'B+'/'RR6', given their deeply subordinated nature. These
instruments are issued under Coty Inc.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
ISSUER PROFILE
Founded in 1904, Coty Inc. is one of the world's largest beauty
companies, manufacturing, marketing and distributing prestige and
mass market products with a top-three global position in both
fragrances and mass color cosmetics, and an emerging presence in
skincare & body care categories.
SUMMARY OF FINANCIAL ADJUSTMENTS
Historical and projected EBITDA is adjusted to add back non-cash
stock-based compensation and exclude non-recurring charges.
Entity/Debt Rating Recovery
----------- ------ --------
Coty Inc.
senior secured LT BB+ New Rating RR2
CSC 1 LLC: Hires Bronson Law Offices P.C. as Counsel
----------------------------------------------------
CSC 1 LLC and its affiliates seeks approval from the U.S.
Bankruptcy Court for the Southern District of New York to employ
Bronson Law Offices, P.C. as counsel.
The firm will provide these services:
(a) assist in the administration of the Debtor's Chapter 11
case;
(b) prepare or review operating reports;
(c) set a deadline for filing proofs of claim;
(d) seek court approval to use cash collateral;
(e) review claims and resolve claims, which should be
disallowed; and
(f) assist in reorganizing and confirming a Chapter 11 plan.
The firm will be paid at these rates:
H. Bruce Bronson, Esq. $495 per hour
Paralegal or Legal Assistant $150 to $250 per hour
The firm received a retainer in the amount of $15,000.
As disclosed in court filings, Bronson Law Offices does not
represent any interest adverse to the Debtor and its estate.
The firm can be reached at:
H. Bruce Bronson, Esq.
BRONSON LAW OFFICES, P.C.
480 Mamaroneck Ave.
Harrison, NY 10528
Tel: (914) 269-2530
Fax: (888) 908-6906
Email: hbbronson@bronsonlaw.net
About CSC 1 LLC
CSC 1 LLC operates a retail sandwich deli located at 99-103 Third
Avenue in New York, serving drug free meats, nitrate-free north
country smokehouse bacon, cage-free brown eggs, and Balthazar
croissants.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D.N.Y. Case No. 23-10943) on June 16,
2023. In the petition signed by Richard D. Zaro, manager of owner,
the Debtor disclosed up to $500,000 in both assets and
liabilities.
Judge Lisa G. Beckerman oversees the case.
H Bruce Bronson, Esq., at Bronson Law Office, P.C., represents the
Debtor as legal counsel.
CSG SYSTEMS: Moody's Affirms 'Ba2' CFR, Outlook Remains Stable
--------------------------------------------------------------
Moody's Investors Service affirmed CSG Systems International,
Inc.'s corporate family rating at Ba2, and its probability of
default rating at Ba2-PD. Moody's upgraded the instrument rating on
the senior secured first lien credit facilities to Ba1. Moody's
maintained CSG's speculative grade liquidity ("SGL") rating
unchanged at SGL-1. The outlook remains stable. CSG is a
Colorado-based leading global provider of revenue management,
digital monetization, customer experience software and payment
solutions.
The affirmation of the CFR and PDR follows CSG's issuance of $425
million aggregate principal of unsecured convertible notes.
Proceeds from the debt issuance will be used to (i) fund a $90
million share repurchase, (ii) pay transaction fees and the
approximately $34.3 million cost of related capped call derivatives
that will be put in place to mitigate equity dilution, (iii) add up
to $15 million of cash to the balance sheet, and (iv) repay
approximately $275 million of revolver outstanding.
The transaction is credit negative because it increases CSG's total
debt and pro forma financial leverage to roughly 2.7x from 2.1x as
of the twelve-month period ending June 30, 2023. However,
debt/EBITDA remains appropriate for the current Ba2 rating and
Moody's expects CSG will continue to employ financial policies that
sustain long-term leverage below 3.0x. The upgrade of the senior
secured first lien credit facilities instrument rating to Ba1 from
Ba2 reflects their priority in the pro forma capital structure,
ahead of the new unsecured notes (unrated), which would absorb
potential losses in a default scenario.
Upgrades:
Issuer: CSG Systems International, Inc.
Senior Secured 1st Lien Bank Credit Facility, Upgraded to Ba1 from
Ba2
Affirmations:
Issuer: CSG Systems International, Inc.
Corporate Family Rating, Affirmed Ba2
Probability of Default Rating, Affirmed Ba2-PD
Outlook Actions:
Issuer: CSG Systems International, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
CSG Systems International, Inc.'s ("CSG") benefits from a strong
competitive position in the North American cable and direct
broadcast satellite (DBS) billing and customer management services
market. Most of CSG's revenue is generated from SaaS subscriptions
and related services, with contracts typically spanning 4-6 years
and high renewal rates, which results in a stable recurring revenue
profile. The company has improved its organic growth over the last
two years towards mid single-digit rates and seeks to boost growth
to achieve a $1.5 billion total revenue target by 2025, from $1.1
billion for the last 12 month ending June 30, 2023. Larger scale
and diversification are credit positive, but event risk has
increased given the ambitious revenue goal, which we expect will
require inorganic contributions that could lead to a higher
appetite for financial leverage. The recent issuance of convertible
notes in September 2023 has increased pro forma debt/EBITDA
leverage to roughly 2.7x (for the 12-month period ending June 30,
2023), which reduces CSG's capacity for incremental debt-funded M&A
within the Ba2 rating category. The current ratings reflect Moody's
expectation for balanced financial strategies that sustain
long-term debt/EBITDA leverage under 3.0x (Moody's adjusted).
CSG has steadily grown its annual revenue over the years but scale
remains small relative to peers in the Ba2 rating category. High
client and market concentration also weigh on the credit profile.
CSG's top 2 customers, Comcast Corporation (A3 stable) and Charter
Communications, Inc. (Ba2 stable), account for approximately 40% of
total revenue. About 70% of revenue is derived from a relatively
small number of communications services providers ("CSP"). CSG also
has geographic concentration with roughly 85% of revenue generated
in the US, a mature market. Large customers have negotiating
leverage and may demand pricing discounts upon renewal
negotiations, pressuring growth and profits. CSG seeks to diversify
geographically, and beyond the mature US billing and customer
services market for CSPs, but investments in new revenue streams
could lower overall profitability and face heightened competition.
The stable outlook reflects Moody's expectation that CSG will
experience sustained growth and profitability, while keeping
balanced financial policies. The ongoing conversion of Charter
subscribers in the US to CSG's ACP platform will continue to boost
revenue growth in 2023 towards high single-digits. Moody's expects
2024 revenue growth closer to CSG's long-term expectations in the
mid single-digit range, supported by the lack of large contract
renewals. Moody's anticipates moderating labor inflation will
result in modest profitability improvements, with CSG's EBITA
margin in the 16% - 17% range and debt/EBITDA around 2.5x, in the
absence of leveraging transactions. All metrics Moody's adjusted.
CSG's speculative grade liquidity rating of SGL-1 reflects a very
good liquidity profile based on a cash and short-term investments
balance of $146 million as of 30 June 2023. Moody's expects annual
cash from operations over $125 million (Moody's adjusted, excluding
transaction and capped call costs) will be more than sufficient to
cover capital expenditures around $50 million (Moody's adjusted),
about $35 million of dividend payments and mandatory term loan
amortization payments. Pro forma with the convertible notes
issuance, CSG also has approximately $417 million of available
capacity within its $450 million revolving credit facility, which
matures September 13, 2026. Per the Credit Agreement, the interest
coverage ratio, defined as the ratio of consolidated EBITDA to
consolidated interest expense, cannot be less than 2.0x. In
addition, the company's total leverage, as defined by its total
debt/EBITDA ratio cannot be greater than 4.5x and the first-lien
leverage ratio cannot exceed 2.75x (all covenant metrics per the
Credit Agreement definition). Moody's expects CSG will be well in
compliance with its covenants for at least the next twelve months.
The ratings for CSG's debt instruments reflect both the Ba2-PD
probability of default rating and an average family loss given
default assessment. The senior secured first lien credit facilities
are rated Ba1, one notch above the corporate family rating. The
senior secured facilities benefit from the cushion from the $425
million senior unsecured convertible notes (unrated), which rank
lower in the capital structure.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Moody's expects 1) organic revenue
growth above mid-single digits, evidencing market share gains or
successful expansion into new markets; 2) increased scale and
market diversification result in materially lower customer
concentration; 3) conservative financial policies that keep
debt/EBITDA around historical levels; 4) sustained improvements in
profitability and free cash flow, with operating margins (Moody's
adjusted) stabilizing in the upper 10s percent and free cash flow
to debt above 20%; and 5) CSG will maintain very good liquidity.
The ratings could be downgraded if Moody's expects 1) organic
revenue declines due to client losses or large contract renewals at
unfavorable terms, signaling a weakening competitive position; 2)
debt/EBITDA (Moody's adjusted) sustained above 3.0x; 3)
profitability declines with operating margin (Moody's adjusted)
trending towards 10% or free cash flow to debt (Moody's adjusted
including dividends) sustained below 15%; or 4) liquidity
deteriorates materially. The senior secured instrument ratings
could be downgraded if the convertible notes are redeemed or the
proportion of secured debt increases.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
CSG Systems International, Inc., based in Englewood, Colorado, is a
leading global provider of revenue management, digital
monetization, customer experience software and payment solutions.
The company generated roughly $1.1 billion in revenue as of the
twelve months ending June 30, 2023.
CSTN MERGER: Moody's Affirms 'Caa2' CFR, Outlook Remains Negative
-----------------------------------------------------------------
Moody's Investors Service affirmed CSTN Merger Sub, Inc.'s (d.b.a.
Cornerstone Chemical Company or "Cornerstone") corporate family
rating at Caa2 and the Caa2 rating on its $450 million 10.25%
senior secured notes due 2027. Moody's also downgraded
Cornerstone's probability of default rating to Caa3-PD /LD from
Caa2-PD and appended a limited default designation (/LD). These
actions follow the company's announcement that it had entered into
a $50 million super senior secured bridge facility term sheet on
August 25, 2023 that will provide additional liquidity that is
needed to continue operations until end market demand and
profitability recovers. The outlook remains negative.
Affirmations:
Issuer: CSTN Merger Sub, Inc.
Corporate Family Rating, Affirmed Caa2
Senior Secured Regular Bond/Debenture, Affirmed Caa2
Downgrades:
Issuer: CSTN Merger Sub, Inc.
Probability of Default Rating, Downgraded to Caa3-PD /LD from
Caa2-PD (/LD appended)
Outlook Actions:
Issuer: CSTN Merger Sub, Inc.
Outlook, Remains Negative
RATINGS RATIONALE
Cornerstone's Caa2 rating reflects weak margins and demand for two
of its three main commodities: acrylonitrile and melamine. While
demand and margins for sulfuric acid remain relatively healthy,
this business is not large enough offset the weakness in the other
two main commodities and keep the company free cash flow breakeven.
Additionally, weak domestic demand in China is keeping pressure on
global acrylonitrile and melamine margins. These trends are likely
to continue through the second half of 2023 and into 2024. While
the additional capital is a credit positive, Cornerstone will need
these funds to make improvements that will allow it to adapt its
cost structure to a weaker margin environment. Credit metrics are
likely to remain weak until market conditions improve.
On August 29, 2023, Cornerstone disclosed that it had entered into
a $50 million super senior secured bridge facility term sheet on
August 25, 2023. Notes issued under this facility would be secured
by the same collateral that secures the 2027 notes on a super
senior first priority basis. With respect to the collateral
securing the company's ABL facility, the new notes would have a
claim that would be junior to the ABL obligations, but senior to
the 2027 notes. The new notes will have an interest rate of 13%,
payable monthly, and mature on August 25, 2024.
Cornerstone's initial draw under the bridge facility took place on
August 25, 2023 with the issuance of $22 million of 13% Priority
Senior Secured Notes due 2024. This leaves $28 million than can be
funded with one or more additional draws. However, all the Priority
Senior Secured Notes must be repaid on August 25, 2024. The bridge
facility is provided by a syndication comprised of Brigade Capital
Management, LP, Millstreet Credit Fund LP, and Mercer Investment
Fund 1.
Coincident with the new facility, holders of the existing 2027
notes have also agreed to extended the grace period for a default
on interest payments from 30 days to 361 days. Given that the first
$20 million interest payment on the 2027 notes was scheduled to be
paid on 0September 01, 2023, there will likely be an extended delay
in the actual payment. Furthermore, consistent with Moody's
policies these agreements constitute a distressed exchange. Hence
Moody's downgraded Cornerstone's PDR rating to Caa3-PD /LD. A
distressed exchange is when bondholders make concessions that
amount to a diminished financial return relative to the original
obligation with the effect of the transaction being the avoidance
of an eventual payment default on the debt.
In connection with the bridge facility, Cornerstone entered into a
pledge and security agreement granting security interests in
substantially all of their assets to Wilmington Savings Fund
Society, FSB, as collateral agent, to secure the obligations under
the new notes.
Cornerstone's liquidity will improve by roughly $90 million until
August 2024 due to the funds available under the new super senior
secured bridge facility and the ability to defer its September 2023
and March 2024 interest payments for almost one year. However, all
these obligations will remain short term liabilities. Hence, in
Moody's opinion, liquidity has not improved sustainably. In
addition to the new funds, the company has access to a $100 million
ABL facility maturing in 2027 with less than $9 million of
availability at June 30, 2023. The company also has access to a one
year 9 million Pound Sterling facility maturing May 31, 2024 (the
company as renewed this on a yearly basis since 2018) with less
than $1 million of availability as of June 30, 2023. The company
had $3 million of cash on the balance sheet. Free cash flow in 2023
is likely to be negative and 2024 is less certain given the limited
visibility on volumes and margins. The ABL has a springing fixed
charge coverage ratio of not less than 1.0x, which is calculated
quarterly and tested whenever availability is less than $9.6
million. Also availability under the ABL facilities could be
constrained by lower demand and selling prices.
Cornerstone has struggled in 2023 due to weaker demand and margins
in acrylonitrile and melamine despite access to lower ammonia and
propylene costs. Given the relatively weak markets for housing,
electronics and durable goods in North America, Moody's believes
that the company's financial performance will remain challenged
until its can make additional improvements that will allow it to
adapt its cost structure to this weaker economic environment.
Moody's expect these end market conditions to persist through the
latter half of 2023 and into 2024. Furthermore, weak demand in
Europe and Asia, especially China, will keep global commodity
prices low over the same timeframe. Prior to the issuance of these
new notes, Cornerstone's liquidity was severely stressed with
roughly $12 million of cash and availability under its facilities
as of June 30, 2023. In addition, its on-site customer Roehm
America LLC (rated parent Roehm Holding GmbH; B3 negative) has
announced its intension to stop manufacturing at Cornerstone's site
in June 2025. Roehm purchases by-product HCN (from the
acrylonitrile process) and sulfuric acid from Cornerstone, and pays
an allocated share of the fixed costs at the Louisiana site.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's would likely consider a downgrade, if Cornerstone's
liquidity declines below $15 million and if free cash flow is
negative by more than $30 million in 2023. An upgrade is highly
unlikely at this time due to the company's weak credit metrics and
liquidity, but in the future, if liquidity improves to over $25
million on a sustained basis, Moody's-adjusted leverage declines
below 8.0x, and the company is likely to generate free cash flow in
most years, Moody's would consider an upgrade. An upgrade would
likely require the company to find a new customer for the vast
majority of its HCN volumes post June 2025, or a sustained
improvement in margins for its three main commodities.
ESG CONSIDERATIONS
CSTN's Credit Impact Score of CIS-5 is due to the private equity
sponsors tolerance for elevated leverage at a single site commodity
chemical plant that has experienced significant volatility in
earnings and higher than planned capital costs. In addition,
environmental and social risks reinforce the CIS-5 score.
Environmental risks are elevated (E-5) for chemical companies due
to the amount of waste and pollution generated on an annual basis
relative to most other industries. Physical climate risk is also
elevated due to the location of CSTN's sole facility on the US Gulf
Coast. Social risks are significant (S-4) due to the toxic and
flammable nature of the chemicals used and produced at the
company's facility (responsible production and health and safety
risks). CSTN's governance score has been lowered to G-5 due to the
sponsor's tolerance for elevated leverage, variability in financial
performance versus management's projections and the reliance on
other companies that operate at the site.
Headquartered in Waggaman, LA, CSTN Merger Sub, Inc., more commonly
known as Cornerstone Chemical Company, produces base chemicals such
as acrylonitrile, urea, melamine, and sulfuric acid. Cornerstone is
the third largest producer of acrylonitrile and the only producer
of melamine in the US. Revenues are under $600 million. Private
equity firm Littlejohn & Co. bought Cornerstone in August 2017 from
H.I.G. Capital.
The principal methodology used in these ratings was Chemicals
published in June 2022.
CUSTOM LOGGING: Court OKs Interim Cash Collateral Access
--------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of North
Carolina, Raleigh Division, authorized Custom Logging, LLC to use
cash collateral on an interim basis in an amount not to exceed
$50,000 in accordance with the budget.
The Debtor requires the use of cash collateral to pay for proper
and necessary insurance coverage for its automobiles and
equipment.
The possible lienholders of the Debtor's cash collateral are
Commercial Credit Group, Globex Funding, Iruka Capital Group,
Parkview Advance, and Venture Plus Partners dba Avanza Capital.
As adequate protection, the Secured Creditors are granted a lien in
the Debtor's post-petition revenue and other assets acquired
post-petition to the same extent and priority as they had prior to
the filing of the case.
A further hearing on the matter is set for September 21, 2023 at
1:30 p.m.
A copy of the order is available at https://urlcurt.com/u?l=Ef0Cgu
from PacerMonitor.com.
About Custom Logging, LLC
Custom Logging, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. N.C. Case No. 23-02538) on September
1, 2023. In the petition signed by James Sherrill Sewel,
member-manager, the Debtor disclosed $50,000 in assets and up to
$10 million in liabilities.
Judge Pamela W. Mcafee oversees the case.
Philip M. Sasser, Esq., at Sasser Law Firm, represents the Debtor
as legal counsel.
CVR ENERGY: Moody's Affirms 'Ba3' CFR, Outlook Remains Negative
---------------------------------------------------------------
Moody's Investors Service affirmed CVR Energy, Inc.'s (CVI)
Corporate Family Rating at Ba3 and the company's senior unsecured
notes ratings at B1. CVI's Speculative Grade Liquidity (SGL) rating
remains unchanged at SGL-2. The outlook remains negative.
"The continued negative outlook on CVR Energy's ratings reflects
uncertainties relating to financial policies around return of
capital to shareholders" commented Jonathan Teitel, a Senior
Analyst at Moody's. "The affirmation of the ratings reflects the
company's solid operating performance and good liquidity."
Affirmations:
Issuer: CVR Energy, Inc.
Corporate Family Rating, Affirmed Ba3
Probability of Default Rating, Affirmed Ba3-PD
Senior Unsecured Regular Bond/Debenture, Affirmed B1
Outlook Actions:
Issuer: CVR Energy, Inc.
Outlook, Remains Negative
RATINGS RATIONALE
CVI's negative outlook reflects Moody's concerns regarding the
potential for future changes in financial policies around return of
capital to shareholders and maintenance of ample liquidity to
manage its large potential liability for renewable identification
numbers (RINs) and related litigation, particularly given the
controlled nature of the business.
CVI's Ba3 CFR reflects the company's solid operating track record,
strong regional market position and Moody's expectation for CVI's
refining margins to remain solid through 2024, offset by modest
scale. CVI's debt capacity is largely supported by the refining
business, which is exposed to the cyclicality of the sector.
Refining margins continue to be supported by healthy demand for
petroleum products, limited refining capacity, and relatively low
inventories. CVI has large open positions for RINs and related
liabilities, with ongoing litigation pertaining to the US
Environmental Protection Agency's (EPA) denial of small refinery
exemptions for its Wynnewood refinery for certain years, the
outcome of which could affect its liabilities and drive the timing
for their settlement. A US court has stayed the EPA's ability to
enforce the Renewable Fuel Standard (RFS) against Wynnewood
relating to Wynnewood's 2020 and 2021 obligations until conclusion
of the litigation, and Wynnewood is seeking to add 2022 obligations
to this stay. CVI started up a renewable diesel unit in 2022 at its
Wynnewood refinery complex and is constructing a pre-treatment unit
at the site that it expects to begin operations in the fourth
quarter of 2023. Production of renewable diesel generates RINs
which would reduce the number of RINs that CVI needs to purchase in
the open market. Governance considerations are an important rating
consideration and include concentrated equity ownership, potential
for the board of directors to change future financial policies and
the amount of further special dividends and the level of cash
balances maintained.
CVI's SGL-2 rating reflects Moody's expectation for the company to
maintain good liquidity through 2024 owing to its large cash
balance supplemented by available borrowing capacity on its
committed credit facility and continued crude oil supply agreement.
As of June 30, 2023, CVI had about $682 million of cash, which
excludes the $69 million at CVR Partners, LP (CVRP, B1 stable).
Also, as of June 30, 2023, CVI's refining business had $255 million
available under its undrawn $275 million ABL revolving credit
facility due June 2027 ($20 million in letters of credit were
outstanding). The revolver has a springing minimum fixed charge
coverage ratio covenant, with springing based on availability under
the facility, which Moody's does not view as likely of becoming
operational and if it did, the company should have significant
compliance headroom. CVI relies on a crude oil supply agreement to
meet working capital needs. The current agreement terminates on
December 31, 2023 and a new agreement begins on January 1, 2024,
and has a 2-year term, subject to automatic one-year renewals
thereafter so long as neither party provides notice of termination
180 days in advance.
CVI's $600 million of senior unsecured notes due February 2025 and
$400 million of senior unsecured notes due February 2028 are rated
B1, one notch below the CFR, reflecting the effective seniority of
the revolver's secured claims. The notes are guaranteed on an
unsecured basis by the wholly-owned subsidiaries of CVI with the
exception of CVRP and CVRP's subsidiaries, and certain immaterial
wholly-owned subsidiaries of CVI.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to a downgrade include more aggressive
financial policies; leverage relating to the refining business
above 3x; or weakening liquidity.
Factors that could lead to an upgrade include increased scale and
diversification of refining assets while reducing leverage related
to the refining business; and maintenance of good liquidity and
conservative financial policies.
CVR Energy Inc. (CVI), headquartered in Sugar Land, Texas, is a
publicly traded holding company focused on refining and renewable
biofuels production at its CVR Refining subsidiaries, and it owns
the general partner and 37% of the common units of CVR Partners, LP
(B1 stable), a producer of nitrogen fertilizers. As of June 30,
2023, Icahn Enterprises L.P. (Ba3 stable) and its affiliates owned
about 71% of CVI's outstanding common stock.
The principal methodology used in these ratings was Refining and
Marketing published in August 2021.
CWGS ENTERPRISES: Moody's Lowers CFR to 'B2', Outlook Stable
------------------------------------------------------------
Moody's Investors Service downgraded CWGS Enterprises, LLC's
("Camping World") corporate family rating to B2 from B1, its
probability of default rating to B2-PD from B1-PD and its $1.4
billion senior secured term loan and its $65 million senior secured
revolving credit facility ratings to B2 from B1. The speculative
grade liquidity rating of SGL-3 (adequate) is unchanged. The
outlook is stable.
The downgrades reflect Moody's expectation that Camping World's
lease-adjusted debt/EBITDA will remain elevated at over 5.0x with
EBIT/interest at around 1.9x by the end of 2024, as it recovers
from discounting overstocked RVs in 2023 with limited gross margin
expansion opportunities prospectively as consumer demand remains
tempered by high interest rates and persistent inflation. Moody's
forward view also incorporates a higher level of SG&A expense as
the company integrates planned RV dealership acquisitions.
Downgrades:
Issuer: CWGS Enterprises, LLC
Corporate Family Rating, Downgraded to B2 from B1
Probability of Default Rating, Downgraded to B2-PD from B1-PD
Senior Secured Revolving Credit Facility, Downgraded to B2 from
B1
Senior Secured Term Loan B, Downgraded to B2 from B1
Outlook Actions:
Issuer: CWGS Enterprises, LLC
Outlook, Remains Stable
RATINGS RATIONALE
Camping World's B2 CFR reflects Moody's expectation that business
conditions for RV retailing will remain challenging in 2023 as well
as the highly cyclical nature of RV demand. The B2 CFR also
reflects Camping World's projected modest interest coverage
trending down in 2023 to approximately 1.4x before recovering to
about 1.9x in 2024. Camping World's B2 CFR also reflects its
moderate leverage profile with lease adjusted debt-to-EBITDA which
Moody's expects to peak around 6.4x in 2023, but to recover in 2024
to about 5.1x. Moody's expects the recovery in 2024 credit metrics
to be driven by a healthier supply environment for new RVs that
aligns more closely with underlying demand, resulting in more
stable, though still subdued, gross margins, partially offset by
growth in acquisition-related SG&A expense, operating leases and
real estate debt. While subdued, Moody's expects new RV margins in
2024 to be supported by OEM invoice price reductions and
decontenting. In response to the high demand for RVs experienced
during the pandemic, the RV industry overproduced 2022 model year
RVs, which began to negatively impact new RV profitability in late
2022, but has become more pronounced in 2023 due to heavy
discounting.
Given the highly cyclical and discretionary nature of the retail RV
industry, a key factor underlying Camping World's B2 CFR is Moody's
expectation that its financial strategy will remain balanced with a
prudent approach to capital allocation, including shareholder
returns. To help fund current dealership acquisitions, the company
has lowered its common dividend to public shareholders to a run
rate of approximately $22 million annually, from $112 million.
The B2 CFR is also supported by Camping World's market position as
the largest RV retailer in a highly fragmented segment and its
diversified revenue streams between new and used vehicles,
membership services, finance & insurance and parts & service.
The stable outlook reflects Moody's expectation for adequate
liquidity and a recovery in earnings and credit metrics in 2024,
including modestly positive free cash flow as the industry realigns
supply with demand.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if liquidity weakens for any
reason. The ratings could also be downgraded if, due to either
operating performance declines or a more aggressive financial
strategy, debt-to-EBITDA is sustained above 5.75x or EBIT/interest
expense is sustained below 1.25x.
The ratings could be upgraded if revenue and earnings growth is
sustained and at least good liquidity is maintained, including
consistent and solid positive free cash flow. Quantitatively, the
ratings could be upgraded if Moody's expects debt/EBITDA will be
sustained below 4.5x and EBIT/interest expense will be sustained
above 2.5x through an industry cycle and Camping World maintains
balanced financial policies that support metrics remaining at these
levels.
Headquartered in Lincolnshire, IL, Camping World is America's
largest retailer of recreational vehicles and related products and
services with over 200 dealerships, service centers and stores
across 42 states. For the LTM period ending June 30, 2023, revenue
was approximately $6.5 billion. The company is controlled by CEO
Marcus Lemonis and certain funds controlled by Crestview Partners
II GP, LP.
The principal methodology used in these ratings was Retail
published in November 2021.
DEAN GUTIERREZ: Wins Cash Collateral Access on Final Basis
----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Brownsville Division, authorized Dean Gutierrez Investments, LP to
use cash collateral on a final basis in accordance with the
budget.
The cash collateral consists of post-petition net proceeds, after
deducting normal fixed and variable costs, from the sales of the
restaurant products at Trevinos Tortilla Factory and Restaurant.
Mantis Funding LLC has and will continue to have pursuant to 11
U.S.C. Sections 361 and 363(e), security interests in the cash
collateral, subject to the right of the Debtor to assert any
avoidance or other action to determine the extent of the lien or
concerning lack of perfection against Mantis Funding LLC or QFS
Capital LLC.
Mantis Funding LLC will also receive $500 as adequate protection
payment.
The Debtor's right to use cash collateral will terminate on the
earliest to occur of:
a. failure of the Debtor to abide by the material terms,
covenants, and conditions of the Order;
b. the dismissal of the Chapter 11 Case, the conversion of the
Chapter 11 Case to a case under chapter 7 of the Bankruptcy Code,
the appointment in the Chapter 11 Case of a trustee (other than the
Subchapter V Trustee) or examiner with expanded powers, or the
removal of the debtor in possession in accordance with Section 1185
of the Bankruptcy Code; or;
c. an order of the Court is entered reversing, staying,
vacating, or otherwise modifying in any material respect the terms
of the Order.
The Debtor will provide Mantis Funding LLC or QFS Capital LLC with
a timely copy of Debtor's chapter 11 monthly operating reports and
any other reports requested and reasonably required by Mantis
Funding LLC and QFS Capital LLC.
The use of cash collateral will expire on confirmation of a plan.
A copy of the order is available at https://urlcurt.com/u?l=UX5FtQ
from PacerMonitor.com.
About Dean Gutierrez Investments, LP
Dean Gutierrez Investments, LP's business is in operating a food
restaurant in Brownsville, Cameron County, Texas and in
constructing residences on subdivision lots in Cameron County,
Texas.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Case No. 23-10116) on July 3,
2023. In the petition signed by Melissa Gutierrez, general partner,
the Debtor disclosed up to $1 million in both assets and
liabilities.
Judge Eduardo V. Rodriguez oversees the case.
Antonio Martinez Jr., Esq., at Law Office of Antonio Martinez, Jr.
PC, represents the Debtor as legal counsel.
DIAMOND OFFSHORE: Moody's Assigns 'B2' CFR, Outlook Stable
----------------------------------------------------------
Moody's Investors Service assigned new ratings to Diamond Offshore
Drilling, Inc. (Diamond), including a B2 Corporate Family Rating, a
B2-PD Probability of Default Rating, a SGL-2 Speculative Grade
Liquidity Rating (SGL), and a B3 rating to its proposed senior
secured second lien notes to be issued by its wholly owned
subsidiaries, Diamond Foreign Asset Company and Diamond Finance,
LLC as co-issuer. The outlook for both Diamond and Diamond Foreign
Asset Company is stable.
The company will use the proceeds of its proposed senior secured
notes to repay outstanding indebtedness, pay transaction costs, and
for general corporate purposes.
"Diamond's proposed refinancing transaction will simplify the
company's capital structure, add liquidity, and extend its maturity
schedule," said Jake Leiby, Moody's Vice President. "Upon closing,
the company will have $500 million of balance sheet debt and
greater than $400 million of total liquidity, including available
borrowing capacity under its amended $300 million senior secured
credit facility."
Assignments:
Issuer: Diamond Offshore Drilling, Inc.
Corporate Family Rating, Assigned B2
Probability of Default Rating, Assigned B2-PD
Speculative Grade Liquidity Rating, Assigned SGL-2
Issuer: Diamond Foreign Asset Company
Senior Secured 2nd Lien Regular Bond/Debenture, Assigned B3
Outlook Actions:
Issuer: Diamond Offshore Drilling, Inc.
Outlook, Assigned Stable
Issuer: Diamond Foreign Asset Company
Outlook, Assigned Stable
RATINGS RATIONALE
Diamond's B2 CFR is supported by its high quality offshore rig
fleet that provides competitive advantages and meaningful
collateral value, its improving leverage profile, contract drilling
backlog of $1.6 billion as of August 2023 providing a baseline of
cash flow generation over the coming years, and its status among
the leading offshore drilling services providers in the global
offshore oil and gas industry. The rating considers Diamond's
conservative financial policies with respect to liquidity and net
leverage.
The company's credit profile is constrained by recontracting risks
that have significant leverage to the volatile and inherently
cyclical nature of oil and gas prices, its smaller scale relative
to a number of key competitors, and its currently elevated leverage
profile. The credit profile also reflect Diamond's evolving
business strategy and financial policies following its emergence
from bankruptcy in 2021. The offshore drilling industry has been
experiencing an upcycle that has benefited offshore rig
utilization, dayrates, and valuations, however, Moody's expects the
contracting environment to remain highly competitive as industry
players seek to maintain utilization of their assets. Diamond will
need to successfully recontract its rigs at improving dayrates in
order to continue to improve its credit profile, which Moody's
believes will require a continuation of the currently constructive
oil and gas price environment.
The stable outlook reflects Diamond's contract backlog and Moody's
expectation for leverage to improve as rigs roll onto higher priced
contracts in over the remainder of 2023 and in 2024.
Diamond's SGL-2 liquidity rating reflects the company's good
liquidity through 2024. Pro forma for the refinancing transaction,
the company will have roughly $140 million of cash plus a $300
million undrawn revolving credit facility that will have a five
year maturity. Moody's expects Diamond to generate a modest free
cash flow shortfall in 2023, which can be funded comfortably with
existing liquidity, and to generate over $100 million of free cash
flow in 2024. The company should be able to comply with the
revolver's financial compliance covenants comfortably through
2024.
Diamond's $500 million senior secured second lien notes are rated
B3, one notch below the B2 CFR, given the significant size of the
$300 million super senior revolving credit facility, which is
secured by a first lien claim on Diamond's assets that has priority
over the notes. The notes will be issued by Diamond Foreign Asset
Company and Diamond Finance, LLC as co-issuer, both of which are
wholly owned subsidiaries of Diamond. The notes will mature in 2030
and be fully and unconditionally guaranteed on a senior secured
second lien basis by Diamond and all of Diamond's subsidiaries that
are borrowers or guarantors under the secured revolving credit
facility.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS
There is a discernible negative impact on the current rating
(CIS-4) driven by high governance risks. Environmental and social
risks will likely have more consequential effects over time as the
world transitions towards more sustainable and cleaner energy
sources, but have limited impact. Diamond's credit metrics and
competitive position could support a higher rating if governance
risks were mitigated through a longer track record of conservative
financial management.
Diamond's governance score (G-4) considers the relatively short
operating and financial track record since the company's emergence
from bankruptcy in 2021. The company emerged from bankruptcy with a
relatively low amount of debt, however, its business policies and
financial strategy are likely to evolve. Management's stated
financial policies, including the maintenance of low leverage and
strong liquidity, are conservative and could lead to a higher score
in the future with further established track record and management
through industry cycles.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade could be considered if Diamond successfully recontracts
its fleet and grows its revenue backlog against the backdrop of a
strong global offshore rig market outlook. Moody's will also
consider the company's demonstration of a track record of adhering
to conservative financial policies, including the maintenance of
good liquidity, debt/Ebitda declining towards 2.0x, generation of
free cash flow after reasonable reinvestment rates, and maintaining
prudent shareholder distributions.
The ratings could be downgraded if Diamond's earnings and backlog
decline materially, the company generates negative free cash flow
or suffers a deterioration in liquidity, or the debt/EBITDA ratio
does not fall below 3.0x in 2024. Any leveraging acquisition or
shareholder distribution could also trigger a downgrade.
Diamond Offshore Drilling, Inc. is a publicly traded provider of
contract drilling services to the energy industry around the globe
with a fleet consisting of four owned drillships, eight owned
semisubmersibles, and two managed rigs.
The principal methodology used in these ratings was Oilfield
Services published in January 2023.
DIMENSIONS IN SENIOR: Affiliate to Sell Assets to Market Ready
--------------------------------------------------------------
Wilcox Properties of Columbia, LLC, an affiliate of Dimensions in
Senior Living, LLC, asked the U.S. Bankruptcy Court for the
District of Nebraska to sell some of its assets to Market Ready,
LLC.
The assets up for sale include Wilcox's real property in Columbia,
Mo., and certain personal properties used to operate its business.
Market Ready offered $777,000 for the assets, which will be sold
"free and clear" of all liens, claims, interests and encumbrances.
Wilcox will use the proceeds from the sale to first reduce the
claims of its secured creditors.
"A reduction in secured debts leaves open the possibility of
distributions to priority and unsecured creditors," Patrick Turner,
Esq., the company's attorney, said.
About Dimensions in Senior Living
Dimensions in Senior Living, LLC -- https://www.dimsrivg.com/ --
through a series of entities, owns and manages a series of senior
living and assisted living facilities in Nebraska, Iowa, Missouri,
and Kansas.
Dimensions in Senior Living and six affiliates each filed a
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
D. Neb. Lead Case No. 22-80860) on Nov. 21, 2022. In the petition
filed by its chief restructuring officer, Amy Wilcox-Burns,
Dimensions in Senior Living reported assets and liabilities between
$1 million and $10 million.
Judge Brian S. Kruse oversees the cases.
The Debtors are represented by Patrick Raymond Turner, Esq., at
Turner Legal Group, LLC.
Abigail T. Mohs, Esq., at Baird Holm, LLP is the patient care
ombudsman appointed in the Debtor's case.
DIOCESE OF BUFFALO: Hires Hanna Commercial as Real Estate Broker
----------------------------------------------------------------
The Diocese of Buffalo, N.Y. seeks approval from the U.S.
Bankruptcy Court for the Western District of New York to employ
Hanna Commercial Real Estate as real estate broker.
The firm will market and sell the Debtor's commercial real property
located at 711 Knox Rd., East Aurora, New York 14052.
The firm will be paid a commission of 5 percent of the sales
price.
William K. Heussler, manager and licensed associate real estate
broker of Hanna Commercial Real Estate, 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:
William K. Heussler
Hanna Commercial Real Estate
344 Delaware Avenue Suite 200
Buffalo, NY 14202
Tel: (716) 856-7107
About The Diocese of Buffalo, N.Y.
The Diocese of Buffalo, N.Y., is home to nearly 600,000 Catholics
in eight counties in Western New York. The territory of the
diocese is co-extensive with the counties of Erie, Niagara,
Genesee, Orleans, Chautauqua, Wyoming, Cattaraugus, and Allegany in
New York State, comprising 161 parishes. There are 144 diocesan
priests and 84 religious priests who reside in the Diocese.
The diocese through its central administrative offices (a) provides
operational support to the Catholic parishes, schools, and certain
other Catholic entities that operate within the territory of the
Diocese "OCE"; (b) conducts school operations through which it
provides parish schools with financial and educational support; (c)
provides comprehensive risk management services to the OCEs; (d)
administers a lay pension trust and a priest pension trust for the
benefit of certain employees and priests of the OCEs; and (e)
provides administrative support for St. Joseph Investment Fund,
Inc.
Dealing with sexual abuse claims, the Diocese of Buffalo sought
Chapter 11 protection (Bankr. W.D.N.Y. Case No. 20-10322) on Feb.
28, 2020. The diocese was estimated to have $10 million to $50
million in assets and $50 million to $100 million in liabilities as
of the bankruptcy filing.
The Honorable Carl L. Bucki is the case judge.
Bond, Schoeneck & King, PLLC, led by Stephen A. Donato, Esq., is
the diocese's counsel; Connors LLP and Lippes Mathias Wexler
Friedman LLP are its special litigation counsel; and Phoenix
Management Services, LLC is its financial advisor. Stretto is the
claims agent, maintaining the page:
https://case.stretto.com/dioceseofbuffalo/docket
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on March 12, 2020. The committee is represented by
Pachulski Stang Ziehl & Jones, LLP and Gleichenhaus, Marchese &
Weishaar, PC.
DIOCESE OF CAMDEN: Ordered to Rework Its Bankruptcy Plan
--------------------------------------------------------
Andrew G. Simpson of Insurance Journal reports that the Catholic
Diocese of Camden, New Jersey must rework its bankruptcy plan to
better protect insurers from invalid and inflated sexual abuse
claims and unreasonable attorneys' fees.
Citing some concerns raised by insurers, U.S. Bankruptcy Judge
Jerrold Poslusny Jr. declined to approve the eighth reorganization
proposal put forth by the church that is facing millions of dollars
in claims of sexual abuse by clergy. The plan was approved by the
committee for survivors.
"The court cannot approve a plan which allows attorneys to file
invalid and fraudulent claims without consequence," Poslusny wrote
in his opinion ordering a reworking of the plan.
The plan calls for some insurers to pay $30 million into a trust to
cover claims and expenses. The participating insurers expressed
concern that the plan has loopholes that could end up costing them
more than the agreed-upon $30 million.
The judge did not agree with all of the insurers' criticisms but
did single out one feature, a so–called "quick pay" option under
which claimants could get $2,500 without any real examination of
the validity of their claims.
The judge said there have been claims that make no allegations
against the church or do not involve minors. He said the plan
cannot be an "avenue for claims that are facially invalid or
fraudulent."
The judge said there is room for an expedited pay system in the
process but the plan must be adjusted so that there is a mechanism
for review and denial of claims that are facially deficient.
In addition, Poslusny agreed with insurers that the plan as written
could lead to unreasonable attorneys’ fees. He pointed to a
provision whereby, after simply checking boxes on a nine page claim
form, the attorney automatically gets 40% of the settlement.
The judge said the court cannot allow attorneys to collect fees in
excess of what is permitted under New Jersey law or in excess of
what is "reasonable for the work required and risk taken."
The diocese has indicated it will submit a revised plan as soon as
possible.
In addition to the $30 million from a number of insurers, the plan
that was approved by the committee for survivors calls for the
diocese and related church organizations to contribute $87.5
million into the trust.
The diocese has been dealing with claims of sexual abuse against
minors by clergy members for years. From 1990 to 2019 the diocese
paid $10 million to survivors. In 2019, it established a survivors
fund that has paid out more.
The diocese filed for Chapter 11 bankruptcy in October 2020, citing
liability claims it faced after New Jersey enacted the Child
Victims Act, a law that reopened the statute of limitations to
allow claims for those alleging they were abused when they were
children.
The plan's $30 million insurance provision does not include all of
the diocese’s insurers. Plaintiffs will be free to pursue
separate action against non-settling insurers.
The insurers challenging the plan include Lloyd’s of London
underwriters, Federal Insurance, Illinois Insurance, Granite State,
National Union Fire, Century Indemnity, Interstate Fire, Lexington
Insurance, and the National Catholic Risk Retention Group.
The diocese serves 480,000 Catholics across 62 parishes. It has
released the names of 55 priests credibly accused of abuse.
About The Diocese of Camden, NJ
The Diocese of Camden, New Jersey is a nonprofit religious
corporation organized pursuant to Title 16 of the Revised Statutes
of New Jersey. The Diocese is the secular legal embodiment of the
Roman Catholic Diocese of Camden, a juridic person recognized under
Canon Law.
The Diocese of Camden sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D.N.J. Case No. 20-21257) on Oct. 1, 2020.
The petition was signed by Reverend Robert E. Hughes, vicar General
and vice president. At the time of the filing, the Debtor had
total assets of $53,575,365 and liabilities of $25,727,209. Judge
Jerrold N. Poslusny Jr. oversees the case. McManimon, Scotland &
Baumann, LLC, is the Debtor's legal counsel.
DIVE PLACE II: Court OKs Cash Collateral Access Thru Oct 3
----------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida,
Orlando Division, authorized The Dive Place II LLC to use cash
collateral on a further interim basis in accordance with the
budget, through October 3, 2023.
As previously reported by the Troubled Company Reporter, Premier
Capital may hold a security interest in the Debtor's cash or cash
equivalents.
Prior to the Petition Date, the Debtor obtained financing from
Premier Capital, which is purportedly secured by substantially all
of the accounts and receivables of TDP, including cash and cash
equivalents. Premier Capital Funding may assert a first priority
security interest in the Debtor's cash and cash equivalents by
virtue of a UCC-1 Financing Statement filed with the State of
Florida on April 1, 2020. The outstanding balance owed to Premier
Capital is approximately $13,429, which amount may be subject to
dispute.
Holders of inferior position security interests in the Debtor's
cash, accounts and cash equivalents -- Inferior Interests -- may
claim an inferior interest in the Debtor's cash and cash
equivalents by virtue of alleged liens on the Debtor's personal
property. The Debtor believes the Inferior Interests may be wholly
unsecured due to the outstanding amounts owed to the senior secured
lender with a superior interest in the Debtor's property, or due to
disputes over the basis for such creditors' respective alleged
security interests.
The court said that the Debtor authorized to use cash collateral to
pay: (a) amounts expressly authorized by the Court, including
payments to the Subchapter V Trustee and payroll obligations
incurred post-petition in the ordinary course of business; (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 the U.S. Small
Business Administration.
As adequate protection for the use of cash collateral, the Secured
Creditors will have a perfected post-petition lien against cash
collateral to the same extent and with the same validity and
priority as the prepetition lien, without the need to file or
execute any documents as may otherwise be required under applicable
non-bankruptcy law.
The Debtor will maintain insurance coverage for its property in
accordance with the obligations under all applicable loan and
security documents.
A continued preliminary hearing on the matter is set for October 3
at 3 p.m.
A copy of the court's order and the Debtor's budget is available at
https://urlcurt.com/u?l=9vY6WM from PacerMonitor.com.
The Debtor projects total expenses, on a weekly basis, as follows:
$9,961 for August 27, 2023;
$7,600 for September 3, 2023;
$7,500 for September 10, 2023;
$6,900 for September 17, 2023; and
$6,900 for September 24, 2023.
About The Dive Place II
The Dive Place II, LLC is a Scuba Diving International and
Technical Diving International certified dive center, which offers
open water, advanced diver and technical diver certifications, as
well as specialty certifications including drysuit diver, wreck
diver, search and recovery, and deep diver. In addition to its
certification classes, the Debtor coordinates and conducts special
dive events at various dive sites around the State of Florida and
sells the full range of dive equipment at its retail store in
Winter Garden.
Dive Place II sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Fla. Case No. 23-00907) on March 13,
2023. In the petition signed by its managing member, Noel Hansen,
the Debtor disclosed up to $500,000 in assets and up to $1 million
in liabilities.
Judge Lori V. Vaughan oversees the case.
The Debtor tapped Daniel A. Velasquez, Esq., at Latham Luna Eden
and Beaudine, LLP as legal counsel and John Roney, CPA as
accountant.
DIVERSITY FREIGHT: Court OKs Cash Collateral Access on Final Basis
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Pennsylvania
authorized Diversity Freight Lines Inc. to use the cash collateral
of JP Morgan Chase Bank, N.A. in accordance with the budget, with a
10% variance, on a final basis.
As of the Petition Date: (a) the agreements between the Debtor and
Chase Bank are valid and binding agreements and obligations of the
Debtor, (b) the amount of the pre-petition debt due and payable to
Chase Bank by the Debtor, according to the Debtor's books and
records, is approximately $96,949, including $1,411 of interest (c)
Chase Bank is a secured creditor and has allowed claims as of the
Petition Date in the amount of $96,949, (d) Chase Bank's security
interests in and liens upon the prepetition collateral are valid,
perfected, enforceable and nonavoidable, the Debtor does not
possess and may not assert any claim, counterclaim, setoff or
defense of any kind or nature which would in any way affect the
validity, enforceability and non-avoidability of the Pre-Petition
Chase Bank Debt and Chase Bank's security interests in and liens
upon the Pre-Petition Chase Bank Collateral.
The Debtor will make adequate protection payments to Chase Bank in
the amount of $1,886 per month with first payment beginning on or
before September 30, 2023 and by the last day of each following
month until further Order of the Court. The payments will be
applied to the Pre-Petition Chase Bank Debt in a manner determined
in the sole discretion of Chase Bank. Chase Bank reserves the right
to seek higher and/or additional adequate protection payments.
In partial consideration of Chase Bank's consent to the use of the
cash collateral, the Debtor grants to Chase Bank as of the Petition
Date a first priority security interest in and lien upon all
property of the Debtor.
A copy of the order and the Debtor's budget is available at
https://urlcurt.com/u?l=8sZUNg from PacerMonitor.com.
The Debtor projects $725,000 in total revenue and $710,772 in total
expenses.
About Diversity Freight
Diversity Freight Lines, Inc., a trucking company in Pennsylvania,
filed a petition under Chapter 11, Subchapter V of the Bankruptcy
Code (Bankr. W.D. Pa. Case No. 23-21584) on July 27, 2023, with $1
million to $10 million in both assets and liabilities. Kanatbek
Nurmamatov, president, signed the petition.
Judge Gregory L. Taddonio oversees the case.
Christopher M. Frye, Esq., at Steidl & Steiberg, P.C. represents
the Debtor as legal counsel.
ELENAROSE CAPITAL: Seeks Cash Collateral Access
-----------------------------------------------
Elmer Buchta Trucking LLC; Buchta Leasing, LLC; WBF, LLC; Transport
Acquisitions LLC; and ElenaRose Capital LLC ask the U.S. Bankruptcy
Court for the Southern District of Indiana, Evansville Division,
for authority to use cash collateral and provide adequate
protection.
The Debtors require the use of cash collateral for payment of their
ordinary and necessary operating expenses through the date of a
final hearing on the matter.
The Debtors have performed a preliminary investigation and analysis
of related UCC filings and based upon their preliminary
investigation believe that the assets of Debtors may serve as
collateral to secure the payment of certain of the obligations.
Based upon Debtors' initial investigation and analysis of UCC
filings, the Debtors believe that KTB Equity, Inc., VFS US LLC, and
VFS Leasing Co. may assert interest in the Debtors' cash
collateral.
As adequate protection for the use of cash collateral, the Debtors
will grant Creditors post-petition replacement liens in the cash of
Debtors in the total aggregate amount of the value of the cash
collateral that existed as of the Petition Date to the same extent
and priority as its properly perfected, prepetition security
interest.
A copy of the motion is available at https://urlcurt.com/u?l=RmLnRL
from PacerMonitor.com.
About ElenaRose Capital LLC
ElenaRose Capital LLC sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. S.D. Ind. Case No. 23-70665-AKM-11) on
September 8, 2023. In the petition signed by Louis Capolino,
president/manager, the Debtor disclosed up to $50,000 in assets and
up to $10 million.
Weston E. Overturf, Esq., at Kroger, Gardis & Regas, LLP,
represents the Debtor as legal counsel.
ELETSON HOLDINGS: To File for Chapter 11 Bankruptcy
---------------------------------------------------
Jeremy Hill of Bloomberg News reports that Eletson Holdings Inc. is
planning to seek Chapter 11 bankruptcy after resolving a dispute
with creditors who tried to force the fuel shipper to liquidate.
Eletson, a shipping company based in Greece, has agreed to
voluntarily enter Chapter 11 protection rather than keep fighting
with creditors who have been attempting to force it into a
liquidation bankruptcy, court papers show. Some of the company's
bondholders filed involuntary Chapter 7 petitions against Eletson
in March 2023.
Investors holding more than $200 million of Eletson bonds turned to
a US bankruptcy court for help collecting on their debts earlier
this 2023.
About Eletson Holdings
Eletson Holdings Inc. is a family-owned international shipping
company, which touts itself as having a global presence with
headquarters in Piraeus, Greece as well as offices in Stamford,
Connecticut, and London.
At one time, Eletson claimed to ownand operate one of the world's
largest fleets of medium and long-range product tankers and boasted
a fleet consisting of 17 double hull tankers with a combined
capacity of 1,366,497 dwt, 5 LPG/NH3 carriers with a combined
capacity of 174,730 cbm and 9 LEG carriers with capacity of 108,000
cbm.
Eletson Holdings, a Liberian company, is Eletson's ultimate parent
company and is the direct parent and owner of 100% of the equity
interests in the two other debtors, Eletson Finance (US) LLC, and
Agathonissos Finance LLC.
Eletson Holdings Inc. and its two affiliates were subject to
involuntary Chapter 7 bankruptcy petitions (Bankr. S.D.N.Y. Case
No. 23-10322) filed on March 7, 2023. The petitions were signed by
alleged creditors Pach Shemen LLC, VR Global Partners, L.P., and
Alpine Partners (BVI), L.P.
The petitioning creditors are represented by:
Kyle J. Ortiz
Togut, Segal & Segal LLP
212-594-5000
kortiz@teamtogut.com
ENVISION HEALTHCARE: MGPO Opposes Plan Confirmation
---------------------------------------------------
Massachusetts General Physician's Organization, Inc. ("MGPO") and
Gordon Harris (together, the "MGPO Parties"), as creditors in the
Chapter 11 cases, submitted an objection to confirmation of the
Second Amended Joint chapter 11 Plan of Reorganization of the EVPS
Debtors.
Prior to the petition date, MGPO and Harris brought suit against
EVPS Debtor Imaging Advantage, LLC ("IA") for breach of contract in
the Superior Court for Suffolk County, Massachusetts.
On Dec. 7, 2021, the Massachusetts Superior Court entered an order
for summary judgment against IA in favor of the MGPO Parties.
Judgment for MGPO was entered in the amount of $5,000,000, plus
interest at 12% from June 20, 2010. Judgment for Dr. Harris was
entered in the amount of $750,000, plus interest at 12% from June
20, 2010.
On August 3, 2023, MGPO and Harris each filed proofs of claims
against IA. MGPO filed a proof of claim in the amount of
$13,431,795.11, reflecting $12,742,094,46 for the judgment and
interest accrued through the petition date and $689,701 for
attorney's fees. Harris filed a proof of claim in the amount of
$1,876,933, reflecting the judgment and interest accrued through
the petition date. No party has filed an objection to the MGPO
Parties' proofs of claim. The claims are therefore deemed allowed
for purposes of voting on the EVPS Plan.
Counsel for MGPO Parties raised an informal objection to the EVPS
Plan with the Debtor on August 7, 2023. In particular, the MGPO
Parties sought clarification in the EVPS Plan or a proposed
confirmation order that the EVPS Plan would not prevent the MGPO
Parties from recovering against the surety under the Appeal Bond or
taking actions necessary for such recovery. The MGPO Parties and
the Debtors have not yet reached a consensual resolution.
On September 5, 2023, the MGPO Parties voted to reject the EVPS
Plan. On information and belief, the MGPO Parties' claims reflect
approximately 31% of the Class 8 general unsecured claims against
IA.
Creditors point out that the effective release of the MGPO Parties'
claims against the surety under the Appeal Bond would not comply
with 11 U.S.C. s 524(e) and therefore the EVPS Plan would fail to
meet the requirements of 11 U.S.C. s 1129(a)(1).
* Certain provisions of the EVPS Plan seem to go beyond a discharge
under Section 524. For example, Article VIII(A) of the EVPS Plan
provides that "the distributions, rights, and treatment that are
provided in this Plan shall be in complete satisfaction, discharge,
and release, effective as of the Effective Date, of Claims . . .
Interests, and Causes of Action of any nature whatsoever . . . ."
(emphasis added). Further, Article VIII(F) of the EVPS Plan
permanently enjoins, among other things, the following actions
against the Reorganized EVPS or the "Released Parties":
(a) commencing or continuing in any manner any action or
other proceeding of any kind on account of or in connection with or
with respect to any such claims or interests; (b) enforcing,
attaching, collecting, or recovering by any manner or means any
judgment, award, decree, or order against such Entities on account
of or in connection with or with respect to any such claims or
interests; . . . and (e) commencing or continuing in any manner any
action or other proceeding of any kind on account of or in
connection with or with respect to any such claims or interests
released or settled pursuant to this Plan.
These provisions expand upon the discharge provided by Bankruptcy
Code section 524 to the extent that (a) the terms "satisfaction"
and "release" mean something more than the term "discharge" or (b)
would prevent pursuing recovery from non-debtor Released Parties by
the MGPO Parties. While IA's personal liability to MGPO and Harris
may be discharged, the obligation has not been satisfied or
released.
To the extent that the EVPS Plan would have the effect of
preventing the MGPO Parties from pursuing or recovering against the
surety under the Appeal Bond, it would be contrary to the clear
provisions of Bankruptcy Code s 524(e) as interpreted by the Fifth
Circuit Court of Appeals. The EVPS Plan would therefore not meet
the requirement of Bankruptcy Code s 1129(a)(1), requiring plans to
comply with the applicable provisions of the Bankruptcy Code.5
Confirmation of the EVPS Plan should be denied unless (a) the Court
finds that the EVPS Plan would not prevent the MGPO Parties from
continuing the appeal, recovering under the Appeal Bond, or taking
actions necessary to recover under the Appeal Bond, (b) the EVPS
Plan is modified to address the issues raised above, or (c)
clarification in any order confirming the EVPS Plan.
Creditors further point out that the effective release of the MGPO
Parties' claims against the surety under the Appeal Bond while
allowing other holders of Class 8 general unsecured claims to
pursue claims against "insurers" impermissibly provides disparate
treatment of the MGPO Parties that would not comply with 11 U.S.C.
s 1123(a)(4) and therefore the EVPS Plan would fail to meet the
requirements of 11 U.S.C. S 1129(a)(1).
The EVPS Plan clearly contemplates that unsecured creditors with
claims payable by third-party insurance policies will be able to
pursue their claims against those third-parties. Indeed,
claimholders are required to exhaust all remedies with respect to
insurance policies prior to receiving a distribution from the
bankruptcy estate.
To the extent that the EVPS Plan would have the effect of
preventing the MGPO Parties from pursuing the surety under the
Appeal Bond, it would not meet the requirements of Bankruptcy Code
s 1123(a)(4) and therefore not meet the requirement of Bankruptcy
Code s 1129(a)(1), requiring plans to comply with the applicable
provisions of the Bankruptcy Code. Confirmation of the EVPS Plan
should be denied unless (a) the Court finds that the EVPS Plan
would not prevent the MGPO Parties from continuing the Appeal,
recovering under the Appeal Bond, or taking actions necessary to
recover under the Appeal Bond, (b) the EVPS Plan is modified to
address the issues raised above, or (c) clarification in any order
confirming the EVPS Plan.
Creditors assert that the EVPS Plan unfairly discriminates against
Class 8 general unsecured claims. According to the exhibits to the
Second Amended Disclosure Statement for the First Amended Joint
Chapter 11 Plan of Reorganization of the EVPS Debtors (the "EVPS
Disclosure Statement"), Class 5—comprising the EVPS Second-Out
Term Loan Claims— is out of the money in a liquidation scenario.
However, Class 5 will receive 100% of the Reorganized Envision
Parent New Common Stock, providing an estimated recovery of 29%.
The estimated Enterprise Value of the Reorganized EVPS Debtors is
$550 million. On the other hand, holders of Class 8 claims will
receive distributions of less than 1%. Undoubtedly, the EVPS
Disclosure Statement is only a summary of the relevant information
and the EVPS Debtors may be able to submit evidence showing that
Class 5 claims are not entirely unsecured or that the
discrimination is nevertheless justified. Absent such showing,
however, confirmation of the EVPS Plan must be denied if Section
1129(b) applies.
Counsel to the MGPO Parties:
Kyung S. Lee, Esq.
R. J. Shannon, Esq.
SHANNON & LEE LLP
2100 Travis Street, STE 1525
Houston, TX 77002
Telephone: (713) 714-5770
E-mail: klee@shannonleellp.com
rshannon@shannonleellp.com
About Envision Healthcare Corporation
Envision Healthcare Corporation -- http://www.EnvisionHealth.com/
-- is a national medical group that delivers physician and advanced
practice provider services, primarily in the areas of emergency and
hospitalist medicine, anesthesiology, radiology, teleradiology and
neonatology. As a leader in ambulatory surgical care, AMSURG holds
ownership in more than 250 surgery centers in 41 states and the
District of Columbia, with medical specialties ranging from
gastroenterology to ophthalmology and orthopedics. In total, the
medical group offers a differentiated suite of clinical solutions
on a national scale with a local understanding of communities,
creating value for health systems, payers, providers and patients.
On May 15, 2023, Envision and affiliates filed voluntary petitions
for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Texas Lead Case No. 23-90342). Envision reported $1 billion to $10
billion in both assets and liabilities.
Judge Christopher M. Lopez oversees the cases.
The Debtors tapped Kirkland & Ellis, LLP and Kirkland & Ellis
International, LLP as bankruptcy counsels; Jackson Walker, LLP as
conflict counsel and co-counsel with Kirkland & Ellis; Alvarez &
Marsal North America, LLC as restructuring advisor; PJT Partners,
LP as investment banker; and KPMG, LLP as tax consultant. Kroll
Restructuring Administration, LLC is the claims, noticing and
solicitation agent.
The U.S. Trustee for Region 7 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases. The
committee tapped White & Case, LLP as legal counsel and Force Ten
Partners, LLC as financial advisor.
ENVISION HEALTHCARE: Plan Does Not Affect the Pending Litigation
----------------------------------------------------------------
American Academy of Emergency Medicine Physician Group, Inc.
("AAEMPG") filed an objection to EVPS Debtors' Second Amended Joint
Chapter 11 Plan of Reorganization.
On December 20, 2021, AAEMPG filed a lawsuit seeking injunctive and
declaratory relief against Envision Healthcare Corporation and
Envision Physician Services LLC (jointly referred to as "Envision")
in the Superior Court of California for the County of Contra Costa
under Case No. C2l-02633. AAEMPG alleges Envision engaged in unfair
business practices in violation of California Business &
Professions Code $ 17200. On January 21, 2022, Envision removed the
state court case to federal court in the Northern District of
California, where it was assigned Case No. 3:22-cv -00 421 (the
"Pending Litigation").
Envision unsuccessfully challenged the Pending Litigation when
Envision moved for dismissal pursuant to Rule 12(bX6) of the
Federal Rules of Civil Procedure. The Northern District of
California, in ruling on Envision's motion to dismiss, ruled that
if AAEMPG is able to prove its allegations, it will establish a
successful CPOM claim. Trial in the Pending Litigation is set for
July 12, 2024. As alleged in the Complaint, the Debtors continue to
operate their business in violation of California law.
The EVPS Debtors improperly attempt to expand the discharge
provisions of 11 U.S.C. s 1411(d); improperly seek releases beyond
that allowed by Fifth Circuit precedent; improperly seek injunctive
relief; improperly seek to expand this Court's post-confirmation
jurisdiction; improperly seek to limit another court's jurisdiction
of the Pending Litigation through an inappropriate document
retention provision. In short, the provisions of Article VIII.A.,
D., E., F. and H. of the EVPS Debtors' Plan are improper and overly
broad.
Accordingly, the EVPS Debtors define the Pending Litigation (which
is certainly a cause of action, an action, a proceeding, and/or a
suit) as a "Cause of Action" which they improperly seek to
discharge. Since the discharge allowable under 11 U.S.C. s 1141(d)
is only as to the payment of a debt; and the term debt is defined
in the Code as liability on a claim; and a claim is defined in the
Code as a right to payment. The Pending Litigation is not a claim
which can be discharged.
The Pending Litigation is not a "claim" because it does not entail
a right to payment, but rather seeks injunctive and declaratory
relief for which money damages are not a suitable alternative.
AAEMPG seeks in the Pending Litigation a declaration that the
Debtors' corporate structure and business practices in California
are unlawful CPOM, and to ban the Debtors from continuing their use
of restrictive covenants and engaging in kickbacks in California.
Because AAEMPG does not have a "claim" against the Debtors'
bankruptcy estate within the meaning of 11 U.S.C. s 101(5), AAEMPG
is not a "creditor" of the Debtors.
For the foregoing reasons, the Pending Litigation does not
constitute a claim dischargeable in bankruptcy. If AAEMPG
successfully adjudicated the Pending Litigation against Envision, a
judgment in the Pending Litigation against the Debtors would not be
subject to discharge in a Chapter 11 bankruptcy plan.
AAEMPG does not consider itself a creditor of the EVPS Debtors or
the holder of a Claim as set forth in AAEMPG's Motion to Lift Stay;
however, out of an abundance of caution, AAEMPG has opted out of
the EVPS Debtors' release by completing and returning a ballot to
Kroll Restructuring Administration LLC.
AAEMPG rejects and objects to the concept that any consideration
could possibly pass between the EVPS Debtors and AAEMPG to support
any notion of a release by AAEMPG of any Released Party as that
term is defined in the EVPS Debtors' Plan. Furthermore, AAEMPG
objects to the EVPS Debtors' attempts to broaden the release
provisions beyond the definition of "Releasing Parties" (as being
"holders of Claims") to include any party asserting "any Cause of
Action." Because the definition of "Releasing Parties" includes
non-debtor parties, the broad releases proposed in the Plan are
unenforceable.
AAEMPG objects to the proposed injunction of the EVPS Debtors'
Plan. Again, in subsection F of the Plan, the EVPS Debtors use the
term "claim" with a lower case "c". AAEMPG has opted out of the
release provisions, is not the holder of a Claim and AAEMPG is not
being released, discharged or the subject to exculpation;
accordingly, AAEMPG is not and should not be subjected in any
injunction from pursuing the Pending Litigation as is contemplated
by subsection F and in particular by sub sentence (e) which seeks
to enjoin "commencing or continuing in any manner any action or
other proceeding of any kind on account of or in connection with or
with respect to any such claims or interests released or settled
pursuant to this Plan."
Furthermore, AAEMPG objects to the proposed gatekeeper function for
the Bankruptcy Court regarding any Cause of Action. Since the
Bankruptcy Court lacks jurisdiction or constitutional authority
over the Pending Litigation, nothing in EVPS Debtors' Plan can or
should affect the Pending Litigation. The EVPS Debtors have been
and continue to violate California law as outlined in the Pending
Litigation pre-petition, during the pendency of this case and
post-petition. This attempt to broaden the Bankruptcy court's
post-confirmation jurisdiction over post-petition events and
occurrence violates Fifth Circuit precedent.
3AAEMPG objects to the provisions of subsection H of Art. XII of
EVPS Debtors' Plan. To the extent a party in interest obtains
release of the stay post-confirmation but prior to the Effective
Date, the Plan should not continue to impose a stay or injunction.
AAEMPG objects to the indefinite definition of the "Effective Date"
and the ability of the Debtors (which will no longer exist
post-petition) to determine the occurrence of the "Effective Date."
The Pending Litigation seeks to enjoin the Reorganized Debtors'
post-confirmation conduct, which violates California Law; as such,
nothing in the EVPS Debtors' Plan can impede the ongoing Pending
Litigation.
Attorneys for American Academy of Emergency Medicine Physician
Group, Inc.:
Michael J. Dunschmidt, Esq.
Kim Lewinski, Esq.
HIRSCH & WESTHEIMER, P.C.
141 5 Louisiana, 36th Floor
Houston, TX 77002
Telephone: (713) 220-9165
Facsimile: (713) 223-9319
E-mail: mdurrschmidt@hirschwest.com
klewinski@hirschwest.com
- and -
David J. Millstein, Esq.
MILLSTEIN FELLNER LLP
100 The Embarcadero, Penthouse Suite
San Francisco, CA 84105
Telephone: (415) 348-0348
E-mail: dmillstein@millsteinfellner.com
About Envision Healthcare Corporation
Envision Healthcare Corporation -- http://www.EnvisionHealth.com/
-- is a national medical group that delivers physician and advanced
practice provider services, primarily in the areas of emergency and
hospitalist medicine, anesthesiology, radiology, teleradiology and
neonatology. As a leader in ambulatory surgical care, AMSURG holds
ownership in more than 250 surgery centers in 41 states and the
District of Columbia, with medical specialties ranging from
gastroenterology to ophthalmology and orthopedics. In total, the
medical group offers a differentiated suite of clinical solutions
on a national scale with a local understanding of communities,
creating value for health systems, payers, providers and patients.
On May 15, 2023, Envision and affiliates filed voluntary petitions
for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Texas Lead Case No. 23-90342). Envision reported $1 billion to $10
billion in both assets and liabilities.
Judge Christopher M. Lopez oversees the cases.
The Debtors tapped Kirkland & Ellis, LLP and Kirkland & Ellis
International, LLP as bankruptcy counsels; Jackson Walker, LLP as
conflict counsel and co-counsel with Kirkland & Ellis; Alvarez &
Marsal North America, LLC as restructuring advisor; PJT Partners,
LP as investment banker; and KPMG, LLP as tax consultant. Kroll
Restructuring Administration, LLC is the claims, noticing and
solicitation agent.
The U.S. Trustee for Region 7 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases. The
committee tapped White & Case, LLP as legal counsel and Force Ten
Partners, LLC as financial advisor.
EYECARE PARTNERS: CEO Clark Left Company After Cash Burn
--------------------------------------------------------
Ellen Schneider and Reshmi Basu of Bloomberg News reports that
EyeCare Partners Chief Executive Officer David A. Clark has left
the company, after the network of eye doctor practices posted
quarterly results last week that showed it was still burning cash,
according to people with knowledge of the situation.
Benjamin Breier, an executive at EyeCare's private equity backer,
Partners Group, will serve as interim CEO while the company
searches for a permanent successor, according to a memo reviewed by
Bloomberg. Clark had been CEO since April 2021, and joined the
company in 2020.
About Eyecare Partners
EyeCare Partners, LLC, headquartered in St. Louis, Missouri, is a
medically focused eye care services provider. EyeCare Partners is
vertically integrated, providing optometry, ophthalmology and
retail products.
FORWARD AIR: Fitch Assigns 'BB-' LongTerm IDR, Outlook Stable
-------------------------------------------------------------
Fitch Ratings has assigned a first-time Long-Term Issuer Default
Rating (IDR) of 'BB-' to Forward Air Corporation and Clue Opco, LLC
(collectively Forward Air; FWRD). Fitch has also assigned Clue
Opco, LLC's senior secured credit facilities and notes ratings of
'BB'/'RR3'. The Rating Outlook is Stable.
The ratings for FWRD reflect the company's large and established
premium less-than-truckload operation as well as the meaningful
scale of Omni Logistics (OMNI) in the freight forwarding market.
The ratings also consider FWRD's forecast post-acquisition positive
FCF profile (annual post-dividend FCF around $100 million-$225
million), adequate liquidity position, and improving leverage and
interest coverage metrics in the low/mid-3x and mid-3x-to-low-4x
range, respectively, in FY 2024-2025, consistent with 'BB-' level
transportation credits in FY2024. Fitch currently forecasts an
improvement in market conditions in 2024, as well as execution on
expected cost synergies and internal growth initiatives to support
improvements in EBITDA and FCF. Fitch also incorporates
management's stated capital allocation priorities of debt repayment
and intentions to manage company-calculated leverage under 2.0x.
The agency recognizes there is considerable post-acquisition
execution risk and believes future rating actions will be linked to
the company's ability to de-risk its operational targets and
leveraged financial profile. The secured debt notching of
'BB'/'RR3' is reflective of the combined company's asset-light
business model and fully first-lien secured debt structure.
KEY RATING DRIVERS
Mid-3.0x Leverage: Fitch forecasts EBITDA leverage of about 3.4x in
2024, which is consistent with the rating thresholds for 'BB-' and
an improvement from 4.8x on a projected PF2023 basis, before
synergies. Fitch projects incremental improvement as the market
improves and operating initiatives progress. Fitch also believes
FWRD will remain committed to its stated financial policies,
including achieving company-calculated net leverage of under 2.0x
and prioritizing gross debt repayment over repurchasing shares.
FCF Supports Financial Flexibility: Fitch forecasts FCF of about
$90 million in FY2024 before further improving to over $150 million
in FY2025, partly reflecting EBITDA margin expanding to around 15%
in FY2024 from 13% on a forecast Fitch-adjusted PF 2023 basis. This
level of FCF is expected to be supportive of FWRD's deleveraging
plan and assumes a moderate recovery in market conditions in 2024,
strong execution on cost synergies and some revenue synergy
benefit.
FWRD's liquidity profile is expected to be comfortable, with an
undrawn $400 million revolving credit facility at close and
adequate cash balance. EBITDA interest coverage is expected to be
around 3.3x in FY2024, which is consistent with rating thresholds
for 'BB-', before rising into the low-4.0x range in FY2025. Fitch
assumes that the preferred shares will be converted to common
equity or paid-in-kind given the incentive for common shareholders
to approve the conversion or otherwise slow debt repayment and
reduce financial flexibility. Fitch estimates that fully cash paid
dividends would be around $140 million annually.
Challenged Market Elevates Execution Risks: Fitch views the
execution risk of adding a large new service line, freight
forwarding, as elevated, particularly in the near term when it is
exhibiting heightened cyclicality as a result of exposure to
challenged air and ocean freight conditions. Fitch also views the
competitive barriers in freight forwarding as relatively lower than
operating a less-than-truckload (LTL) network that requires the
ability to replicate and operate a large physical network. Fitch
recognizes that there is potential that the combined company's
value proposition, direct-to-customer access and adding a premium
LTL network to OMNI, strengthens its position in the premium LTL
market and enhances its FCF profile.
Moderate Integration Synergies Forecast: Fitch assumes about $70
million of EBITDA cost synergies realized within the first three
years after the combination, largely reflecting the potential for
OMNI to leverage FWRD's LTL network. A net incremental $30 million
of EBITDA from revenue synergies is forecast over a four-year
period, reflecting the cross-sell opportunities and FWRD's ability
to capture wholesale margin from new OMNI revenue. Fitch believes
integration risks are moderated by the asset-light nature of OMNI.
Weak Near-Term Market Conditions: Freight market conditions have
been softening since 2022 and Fitch currently assumes a low-point
is broadly reached in 2H 2023, which would set up for a recovery in
2024. While freight markets are cyclical, Fitch believes large and
well-established operators tend to exhibit some comparative
resiliency as economic conditions improve. However, Fitch expects
OMNI's post-pandemic airfreight and ocean businesses to be
sustainably smaller as those markets normalize from temporary
pandemic-driven highs.
Service Quality Supports Market Position: FWRD has historically
differentiated itself from common LTL operators by focusing on
expedited or high value freight where premium quality service
levels are able to capture outsized margins. FWRD has been the
largest operator in this segment of the market and the company aims
to accelerate its growth with the OMNI purchase, gaining direct
retail access, which it estimates opens up half of the $15 billion
expedited LTL market. At this point, Fitch views the combination as
neutral-to-positive to FWRD's business profile.
DERIVATION SUMMARY
Fitch compares FWRD with other trucking and transportation credits
such as XPO, Inc. (BB+/Stable), STG Logistics (B+/Stable), and TFI
International (NR). The combined FWRD business includes LTL and
freight forwarding, similar to the LTL heavy XPO and TFI
operations, while STG is an intermodal services provider stretching
drayage, rail brokerage and logistics. FWRD's focus on premium and
expedited freight, which requires a higher degree of network speed
and premium service quality, while XPO and TFI move more
traditional freight. XPO and TFI are larger peers (top 5) within
the broader LTL market and benefit from large geographic networks
within the U.S. and Canada.
Fitch expects XPO's EBITDA and EBITDAR leverage to range in the
high 2.0x to 3.0x in 2023 before improving the low-2.0x and
mid-2.0x, respectively, over the subsequent two years reflecting
intentions to deleverage and the potential for operating
improvements to drive higher FCF. TFI's leverage has historically
been managed to the mid-1.0x to low-2.0x and has demonstrated
capacity to manage at this level through the recent large
acquisition of UPS Freight. STG's EBITDAR and EBITDA leverage are
expected to rise to the low-5.0x and mid-4.0x, respectively, as a
result of tempering freight market conditions. Concerns of STG's
elevated leverage is moderated by its liquidity position.
The holders of the preferred shares will have a material equity
interest, which aligns their interest with other common equity.
Fitch believes these interests will remain aligned and does not
view the preferred shares as materially heightening default risk.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within the Rating Case for the Issuer:
- Fitch forecast PF2023 revenue of about $3.1 billion and rising by
11% in FY 2024, reflecting growth initiatives at both businesses
and market recovery, before moderating to the mid-single digits;
- Combined EBITDA margin rises to about 15% in FY2024, from a
forecast Fitch-adjusted PF 2023 basis of 13%, reflecting underlying
operating improvement at FWRD and OMNI and anticipated synergies;
- Incremental EBITDA from cost and revenue synergies rise to $65
million-$95 million per year over the 2024-2025 timeframe;
- The preferred shares are converted to common equity in the near
term, or dividends are paid-in-kind;
- FWRD remains committed to stated deleveraging targets, including
debt repayment as the primary focus of FCF over the next few
years.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Adherence to a financial policy that leads to EBITDA Leverage
sustained below 3.0x;
- Execution against the company's financial targets or a material
improvement in FWRD's value proposition that strengthens the
through-the-cycle FCF profile and EBITDA margin to the mid-teens or
above;
- Demonstrated commitment to a capital allocation plan that reduces
gross debt and retains financial flexibility.
Factors that could, individually or collectively, lead to negative
rating action/upgrade:
- EBITDA leverage sustained above 3.5x;
- Deviation from capital allocation plans, such as increasing
shareholder returns or an aggressive M&A strategy, that restricts
financial flexibility;
- EBITDA interest coverage sustained below 3.0x.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: At close, FWRD is expected to have roughly $117
million of cash and $400 million of availability under the undrawn
revolving credit facility. Fitch forecast post-dividend FCF should
further support financial flexibility. There are no near-term debt
maturities.
ISSUER PROFILE
FWRD is a leading asset-light freight and logistics company that
provides less-than-truckload, final mile, truckload and intermodal
drayage services across the U.S., Canada and Mexico. OMNI is a
freight forwarding and supply chain company that provides a range
of domestic, expedited, air and ocean forwarding services.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery
----------- ------ --------
Forward Air
Corporation LT IDR BB- New Rating
Clue Opco LLC LT IDR BB- New Rating
senior secured LT BB New Rating RR3
FREEDOM MORTGAGE: Moody's Rates New $600MM Unsecured Bond 'B2'
--------------------------------------------------------------
Moody's Investors Service has assigned a B2 rating to Freedom
Mortgage Corporation's proposed $600 million senior unsecured bond
due in 2028. The rating outlook is stable.
RATINGS RATIONALE
Moody's has rated the senior unsecured bond B2 based on Freedom's
B1 corporate family rating (CFR) and the unsecured bond's priority
ranking in the company's capital structure.
The B1 CFR assigned to Freedom reflects its strong capitalization
with tangible common equity (TCE) to adjusted tangible managed
(TMA) assets of 34% as of June 30, 2023. The CFR also reflects that
profitability is currently somewhat weaker than the average of
rated non-bank mortgage company peers. Like most rated peers, the
company largely relies on confidence-sensitive secured funding to
finance loan originations, resulting in elevated refinancing risk.
In Moody's view, with modest levels of unencumbered assets, the
company's alternative financing options are limited, particularly
during times of stress. Furthermore, the yield on Freedom's
unsecured debt is high, both on an absolute basis as well as
compared to peers; therefore, the company's access to the unsecured
debt markets is weaker than the average peer, a credit negative for
the company's liquidity profile.
The B2 senior unsecured bond rating is one notch below the
company's B1 CFR and incorporates the priority of claim and
strength of asset coverage as well as Moody's expectation that the
company's financial policy is to keep the ratio of secured debt
associated with MSRs and secured corporate debt to total corporate
debt (secured debt ratio) below 50%. As of June 30, 2023, the
company's secured debt ratio was 66%. Excluding any secured debt
repayments, upon issuance of the $600 million senior unsecured
bond, the secured debt ratio will decrease to around 60%, a credit
positive.
At a later date, after the satisfaction of certain conditions, in
particular the repayment of the company's unsecured notes maturing
in 2024 and 2025, Freedom will enter into supplemental indentures
for this new issuance along with the company's unsecured notes
maturing in 2026 and 2027 whereby a new holding company, Freedom
Mortgage Holdings LLC, shall automatically succeed Freedom and be
subject to all the obligations of Freedom as issuer (i.e., issuer
substitution). Freedom shall unconditionally guarantee such new
senior unsecured bonds of Freedom Mortgage Holdings LLC. Given the
guarantee, Moody's anticipates that the credit risk will be
unchanged and therefore expect that the rating of the new Freedom
Mortgage Holdings LLC bonds will be aligned with Freedom's senior
unsecured rating as of the date of the issuer substitution.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The ratings could be upgraded if Freedom strengthens its
profitability, such as by demonstrating a through-the-cycle net
income to assets (ROA) ratio of above 3.0%. In addition, the
company would need to maintain strong capital levels, such as TCE
to TMA of around 20.0%. An upgrade would also likely be contingent
upon the company exhibiting strengthened access to the unsecured
debt markets that results in improved funding costs in relation to
earning asset yields.
The ratings could be downgraded if Freedom's financial performance
deteriorates, for example if the company's TCE to TMA falls below
and is expected to remain below 15.0%, or profitability
deteriorates with ROA falling below the peer average such that
through-the-cycle average ROA is below 2.0%. The senior unsecured
bonds could be downgraded if the secured debt ratio increases above
70%, remains above 60% as of December 31, 2023, or remains above
50% as of December 31, 2024; a partial offset to the company's
current high secured debt ratio would be the company maintaining
its TCE to TMA materially above its historical average of around
20%.
The principal methodology used in this rating was Finance Companies
Methodology published in November 2019.
FREEDOM MORTGAGE: S&P Rates New $600MM Senior Unsecured Notes 'B'
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B' issue rating and '3' recovery
rating to Freedom Mortgage Corp.'s (B/Stable/--) proposed $600
million senior unsecured notes due 2028. The '3' recovery rating
reflects S&P's expectation for meaningful recovery (rounded
estimate: 60%) in a simulated default scenario.
S&P expects the transaction to be leverage neutral. The company
will use proceeds and cash on hand to fully repay the senior
unsecured notes due 2024 and 2025, with any remaining proceeds used
to repay outstanding borrowings under the KeyBank line. Freedom
Mortgage Corp. will initially issue the new senior notes, and
eventually Freedom Mortgage Holdings LLC will assume the notes.
S&P said, "The stable outlook reflects our expectation that over
the next 12 months, Freedom will manage through low originations
while maintaining debt to EBITDA around 5x, debt to tangible equity
below 1.5x, and EBITDA interest coverage above 2x. We also expect
Freedom will continue to build its servicing book organically and
through purchases, while maintaining sufficient liquidity."
FTX GROUP: Former Exec. Salame Pleads Guilty on Criminal Charges
----------------------------------------------------------------
Ava Benny-Morrison of Bloomberg Law reports that ex-FTX executive
Salame pleads guilty to criminal charges.
Former FTX executive Ryan Salame pleaded guilty to criminal charges
stemming from the collapse of the cryptocurrency exchange.
Salame, who was the co-chief executive of FTX's Bahamas subsidiary
before the exchange imploded last November, appeared in Manhattan
federal court on Thursday, September 7, 2023, afternoon. Flanked by
lawyers and wearing a blue suit and Bitcoin socks, Salame pleaded
guilty to one campaign finance violation and one charge of
operating an illegal money-transmitting business.
Salame’s plea agreement did not include a promise to testify
against Sam Bankman-Fried, who goes on trial for fraud next month,
but the deal will likely increase the pressure on the FTX
co-founder. Prosecutors claim Bankman-Fried orchestrated a
yearslong scheme to misuse FTX customer funds for personal
expenses, high-risk bets through affiliated hedge fund Alameda
Research and political donations meant to influence US crypto
regulation before the exchange’s collapse. Bankman-Fried has
pleaded not guilty.
Three of Bankman-Fried's other close associates — Alameda Chief
Executive Officer Caroline Ellison, FTX co-founder Gary Wang and
engineering chief Nishad Singh all previously pleaded guilty and
agreed to testify in the hopes of receiving lighter sentences.
Each of the counts to which Salame, 30, pleaded guilty carries a
maximum sentence of five years in prison. Though Salame agreed to a
$1.55 billion forfeiture order — dwarfing even the $700 million
prosecutors are seeking from Bankman-Fried — the government said
it would pursue that amount only if Salame lied or failed to
surrender a much smaller amount in assets, including $6 million in
cash and a Porsche 911 Turbo.
Salame, who joined Alameda in 2019, was a member of
Bankman-Fried’s inner-circle and a prolific political donor,
spending $24 million in support of Republican campaigns.
Prosecutors allege Bankman-Fried, 31, used Salame and other
executives as straw donors. On Thursday, Salame admitted that he
made donations in 2021 and 2022 using money from Alameda accounts.
"At the time I knew it was prohibited by campaign finance laws to
make contributions in my name with money that wasn’t my own,"
Salame said in court. He added that, though the funds were
categorized as loans, "I never intended to repay them."
He said his political donations were supported by Bankman-Fried.
While prosecutors withdrew a campaign finance law charge against
Bankman-Fried earlier this year, the government has incorporated
the alleged political donations scheme into other counts in the
case.
A spokesman for Bankman-Fried declined to comment.
Berkshires Restaurants
Manhattan US Attorney Damian Williams said in a statement that
Salame's actions "helped FTX grow faster and larger by operating
outside of the law" and that his guilty plea reflected the
government's commitment to "pursue swift justice against
individuals at FTX."
After the hearing, Salame was freed on a $1 million bond. He's
scheduled to be sentenced on March 6, 2023.
"Ryan looks forward to putting this chapter behind him and moving
forward with his life," Salame's attorney, Jason Linder, said on
Thursday night.
The illegal money-transmitting charge against Salame related to
efforts to open a bank account to accept FTX customer funds under
false pretenses. According to the charging documents, Salame,
Bankman-Fried and Alameda employees falsely claimed the account
would be used for trading to avoid having to register FTX as a
money services business.
In addition to his political donations, Salame was known for his
investments in restaurants. In 2019, he paid more than $6 million
for five eateries in Lenox, Massachusetts, in the Berkshires. As
part of his plea, Salame agreed to surrender two properties in
Lenox and his interest in the East Rood Farm Corp., a company that
holds some of his restaurants.
The case is US v. Bankman-Fried, 22 cr 673, US District Court,
Southern District of New York (Manhattan).
About FTX Group
FTX is the world's second-largest cryptocurrency firm. FTX is a
cryptocurrency exchange built by traders, for traders. FTX offers
innovative products including industry-first derivatives, options,
volatility products and leveraged tokens.
Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that
FTX paused customer withdrawals after it was hit with roughly $5
billion worth of withdrawal requests.
Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell
itself to its giant rival Binance, but Binance walked away from the
deal amid reports on FTX regarding mishandled customer funds and
alleged US agency investigations.
At 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step
aside, and restructuring vet John J. Ray III was quickly named new
CEO.
FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc.
(d/b/a FTX US), Alameda Research Ltd. and certain affiliated
companies then commenced Chapter 11 proceedings (Bankr. D. Del.
Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022.
Additional entities sought Chapter 11 protection on Nov. 14, 2022.
FTX Trading and its affiliates each listed $10 billion to $50
million in assets and liabilities, making FTX the biggest
bankruptcy filer in the US this year.
According to Reuters, SBF shared a document with investors on Nov.
10, 2022, showing FTX had $13.86 billion in liabilities and $14.6
billion in assets. However, only $900 million of those assets were
liquid, leading to the cash crunch that ended with the company
filing for bankruptcy.
The Hon. John T. Dorsey is the case judge.
The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel;
Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal
North America, LLC as financial advisor. Kroll is the claims agent,
maintaining the page https://cases.ra.kroll.com/FTX/Home-Index
The Official Committee of Unsecured Creditors tapped Paul Hastings
as counsel, FTI Consulting, Inc., as financial advisor, and
Jefferies LLC as the investment banker. Young Conaway Stargatt &
Taylor LLP is the Committee's Delaware and conflicts counsel.
Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory
T. Donilon, Edward L. Schnitzer, and David M. Banker, is
representing Sam Bankman-Fried in the Chapter 11 cases.
White-collar crime specialist Mark S. Cohen has reportedly been
hired to represent SBF in litigation. Lawyers at Paul Weiss
previously represented SBF but later renounced representing the
entrepreneur due to a conflict of interest.
FTX GROUP: Wants to Clawback Payments to Naomi Osaka, Shaq O'Neal
-----------------------------------------------------------------
Jonathan Randles of The Bloomberg Law reports that FTX Group
advisers have scrutinized whether they can claw back millions of
dollars paid to Shaquille O'Neal, tennis star Naomi Osaka and other
professional athletes and teams that promoted Sam Bankman-Fried’s
crypto platform before its collapse.
Financial advisers hired by FTX disclosed in court papers that
they'e analyzed if certain payments dished out to athletes before
the company unraveled last November can be recovered in Chapter 11.
Advisers have reviewed payments to O’Neal, Osaka and others to
determine if the transfers are subject to rules that permit
companies to reverse transactions that occurred just before a
Chapter 11.
About FTX Group
FTX is the world's second-largest cryptocurrency firm. FTX is a
cryptocurrency exchange built by traders, for traders. FTX offers
innovative products including industry-first derivatives, options,
volatility products and leveraged tokens.
Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that
FTX paused customer withdrawals after it was hit with roughly $5
billion worth of withdrawal requests.
Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell
itself to its giant rival Binance, but Binance walked away from the
deal amid reports on FTX regarding mishandled customer funds and
alleged US agency investigations.
At 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step
aside, and restructuring vet John J. Ray III was quickly named new
CEO.
FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc.
(d/b/a FTX US), Alameda Research Ltd. and certain affiliated
companies then commenced Chapter 11 proceedings (Bankr. D. Del.
Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022.
Additional entities sought Chapter 11 protection on Nov. 14, 2022.
FTX Trading and its affiliates each listed $10 billion to $50
million in assets and liabilities, making FTX the biggest
bankruptcy filer in the US this year.
According to Reuters, SBF shared a document with investors on Nov.
10, 2022, showing FTX had $13.86 billion in liabilities and $14.6
billion in assets. However, only $900 million of those assets were
liquid, leading to the cash crunch that ended with the company
filing for bankruptcy.
The Hon. John T. Dorsey is the case judge.
The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel;
Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal
North America, LLC as financial advisor. Kroll is the claims agent,
maintaining the page https://cases.ra.kroll.com/FTX/Home-Index
The Official Committee of Unsecured Creditors tapped Paul Hastings
as counsel, FTI Consulting, Inc., as financial advisor, and
Jefferies LLC as the investment banker. Young Conaway Stargatt &
Taylor LLP is the Committee's Delaware and conflicts counsel.
Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory
T. Donilon, Edward L. Schnitzer, and David M. Banker, is
representing Sam Bankman-Fried in the Chapter 11 cases.
White-collar crime specialist Mark S. Cohen has reportedly been
hired to represent SBF in litigation. Lawyers at Paul Weiss
previously represented SBF but later renounced representing the
entrepreneur due to a conflict of interest.
FULTON MERCER: Hires Weiss Law Group, LLC as Counsel
----------------------------------------------------
Fulton Mercer Corporation seeks approval from the U.S. Bankruptcy
Court for the Western District of Texas to employ Weiss Law Group,
LLC as counsel.
The firm's services include:
a. providing legal advice with respect to the powers, rights,
and duties of the Debtor and Debtor-in-Possession;
b. providing legal advice and consultation related to the legal
and administrative requirements of this case, including assisting
Applicant in complying with the procedural requirements of the
Office of the United States Trustee;
c. taking appropriate actions to protect and preserve the
Estate, including prosecuting actions on the Debtor's behalf,
defending actions commenced against the Debtor, and representing
the Debtor's interests in any negotiations or litigation in which
the Debtor may be involved, including objections to the claims
filed against the Estate, and preparing witnesses and reviewing
documents in this regard;
d. preparing appropriate documents and pleadings, including but
not limited to Schedules, Applications, Motions, Answers, Orders,
Complaints, Reports, or other documents appropriate to the
administration of the Estate;
e. representing the Debtor's interests at the Initial Debtor
Interview, the Meeting of Creditors, any Status Conferences, any
Disclosure Statement Hearing, the Confirmation Hearing, and other
hearings before this Court related to the Debtor;
f. assisting and advising the Debtor in the formulation,
negotiation, and implementation of a Disclosure Statement and/or
Chapter 11 Plan and all documents related thereto;
g. assisting and advising the Debtor with respect to
negotiation, documentation, implementation, consummation, and
closing of transactions, including the sale of assets or the
incurring of debt;
h. assisting and advising the Debtor with respect to the use of
cash collateral, obtaining financing, and negotiating, drafting,
and seeking approval of any documents related thereto;
i. reviewing and analyzing claims filed in this case, and
advising and representing the Debtor in connection with objections
to such claims;
j. assisting and advising the Debtor with respect to executory
contracts and unexpired leases, including assumptions, assignments,
rejections, and renegotiations;
k. coordinating with other professionals employed in the case;
l. reviewing and analyzing applications, orders, motions, and
other pleadings and documents filed with the Bankruptcy Court and
advising the Debtor thereon; and
m. assisting the Debtor in performing such other services as may
be in the interest of the Debtor and the Estate and performing all
other legal services required by the Debtor.
The firm will be paid $595 per hour for partners, $125 per hour for
associates, and $125 per hour for paralegals.
The firm will be paid a retainer in the amount of $15,000.
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Brett Weiss, a partner at Weiss Law Group, LLC, 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:
Brett Weiss, Esq.
WEISS LAW GROUP, LLC
8843 Greenbelt Road, Suite 299,
Greenbelt, Maryland 20770
Tel: (301) 924-4400
Fax: (240) 627-4186
Email: brett@BankruptcyLawMaryland.com
About Fulton Mercer Corporation
Fulton Mercer Corporation, a provider of death care services,
sought protection under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. W.D. Tex. Case No. 23-10590) on Aug. 1, 2023. In the
petition signed by Jason Wayne Fulton, president, the Debtor
disclosed up to $10 million in both assets and liabilities.
The Debtors tapped Amy Wilburn, Esq., at Lincoln Goldfinch Law as
counsel and Joshua Ray, CPA, at Ray CPA as accountant.
FUTURE PRESENT: Taps Mashiah & Sheffer as Transactional Counsel
---------------------------------------------------------------
Future Present Productions, LLC seeks approval from the U.S.
Bankruptcy Court for the Eastern District of New York to employ
Mashiah & Sheffer, LLP as transactional counsel.
The firm will render these services:
(a) prepare or review leasing or purchase documents;
(b) draft or review contracts;
(c) prepare written correspondence and communication with
landlords; and
(d) work with outside counsel in matters where required.
Keren Mashiah, Esq., the primary attorney in this representation,
has agreed that billing for services in connection with this case
will be at a flat rate of $8,000 per month for general business
services and at a rate of $400 per hour for litigation services.
In addition, the firm will seek reimbursement for expenses
incurred.
Ms. Mashiah disclosed in a court filing that her firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
Keren Mashiah, Esq.
Mashiah & Sheffer, LLP
195 Montague Street, 14th Floor
Brooklyn, NY 11201
Telephone: (718) 328-3800
Email: EMiller@bayardlaw.com
About Future Present Productions
Future Present Productions, LLC, doing business as GUM Studios, is
a multi-location film stage and equipment rental facility with
production capabilities in the New York Metropolitan - Tri State
area. It caters to production companies, advertising agencies,
video-photographers, designers, and large tv and film productions.
The Debtor filed Chapter 11 petition (Bankr. E.D. N.Y. Case No.
23-42510 on July 18, 2023, with $6,065,879 in assets and $5,760,994
in liabilities. Carrie White, chief executive officer, signed the
petition.
Judge Elizabeth S. Stong oversees the case.
The Debtor tapped Lewis W. Siegel, Esq., as bankruptcy counsel and
Keren Mashiah, Esq., at Mashiah & Sheffer, LLP as transactional
counsel.
GAFC SERVICES: Hires Jacqueline E. Hernandez Santiago as Counsel
----------------------------------------------------------------
GAFC Services, LLC seeks approval from the U.S. Bankruptcy Court
for the District of Puerto Rico to employ Legal Office of
Jacqueline E. Hernandez Santiago, Esq. as counsel.
The firm will provide these services:
a. advise the Debtor with respect to its duties, powers and
responsibilities in the bankruptcy case;
b. advise the Debtor in connection with the determination,
whether reorganization is feasible and, if not, assist in the
orderly liquidation of assets;
c. assist the Debtors with respect to the negotiations with
creditors for arranging the orderly liquidation of assets, and plan
of reorganization;
d. prepare on behalf of the Debtor legal papers;
e. perform the required legal services needed by the Debtors to
proceed or in connection with the operation of and involvement with
is business; and
f. perform necessary services for the benefit of the Debtor and
the estate.
The firm will be paid at the rate of $275 per hour, and will also
be reimbursed for reasonable out-of-pocket expenses incurred.
The retainer is $15,000.
As 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:
Jacqueline E. Hernandez Santiago, Esq.
LEGAL OFFICE OF JACQUELINE E.
HERNANDEZ SANTIAGO, ESQ.
22 Mayaguez Street
Hato Rey, PR 00918
Tel: (787) 766-0570
About GAFC Services, LLC
GAFC Services, LLC in Carolina, PR, filed its voluntary petition
for Chapter 11 protection (Bankr. D.P.R. Case No. 23-02567) on
August 18, 2023, listing $2,245,501 in assets and $1,565,422 in
liabilities. Juan Carlos Arocha as president, signed the petition.
Judge Mildred Caban Flores oversees the case.
HERNANDEZ LAW OFFICES serve as the Debtor's legal counsel.
GRACO SERVICES: Seeks to Hire C. Taylor Crockett as Legal Counsel
-----------------------------------------------------------------
Graco Services, Inc. seeks approval from the U.S. Bankruptcy Court
for the Northern District of Alabama to employ C. Taylor Crockett,
Esq., an attorney practicing in Birmingham, Ala., as its counsel.
The Debtor requires legal counsel to:
(a) give advice regarding the powers and duties of the Debtor
in the continued management of its financial affairs and property;
(b) prepare legal papers;
(c) review all leases and other corporate papers and prepare
necessary motions to assume unexpired leases or executory contracts
and assist in preparation of corporate authorizations and
resolutions regarding the Chapter 11 case; and
(d) perform all other legal services for the Debtor.
Mr. Crockett will be paid at his hourly rate of $450. He also
received a retainer of $12,000 plus filing fee of $1,738.
The attorney disclosed in a court filing that he is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The attorney can be reached at:
C. Taylor Crockett, Esq.
C. Taylor Crockett, PC
2067 Columbiana Road
Birmingham, AL 35216
Telephone: (205) 978-3550
Email: taylor@taylorcrockett.com
About Graco Services
Graco Services, Inc. sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Ala. Case No. 23-81577) on Aug. 28,
2023, with as much as $1 million in both assets and liabilities.
Trena Jaco Grant, president, signed the petition.
Judge Clifton R Jessup Jr. oversees the case.
C. Taylor Crockett, Esq., represents the Debtor as legal counsel.
GREEN DISTRICT: Seeks to Hire DelCotto Law as Counsel
-----------------------------------------------------
Green District Franchisee Parent, Inc. seeks approval from the U.S.
Bankruptcy Court for the Western District of Kentucky to employ
DelCotto Law Group PLLC as its attorneys.
The firm will render these services:
(a) take all necessary action to protect and preserve the
Estate of the Debtor, including the prosecution of actions on the
Debtor's behalf, the defenses of any actions commenced against the
Debtor, negotiations concerning all litigation in which the Debtor
is involved, and objections to claims filed against the Estate;
(b) prepare on behalf of the Debtor, as Debtor in possession,
necessary motions, applications, schedules, statements, answers,
orders, reports and papers in connection with the administration of
its Estate;
(c) negotiate and prepare on behalf of the Debtor a plan of
reorganization and all related documents; and
(d) perform all other necessary legal services in connection
with this Chapter 11 case.
The firm's current rates range from $235 to $550 per hour for
attorneys and $150 to $175 per hour for paralegals.
For providing bankruptcy advice and assistance, the firm received a
retainer of $59,513.
Dean A. Langdon, Esq., a partner at DelCotto Law Group PLLC,
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:
Dean A. Langdon, Esq.
DELCOTTO LAW GROUP PLLC
200 North Upper Street
Lexington, KY 40507
Tel: (859) 231-5800
Fax: (859) 281-1179
Email: dlangdon@dlgfirm.com
About Green District Franchisee Parent, Inc.
Green District Franchisee Parent, Inc., is a Delaware corporation
with its principal office located at 225 South 5th Street in
Louisville, Kentucky. GDFP operates 9 Green District restaurants in
Kentucky, Indiana, Ohio and Colorado.
The Green District restaurants are a casual fast-food restaurant
chain offering food products focused on salads and healthy fare.
GDFP currently employs approximately 168 employees in its
operations.
Four individuals own common stock in the company, and CGGD
Franchisee, LP, owns all the preferred stock in the company. CGGD
Franchisee is also the holder of a convertible promissory note from
GDFP dated April 15, 2022 in the face amount of $15 million.
Green District Franchisee Parent sought protection under Chapter 11
of the U.S. Bankruptcy Code (Bankr. W.D. Kent. Case No. 23-31922)
on August 18, 2023.
In the petition signed by Chris Furlow, director, the Debtor
disclosed up to $10 million in assets and up to $50 million in
liabilities.
Judge Joan A Lloyd oversees the case.
Dean A. Langdon, Esq., at Delcotto Law Group, PLLC, is the Debtor's
legal counsel.
GROM SOCIAL: Closes $3 Million Public Stock Offering
----------------------------------------------------
Grom Social Enterprises, Inc. closed its previously announced
underwritten public offering of 946,000 units at a price to the
public of $3.00 per Unit and 54,000 pre-funded units at a price to
the public of $2.999 per Pre-Funded Unit for aggregate gross
proceeds of approximately $3.0 million, prior to deducting
underwriting discounts, commissions, and other estimated offering
expenses.
Each Unit consisted of one share of common stock, one Series A
warrant to purchase one share of common stock and one Series B
warrant to purchase one share of common stock. The Warrants have
an exercise price of $3.00 per share, are exercisable immediately
upon issuance, and will expire five years following the date of
issuance. Each Pre-Funded Unit consisted of one pre-funded warrant
exercisable for one share of common stock, one Series A Warrant and
one Series B Warrant, identical to the Warrants in the Units. The
purchase price of each Pre-Funded Unit is equal to the price per
Unit being sold to the public in the offering, minus $0.001, and
the exercise price of each Pre-Funded Warrant is $0.001 per share.
The Pre-Funded Warrants are immediately exercisable and may be
exercised at any time until all of the Pre-Funded Warrants are
exercised in full.
In addition, the Company granted the underwriters a 45-day option
to purchase up to an additional 150,000 shares of common stock
and/or Pre-funded Warrants to purchase up to 150,000 shares of
Common Stock and/or Series A Warrants to purchase up to 150,000
shares of common stock and/or Series B Warrants to purchase up to
150,000 shares of common stock, solely to cover over-allotments, if
any, less underwriting discounts and commissions. On Sept. 8,
2023, the underwriters exercised the option to purchase an
additional 150,000 Series A Warrants and 150,000 Series B
Warrants.
The Company intends to use the net proceeds from this offering for
working capital and general corporate purposes.
EF Hutton, division of Benchmark Investments, LLC, acted as sole
book running manager for the offering. Lucosky Brookman LLP acted
as legal counsel to the Company, and Carmel, Milazzo & Feil LLP
acted as legal counsel to EF Hutton for the offering.
The offering was conducted pursuant to the Company's registration
statement on Form S-1, as amended (File No. 333-273895), previously
filed with the Securities and Exchange Commission that was declared
effective by the SEC on Sept. 7, 2023.
The offering was made only by means of a prospectus supplement and
accompanying prospectus. The final prospectus supplement and
accompanying base prospectus relating to the securities being
offered in the offering were filed with the SEC on Sept. 11, 2023.
Copies of the prospectus supplement and the accompanying prospectus
relating to this offering may be obtained, when available, on the
SEC's website at http://www.sec.govor by contacting EF Hutton,
division of Benchmark Investments, LLC Attention: Syndicate
Department, 590 Madison Avenue, 39th Floor, New York, NY 10022, by
email at syndicate@efhuttongroup.com, or by telephone at (212)
404-7002.
About Grom Social Enterprises Inc.
Boca Raton, Florida-based Grom Social Enterprises, Inc. -- @
www.gromsocial.com -- is a media, technology and entertainment
company focused on delivering content to children under the age of
13 years in a safe secure Children's Online Privacy Protection Act
("COPPA") compliant platform that can be monitored by parents or
guardians.
Grom Social reported a net loss of $16.77 million for the year
ended Dec. 31, 2022, compared to a net loss of $10.22 million for
the year ended Dec. 31, 2021. As of Dec. 31, 2022, the Company had
$24.64 million in total assets, $4.30 million in total liabilities,
and $20.35 million in total stockholders' equity.
Somerset, New Jersey-based Rosenberg Rich Baker Berman, P.A., the
Company's auditor since 2022, issued a "going concern"
qualification in its report dated April 17, 2023, citing that the
Company's significant operating losses and negative cash flows
from operations raise substantial doubt about its ability to
continue as a going concern.
GWD INC: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------
Debtor: GWD Inc.
DBA American Overhead Door
4336 N. Nevada Avenue
Colorado Springs, CO 80907
Business Description: GWD is an independent, non-franchise
overhead door dealer in Southern Colorado.
Chapter 11 Petition Date: September 14, 2023
Court: United States Bankruptcy Court
District of Colorado
Case No.: 23-14137
Debtor's Counsel: Jonathan M. Dickey, Esq.
KUTNER BRINEN DICKEY RILEY PC
1660 Lincoln Street, Suite 1720
Denver, CO 80264
Tel: 303-832-2400
Email: jmd@kutnerlaw.com
Total Assets: $748,024
Total Liabilities: $3,089,574
The petition was signed by Gary Dejong 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/XHO4RDQ/GWD_Inc__cobke-23-14137__0003.0.pdf?mcid=tGE4TAMA
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/W53LGNI/GWD_Inc__cobke-23-14137__0001.0.pdf?mcid=tGE4TAMA
HAYS MECHANICAL: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: Hays Mechanical, LLC
1995 Ferry Avenue
Camden, NJ 08104
Business Description: The Debtor is primarily engaged in
manufacturing construction machinery,
surface mining machinery, and logging
equipment.
Chapter 11 Petition Date: September 14, 2023
Court: United States Bankruptcy Court
District of New Jersey
Case No.: 23-18041
Debtor's Counsel: David Stevens, Esq.
SCURA WIGFIELD, HEYER, STEVENS & CAMMAROTA LLP
1599 Hamburg Turnpike
Wayne, NJ 07470
Tel: 201-490-4777
Email: dstevens@scura.com
Estimated Assets: $500,000 to $1 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Michael L. Hays as managing
member/principal.
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/JSRIB7A/Hays_Mechanical_LLC__njbke-23-18041__0001.0.pdf?mcid=tGE4TAMA
IDAHO HOUSING: Moody's Rates Series 2023A/B Revenue Bonds 'Ba3'
---------------------------------------------------------------
Moody's Investors Service has assigned initial Ba3 underlying and
Aa2 enhanced ratings to the Idaho Housing and Finance Association's
Nonprofit Facilities Revenue Bonds (White Pine Charter School
Project), Series 2023A (Credit Enhancement) and Series 2023B
(Credit Enhancement) (Federally Taxable). The bonds will be issued
in the expected par amounts of $13.9 million and $925,000,
respectively. Concurrently, Moody's has assigned a stable outlook
on the underlying rating. Following issuance, the Series 2023A/B
bonds will be White Pine Charter School's only outstanding debt.
RATINGS RATIONALE
The initial Ba3 is based on the school's relatively small scale and
recent history of not achieving budgeted enrollment, resulting in a
significant draw on reserves in fiscal 2023 and failure to generate
any revenues available for debt service. The rating considers the
fact that the school's liquidity remains sufficient to support its
operations despite the draw. Furthermore, preliminary enrollment
information for the 2023-24 school year indicates that enrollment
will exceed budgeted expectations and result in a rebound in
budgetary performance. Finally, the rating considers the school's
highly elevated debt relative to revenue, operating cash flow, and
reserves.
Governance is a key consideration for all initial rating actions.
Both the school's board and administration has been completely
replaced over the past four years. The new leadership has
implemented a wide variety of budgetary and operational reforms
that will improve the school's performance in future, though there
has been significant disruption associated with the transition that
culminated in the negative financial performance in fiscal 2023.
Despite the disruption, the school remains in good standing with
its charter authorizer and the school has a history of successful
charter renewal.
The Aa2 enhanced rating reflects the credit quality of the State of
Idaho (Aaa stable) and its moral obligation pledge under the
provisions of the Idaho Public Charter School Facilities Program.
The program's strengths include statutory requirements that the
Idaho Housing and Finance Association and the Governor request the
legislature to make an appropriation to replenish the bonds' debt
service reserve fund in the event of a draw on that fund. The
rating also reflects the essentiality of charter schools in the
state's K-12 education system and the state's established track
record of making appropriation-backed debt payments under certain
financing agreements for state projects. The two-notch distinction
between the programmatic rating and the state's issuer rating
reflects the weaknesses inherent in the contingent,
subject-to-appropriation nature of the state's support.
RATING OUTLOOK
The stable outlook on the underlying rating reflects Moody's
expectation that the school's management will continue gradually
growing the school's enrollment and maintain the school's good
standing with its authorizer. However the elevated debt burden and
small revenue base will continue to be negative credit
considerations for the foreseeable future.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
- Continued enrollment growth that meets or exceeds projections
- Significant and sustained improvement in operating performance
and reserves
- Not applicable for enhanced rating
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
- Further negative fluctuations in enrollment
- Additional draws on reserves or failure to generate sum
sufficient debt service coverage
- Additional borrowing given already very high leverage
- Downgrade of the State of Idaho's issuer rating (enhanced
rating)
LEGAL SECURITY
The bonds are payable from payments received pursuant to a loan
agreement between White Pine Charter School and the Idaho Housing
and Finance Association. The association serves as the issuer of
the debt. Under the loan agreement, White Pine Charter School has
pledged to make payments from a pledge of gross revenues. The
revenues are primarily comprised of state funding, though the
agreement does also include any other revenues derived from
operation of the school. A deed of trust on the school facility
backs the loan in the event of nonpayment.
The school has been approved for and intends to use the Idaho
Public Charter School Facilities Program. A key requirement of the
program is a direct-pay arrangement for debt service, whereby all
state per pupil payments to the school are sent directly to the
bond trustee to set aside funds in accordance with the bond
indenture. The bonds will also benefit from a debt service reserve
funded at the lesser of the standard three-prong test and at least
twelve months of debt service.
USE OF PROCEEDS
Bond proceeds will be used to consolidate the school's operations
in a single location by expanding its K-5 facility to serve grades
6-12. Proceeds will also be used to refinance the school's existing
debt.
PROFILE
White Pine Charter School is a K-12 public charter school located
in Ammon, Idaho. The school opened in Fall 2003 and presently
serves 561 students.
METHODOLOGY
The principal methodology used in the underlying ratings was US
Charter Schools published in September 2016.
INNOVATIVE GENOMICS: Court OKs Cash Collateral Access Thru Sept 21
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida,
Miami Division, authorized Innovative Genomics, LLC to use cash
collateral on an interim basis in accordance with the budget, with
a 10% variance, through September 21, 2023.
The Debtor requires the use of cash collateral to pay its regular
business operating expenses and administrative expenses and other
ordinary expenses as they become due.
As adequate protection for the Debtor's use of cash collateral,
Simmons Bank and US Small Business Administration are each granted
a replacement lien to the same extent as any pre-petition lien,
pursuant to 11 U.S.C. Section 361(2) on the property set forth in
its security agreements, without any prejudice to any rights of the
Debtor to seek to void the lien as to the extent, validity, or
priority of said liens.
A further hearing on the matter is set for September 21 at 2:30
p.m.
A copy of the order is available at https://urlcurt.com/u?l=EdibbU
from PacerMonitor.com.
About Innovative Genomics
Innovative Genomics, LLC owns and operates a medical and diagnostic
laboratory in Miami, Fla.
The Debtor filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. S.D. Fla. Case No. 23-16852) on Aug. 28,
2023, with $1 million to $10 million in both assets and
liabilities. Enrique Perez-Paris, president, signed the petition.
Judge Robert A. Mark oversees the case.
R. Scott Shuker, Esq., at Shuker & Dorris, P.A. represents the
Debtor as legal counsel.
INSPIREMD INC: All Four Proposals Passed at Annual Meeting
----------------------------------------------------------
InspireMD, Inc. held its Annual Meeting on Sept. 13, 2023, during
which the Company's stockholders:
(1) re-elected Marvin Slosman, Thomas J. Kester and Kathryn
Arnold to serve on the Board of Directors, as Class 3 directors,
for a term of three years or until his or her successor is elected
and qualified;
(2) approved the potential issuance of shares in the Private
Placement Offering, which would result in a "change of control" of
the Company under the applicable rules of The Nasdaq Stock Market
LLC;
(3) approved an amendment to the Company's Amended and Restated
Certificate of Incorporation to limit the liability of certain
officers of the Company as permitted by recent amendments to
Delaware law; and
(4) ratified the appointment of Kesselman & Kesselman, a member
of PricewaterhouseCoopers International Limited, as the Company's
independent registered public accounting firm for the 2023 fiscal
year.
About InspireMD
Headquartered in Tel Aviv, Israel, InspireMD, Inc. --
http://www.inspiremd.com-- is a medical device company focusing on
the development and commercialization of its proprietary MicroNet
stent platform technology for the treatment of complex vascular and
coronary disease. A stent is an expandable "scaffold-like" device,
usually constructed of a metallic material, that is inserted into
an artery to expand the inside passage and improve blood flow. Its
MicroNet, a micron mesh sleeve, is wrapped over a stent to provide
embolic protection in stenting procedures.
InspireMD reported a net loss of $18.49 million for the year ended
Dec. 31, 2022, compared to a net loss of $14.92 million for the
year ended Dec. 31, 2021. As of Dec. 31, 2022, the Company had
$24.65 million in total assets, $7.26 million in total liabilities,
and $17.39 million in total equity.
Tel-Aviv, Israel-based Kesselman&Kesselman, the Company's auditor
since 2010, issued a "going concern" qualification in its report
dated March 30, 2023, citing that the Company has suffered
recurring losses from operations and cash outflows from operating
activities that raise substantial doubt about its ability to
continue as a going concern.
ITTELLA INTERNATIONAL: Committee Taps Brinkman as Legal Counsel
---------------------------------------------------------------
The official committee representing unsecured creditors of New
Mexico Food Distributors, an affiliate of Ittella International
LLC, seeks approval from the U.S. Bankruptcy Court for the Central
District of California to employ Brinkman Law Group, PC.
The committee requires legal counsel to:
(a) give advice with regards to the powers and duties of the
committee;
(b) assist the committee in investigating the acts, conduct,
assets, liabilities, and financial condition of the Debtor, the
operation of its business, potential claims, and any other matters
relevant to the Debtor's Chapter 11 case;
(c) participate in the formulation of a Chapter 11 plan;
(d) advise the committee with respect to any disclosure
statement and plan filed in this case;
(e) prepare legal papers;
(f) appear in court to present necessary motions,
applications, and filings, and otherwise protect the interests of
those represented by the committee;
(g) assist the committee in requesting the appointment of a
trustee or examiner, should such action be necessary; and
(h) perform all other legal services as may be required.
The hourly rates of the firm's counsel and staff are as follows:
Daren Brinkman $875
Jory Cook $525
Paralegals $325
In addition, the firm will seek reimbursement for expenses
incurred.
Daren Brinkman, Esq., a principal at Brinkman Law Group, 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:
Daren R. Brinkman, Esq.
Jory D. Cook, Esq.
Brinkman Law Group, PC
543 Country Club Drive, Suite B
Wood Ranch, CA 93065
Telephone: (818) 597-2992
Facsimile: (818) 597-2998
Emai: firm@brinkmanlaw.com
About Ittella International
Ittella International, LLC is a supplier of plant-based products
based in Paramount, Calif.
Ittella International and seven affiliates sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. C.D. Cal. Lead Case
No. 23-14154) on July 2, 2023. In the petition signed by its chief
executive officer, Salvatore Galletti, Ittella International
reported $10 million to $50 million in both assets and
liabilities.
Judge Sandra R. Klein oversees the cases.
The Debtors tapped David L. Neale, Esq., at Levene, Neale, Bender,
Yoo and Golubchik, LLP as bankruptcy counsel; Rutan and Tucker, LLP
as their special corporate and SEC counsel; SC&H Group, Inc. as
investment banker; and Grant Thornton, LLP as accountant.
The U.S. Trustee for Region 16 appointed two separate committees to
represent unsecured creditors of Ittella International and its
affiliate, New Mexico Food Distributors, Inc. The committee of New
Mexico Food Distributors tapped Brinkman Law Group, PC as counsel.
ITTELLA INTERNATIONAL: Hires Loeb & Loeb LLP as Counsel
-------------------------------------------------------
The official committee of unsecured creditors of Ittella
International LLC and its affiliates seeks approval from the U.S.
Bankruptcy Court for the Central District of California to employ
Loeb & Loeb LLP as counsel.
The firm will provide these services:
a. provide legal advice with respect to the Creditors'
Committee's rights, duties, and interests in these Chapter 11
cases;
b. prepare and respond on behalf of the Creditors' Committee to
any and all applications, motions, answers, orders, reports, and
other pleadings and appear at any hearings in connection with the
case;
c. provide legal analysis and advice regarding any sale of the
Debtors' assets; protect the Creditors' Committee's interests with
respect to confirmation and consummation of any plan of
reorganization or liquidation that may be submitted in these cases;
and
d. perform any other legal services requested by the Creditors'
Committee in connection with these cases.
The firm will be paid at these rates:
Partners $675 to $1,600 per hour
Associates $525 to $850 per hour
Paraprofessionals $275 to $615 per hour
Bernard R. Given, II $1,025 per hour
Schuyler G. Carroll $1,025 per hour
Daniel B. Besikof $1,025 per hour
Guy Macarol $545 per hour
Fiona McKeown $430 per hour
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Bernard R. Given, II, a partner at Loeb & Loeb LLP, 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:
Bernard R. Given, II, Esq.
LOEB & LOEB LLP
10100 Santa Monica Blvd., Suite 2200
Los Angeles, CA 90067
Telephone: (310) 282-2000
Facsimile: (310) 282-2200
Email: bgiven@loeb.com
gmacarol@loeb.com
About Ittella International LLC
Ittella International, LLC is a supplier of plant-based products
based in Paramount, Calif.
Ittella International and seven affiliates sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. C.D. Calif. Lead
Case No. 23-14154) on July 2, 2023. In the petition signed by its
chief executive officer, Salvatore Galletti, Ittella International
reported $10 million to $50 million in both assets andliabilities.
Judge Sandra R. Klein oversees the cases.
The Debtors tapped David L. Neale, Esq., at Levene, Neale, Bender,
Yoo and Golubchik, LLP as bankruptcy counsel; Rutan and Tucker, LLP
as their special corporate and SEC counsel; SC&H Group, Inc. as
investment banker; and Grant Thornton, LLP as accountant.
The U.S. Trustee for Region 16 appointed two separate committees
to
represent unsecured creditors of Ittella International and its
affiliate, New Mexico Food Distributors, Inc.
JANE STREET: Fitch Affirms LongTerm IDR at 'BB+', Outlook Stable
----------------------------------------------------------------
Fitch Ratings has affirmed Jane Street Group, LLC's Long-Term
Issuer Default Rating (IDR) and senior secured debt rating at
'BB+'. The Rating Outlook is Stable.
KEY RATING DRIVERS
Jane Street's rating reflects its strong, established market
position as a technology-driven market maker in the exchange traded
fund (ETF) market across various venues, its size and scale versus
rated peers, and its strong operating performance which has
augmented capital and supported the firm's appropriate leverage
profile over time. The rating further reflects management's good
track record of managing market and operational risks which has
been driven by a high level of employee ownership that ensures risk
and return interests are well-aligned.
Primary rating constraints include elevated operational risks
inherent in technology-driven trading, although Fitch believes the
firm has a robust risk control framework. Other constraints include
elevated market risk due to Jane Street's willingness to hold
positions longer than peer market makers given its focus on less
liquid markets, limited business diversification outside of the
liquidity provision space and reliance on volatile transactional
revenue streams.
Jane Street's balance sheet exposures have grown materially over
the last three years, driven by strong market dynamics, including
continued fund flows into ETFs, where the firm is a market leader.
This, along with Jane Street's ability to grow in adjacent
strategies, has supported revenue and firm profitability at levels
above those experienced pre-pandemic. While net trading revenues
fell in the first half of 2023 compared to last year, Fitch expects
Jane Street's profitability to remain elevated relative to its
assigned rating over the near to medium term due to the firm's
efforts in building out expansive strategies from an asset class
and geographic perspective.
Jane Street's GAAP balance sheet leverage is relatively low, at
5.8x at 2Q23 compared to Fitch's 'bb' category capitalization and
leverage benchmark range of 10x-15x for securities firms with high
balance sheet usage. Leverage declined from 6.2x a year ago, driven
by strong earnings and reasonable capital distributions. Fitch
notes that on an absolute basis, Jane Street's tangible capital
base has increased by almost $17 billion since the end of 2019,
supporting the firm's balance sheet growth. With member withdrawals
expected to be nominal in the context of earnings, the firm's
rating reflects Fitch's expectation that leverage will remain
conservatively managed.
Similar to peers, Jane Street's funding profile is viewed as
limited given its fully secured corporate debt profile and reliance
on confidence-sensitive secured prime broker facilities. Corporate
debt includes a $2.45 billion senior secured term loan due in
January 2028 and a $600 million senior secured note due in November
2029. The remaining portion of funding comprises short-term debt
positions, repo transactions and securities loaned, as well as
trade payables, which can be highly confidence-sensitive. However,
Fitch believes Jane Street's strong relationships with its number
of highly-rated prime brokers mitigates some risks associated with
funding confidence.
Fitch views Jane Street's liquidity as generally adequate, as the
risks of its confidence-sensitive and predominantly secured funding
profile are partially offset by the largely liquid securities
inventory. However, given its business model and strategy, Fitch
notes that Jane Street tends to hold relatively more Level 2 assets
as a percentage of total securities owned compared to peers, which
are not as liquid and could be subject to more material valuation
marks during a market dislocation. Augmenting the firm's liquidity
is its $250 million committed revolving line of credit which could
cover short-term funding needs if needed as well as the relatively
high level of cash the firm holds relative to its overall trading
capital. Fitch also notes that Jane Street manages its trading
capital in excess of margin requirements, allowing for reasonable
financial flexibility should markets become volatile and margin
requirements meaningfully increase.
The Stable Rating Outlook reflects Fitch's expectation that Jane
Street will maintain strong operating performance, low balance
sheet leverage and sufficient liquidity. The Outlook also
incorporates the expectation that Jane Street's strong risk
management and controls' framework will remain effective and
scalable in accordance with its overall growth and broadening of
operations.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- An idiosyncratic liquidity event that adversely impacts the
firm's ability to execute on its core business strategies;
- Material operational or risk management failures that adversely
impact profitability and/or market confidence;
- An inability to maintain balance sheet leverage below 10.0x on a
net adjusted leverage basis;
- Adverse legal or regulatory actions against Jane Street, which
results in a material fine, reputational damage, or alteration in
the business profile;
- An inability to maintain its strong market position in the face
of evolving market structures and technologies.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Positive rating action is likely limited given the significant
operational risk inherent in technology-driven trading. However,
factors that could, individually or collectively, lead to positive
rating action/upgrade over the long-term include:
- Consistent operating performance and minimal operational losses
over a longer time period;
- Maintaining balance sheet leverage consistently at-or-below 5x on
a net adjusted leverage basis;
- Increased funding flexibility, including demonstrated access to
third party funding through market cycles, the introduction of an
unsecured funding component and/or a meaningful increase in excess
trading capital over margin requirements.
DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS
The secured term loan rating is equalized with the IDR and reflects
the fully secured funding profile and average recovery prospects in
a stressed scenario.
DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES
The secured term loan rating is primarily sensitive to changes in
Jane Street's IDR, and secondarily, to material changes in its
capital structure and/or changes in Fitch's assessment of the
recovery prospects for the debt instrument.
ADJUSTMENTS
The Standalone Credit Profile (SCP) has been assigned in-line with
the implied SCP.
The Business Profile score has been assigned below the implied
score due to the following adjustment reason: Business model
(negative).
The Earnings & Profitability score has been assigned below the
implied score due to the following adjustment reason: Revenue
Diversification (negative).
The Funding, Liquidity & Coverage score has been assigned below the
implied score due to the following adjustment reason: Business
model/funding market convention (negative).
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
Jane Street
Group, LLC LT IDR BB+ Affirmed BB+
senior secured LT BB+ Affirmed BB+
JSG Finance, Inc.
senior secured LT BB+ Affirmed BB+
KASPIEN HOLDINGS: Raises Going Concern Doubt
--------------------------------------------
Kaspien Holdings Inc. disclosed in a Form 10-Q Report filed with
the U.S. Securities and Exchange Commission for the quarterly
period ended July 29, 2023, that there is substantial doubt about
the Company's ability to continue as a going concern.
Kaspien said, "As of July 29, 2023, we had cash and cash
equivalents of $0.3 million, a net working deficit of $0.7 million,
and $8.8 million in borrowings on our revolving credit facility, as
further discussed below. As of July 29, 2023, and July 30, 2022,
the Company had no outstanding letters of credit. The Company had
$3.4 million and $7.7 million available for borrowing under the
Credit Facility as of July 29, 2023, and July 30, 2022,
respectively."
The ability of the Company to meet its liabilities and to continue
as a going concern is dependent on improved profitability, the
strategic initiatives for Kaspien and the availability of future
funding. Based on recurring losses from operations, negative cash
flows from operations, the expectation of continuing operating
losses for the foreseeable future, and uncertainty with respect to
any available future funding, the Company has concluded that there
is substantial doubt about the Company's ability to continue as a
going concern.
"Our ability to achieve profitability and meet future liquidity
needs and capital requirements will depend upon numerous factors,
including the timing and amount of our revenue; the timing and
amount of our operating expenses; the timing and costs of working
capital needs; and successful implementation of our strategy and
planned activities. There can be no assurance that we will be
successful in further implementing our business strategy or that
the strategy, including the completed initiatives, will be
successful in sustaining acceptable levels of sales growth and
profitability," the Company stated.
Kaspien Holdings reported a net loss of $3,312,000 and $8,846,000
for the 26 weeks ended July 29, 2023, and July 30, 2022,
respectively.
About Kaspien Holdings Inc.
New York-based Kaspien Holdings Inc. was incorporated in New York
in 1972. Kaspien is a third-party marketplace retailer. The Company
leverages in-house expertise, technology, and services to generate
revenue through marketplace transactions. Kaspien provides account
management, brand development, listings management, data reporting,
joint business planning, and comprehensive marketing support
services to its vendor partners.
As of July 29, 2023, Kaspien has $38,809,000 in total assets and
$43,090,000 in total liabilities.
KATANA ELECTRONICS: Seeks to Tap Beynon & Associates as Accountant
------------------------------------------------------------------
Katana Electronics, LLC seeks approval from the U.S. Bankruptcy
Court for the District of Utah to employ Beynon & Associates, Inc.
as its accountant.
The Debtor requires an accountant to prepare and file delinquent
tax returns and ongoing tax returns and perform all other
accounting services for the Debtor that may be necessary.
Beynon has agreed to perform accounting services for $135 per hour
and has agreed to charge $60 per hour for staff time.
Roger Beynon, president of Beynon & Associates, disclosed in a
court filing that his firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Roger P. Beynon
Beynon & Associates, Inc.
404 E. 4500th S., Ste. B34
Salt Lake City, UT 84117
Telephone: (801) 268-8149
About Katana Electronics
Katana Electronics, LLC is an electronics manufacturing company
specializing in circuit boards and other electronic hardware.
Katana Electronics filed a petition under Chapter 11, Subchapter V
of the Bankruptcy Code (Bankr. D. Utah Case No. 23-22919) on July
11, 2023, with $50,001 to $100,000 in assets and $100,001 to
$500,000 in liabilities. Brian Rothschild, Esq., has been appointed
as Subchapter V trustee.
Judge Kevin R. Anderson oversees the case.
The Debtor tapped Theodore Floyd Stokes, Esq., at Stokes Law PLLC
as legal counsel and Beynon & Associates, Inc. as accountant.
KNS MOTEL: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: KNS Motel, Inc.
DBA Fairfield Inn & Suites
619 N. Shore Drive
Jeffersonville, IN 47130
Business Description: The Debtor is part of the traveler
accommodation industry. The Debtor owns in
fee simple interest a real property located
at 619 N. Shore Drive, Jeffersonville, IN
valued at $6.1 million.
Chapter 11 Petition Date: September 13, 2023
Court: United States Bankruptcy Court
Southern District of Indiana
Case No.: 23-90897
Judge: Hon. Andrea K. Mccord
Debtor's Counsel: Michael W. McClain, Esq.
GOLDBERG SIMPSON LLC
9301 Dayflower Street
Prospect, KY 40059
Tel: (502) 589-4440
Fax: (502) 581-1344
Email: mmcclain@goldbergsimpson.com;
sdaniel-harkins@goldbergsimpson.com
Total Assets: $6,193,078
Total Liabilities: $5,006,679
The petition was signed by Indravadan Patel 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/FXAG3CA/KNS_Motel_Inc__insbke-23-90897__0001.0.pdf?mcid=tGE4TAMA
LATHAM POOL: Moody's Affirms 'B1' CFR & Alters Outlook to Negative
------------------------------------------------------------------
Moody's Investors Service affirmed Latham Pool Products, Inc.'s
ratings including the Corporate Family Rating at B1, Probability of
Default Rating at B1-PD, and the B1 rating on the company's senior
secured first lien credit facility. The first lien credit facility
consists of a $75 million first lien revolver due 2027 and $325
million original principal amount first lien term loan due 2029.
The company's SGL-2 Speculative Grade Liquidity rating is
unchanged. The outlook changed to negative from stable.
"The outlook change to negative reflects Latham's high financial
leverage and the elevated downside risks given the ongoing pool
industry downturn," stated Moody's AVP-Analyst Oliver Alcantara.
"The meaningful demand headwinds affecting discretionary products
with significant declines in pools starts this year will make it
challenging for Latham to improve credit metrics, however, the
company's good liquidity supported by an undrawn $75 million
revolver due 2027 provides financial flexibility to fund business
seasonality over the next 12 months."
Latham's financial leverage is elevated with debt/EBITDA at 4.0x
(all ratios are Moody's adjusted unless otherwise stated) as of the
last twelve months (LTM) period ending July 1, 2023, up from 2.5x
at the end of fiscal 2022. LTM leverage excludes Moody's estimate
of around $27 million of non-cash stock-based compensation expense
primarily related to the company's April 2021 initial public
offering (IPO). The ongoing pool industry downturn and the
wholesale channel inventory de-stocking is negatively impacting the
company's revenue and profitability. Latham's company-adjusted
EBITDA declined by over 50% in the first half of fiscal 2023 versus
the same period last year, pressured by lower sales and higher cost
of inventory. Although moderating, persistently high inflation is
pressuring consumer discretionary spending, and rising borrowing
costs and weaker macro-economic conditions is negatively impacting
demand for the company's products. The outlook changed to negative
because Moody's expects these demand pressures will persist into
2024. The difficult operating environment in the pools industry
will make it challenging for Latham to sustainably improve its
financial metrics over the next 12 months.
Based on the mid-point of Latham's fiscal 2023 guidance provided in
its second quarter earnings results, the company anticipates
reporting for the second half of fiscal 2023 a year-over-year
revenue decline in the high single digit percentage and
company-adjusted EBITDA growth in the low-teens percentage points.
Latham expects its profitability will benefit from further
realization of cost actions and productivity initiatives and from
modest deflation as they sell through higher cost inventory.
The ratings affirmation reflects Moody's expectations that Latham's
financial leverage will sequentially improve to around 3.6x by
fiscal year end 2023, and that the company's good liquidity
provides financial flexibility to support business investments and
manage a relatively short pool industry downturn. Moody's projects
free cash flow of over $40 million over the next 12 months, which
provides financial flexibility to reduce debt and improve credit
metrics.
Affirmations:
Issuer: Latham Pool Products, Inc.
Corporate Family Rating, Affirmed B1
Probability of Default Rating, Affirmed B1-PD
Backed Senior Secured Bank Credit Facility, Affirmed B1
Outlook Actions:
Issuer: Latham Pool Products, Inc.
Outlook, Changed To Negative From Stable
RATINGS RATIONALE
Latham Pool Products, Inc.'s (Latham) credit profile broadly
reflects its solid market position in its core pool product
categories, particularly in the company's biggest and high margin
fiberglass category, which continues to grow its share of the US
market. The company's good EBITDA margin in the high-teens
percentage range is supported by the increased penetration of
fiberglass pools, and its large manufacturing network across North
America is a competitive advantage. The company's good liquidity is
supported by Moody's expectation for positive free cash flow of
around over $40 million over the next 12-18 months, and an undrawn
$75 million revolver and $43 million cash balance as of July 1,
2023.
Latham's credit profile also reflects its small scale and narrow
product focus in the highly discretionary swimming pool and pool
equipment categories, and its exposure to the inherent cyclicality
and high seasonality of the residential pool industry due to
reliance on discretionary consumer spending and weather.
Persistently high inflation and weakening economic conditions are
limiting demand for pools and related products. We anticipate these
pressures will persist into 2024 and that consumer demand for pools
will continue to moderate. Governance risk factors primarily relate
to Latham's high ownership concentration and growth through
acquisitions strategy.
Latham's ESG credit impact score CIS-4, indicates the company's
rating is lower than it would have been if ESG exposure did not
exist. The score is mainly driven by the concentrated decision
making under concentrated ownership by financial sponsors and the
use of leverage that Moody's consider high because of the company's
exposure to highly cyclical end markets. The company is moderately
negatively exposed to environmental and social risks.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if the company meaningfully increases
its revenue scale while further increasing and diversifying its
somewhat less cyclical aftermarket business, and demonstrates
consistent organic revenue and EBITDA growth, and debt/EBITDA is
sustained below 2.5x. A ratings upgrade would also require
maintenance of at least good liquidity, including consistently
strong free cash flow and revolver availability, as well as
financial policies that support credit metrics at the above level.
The ratings could be downgraded if demand for the company's
products does not stabilize or the company is unable to improve its
EBITDA, free cash flow is weak, or if debt/EBITDA remains above
3.5x. The ratings could also be downgraded if liquidity
deteriorates for any reason, including high reliance on revolver
borrowings, or if the company completes a debt-financed acquisition
or return to shareholder transaction.
The principal methodology used in these ratings was Consumer
Durables published in September 2021.
Headquartered in Latham, New York, Latham Pool Products, Inc.
(Nasdaq: SWIM) is a manufacturer and marketer of in-ground
residential swimming pools and pool related products in North
America, Australia, and New Zealand. Latham's reported revenue for
the LTM period ending July 1, 2023 is $612 million. The company is
majority owned and controlled by financial sponsors Pamplona
Capital Management and Wynnchurch, which collectively own
approximately 58% of Latham's shares.
LAURA'S ORIGINAL: Amends Plan to Include Brotman Secured Claim Pay
------------------------------------------------------------------
Laura's Original Boston Brownies, Inc., submitted a Second Amended
Plan of Reorganization for Small Business dated September 7, 2023.
The Plan Proponent's financial projections show that the Debtor
will have projected disposable income of $4,329,836. The final Plan
payment is expected to be paid on October 1, 2028.
This Plan of Reorganization proposes to pay creditors of the Debtor
from the receipt of Earned Income Tax Credits, the sale of
equipment, and income from operations.
Non-priority unsecured creditors holding allowed claims will
receive distributions, which the proponent of this Plan has valued
at approximately 40 cents on the dollar. This Plan also provides
for the payment of administrative and priority claims.
Classes 2a and 2b consists of the Secured Claims of Comerica Bank.
Comerica's Class 2a and 2b secured claims will be paid through an
Effective Date payment and monthly payments of interest and
principal thereafter until Comerica is paid in full. Comerica will
receive on or before the Effective Date payments of $1,048,951 on
its Revolving Note and Installment Note, inclusive of the equipment
paydown received pre-confirmation and an Effective Date payment of
an additional $585,000. The Effective Date payment will first be
used to pay all reasonable pre- and post-petition interest, fees,
and costs due and owing under Section 506(b) of the Bankruptcy
Code. The remainder of the Effective Date payment will be paid on a
pro-rata basis on the Revolving and Installment Notes with 66.1494%
being paid on the Revolving Note principal and 33.8506% being paid
on the Installment Note principal.
Thereafter Comerica will receive monthly payments from Debtor's
income and operations sufficient to all amounts owed on the
Revolving Note in full by June 1, 2026 and all amounts owed on the
Installment Note in full by March 1, 2027.
Class 2c consists of the undisputed, allowed, secured claim of
Brotman VLO, APC dba Brotman arising from amounts owed under
Debtor's pre-petition Contingent Fee Agreement. Brotman's Class 2c
secured claim will be paid in full without interest in the first
quarterly payment due and owing under the Plan after Comerica's
Class 2a and 2b claims are paid in full.
Like in the prior iteration of the Plan, the holders of allowed,
non-priority, general, unsecured claims in Class 3a will receive
their pro rata share of ten quarterly payments, after payment of
senior classes, in a total amount of $920,708.87, beginning during
the 2d quarter of 2026.
Debtor will contribute all of its projected disposable income and
cash on hand, net of an appropriate operating capital reserve, for
five years following the date that the first payment is due under
the Plan, more than $4,283,219, in 20 quarterly payments. On the
Effective Date Debtor will (1) pay certain of Debtor's
administrative and priority claims in full; (2) fund an
administrative capital reserve; and (3) make a substantial payment
to Debtor's secured creditor Comerica. Subsequent payments under
the plan will be made on the first day of each fiscal quarter
beginning January 1, 2024 and ending October 1, 2028 in the amounts
set forth in the projections.
A full-text copy of the Second Amended Plan dated September 7, 2023
is available at https://urlcurt.com/u?l=YsV2Mr from
PacerMonitor.com at no charge.
Attorney for the Plan Proponent:
Paul J. Leeds, Esq.
Meredith King, Esq.
Franklin Soto Leeds, LLP
444 West C Street, Suite 300
San Diego, CA 92101
Telephone: (619) 872-2520
Facsimile: (619) 566-0221
Email: pleeds@fsl.law
mking@fsl.law
About Laura's Original Boston Brownies
Laura's Original Boston Brownies, Inc. offers low sugar, high
fiber, and clean label products. The Debtor sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Calif. Case No.
23-00656) on March 13, 2023. In the petition signed by Laura
Katleman, chief executive officer, the Debtor disclosed $6,651,309
in assets and $6,498,970 in liabilities.
Judge Christopher B. Latham oversees the case.
Paul Leeds, Esq., and Meredith King, Esq., at Franklin Soto Leeds
LLP, is the Debtor's legal counsel.
LEARFIELD COMMUNICATIONS: S&P 'SD' On Debt-For-Equity Exchange
--------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S.-based
college sports marketing company Learfield Communications LLC to
'SD' (selective default) from 'CCC-' and its issue-level ratings on
its first-lien and second-lien debt to 'D' from 'CCC-' and 'C',
respectively.
The downgrade follows the completion of Learfield's distressed
restructuring. The downgrade follows the company's announcement
that it concluded the exchange of its fully drawn $125 million
first-lien revolving credit facility, $416 million of its $986
million of first-lien term loan debt and its $75 million
second-lien term loan for equity. The company's new capital
structure comprises an undrawn $125 million first-lien revolving
credit facility due in December 2027 and a $570 million first-lien
term loan due in June 2028. In S&P's view, this transaction is
tantamount to a default because it believes debt holders have
received less than originally promised since they received
subordinated equity in place of secured debt. The new equity
holders will own about 97% of the business, with previously
existing equity holders comprising the remaining 3% of ownership.
In S&P's view, Learfield has pursued this transaction because its
capital structure was unsustainable. Absent this transaction, it
believes the company would have not been able to meet its revolving
debt obligation that was due Sept. 1, 2023, nor would it have been
able to meet its first-lien debt obligation that was due Dec. 1
2023, and its second-lien debt obligation that was due Dec. 2,
2024.
S&P said, "We intend to review our ratings on Learfield, including
our issuer credit and issue-level ratings, in the coming days. We
intend to review our ratings on the company over the next week to
incorporate the debt exchanges, recent performance, and our
forward-looking opinion of its creditworthiness."
LEARFIELD: Closes Deleveraging Transaction with Lenders
-------------------------------------------------------
LEARFIELD, a leading media and technology company powering college
athletics, on Sept. 13 disclosed that it has closed on a
comprehensive deleveraging transaction with its lenders and equity
partners. Through this transaction, LEARFIELD has reduced its
outstanding debt by over $600 million and secured $150 million in
new equity investment, strengthening the Company's financial
position and providing additional capital to fuel innovation and
growth across the Company's five operating divisions, which include
LEARFIELD Amplify; CLC; Paciolan; SIDEARM Sports; and its core
multimedia rights business.
Under the terms of the deal, LEARFIELD's majority ownership is now
comprised of its lead capital providers, including Clearlake
Capital Group, L.P. (together with its affiliates, "Clearlake"),
Charlesbank Capital Partners, and funds managed by affiliates of
Fortress Investment Group LLC ("Fortress"). The Company's prior
equity holders will retain an equity stake in the Company.
"This is a seminal moment for the LEARFIELD team, and we are
thrilled for what lies ahead – both for our company, as well as
for the thousands of partners we serve," said Cole Gahagan,
LEARFIELD's President & Chief Executive Officer. "Over the last
several years, LEARFIELD has been a leader in innovation and growth
throughout the college sports and entertainment industries, and
this reboot of our capital structure only positions us for even
greater success in the years to come. We're just getting started."
This transaction is the latest transformative initiative
implemented by the Company to evolve media and technology in
college athletics and position partners for growth. In recent
years, LEARFIELD has introduced a host of solutions to the sports
and entertainment industries, including Fanbase, a leading data
infrastructure platform for college athletics; LEARFIELD Allied, a
name, image & likeness (NIL) program that helps brands leverage
school IP in student-athlete deals; and LEARFIELD Studios, a
growing media and content production group in college sports.
"We are excited to work with Cole and the LEARFIELD leadership team
and support their strategic vision," said James Pade, Partner and
Managing Director, Clearlake. "We believe that this transaction,
Clearlake's O.P.S.(R) resources, and the new capital provided will
advance LEARFIELD's position in college athletics and fuel the
Company's ability to create opportunities for schools and brands to
build new communities and experiences for college sports fans."
"The LEARFIELD team has developed a leadership position in college
athletics, with a growing portfolio of solutions for colleges,
universities and brand partners," said Leslee Cowen, Managing
Director, Fortress. "This transaction positions the Company to
build further on its success to date, bringing new technologies and
innovative solutions to a market and fanbase that they understand
deeply."
Advisors
Kirkland & Ellis LLP and Simpson Thacher & Bartlett LLP served as
legal advisor, Moelis & Company LLC served as investment banker,
Alvarez & Marsal served as financial advisor, and C Street Advisory
Group served as strategy and communications advisor to LEARFIELD.
Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal
advisor and Centerview Partners LLC served as investment banker to
an ad hoc group of the Company's lenders, which included the
Company's lead capital providers.
Sidley Austin LLP served as legal advisor to Clearlake.
Latham & Watkins LLP and Davis Polk & Wardwell LLP served as legal
advisors to certain of the Company's current equity holders.
White & Case LLP served as legal advisor and BRG served as
financial advisor to the group of revolving lenders.
About Clearlake
Clearlake Capital Group, L.P. is an investment firm founded in 2006
operating integrated businesses across private equity, credit, and
other related strategies. With a sector-focused approach, the firm
seeks to partner with experienced management teams by providing
patient, long-term capital to dynamic businesses that can benefit
from Clearlake's operational improvement approach, O.P.S.(R) The
firm's core target sectors are technology, industrials, and
consumer. Clearlake currently has over $70 billion of assets under
management, and its senior investment principals have led or co-led
over 400 investments. The firm is headquartered in Santa Monica, CA
with affiliates in Dallas, TX, London, UK, Dublin, Ireland, and
Singapore.
About Charlesbank Capital Partners
Based in Boston and New York, Charlesbank Capital Partners --
http://www.charlesbank.com-- is a middle-market private investment
firm with more than $15 billion of capital raised since inception.
Charlesbank focuses on management-led buyouts and growth capital
financings and also engages in opportunistic credit and technology
investments. The firm seeks to build companies with sustainable
competitive advantage and excellent prospects for growth.
About Fortress
Fortress Investment Group LLC is a leading, highly diversified
global investment manager. Founded in 1998, Fortress manages $44.7
billion of assets as of June 30, 2023, on behalf of over 1,900
institutional clients and private investors worldwide across a
range of credit and real estate, private equity and permanent
capital investment strategies.
About LEARFIELD
LEARFIELD is a diversified and influential media and technology
company powering college athletics. Through its digital and
physical platforms, LEARFIELD owns and leverages a deep data set
and relationships in the industry to drive revenue, growth, brand
awareness, and fan engagement for brands, sports, and entertainment
properties. With ties to over 1,200 collegiate institutions and
over 15,000 local and national brand partners, LEARFIELD's presence
in college sports and live events delivers influence and maximizes
reach to target audiences. With solutions for a 365 day, 24/7 fan
experience, LEARFIELD enables schools and brands to connect with
fans through licensed merchandise, game ticketing, donor
identification for athletic programs, exclusive custom content,
innovative marketing initiatives, NIL solutions, and advanced
digital platforms. Since 2008, it has served as title sponsor for
the acclaimed LEARFIELD Directors' Cup, supporting athletic
departments across all divisions.
LJF INC: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------
Debtor: LJF, Inc.
1223 Parks Road
Irvona, PA 16656
Chapter 11 Petition Date: September 14, 2023
Court: United States Bankruptcy Court
Western District of Pennsylvania
Case No.: 23-70316
Judge: Hon. Jeffery A. Deller
Debtor's Counsel: David Z. Valencik, Esq.
CALAIARO VALENCIK
938 Penn Avenue, 5th Fl.
Suite 501
Pittsburgh, PA 15222
Tel: 412-232-0930
Fax: 412-232-3858
Email: dvalencik@c-vlaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Leo C. Frailey 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/XX2KE5Y/LJF_Inc__pawbke-23-70316__0001.0.pdf?mcid=tGE4TAMA
LTL MANAGEMENT: Questions Chapter 11 Distress Need in Appeal
------------------------------------------------------------
Vince Sullivan of Law360 reports that the talc unit of Johnson &
Johnson laid out the basis for an appeal of the dismissal of its
Chapter 11 case Friday, saying it questions the need for the
business to be in financial distress to file for bankruptcy in good
faith.
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 Jan. 30, 2023, a panel of the Third Circuit issued an opinion
directing the 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 same
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.
LUCAS MACYSZYN: Files Emergency Bid to Use Cash Collateral
----------------------------------------------------------
Lucas, Macyszyn & Dyer, PLLC asks the U.S. Bankruptcy Court for the
Middle District of Florida, Tampa Division, for authority to use
cash collateral to fund its operating expenses and the costs of
administering the Chapter 11 case in accordance with a proposed
budget.
Specifically, the Debtor intends to use cash collateral for:
a. Payroll;
b. Payment of Insurance;
c. Payment of utilities;
d. Payment to Cogent;
e. Other payments necessary to sustain continued business
operations;
f. Care, maintenance, and preservation of the Debtor’s
assets; and
g. Costs of administration in this Chapter 11 case.
The Debtor's primary secured creditor is Cogent Bank in connection
with a line of credit with a principal balance of approximately
$681,837. Cogent filed a UCC financing statement asserting a
security interest in, among other things, all inventory, equipment,
accounts and accounts receivable.
Cogent also holds a second secured claim in the approximate amount
of $615,602 in connection with a term loan. Cogent filed a UCC
financing statement asserting a security interest in, among other
things, all inventory, equipment, accounts and accounts receivable.
Cogent further holds a third secured claim in the approximate
amount of $450,000 in connection with a second term loan. Cogent
filed a UCC financing statement asserting a security interest in,
among other things, all inventory, equipment, accounts and accounts
receivable.
As of the Petition Date, the Debtor's cash on hand ($728,052) and
accounts receivable ($152,502) totaled approximately $880,553.
In exchange for the Debtor's ability to use cash collateral in the
operation of its business, the Debtor proposes to grant to Cogent,
as adequate protection, continued payments and a replacement lien
to the same extent, validity, and priority as existed on the
Petition Date, notwithstanding 11 U.S.C. section 552. The Debtor
asserts that the interests of Cogent will be adequately protected
by the replacement lien and other adequate protection offered in
the Motion.
The Debtor requests a hearing prior to September 15, 2023 since
certain vendors and payroll will need to be paid on September 15,
2023.
A copy of the Debtor's motion and budget is available at
https://urlcurt.com/u?l=0h1T7A from PacerMonitor.com.
The Debtor projects total expenses, on a monthly basis, amounting
to $540,019, for three months.
About Lucas, Macyszyn & Dyer Law Firm, PLLC
Lucas, Macyszyn & Dyer Law Firm, PLLC is a law firm that handles
car accidents, truck accidents, motorcycle accidents and slip and
fall injury cases.
The Debtor sought protection under Chapter 11 of thte U.S.
Bankruptcy Code (Bankr. M.D. Fla. Case No. 23-03944) on September
8, 2023. In the petition signed by Jeffrey Lucas, Manager of Jeff
Lucas PLLC, member, the Debtor disclosed up to $10 million in both
assets and liabilities.
Alberto F. Gomez, Jr., Esq., at Johnson, Pope, Bokor, Ruppel &
Burns, LLP, represents the Debtor as legal counsel.
LURADIANT LLC: May Sell Willard Property for $625,000
-----------------------------------------------------
Luradiant, LLC sought and obtained permission from the U.S.
Bankruptcy Court for the District of Utah to sell its real property
located at 329 E. Saddleback Drive, in Willard, Utah.
The buyers, Eric and Cindy LeBaron, offered $625,000 for the
property identified as Lot 46.
The property will be sold "free and clear" of liens, with the
existing liens attaching to the sale proceeds.
The Debtor said the property has a value of $685,000 as of the
bankruptcy filing date.
Luradiant will use a portion of the sale proceeds to pay Sound
Capital, LLC, which holds a senior lien on the property.
Lot 46 is encumbered by liens in favor of Sound Capital (in first
position, with a total debt of approximately $3,277,456), and Agile
(in second position, with a total debt of approximately $565,747).
It is also encumbered by liens in favor of materialmen or tiered
subcontractors who perfected security interests.
About Luradiant LLC
Luradiant, LLC, a company in Farmington, Utah, filed its voluntary
petition for Chapter 11 protection (Bankr. D. Utah Case No.
23-22098) on May 23, 2023, with as much as $1 million to $10
million in both assets and liabilities. Judge Peggy Hunt oversees
the case.
T. Edward Cundick, Esq., at Workman Nydegger serves as the Debtor's
legal counsel.
M.V.J. AUTO: Taps Kingcade, LSS Law as Bankruptcy Counsel
---------------------------------------------------------
M.V.J. Auto World, Inc. seeks approval from the U.S. Bankruptcy
Court for the Southern District of Florida to employ Kingcade,
Garcia & McMaken, PA and Leiderman Shelomith + Somodevilla, PLLC,
doing business as LSS Law.
The Debtor requires legal counsel to:
(a) give advice with respect to the powers and duties of the
Debtor;
(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 legal documents;
(d) protect the interests of the Debtor in all matters pending
before the court;
(e) represent the Debtor in negotiation with its creditors in
the preparation of a plan; and
(f) perform all other legal services for the Debtor.
The hourly rates of the firm's counsel and staff are as follows:
Timothy S. Kingcade $500
Zach B. Shelomith $500
Jessica McMaken $400
Paralegals $100 - $125
In addition, the firm will seek reimbursement for expenses
incurred.
Prior to the petition date, the firm received $19,500 from the
Debtor as retainer.
Timothy Kingcade, Esq., a member of Kingcade, Garcia & McMaken, and
Zach Shelomith, Esq., a member of LSS Law, disclosed in court
filings that the firms are "disinterested persons" as that term is
defined in Section 101(14) of the Bankruptcy Code.
The firms can be reached through:
Timothy S. Kingcade, Esq.
Kingcade, Garcia & McMaken, PA
1370 Coral Way
Miami, FL 33145
Telephone: (305) 285-9100
Email: scanner@miamibankruptcy.com
- and -
Zach B. Shelomith, Esq.
LSS Law
2699 Stirling Road, Suite C401
Ft. Lauderdale, FL 33312
Telephone: (954) 920-5355
Facsimile: (954) 920-5371
Email: zbs@lss.law
About M.V.J. Auto
M.V.J. Auto World, Inc. filed Chapter 11 petition (Bankr. S.D. Fla.
Case No. 23-16612) on Aug. 21, 2023, with $100,001 to $500,000 in
assets and liabilities.
Judge Laurel M. Isicoff oversees the case.
Timothy S. Kingcade, Esq., at Kingcade, Garcia & McMaken, P.A. and
Zach B. Shelomith, Esq., at LSS Law represent the Debtor as legal
counsel.
MCDERMOTT INTL: Reaches Debt Restructuring Deal With Stakeholders
-----------------------------------------------------------------
McDermott International, Ltd., on Sept. 8, 2023, announced that it
has entered into a transaction support agreement ("TSA") with more
than 75%, in aggregate, of its secured letter of credit ("LC")
providers, funded debt creditors and equity holders to initiate a
financial restructuring process to strengthen its capital
structure, enhance its liquidity position, and further position the
Company for long-term success. Additionally, the Company has
received $250 million in new capital from a group of its existing
equity holders, which will support its ability to operate its
business, deliver on existing projects and expand backlog with new
client projects.
Under the terms of the Agreement, McDermott will amend and extend
its term loans and LC facilities for three years, through mid-2027
with no change in pricing, increase the company's liquidity, and
discharge certain legacy legal liabilities. To implement the
Agreement, McDermott International Holdings B.V. and Lealand
Finance Company B.V. will initiate procedures in the Netherlands
under the Dutch Act on Confirmation of Extrajudicial Plans (Wet
Homologatie Onderhands Akkoord or "WHOA"). CB&I UK Limited will
initiate a Restructuring Plan under Part 26A of the Companies Act
2006 (UK) in England.
McDermott International Holdings B.V., Lealand Finance Company
B.V., and CB&I UK Limited are the only McDermott entities named in
these proceedings. Following the completion of the Netherlands and
UK processes, McDermott will make a voluntary filing in the United
States to secure legal recognition of the international court
decisions. The Company expects to continue all current customer
agreements, projects, and vendor commitments throughout these
processes. McDermott currently expects to complete the processes no
later than early 2024.
"Over the past 24 months, our executive leadership has made
transformative progress in resetting and implementing our business
strategy by leveraging the strength of our operating business and
tailoring our approach to our core clients," said Michael McKelvy,
President & CEO of McDermott. "We are pleased to have reached this
agreement with our key stakeholders, which demonstrates their
confidence in the long-term strength and sustainability of our
business. These proactive steps ensure that McDermott is strongly
positioned to deliver on our growing number of client projects as
we continue our important work of accelerating the energy
transition in our industry."
The Company has also completed actions to strengthen its
world-leading storage business, CB&I Storage Solutions. CB&I
Storage Solutions will have dedicated working capital and an
independent LC facility separate from the McDermott LC facilities.
"We intend to continue all operations as normal as we move through
these processes, including continued delivery on our client
projects, and I thank our customers, suppliers and partners for
their patience and unwavering support," McKelvy continued. "I also
thank our outstanding McDermott team around the world for their
tireless work, commitment to safety, and dedication to our values
and strategy. As we celebrate our 100th anniversary, we look
forward to a long future as one of the few companies in the world
with the scope, assets, capabilities, and know-how to meet growing
customer and global demand for low carbon solutions and energy
transition."
In addition to amending and extending its term loans and LC
facilities, the Company intends to discharge certain unsecured
claims associated with legal matters related to the Refineria de
Cartagena S.A. ("Reficar") project, which was originated by Chicago
Bridge & Iron Company N.V. ("CB&I") before McDermott acquired CB&I
in 2018. The two unsecured claims consist of an arbitration
decision issued by the International Chamber of Commerce ("ICC") in
favor of Reficar and an in-country order of the ContralorÃa
General de la República ("ContralorÃa"), an administrative agency
of the Republic of Colombia. McDermott opposes each claim on the
merits; the Company strongly disagrees with and has petitioned to
vacate the decision of the ICC and is engaged in arbitration and
in-country proceedings to challenge the ContralorÃa action as
improper and without jurisdiction over the Company.
About McDermott International
Headquartered in Houston, Texas, McDermott (MDR) --
http://www.mcdermott.com/-- is a provider of engineering,
procurement, construction and installation and technology solutions
to the energy industry. Its common stock was listed on the New
York Stock Exchange under the trading symbol MDR.
As of Sept. 30, 2019, McDermott had $8.75 billion in total assets,
$9.86 billion in total liabilities, $271 million in redeemable
preferred stock, and a total stockholders' deficit of $1.38
billion.
On Jan. 21, 2020, McDermott International announced that it has the
support of more than two-thirds of all its funded debt creditors
for a restructuring transaction that will equitize nearly all the
Company's funded debt, eliminating over $4.6 billion of debt.
McDermott solicited votes from its lenders and bondholders in
support of a prepackaged Chapter 11 Plan of Reorganization and
commenced the prepackaged Chapter 11 later in the day, on Jan. 21,
2020 in the U.S. Bankruptcy Court for the Southern District of
Texas.
McDermott International and 224 affiliates on Jan. 21 and 22, 2020,
filed Chapter 11 bankruptcy petitions (Bankr. Lead Case No.
20-303360). The Hon. Marvin Isgur was the case judge.
The Debtors tapped Kirkland & Ellis LLP (New York) as general
bankruptcy counsel; Jackson Walker L.L.P. as local counsel;
Alixpartners, LLP as restructuring advisor; AP Services, LLC as
operational advisor; Arias, Fabrega & Fabrega as Panamanian
counsel; and Baker Botts L.L.P. as corporate counsel. Prime Clerk
is the claims agent, maintaining the page
https://cases.primeclerk.com/mcdermott
PJT Partners is serving as financial advisor for an ad hoc group of
McDermott's lenders and equity holders and Davis Polk & Wardwell
LLP, Weil, Gotshal & Manges and Loyens & Loeff are serving as the
ad hoc group's legal counsel. FTI Consulting is serving as
financing advisor for the steering committee of McDermott's bank
lenders, and Linklaters LLP and Bracewell LLP are serving as the
steering committee's legal counsel.
METROPLEX RECOVERY: Files Emergency Bid to Use Cash Collateral
--------------------------------------------------------------
Metroplex Recovery, LLC asks the U.S. Bankruptcy Court for the
Northern District of Texas, Fort Worth Division, for authority to
use the cash collateral of the U.S. Small Business Administration,
Legend Advanced Funding II, LLC, National Funding, and Wide
Merchant Capital.
The Debtor requires the use of cash collateral to pay its ongoing
expenses in accordance with the budget, with a 10% variance.
The Debtor can adequately protect the interests of the Secured
Lenders by providing the Secured Lender with post-petition liens, a
priority claim in the Chapter 11 bankruptcy case, and cash flow
payments as necessary to protect the interests of each such lender.
A copy of the motion is available at https://urlcurt.com/u?l=xM4mLV
from PacerMonitor.com.
A copy of the budget is available at https://urlcurt.com/u?l=ZQYEM6
from PacerMonitor.com.
The Debtor projects $80,000 in gross monthly income and $78,806 in
total monthly expenses.
About Metroplex Recovery, LLC
Metroplex Recovery, LLC is a locally owned company that provides
automotive locksmith services to the Ft Worth TX area.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Tex. Case No. 23-42712) on September
7, 2023. In the petition signed by Adrian Torres, managing member,
the Debtor disclosed $843,533 in assets and $2,425,928 in
liabilities.
Lee Law Firm represents the Debtor as legal counsel.
MEZCLA ONE: Gets OK to Hire Herron Hill Law Group as Counsel
------------------------------------------------------------
Mezcla One, LLC received approval from the U.S. Bankruptcy Court
for the Middle District of Florida to employ the law firm of Herron
Hill Law Group, PLLC as counsel.
The Debtor requires legal counsel to:
(a) give advice concerning compliance with Chapter 11 and
orders of this court;
(b) defend any causes of action on behalf of the Debtor;
(c) prepare legal papers;
(d) assist in the formulation of a Chapter 11 plan of
reorganization; and
(e) provide all services of a legal nature in the field of
bankruptcy law.
Herron Hill charges $475 per hour for Kenneth Herron, Jr., Esq.,
and $150 per hour for paralegals.
Herron Hill received a total of $23,738 as a retainer, which
includes the cost deposit of $1,738 for the filing fee.
Mr. Herron, a member of Herron Hill Law Group, disclosed in a court
filing that his firm is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Kenneth D. (Chip) Herron, Jr., Esq.
Herron Hill Law Group, PLLC
P.O. Box 2127
Orlando, FL 32802
Telephone: (407) 648-0058
Email: chip@herronhilllaw.com
About Mezcla One
Mezcla One, LLC filed Chapter 11 petition (Bankr. M.D. Fla. Case
No. 23-03015) on July 27, 2023, listing up to $10 million in both
assets and liabilities. Judge Grace E. Robson oversees the case.
Kenneth D. Herron, Jr., Esq., at Herron Hill Law Group, PLLC serves
as the Debtor' counsel.
MICAH PROPERTY: Gets OK to Sell Chino Hill Property for $3.4MM
--------------------------------------------------------------
Micah Property, LLC received approval from the U.S. Bankruptcy
Court for the Central District of California to sell its real
property to ANZA AAA, LLC.
The property is a 37-acre undeveloped land in the City of Chino
Hill, County of San Bernardino, Calif.
ANZA offered to purchase the property for $3.4 million, which
consists of $1.5 million in cash payable at closing and a seller
carry back note in the amount of $1.9 million.
Stephen Wade, Esq., attorney for Micah Property, said the sale will
satisfy in full all secured obligations of the company as well as
all administrative and priority claims at closing.
Micah Property is expected to move the court for a dismissal of its
Chapter 11 case contingent upon payment of all administrative and
priority claims.
About Micah Property
Micah Property, LLC is a single asset real estate (as defined in 11
U.S.C. Section 101(51B)). The company is based in Pomona, Calif.
Micah Property filed voluntary Chapter 11 petition (Bankr. C.D.
Calif. Case No. 23-12496) on April 25, 2023, with as much as
$50,000 in assets and $1 million to $10 million in liabilities.
Lucy She, manager, signed the petition.
Judge Ernest M. Robles presides over the case.
Stephen R. Wade, Esq., at The Law Offices of Stephen R. Wade
represents the Debtor as counsel.
MIDWEST DOUGH: Seeks Cash Collateral Access
-------------------------------------------
Midwest Dough Guys, LLC asks the U.S. Bankruptcy Court for the
District of Nebraska for authority to use cash collateral to
operate, pay employees, taxes, rent, etc.
On petition date, the Debtor held the sum of $61,515 in cash/cash
equivalents and also inventory in the amount of $45,908, secured by
US Foods/Sysco for payment, but no payment was due to either entity
on petition date.
The following creditors hold an interest in the Debtors accounts,
or proceeds from inventory:
a. Last Chance Funding: $89,320
b. Matt Crumpton: $unk
c. Torro, LLC: $89,400
d. Mantis Funding: $81,400
e. Amerifi Capital: $37,500
f. Irwin Funding: $38,500
g. Wise Venture, LLC: $59,960
h. NE DOR: $33,736
The value of the Debtor's assets does not exceed its liabilities,
however, the Debtor's business is cash-flow heavy and has the
ability to afford its operations expense on a daily basis without
impairment to parties having an interest in cash collateral.
A copy of the motion is available at https://urlcurt.com/u?l=00O8NV
from PacerMonitor.com.
About Midwest Dough
Midwest Dough Guys, LLC filed a petition under Chapter 11,
Subchapter V of the Bankruptcy Code (Bankr. D. Neb. Case No.
23-40758) on Aug. 15, 2023, with $100,001 to $500,000 in assets and
$500,001 to $1 million in liabilities.
Judge Thomas L. Saladino oversees the case.
John A. Lentz, Esq., at Lentz Law represents the Debtor as
bankruptcy counsel.
MILE HI TRANSPORTATION: Seeks Cash Collateral Access
----------------------------------------------------
Mile Hi Transportation, LLC asks the U.S. Bankruptcy Court for the
District of Colorado for authority to use cash collateral in
accordance with the budget, with a 15% variance, and provide
adequate protection.
The Debtor requires the use of cash collateral to pay operating
expenses.
Pre-petition, on March 7, 2019, Triumph Capital Management recorded
its UCC-1 with the Colorado Secretary of State on March 7, 2019 at
Reception Number 20192018971. According to the Debtor's books and
records, Triumph is owed approximately $110,000 as of the date of
the motion.
In addition to Triumph, SOS Capital, LLC also asserts a security
interest in all of the assets of the Debtor. Upon information and
belief, SOS recorded its UCC-1 with the Colorado Secretary of State
on January 3, 2023 at Reception Number 20232000123. According to
the Debtor's books and records, SOS is owed approximately the sum
of $325,000 as of the date of the motion.
As adequate protection, the Debtor will provide the Secured
Creditors with a post-petition lien on all post-petition accounts
receivable and income derived from the operation of the business
and assets, to the extent that the use of the cash results in a
decrease in the value of the Secured Creditors' interest in the
collateral pursuant to 11 U.S.C. section 361(2). All replacement
liens will hold the same relative priority to assets as did the
pre-petition liens.
The Debtor will also keep all of the collateral fully insured.
A copy of the motion is available at https://urlcurt.com/u?l=BEgpRZ
from PacerMonitor.com.
About Mile Hi Transportation, LLC
Mile Hi Transportation, LLC sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. D. Colo. Case No. 23-14054) on
September 8, 2023. In the petition signed by Jesse Trujillo,
managing member, the Debtor disclosed up to $1 million in assets
and up to $10 million in liabilities.
Judge Thomas B. Mcnamara oversees the case.
Jonathan M. Dickey, Esq., at Kutner Brinen Dickey Riley PC,
represents the Debtor as legal counsel.
MINIM INC: Cuts Workforce by 78%, Mulls Possible Bankruptcy Filing
------------------------------------------------------------------
In order to reduce its cash expenditures while continuing to pursue
its existing strategic options, Minim Inc. has implemented an
approximately 78% reduction in its workforce, designed to reduce
costs and extend the Company's cash, according to a Form 8-K filed
by the Company with the Securities and Exchange Commission.
The reduction reduced the Company's workforce from 41 to 9
full-time employees. The Company estimates that it will incur
approximately $29,230.77 of costs in connection with the reduction
in workforce related to sales commissions owed to certain staff
members to whom the Company had contractual commission obligations.
The Company may incur other charges and will record these
expenses, if any, in the appropriate period as they are determined.
These estimates are subject to a number of assumptions, and actual
results may differ. The Company may also incur additional costs not
currently contemplated due to events that may occur as a result of,
or that are associated with, the reduction in workforce.
With the reduction in workforce, the Company eliminated its teams
and operations for hardware engineering, software engineering,
product management and development, sales and marketing, customer
and technical support, and logistics and operations.
The Company said it has continued to experience material liquidity
pressures as it has attempted to manage its negative cash-flow
position due to supply disruptions from its principal manufacturing
partners as a result of the Company's inability to pay past
expenses, which has severely impacted revenue and its cash
position.
Minim stated, "The Company's actions thus far have not fully offset
the Company's lack of continual revenue from normal operations. As
such, substantial doubt exists about our ability to continue as a
going concern, and we will require additional liquidity to continue
operations. The Company has been exploring all remaining
alternatives, including strategic initiatives or selling assets,
other strategic transactions and/or other measures, including
obtaining relief under the U.S. Bankruptcy Code."
About Minim Inc.
Minim was founded in 1977 as a networking company and now delivers
intelligent software to protect and improve the WiFi connections.
Headquartered in Manchester, New Hampshire, Minim holds the
exclusive global license to design, manufacture, and sell consumer
networking products under the Motorola brand. Its cable and WiFi
products, with an intelligent operating system and bundled mobile
app, can be found in leading retailers and e-commerce channels in
the United States. The Company's AI-driven cloud software platform
and applications make network management and security simple for
home and business users, as well as the service providers that
assist them- leading to higher customer satisfaction and decreased
support burden.
On Aug. 17, 2023, Minim received a letter from The Nasdaq Stock
Market LLC stating that, because the Company has not filed its Form
10-Q for the period ended June 30, 2023 with the Securities and
Exchange Commission, the Company is not in compliance with Nasdaq's
rules for continued listing under Nasdaq Listing Rule 5250. Rule
5250 requires, in part, that listed companies timely file all
required periodic financial reports with the Commission. The
non-compliance resulted from the Company's inability to timely
appoint an audit committee to review the financial statements
required to be included in its Form 10-Q for the period ended June
30, 2023 and the Company's Form 10-Q for the period ended March 31,
2023.
Minim reported a net loss of $15.55 million in 2022 following a net
loss of $2.20 million in 2021.
Boston, Massachusetts-based RSM US LLP, the Company's auditor since
2021, issued a "going concern" qualification in its report dated
March 31, 2023, citing that Company has suffered recurring losses
and negative cash flows from operations and will need additional
funding within the next twelve months. This raises substantial
doubt about the Company's ability to continue as a going concern.
MINIM INC: George Kassas Resigns as Director
--------------------------------------------
George I. Kassas, a director of Minim, Inc., advised the Board of
Directors that he intends to resign as a director of the Company
effective Sept. 15, 2023.
Mr. Kassas also serves on the Company's Audit Committee,
Compensation Committee and Nominating and Corporate Governance
Committee of the Board of Directors. Mr. Kassas' resignation is
not due to a disagreement with the Company or its management on any
matter relating to the Company's operations, policies, or
practices, as disclosed by the Company in a Form 8-K filed with the
Securities and Exchange Commission.
About Minim Inc.
Minim was founded in 1977 as a networking company and now delivers
intelligent software to protect and improve the WiFi connections.
Headquartered in Manchester, New Hampshire, Minim holds the
exclusive global license to design, manufacture, and sell consumer
networking products under the Motorola brand. Its cable and WiFi
products, with an intelligent operating system and bundled mobile
app, can be found in leading retailers and e-commerce channels in
the United States. The Company's AI-driven cloud software platform
and applications make network management and security simple for
home and business users, as well as the service providers that
assist them- leading to higher customer satisfaction and decreased
support burden.
On Aug. 17, 2023, Minim received a letter from The Nasdaq Stock
Market LLC stating that, because the Company has not filed its Form
10-Q for the period ended June 30, 2023 with the Securities and
Exchange Commission, the Company is not in compliance with Nasdaq's
rules for continued listing under Nasdaq Listing Rule 5250. Rule
5250 requires, in part, that listed companies timely file all
required periodic financial reports with the Commission. The
non-compliance resulted from the Company's inability to timely
appoint an audit committee to review the financial statements
required to be included in its Form 10-Q for the period ended June
30, 2023 and the Company's Form 10-Q for the period ended March 31,
2023.
Minim reported a net loss of $15.55 million in 2022 following a net
loss of $2.20 million in 2021.
Boston, Massachusetts-based RSM US LLP, the Company's auditor since
2021, issued a "going concern" qualification in its report dated
March 31, 2023, citing that Company has suffered recurring losses
and negative cash flows from operations and will need additional
funding within the next twelve months. This raises substantial
doubt about the Company's ability to continue as a going concern.
MMEX RESOURCES: Says Continuing Losses Raise Going Concern Doubt
----------------------------------------------------------------
MMEX Resources Corporation disclosed in a Form 10-Q Report filed
with the U.S. Securities and Exchange Commission for the quarterly
period ended July 31, 2023, that substantial doubt exists about the
Company's ability to continue as a going concern for a reasonable
period of time.
MMEX explained that since inception, its operations have primarily
been funded through private debt and equity financing, and the
Company expects to continue to seek additional funding through
private or public equity and debt financing.
"We have incurred continuous losses from operations, have an
accumulated deficit, and have reported negative cash flows from
operations since inception. Additionally, we have a working capital
deficit, therefore there is a question of whether or not we have
the cash resources to meet our operating commitments for the next
12 months and have, or will obtain, sufficient capital investments
to implement our business plan."
"Our ability to continue as a going concern is dependent on our
ability to generate sufficient cash from operations to meet our
cash needs and/or to raise funds to finance ongoing operations and
repay debt. However, there can be no assurance that we will be
successful in our efforts to raise additional debt or equity
capital and/or that our cash generated by our operations will be
adequate to meet our needs," said the Company.
These factors, among others, raise substantial doubt that MMEX will
be able to continue as a going concern for a reasonable period of
time
MMEX reported a net loss of $1,185,572 and $863,660 for the three
months ended July 31, 2023, and 2022, respectively.
About MMEX Resources Corporation
MMEX Resources Corporation was formed as a Nevada corporation in
2005. It is focused on the development, financing, construction and
operation of clean fuels infrastructure projects powered by
renewable energy.
As of July 31, 2023, MMEX Resources Corporation has $1,071,956 in
total assets and $4,024,703 in total liabilities.
MONICATTI AUTO: Hires Stevenson & Bullock P.L.C. as Counsel
-----------------------------------------------------------
Monicatti Auto Sales, LLC seeks approval from the U.S. Bankruptcy
Court for the Eastern District of Michigan to employ Stevenson &
Bullock, P.L.C. as counsel.
The firm will provide these services:
a. prepare all schedules, applications, motions, orders, and
reports, and to appear at bankruptcy court hearings on behalf of
the Debtor, in the bankruptcy case; and
b. generally counsel the Debtor in all legal matters during the
Chapter 11 case; whereby the Debtor has retained S&B for the
purposes of representing it in all bankruptcy related matters, and
representation in negotiations and proceedings pertaining to the
Chapter 11 bankruptcy case.
The firm will be paid at these rates:
Attorneys $350 to $470 per hour
Paralegals $195 per hour
Legal Assistants $135 to $150 per hour
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
The firm received from the Debtor a retainer of $16,000.
Elliot G. Crowder, Esq., a member at Stevenson & Bullock, PLC
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:
Elliot G. Crowder, Esq.
STEVENSON & BULLOCK, PLC
26100 American Drive, Suite 500
Southfield, MI 48034
Tel: (248) 354-7906
Fax: (248) 354-7907
Email: ecrowder@sbplclaw.com
About Monicatti Auto Sales, LLC
Monicatti Auto Sales, LLC, a seller of pre-owned vehicles in New
Baltimore, Mich.
The Debtor filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. E.D. Mich. Case No. 23-47427) on Aug. 24,
2023, with $50 to $100,000 in assets and $1 million to $10 million
in liabilities. Michael Monicatti, member, signed the petition.
Judge Thomas J. Tucker oversees the case.
Elliot G. Crowder, Esq., at Stevenson & Bullock, P.L.C. represents
the Debtor as legal counsel.
MOTOS AMERICA: Raises Going Concern Doubt
-----------------------------------------
Motos America Inc. on Tuesday delivered to the U.S. Securities and
Exchange Commission its Form 10-Q Report for the quarterly period
ended January 31, 2022. Motos has yet to file its financial
reports for the 2023 quarters.
As of January 31, 2022, the Company had an accumulated deficit of
$8,018,631.
"Losses have principally occurred as a result of the substantial
resources required for general and administrative expenses
associated with our operations," said the Company.
These conditions raise substantial doubt about the Company's
ability to continue as a going concern, Motos declared.
The Company said its continuation as a going concern is dependent
upon the continued financial support from its stockholders or
external financing. Management believes the existing stockholders
will provide the additional cash to meet with the Company's
obligations as they become due. However, there is no assurance that
the Company will be successful in securing sufficient funds to
sustain the operations.
Motos America Inc. reported a net loss of $351,406 and $28,206 for
the six months ended January 31, 2022, and 2021, respectively.
About Motos America
Motos America Inc. designs itself as a lifestyle company. Motos
America was incorporated under the laws of the State of Nevada on
April 25, 2007, under the name "Contact Minerals Corp.", and later
changed its name to Weconnect Tech International, Inc. In November
2021, the Company filed Articles of Amendment with the State of
Nevada whereby it changed its name to "Motos America Inc." The
Company buys and operates BMW Motorcycle, Triumph Motorcycle and
Ducati Motorcycle dealerships. The Company's business office is
located at 510 South 200 West, Suite 110 Salt Lake City, Utah
84101.
As of January 31, 2022, Motos America Inc. has $2,227,486 in total
assets and $2,225,878 in total liabilities.
MOUNTAIN EXPRESS: Trustee Hires Hughes Watters as Counsel
---------------------------------------------------------
Janet Northrup, the Trustee for Mountain Express Oil Company, and
its affiliates seek approval from the U.S. Bankruptcy Court for the
Southern District of Texas to employ the Law Firm of Hughes Watters
Askanase, L.L.P.
The firm's services include:
a) represent the Trustee in investigating and analyzing the
Debtor's acts, conduct, assets, liabilities and financial
condition, the operation of the Debtor's business and the
desirability of the continuance of such business and to address as
promptly as possible the immediate and long term management demands
of the Debtor's business, and to propose and confirm a Chapter 11
Plan, or in the alternative to demonstrate to the Court and
creditors why confirmation of such a Plan is not feasible or
appropriate, in support, if appropriate, of conversion to Chapter
7, together with any other matters relevant to the case and/or to
the formulation of a Plan;
b) assist the Trustee in obtaining necessary information
regarding the status of the Debtor's interests in estate assets at
the time of the Trustee's appointment, including bank accounts,
real and personal property, executory contracts and leases, and
operating concerns, and regarding liens and other assets and
liabilities, and in connection therewith to represent the Trustee
in preparing and prosecuting any necessary motions and other
actions in this Court or any other court or forum, including
preparing for and conducting any necessary hearings;
c) advise and consult with the Trustee about her powers and
duties in the continued operation of the business and/or the
liquidation of the Debtor's assets;
d) analyze, institute and prosecute actions for the Trustee
regarding property of the estate;
e) assist the Trustee where necessary to negotiate and
consummate non-routine sales of the assets of the estate, wherever
they may be found, including sales free and clear of liens, claims
and encumbrances, and to institute any necessary proceedings in
regard thereto;
f) institute non-routine objections to proofs of claim asserted
against the estate, and to prosecute all contested objections to
proofs of claim asserted against the estate;
g) co-ordinate activities with the United States Trustee as
appropriate in connection with issues of the integrity of the
bankruptcy courts and procedures;
h) aid in the representation of the Trustee in any litigation
against her in her official capacity;
i) confer and cooperate as necessary with the Trustee's
accountants regarding tax issues and other financial matters of
concern to the Trustee's accountants;
j) institute and prosecute proceedings for extraordinary relief
as and when necessary;
k) analyze, institute and prosecute actions regarding insider
transactions and third party dealings, including issues arising
under insurance policies, including directors and officers
liability policies;
l) prepare for and to institute and prosecute examinations under
Bankruptcy Rule 2004;
m) file pleadings with the Bankruptcy Court and any other court
of competent jurisdiction to represent the estate's interest in
regard to any adversaries or contested matters as well as any
non-bankruptcy litigation identified to the Law Firm by the
Trustee;
n) collect any judgments that may be entered in favor of the
estate; and
o) perform other legal services that the Trustee may request in
connection with this Chapter 11 case.
The firm will be paid at these rates:
Attorneys $700 to $775 per hour
Paralegals $225 per hour
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
As 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:
Wayne Kitchens, Esq.
Hughes Watters Askanase, LLP
1201 Louisiana St, 28th Floor
Houston, TX 77002
Tel: (713) 759-0818
Fax: (713) 759-6834
About Mountain Express Oil Company
Mountain Express Oil Company and its affiliates operate in the fuel
distribution and retail convenience industry. As one of the largest
fuel distributors in the American South, MEX and its affiliates
serve 828 fueling centers and 27 travel centers across 27 states.
The Debtors sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 23-90147) on March
18, 2023. In the petition signed by Michael Healy, as chief
restructuring officer, the Debtor disclosed up to $500 million in
assets and liabilities.
Judge David R. Jones oversees the case.
Pachulski Stang Ziehl & Jones LLP represents the Debtor as legal
counsel. The Debtors also tapped FTI Consulting, Inc. as financial
advisor, Raymond James Financial, Inc. as investment banker, and
Kurtzman Carson Consultants LLC as claims, noticing, and
solicitation agent and administrative advisor.
MOUNTAINEER BRAND: Seeks to Hire Eric Young as CEO
--------------------------------------------------
Mountaineer Brand, LLC seeks approval from the U.S. Bankruptcy
Court for the Northern District of West Virginia to employ Eric
Young as CEO.
Mr. Young will assist in selling the business and assets of the
Debtor as a going concern.
Mr. Young will be paid $2,200 per week.
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
As 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.
About Mountaineer Brand, LLC
Mountaineer Brand, LLC manufactures and sells all natural men's
grooming products.
The Debtor filed Chapter 11 petition (Bankr. N.D. W.Va. Case No.
23-00396) on Aug. 18, 2023, with $63,500 in assets and $2,481,721
in liabilities. Eric Young, chief executive officer, signed the
petition.
Martin P. Sheehan, Esq., at Sheehan & Associates, P.L.L.C
represents the Debtor as legal counsel.
MRH AUTO RENO: Hires Harris Law Practice LLC as Counsel
-------------------------------------------------------
MRH Auto-Reno, LLC seeks approval from the U.S. Bankruptcy Court
for the District of Nevada to employ Harris Law Practice LLC as
counsel.
The firm's services include:
a. examining and preparing records and reports as required by
the Bankruptcy Code, Federal Rules of Bankruptcy Procedure and
Local Bankruptcy Rules;
b. preparing of applications and proposed orders to be submitted
to the Court;
c. identifying and prosecuting of claims and causes of action
assertable by Debtor on behalf of the estate;
d. examining proofs of claims anticipated to be filed and the
possible prosecution of objections to certain claims;
e. advising the Debtor and preparing documents in connection
with the contemplated operation of the Debtor's business;
f. assisting and advising the Debtor in performing other
official functions as set forth in Section 521 of the Bankruptcy
Code; and
g. advising and preparing a plan of reorganization, and related
documents, and confirmation of said plan, as provided in Section
1189, et se. of the Bankruptcy Code.
The firm will be paid at these rates:
Stephen R. Harris, Esq. $635 per hour
Norma Guariglia, Esq. $475 per hour
Paraprofessional services, Esq. $175 per hour
The firm received a retainer in the amount of $9,238.
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Stephen R. Harris, a partner at Harris Law Practice LLC, 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:
Stephen R. Harris, Esq.
HARRIS LAW PRACTICE LLC
850 E. Patriot Blvd., Suite F
Reno, NV 89511
Telephone: (775) 786-7600
Email: steve@harrislawreno.com
About MRH Auto-Reno, LLC
MRH Auto-Reno, LLC in Reno, NV, filed its voluntary petition for
Chapter 11 protection (Bankr. D. Nev. Case No. 23-50502) on July
24, 2023, listing $10 million to $50 million in assets and $1
million to $10 million in liabilities. Kevin E. Sheppard as member
of MRH Auto Enterprises, LLC, member, signed the petition.
Judge Hilary L. Barnes oversees the case.
HARRIS LAW PRACTICE LLC serve as the Debtor's legal counsel.
MRH AUTO WINNEMUCCA: Hires Harris Law Practice LLC as Counsel
-------------------------------------------------------------
MRH Auto Winnemucca, LLC seeks approval from the U.S. Bankruptcy
Court for the District of Nevada to employ Harris Law Practice LLC
as general bankruptcy counsel.
The firm's services include:
a. examining and preparing records and reports as required by
the Bankruptcy Code, Federal Rules of Bankruptcy Procedure and
Local Bankruptcy Rules;
b. preparing of applications and proposed orders to be submitted
to the Court;
c. identifying and prosecuting of claims and causes of action
assertable by Debtor on behalf of the estate;
d. examining proofs of claims anticipated to be filed and the
possible prosecution of objections to certain claims;
e. advising the Debtor and preparing documents in connection
with the contemplated operation of the Debtor's business;
f. assisting and advising the Debtor in performing other
official functions as set forth in Section 521 of the Bankruptcy
Code; and
g. advising and preparing a plan of reorganization, and related
documents, and confirmation of said plan, as provided in Section
1189, et se. of the Bankruptcy Code.
The firm will be paid at these rates:
Stephen R. Harris, Esq. $635 per hour
Norma Guariglia, Esq. $475 per hour
Paraprofessional services, Esq. $175 per hour
The firm received a retainer in the amount of $9,238.
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Stephen R. Harris, a partner at Harris Law Practice LLC, 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:
Stephen R. Harris, Esq.
HARRIS LAW PRACTICE LLC
850 E. Patriot Blvd., Suite F
Reno, NV 89511
Telephone: (775) 786-7600
Email: steve@harrislawreno.com
About MRH –Auto Winnemucca, LLC
MRH Auto-Winnemucca, LLC, filed a Chapter 11 bankruptcy petition
(Bankr. D. Nev. Case No. 23-50503) on July 24, 2023, disclosing
under $1 million in both assets and liabilities. The Debtor is
represented by HARRIS LAW PRACTICE LLC.
MYRTLE THROOP: Case Summary & Nine Unsecured Creditors
------------------------------------------------------
Debtor: Myrtle Throop Inc.
968A Myrtle Ave.
Brooklyn, NY 11206
Business Description: Myrtle Throop is a Single Asset Real Estate
debtor (as defined in 11 U.S.C. Section
101(51B)).
Chapter 11 Petition Date: September 14, 2023
Court: United States Bankruptcy Court
Eastern District of New York
Case No.: 23-43278
Debtor's Counsel: Joshua Bronstein, Esq.
LAW OFFICES OF JOSHUA BRONSTEIN & ASSOCIATES
114 Soundview Drive
Port Washington NY 11050
Tel: 516-698-0202
Email: Jbrons5@yahoo.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Teddy Welz as manager.
A copy of the Debtor's list of nine unsecured creditors is
available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/EEKQ2NI/Myrtle_Throop_Inc__nyebke-23-43278__0001.1.pdf?mcid=tGE4TAMA
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/HZMOLEI/Myrtle_Throop_Inc__nyebke-23-43278__0001.0.pdf?mcid=tGE4TAMA
NATIONAL VISION: Moody's Cuts CFR to Ba3 & First Lien Loans to Ba2
------------------------------------------------------------------
Moody's Investors Service downgraded National Vision, Inc's ratings
including its corporate family rating to Ba3 from Ba2 and
probability of default rating to Ba3-PD from Ba2-PD. Moody's also
downgraded its senior secured first lien revolving credit facility
and senior secured term loan A ratings to Ba2 from Ba1. The
speculative grade liquidity rating (SGL) remains unchanged at SGL-2
and the outlook remains negative.
The downgrade reflects the company's weakened metrics since its
2021 peak as National Vision works to offset lower store traffic,
consumer weakness, constrained exam capacity, optometrist shortages
and higher associated labor costs. Additionally, the company will
be dealing with the loss of the Walmart contract which is scheduled
to terminate over the February - June 2024 period. While a lower
margin business, the Walmart contract does provide positive
cashflow which the company will have to replace via organic
performance improvement and successful execution of their store
build out strategy. National Vision will also have to contend with
its approximately $400 million of 2.5% convertible bonds maturing
in May 2025 which could lead to higher interest costs or
utilization of its existing excess cash or revolver availability.
The negative outlook reflects National Vision's significant EBITDA
declines over the LTM ended July 1, 2023 due in part to lower store
traffic and consumer weakness, constrained exam capacity,
optometrist shortages and higher associated labor costs as well the
loss of its Walmart contract. The negative outlook also reflects
the company's weak interest coverage.
Rating Actions:
Downgrades:
Issuer: National Vision, Inc
Corporate Family Rating, Downgraded to Ba3 from Ba2
Probability of Default Rating, Downgraded to Ba3-PD from Ba2-PD
Backed Senior Secured 1st Lien Revolving Credit Facility,
Downgraded to Ba2 from Ba1
Backed Senior Secured Term Loan A, Downgraded to Ba2 from Ba1
Outlook Actions:
Issuer: National Vision, Inc
Outlook, Remains Negative
RATINGS RATIONALE
National Vision, Inc's Ba3 CFR benefits from its position as a
value player in the recession-resilient optical retail industry.
The rating also reflects the company's ability to maintain good
liquidity with excess cash flow used for store expansion. National
Vision's credit profile is constrained by its small scale compared
to similarly rated retail peers, as well as its narrow product
focus at the lower-end of the market. In addition, the company is
exposed to constrained optometrist supply which has weighed on its
cost base and exam capacity. The long-term customer shift to
e-commerce across retail could increase competitive pressure and
investment needs over time in the value eyeglass retail segment,
which has been relatively resistant to online growth.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if revenue scale materially
increases, while the company continues to demonstrate consistent
earnings growth and good liquidity. An upgrade would require
financial strategies that sustain Moody's-adjusted debt/EBITDA
below 4.0 times and Moody's-adjusted EBITA/interest expense above
3.0 times.
The ratings could be downgraded if the company fails to reverse the
current negative operating trends or if liquidity weakens. The
ratings could also be downgraded if the company engages in
debt-funded acquisitions or shareholder distributions.
Quantitatively, the ratings could be downgraded if Moody's-adjusted
debt/EBITDA is sustained above 5.0 times or Moody's-adjusted
EBITA/interest expense below 2.0 times.
Headquartered in Duluth, Georgia, National Vision, Inc (National
Vision) is a publicly traded US optical retailer offering
value-priced eyeglasses, contact lenses and eye exams. The company
operates close to 1,350 locations, including its retail chains
America's Best Contacts and Eyeglasses and Eyeglass World, as well
as host stores at Walmart, Fred Meyer and US military bases.
National Vision also sells contacts online. Revenue for the twelve
months ended July 1, 2023 was approximately $2.1 billion.
The principal methodology used in these ratings was Retail
published in November 2021.
NCR ATLEOS: Fitch Gives First-Time BB- LongTerm IDR, Outlook Stable
-------------------------------------------------------------------
Fitch Ratings has assigned NCR Atleos, LLC a first-time Long-Term
Issuer Default Rating (IDR) of 'BB-'. The Rating Outlook is Stable.
Fitch has also assigned 'BB+'/'RR2' ratings to the company's
planned first lien senior secured debt (revolver, term loans and
senior notes).
NCR Atleos is a market leader in ATM manufacturing and has one of
the largest independent ATM networks in the U.S., with its Allpoint
Network. Fitch believes there are material secular pressures the
company could face over time, but believes the company will
continue to generate meaningful cash through at least the
medium-term horizon. Fitch also expects the newly spun-off entity
to manage its financial leverage at a reasonable level that
positions it fairly at the 'BB-' rating category.
KEY RATING DRIVERS
Solid Position in ATM Services: NCR's credit profile benefits from
its market leadership position, as the company is one of the global
market leaders in ATM manufacturing and operates one of the largest
ATM networks in the U.S. (Allpoint). NCR was the market leader in
ATMs shipped globally in 2022 and was #1 for ATM Installs in more
than 30 countries around the world. The ATM hardware market is
fairly concentrated with three manufacturers having comprised
roughly 85% of units shipped globally in 2022.
ATM networks are more fragmented, but NCR holds a solid position
with nearly 800,000 ATMs managed globally (including 85,000 of its
own units). This comprises roughly 25% of the estimated 3.2 million
ATMs operated worldwide, by Fitch's estimate.
Secular Challenges: Fitch believes ATM sales and network fees could
be pressured over the long term as consumers use less cash,
although increased bank outsourcing could offset this some.
Consumers shifted further away from cash following the pandemic,
particularly in certain markets such as the U.S. where NCR
generates meaningful revenue.
The Nilson Report projects cash usage (USD volume) among U.S.
consumer payments could decline by 23% from 2020-2025 and cash as a
percentage of U.S. payments transactions could shrink to 8%-9% by
2025 versus 17%-18% in 2020. Fitch believes demand for cash/ATMs
will have a long tail and NCR, as one of the market leaders in both
hardware sales and as an independent network operator (via
Cardtronics), will continue to derive material profitability from
the business.
Shift to Service Model: NCR Atleos is in the midst of a multi-year
business model transition away from upfront hardware sales plus
software/services updates paid over time to an ATM-as-a-service
(ATMaaS ) model, whereby it would manage a bank's ATM tech
footprint for zero dollars upfront but a monthly recurring
subscription fee over time. This fee would include hardware,
software, services, cash management, 24x7 monitoring, etc.
Management expects this to drive higher lifetime customer value, or
more than 2x revenue and EBITDA of its prior model, and EBITDA
margin expansion over time into the mid-20% versus high-teens
currently. Fitch believes sustained margin expansion may prove
challenging as the hardware intensive component of its business may
be a limiting factor.
Regional Diversification: NCR's IDR benefits from global
diversification, with less than half of its revenue from the U.S.
and the remaining portion well spread across other countries. Cash
usage varies meaningfully around the world and the company's
worldwide presence functions as somewhat of an offset to the
long-term secular shift away from paper-based cash. It also has a
global manufacturing footprint, but manufactures the largest
portion of its ATMs in India (Chennai).
Manageable Leverage: Fitch views NCR Atleos' leverage as manageable
for the rating level and expects the company will maintain leverage
at a moderate level over time given secular challenges facing cash
usage. Fitch projects the company could operate with EBITDA
leverage (gross) in the high-3.0x to 4.0x range during 2024-2026,
or 3.0x-3.5x on a Fitch-calculated net leverage basis. Management
is targeting net leverage in the 2.5x-3.0x range over the long-term
but Fitch has a more conservative view on revenue growth and margin
expansion given secular industry concerns.
FCF Profile: Fitch expects NCR Atleos will continue to generate
positive FCF in the future, which benefits its IDR and supports its
leverage profile. There are notable secular pressures facing its
end markets over the long term, but Fitch believes the business
should be reasonably stable in the near- to medium term. Global
cash usage remains significant in terms of volumes and varies
meaningfully by country.
Further, with banks expected to continue closing branches,
consumers will increasingly rely on ATMs as their "touch point" for
when physical cash and/or check deposits are needed. Fitch
estimates FCF margins could be in the low-single digit percentage
range in the next few years, after assuming the company institutes
an annual dividend as a stand-alone company.
DERIVATION SUMMARY
NCR Atleos's ratings and Outlook are supported by the company's
market position across its business, relatively stable business,
regional diversification, expectation of positive FCF generation,
and manageable leverage for the rating category. Secular challenges
inherent in the company's key end market is also a key rating
consideration that limits the rating to high yield and positions
the company well at the 'BB-' IDR. Fitch considers the company
relative to other hardware and services companies in the technology
and business services arenas.
NCR's next closest industry peer, Diebold Nixdorf, Incorporated,
filed for bankruptcy during 2023 due to a confluence of high
leverage, limited liquidity and significant fundamental pressures
on its business. While a different business and part of the value
chain, The Brink's Company (BB+/Negative), has relatively similar
revenue/EBITDA scale but generates higher FCF, operates with
long-term contracts and has lower gross leverage.
Fitch rates numerous hardware companies much larger than NCR as
investment grade, including Motorola Solutions, Inc.
(BBB-/Positive), HP Inc. (BBB+/Stable), Dell Technologies Inc.
(BBB/Stable), among others. However, these companies benefit from
much larger scale, greater diversification, better end markets and
more attractive FCF/leverage characteristics.
KEY ASSUMPTIONS
- Organic revenue growth in the low-single digit range in the next
few years;
- EBITDA margins remain relatively stable, with modest expansion to
the high-teens range over time supported by its planned business
model shift to ATMaaS;
- Capex near 7.5% of revenue;
- Excess cash flow used for dividend payments, with a targeted
payout ratio of 35% of FCF;
- EBITDA leverage remains in the high-3.0x to 4.0x range over the
ratings horizon;
- Leverage projected to be in the mid- to high-3.0x range in the
next few years. Floating rate debt assumes SOFR of 5% from
2024-2026.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- EBITDA leverage, defined as debt/EBITDA, sustained at/below
3.5x;
- Revenue growth projected to be sustained in the mid-single digit
percentage range or higher over time.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- EBITDA leverage sustained at/above 4.0x;
- Revenue growth deteriorates and is expected to be pressured over
a multi-year period;
- Deterioration in key fundamentals including EBITDA margins or FCF
generation.
LIQUIDITY AND DEBT STRUCTURE
Liquidity Upon Separation: Fitch expects NCR to have liquidity upon
separation that is sufficient to support its operations as well as
growth plans in the next few years. Liquidity is supported by: (i)
an estimated $300 million of cash and equivalents at separation;
(ii) undrawn capacity on its planned $500 million senior secured
revolver; and (iii) forecasted positive FCF generation, although
this may be constrained in the near-term as the company positions
itself as a stand-alone company.
Debt Profile: NCR's debt will be a mix of floating rate and fixed
securities, with all of its debt being newly issued to finance the
separation into a newly public company. Proceeds from the financing
will be used to repay existing debt at its prior parent, NCR
Corporation. Outstanding debt upon separation will include: (i)
roughly $1.9 billion of senior secured term loans; (ii) $1.1
billion of senior secured notes; and (iii) a $500 million senior
secured revolver. NCR Atleos is also expected to enter into a trade
receivables facility with up to $120 million of capacity upon
separation from NCR Corp.
ISSUER PROFILE
NCR Atleos, LLC is the global leader in ATM hardware sales and one
of the largest ATM network operators globally. The company was
formed via a 2023 spin-off from NCR Corporation, but has history in
ATMs dating back to the 1980s.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery
----------- ------ --------
NCR Atleos, LLC LT IDR BB- New Rating
senior secured LT BB+ New Rating RR2
NCR ATLEOS: Moody's Assigns First Time B2 Corporate Family Rating
-----------------------------------------------------------------
Moody's Investors Service assigned a first-time B2 corporate family
rating and B2-PD probability of default rating to NCR Atleos LLC
("NCR Atleos"). Moody's also assigned a B2 rating to the proposed
senior secured bank credit facility, which includes a $500
revolving credit facility due 2028, a $835 million term loan A due
2028, and a $1,050 million term loan B due 2030. The outlook is
positive.
As part of the transaction, the company will also launch other
secured debt of about $1,050 million. Proceeds from the debt
issuance, totaling $2,935 million of funded debt, will be used, net
of transaction costs, to make a distribution to NCR Corporation,
from which NCR Atleos is separating in the fourth quarter of this
year. NCR Corporation will use the proceeds, along with incurrence
of other debt, to repay its 5.75% $500 million senior notes due
2027, its 6.125% $500 million senior notes due 2029, and all
outstanding loans under its existing senior secured credit
facility, with about $2,155 million outstanding at June 30, 2023.
Moody's took the following rating actions:
Assignments:
Issuer: NCR Atleos LLC
Corporate Family Rating, Assigned B2
Probability of Default Rating, Assigned B2-PD
Speculative Grade Liquidity Rating, Assigned SGL-2
Senior Secured First Lien Term Loan A, Assigned B2
Senior Secured First Lien Term Loan B, Assigned B2
Senior Secured First Lien Revolving Credit Facility, Assigned B2
Outlook Actions:
Issuer: NCR Atleos LLC
Outlook, Assigned Positive
RATINGS RATIONALE
The B2 CFR reflects NCR Atleos' solid market position and scale,
balanced against moderately high leverage, initial expectation of
modest cash flow generation relative to the adjusted debt load, and
near-term muted growth given currency headwinds and the transition
into larger ATM-as-a-Service (ATMaaS) revenue streams which come
with lower upfront revenue realization. While Moody's expect cash
to continue to be a prevalent form of payment globally, the company
is nonetheless exposed to a potential acceleration in the shift
towards cashless payments that many countries are promoting.
Governance was a key driver of the rating assignment given the
company's moderately high leverage and plans to pay a regular
dividend.
The positive outlook reflects expectations that the company will
maintain debt-to-EBITDA (Moody's-adjusted) near the low 4x range in
the next 12-18 months and that (cash flow from operations minus
capex)-to-debt will approach 4-5% once one-time costs connected to
the spin transaction from NCR Corporation are lapped.
The company enjoys a strong position in the ATM industry with an
estimated 25% command of the global installed base of ATMs,
considering the approximately 800,000 ATMs that NCR Atleos owns,
manages, or services, out of about 3 million total ATMs in
operation in the world. Additionally, the company has been a
ship-share leader for ATMs in the last few years and performed well
in terms of deliveries and service levels despite the challenging
supply chain obstacles of the past two years.
At the same time, the credit profile exhibits moderately high
leverage with debt-to-EBITDA (Moody's-adjusted) of about 4.6x at
the LTM ending March 31, 2023, pro forma for the expected $150
million contribution to the company's pension. Moody's expects
debt-to-EBITDA to improve to the low-4x range at year end 2023, as
EBITDA grows from declines in material input costs and freight
inflation, and the company achieves greater efficiency from its
maintenance operations.
Despite the expectation that debt-to-EBITDA will improve, initially
modest cash flows relative to debt place the company more in line
with B2 companies in the Moody's rated payments space. Moody's
expects NCR Atleos to generate free cash flow-to-debt of about 2%
at year-end 2024, which is inclusive of an anticipated $48 million
dividend to commence in fiscal 2024. That being said, near term
cash flows are constrained by one-time costs connected with the
transaction to spin-off from NCR Corporation, and the free cash
flow profile is expected to improve, especially in 2025.
The transition towards ATMaaS in the company's Self-Service Banking
segment is a positive development, since it will expand the revenue
opportunity as it enables the company to provide more services
beyond the traditional hardware, software, and maintenance sales
package. Besides, ATMaaS establishes 5-to-7-year contracts which
lead to good revenue visibility. These positives are somewhat
tempered in the near term by initial revenue headwinds since direct
hardware and software sales result in higher upfront revenue
realization vs. the ATMaaS contracts.
Similarly, NCR Atleos will need to undergo large capital
investments to build out the ATMaaS units and expand its service
offerings.
From an industry standpoint, Moody's anticipates that cash will
remain a prevalent form of payment globally, and that the use of
ATMs will increase in certain countries, especially those
undergoing greater financial inclusion. However, the growth of
digital wallets and the push that certain countries are making
towards digital payments, could accelerate a shift towards a lower
use of cash, which could lead to a reduced need for ATM
withdrawals. While factoring in this risk in its analysis, Moody's
also recognizes that this shift, even if accelerated, will be
gradual and that the company's scale and market share will protect
it against a material impact.
Governance considerations were a key driver of the rating
assignments and reflect moderately high leverage and financial
policies that prioritize shareholders, including the expectation
that the company will pay a regular dividend. Social risks include
the exposure to a potential acceleration in the shift towards a
greater proportion of cashless transactions. The company's
environmental exposure includes the sharing of a portion of any
potential costs related to the Kalamazoo River environmental
liability with NCR Corporation, although the amount is not expected
to be material. These factors are tempered by the company's large
scale and installed base, a large proportion of revenues from
software and services, and a commitment to keep leverage from
increasing above the current expected levels. Overall, the ESG
Credit Impact Score (CIS) of 4 indicates that the rating would have
been higher if ESG risk exposures did not exist.
Liquidity is good and is supported by $300 million of cash pro
forma for the new financing package, and expectations for free cash
flow of about $80 million in FY 2024. Additionally, the company
will have an undrawn $500 million revolver as well as a financing
program to fund a portion of hardware units to be placed into
ATM-as-a-Service contracts. These sources of liquidity will be
sufficient to fund quarterly working capital needs and cover term
loan amortization (about $70 per annum) and principal payments
related to the company's financing program for ATMaaS units. The
term loan A and revolver are expected to have a maximum 4.75x net
leverage covenant (with netting of unrestricted cash in excess of
$150 million) and step-downs after September 30, 2024. Moody's
anticipates the company to maintain sufficient headroom.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if financial leverage is sustained
below 4.5x and (Cash Flow from Operations Minus Capex)-to-Debt is
sustained above 4%, while revenue and EBITDA continue to grow
organically, and the ATM industry remains constructive.
The ratings could be downgraded if financial leverage is maintained
above 5.5x, and/or in the event of consistent organic revenue or
margin decline, weakened cash flow generation, or aggressive
financial strategy.
STRUCTURAL CONSIDERATIONS
The B2 rating for NCR Atleos' senior secured bank credit facility
(including the $500 revolver, $835 million term loan A, and $1,050
million term loan B) reflects the borrower's B2-PD Probability of
Default Rating (PDR) and an average expected family recovery rate
of 50% at default, given the significant amount of non-debt
liabilities in the capital structure such as the pension and trade
payables. The bank credit facility rating is consistent with the
CFR, reflecting the single class of secured debt comprising NCR
Atleos' debt capital structure. This debt class, along with the
expected $1,050 million in other secured debt, benefits from a
first lien security collateral comprising substantially all
tangible and intangible assets of the issuer and its guarantors,
subject to certain exceptions.
As proposed, the new credit facilities are expected to provide
covenant flexibility that if utilized could negatively impact
creditors. Notable terms include the following:
Incremental debt capacity up to $300 million plus unlimited amounts
subject to a net Secured Leverage Ratio not to exceed 3.5x on a
pro forma basis (if pari passu secured). No portion of the
incremental may be incurred with an earlier maturity than the
initial term loans.
There are no express "blocker" provisions which prohibit the
transfer of specified assets to unrestricted subsidiaries; such
transfers are permitted subject to carve-out capacity and other
conditions.
Non-wholly-owned subsidiaries are not required to provide
guarantees; dividends or transfers resulting in partial ownership
of subsidiary guarantors could jeopardize guarantees, with no
explicit protective provisions limiting such guarantee releases.
The credit agreement provides limitations on up-tiering
transactions, including requiring the consent of each lender
affected for any subordination of the lien on a material portion of
the collateral and for any subordination of the term loans and
revolver commitments in right of payment to any other indebtedness,
unless such lender is offered a bona fide opportunity to
participate on a pro rata basis in any priming indebtedness.
The proposed terms and the final terms of the credit agreement may
be materially different.
NCR Atleos LLC is a provider of ATM solutions to financial
institutions, retailers, and consumers through its Self-Service
Banking segment that primarily provides ATM hardware, software, and
services to traditional banks, and through its retail-based ATM
network in its Payments & Network segment that enables financial
institutions to offer cash-related and other banking services to
consumers through a large network of ATMs.
The principal methodology used in these ratings was Diversified
Technology published in February 2022.
NCR CORP: Moody's Hikes CFR to B1 & Rates Secured Loans to Ba2
--------------------------------------------------------------
Moody's Investors Service upgraded the credit ratings of NCR
Corporation ("NCR Voyix" or "Voyix" pro forma for imminent
transaction), including the corporate family rating to B1,
probability of default rating to B1-PD, the senior secured rating
to Ba2, and the senior unsecured rating to B2, with a stable
outlook. Previously, the rating was on review with direction
uncertain. The speculative grade liquidity rating was upgraded to
SGL-1 from SGL-2.
The rating upgrade takes into account the imminent spin-off of
NCR's ATM business, NCR Atleos, and reflects the anticipated
capital structure and performance of the remaining business, which
will be renamed NCR Voyix. As part of the transaction, NCR Atleos
LLC ("NCR Atleos") will pay a dividend to NCR Voyix, which will
enable it to refinance its term loans into a single term loan with
a principal amount of about $200 million and pay off the two
highest coupon bonds in its capital structure, the 6.125% $500
million senior notes due 2029 and the 5.75% $500 million senior
notes due 2027. As such, total remaining reported debt at NCR Voyix
will be $2,500 million, consisting of the $200 million term loan
maturing in 2028, and three sets of senior notes maturing in 2028,
2029, and 2030.
Upgrades:
Issuer: NCR Corporation
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
Senior Secured Term Loan A, Upgraded to Ba2 from Ba3
Senior Secured Term Loan B, Upgraded to Ba2 from Ba3
Senior Secured Revolving Credit Facility, Upgraded to Ba2 from
Ba3
Senior Unsecured Regular Bond/Debenture, Upgraded to B2 from B3
Outlook Actions:
Issuer: NCR Corporation
Outlook, Changed To Stable From Rating Under Review
RATINGS RATIONALE
The upgrade of NCR Voyix's CFR to B1 reflects the improvement in
the company's leverage profile, with debt-to-EBITDA (Moody's
adjusted) expected to approach the low 4x range and
free-cash-flow-to-debt to be north of 5% in the next 12-18 months,
the expectation that EBITDA margins will expand to closer to 18% by
year end 2024, the ongoing progress in the company's shift to a
larger proportion of revenue coming from recurring
Software-as-a-Service (SaaS) contracts, and the company's continued
strong market position, especially among enterprise customers in
the hospitality and retail POS and Self-Checkout space. The credit
profile also considers the reduced diversification in the business,
as the company will no longer have the ATM business, which
generates stable and significant cash flows. Governance was a key
driver of the rating action given the company's moderately high
leverage at the time of the separation.
Strong cash flow generation of nearly $500 million in the LTM
period ended June 30, 2023 together with a dividend that is
expected to be paid by NCR Atleos to NCR Voyix with a new debt
raise at NCR Atleos will enable NCR to reduce its debt load, such
that total reported debt will decline from about $5,400 million to
about $2,500 million. This, together with the company's public
commitment to target a net leverage profile of 2x to 3x (based on
management's leverage calculations and which translates to
approximately 3x to 4x in Moody's adjusted terms), will lead to a
reduction in debt-to-EBITDA (Moody's adjusted) to about 4x by year
end 2024 from about the 4.5x-5x range that NCR Corporation had
maintained in the last few years.
Voyix will also benefit from a lower interest capital structure,
80% fixed-rate, which results in a weighted average cost of debt of
about 5.4%. Supported by beneficial tax assets that Voyix is
retaining and expanding margins, the company should be able to
generate free cash flow north of $150 million in the next 12
months, such that free-cash-flow-to-debt should exceed 5%.
The company's EBITDA margins will benefit from the growth of the
Digital Banking segment, which has been able to achieve
consistently strong EBITDA margins of around 40%. The margin
profile also benefits from lower material input costs on the
hardware business, which is about 30% of revenue, headcount actions
taken in 2022, and the continued conversion of customers in the
Hospitality and Retail businesses to the SaaS platform, which
facilitates adding on additional services, resulting in greater
average revenue per user (ARPU). Thus, Moody's expects EBITDA
margins to exceed 18% in the next 12-18 months.
The credit profile has already benefitted from some progress in
converting customers that would previously purchase a one-time
software license and hardware order into subscription-based
platform customers, which management estimates results in an
immediate increase in ARPU of 1.5x and can eventually lead to
something closer to 4x the legacy ARPU for Hospitality and Commerce
customers. Annual recurring revenue is currently about 54% of total
revenue.
The company continues to benefit from leading market positions in
the POS retail and hospitality segments, retail self-checkout, and
digital banking solutions, with a portfolio of strong and large
customers across its different end markets. The company's
particular strength among enterprise retail and hospitality
customers provides some cushion against high growth POS integrated
systems providers, such as Toast, Square, and Clover, particularly
in the hospitality space.
The SGL-1 speculative grade liquidity rating reflects the company's
very good liquidity. Pro forma for the spin transaction, the
company is expected to have a $150 million cash balance and a $500
million revolving credit facility, to be drawn modestly at
transaction close. The $150 million plus free cash flow (after
preferred dividend payments) in the next 12 months will also
support the liquidity profile and will be sufficient to cover the
expected $15 million in annual term loan amortization. The company
has a book reserve environmental liability of about $160 million,
which could reduce cash flows in the next few years, but Moody's
expect its current cash sources to be sufficient to cover this
contingent liability. The senior secured bank credit facility is
expected to have a maximum net leverage covenant of 4.75x, stepping
down to 4.5x in late 2024. Moody's expects the company to maintain
ample headroom under this test.
The stable outlook reflects expectations that leverage
(Moody's-adjusted) will approach the low 4x range and that the
company will generate free cash flow north of $150 million in the
next 12-18 months.
Governance is a driver of the rating change as the company's
initial financial leverage is moderately elevated. The Credit
Impact Score of CIS-4 reflects the initial leverage profile,
dependence on highly skilled technology talent and cybersecurity
risk related to consumer data.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if financial leverage is sustained
below 4x and free cash flow-to-(debt plus preferred stock) is
maintained consistently near 10%, while the company increases its
annual recurring revenue by converting customers to the SaaS
platform.
The ratings could be downgraded if financial leverage is maintained
above 5x, and/or in the event of consistent organic revenue or
margin decline, weakened cash flow generation, or aggressive
financial strategy.
The Ba2 rating on the still outstanding senior secured debt
instruments reflect the borrower's B1-PD PDR and an average
expected family recovery rate of 50% at default, reflective of the
mix of secured debt and unsecured notes in the capital structure.
These instruments benefit from a priority position and first lien
on the borrower's collateral, relative to the senior unsecured
notes, which are rated B2, one notch below the CFR. The rating on
the senior secured instruments will be withdrawn if these
instruments are refinanced.
The principal methodology used in these ratings was Diversified
Technology published in February 2022.
NCR is a leading global financial technology company, providing
customer communication and point of sale solutions to financial
institutions and merchants. Post separation, NCR Voyix will focus
on providing Point-of-Sale (POS) and Self-Checkout software and
hardware solutions to hospitality and retail customers, as well as
digital banking solutions to financial institutions. Pro forma
revenue for the LTM period is about $3.9 billion.
NF INTERNATIONAL: Hires Robert M. Ward as Special Counsel
---------------------------------------------------------
NF International, Inc. seeks approval from the U.S. Bankruptcy
Court for the Northern District of Georgia to employ Robert M.
Ward, Esq. as special counsel.
The Debtor needs the firm's legal assistance in connection with
international property litigation entitled Noorani Trading, Inc, v.
Amit F. Bijani, Nafisa Bijani, AB International, LLC, NF
International, Inc., Case No. 1:17-cv01344-LMM, filed in the United
States District Court for the Northern District of Georgia.
The firm will be paid at the rate of $495 per hour.
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
As 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 M. Ward, Esq.
3455 Peachtree Road NE, 5th Floor
Atlanta, GA 30326
Tel: (404) 606-6480
Email: rward@bmwiplaw.com
About NF International, Inc.
NF International, Inc., filed a Chapter 11 bankruptcy petition
(Bankr. N.D. Ga. Case No. 23-54962-sms) on May 28, 2023. The Debtor
hires Milton D. Jones, Esq., as counsel. Robert M. Ward, Esq. as
special counsel.
NFP HOLDINGS: Fitch Gives B First-Time LongTerm IDR, Outlook Stable
-------------------------------------------------------------------
Fitch Ratings has assigned first-time, Long-Term Issuer Default
Rating (IDR) of 'B' to NFP Holdings, LLC and NFP Corp., the
company's borrower entity (collectively dba NFP). The Rating
Outlook is Stable. Fitch has also assigned ratings of 'BB-'/'RR2'
to the company's first lien senior secured debt including its $440
million revolving credit facility, term loan and senior secured
notes. Fitch assigned ratings of 'CCC+'/'RR6' to the company's
senior unsecured notes. The ratings impact approximately $5.2
billion, not including undrawn capacity on the company's revolver.
NFP's ratings are reflective of the company's solid market position
in insurance brokerage, stable and recurring business model, solid
EBITDA margins, and exposure to a recession resilient end market.
However, high EBITDA leverage (debt/EBITDA), weak interest
coverage, and an aggressive M&A strategy weighs against the
ratings. Fitch rates NFP relative to other insurance brokers and
business services issuers and believes the company is well
positioned at the 'B' IDR category.
KEY RATING DRIVERS
Market Position: Fitch views NFP's position as the 13th largest
U.S. insurance broker as a credit positive that positions it well
in a fragmented industry landscape. The company reported 2022
revenue of more than $2.2 billion and operates across U.S., Canada
and Europe with more than 7,200 employees. NFP's organic revenue
growth ranged from approximately 2% to 11% since 2014, although its
reported revenue grew faster due to acquisitions over the past
decade. NFP's business is characterized by high client retention
and organic growth that has proven resilient historically. NFP
continues to expand its presence in many end markets and regions
through acquisitions and producer recruitment.
Diversified revenue profile: NFP's ratings benefit from
diversification across its business. NFP provides a full range of
brokerage, consulting and advisory services, including benefits,
property and casualty, life insurance and wealth management and
retirement solutions and has organized its business into three
reportable segments: Benefits and Life (50% of FY 2022 revenues),
P&C (33%) and Wealth and Retirement (16%). Geographically, the
company earns its revenues across U.S., Canada, and Europe but the
vast majority of its commissions (~92%) come from the U.S. It has
diversified its U.S. exposure via M&A and producer recruitment over
the past few years. NFP has limited concentration in terms of
carriers and clients, with no relationship comprising more than 5%
of revenue.
M&A Strategy: Fitch expects M&A will remain a core component of
NFP's growth strategy for the foreseeable future. Fitch estimates
the company could spend nearly $650 million on acquisitions in 2023
and spent more than $2.6 billion since 2018. NFP completed more
than 350 deals since 2013, with most acquisitions being relatively
small tuck-in deals. NFP historically funded M&A via a combination
of debt and operating cash flow, thus resulting in a high leverage
profile. The company's leverage ratio is expected to improve
gradually yet remain high over the rating horizon.
High Leverage, Weak Coverage: M&A activity has led to high
financial leverage that Fitch projects will remain elevated in the
next few years. Fitch calculates pro forma EBITDA leverage, or
gross debt/EBITDA, is in the low- to mid-9.0x range currently and
forecasts this to decline to the high-7.0x over the ratings
horizon. This leverage is high for the 'B' IDR and Fitch would look
for improvement in this metric over time. Sustained leverage in
excess of 8.0x over a multi-year period could lead to negative
rating action over time.
Fitch also considers interest coverage as a key metric in its
ratings evaluation and the agency's forecast for NFP to be in the
mid- to high-1.0x range with this metric in the next few years is
sufficient for the IDR, but low in the near-term and near Fitch's
negative sensitivity threshold for the 'B' IDR. Fitch would look
for improvement in interest coverage over time.
Cash Flow Ratios Constrained: Fitch-defined FCF will likely be
constrained over the ratings horizon due to continued debt-financed
M&A that has increased leverage and interest expense, particularly
with rising rates. Importantly, much of the constrained FCF is a
derivative of the company's M&A roll-up strategy, and Fitch views
the underlying cash generation profile of the business as
reasonably healthy. If the company were to significantly slow M&A,
Fitch believes cash flow generation would improve materially unless
all of excess cash flow were then diverted to shareholder capital
returns.
Stable Industry: Fitch believes the company operates a fairly
predictable business model in an industry that performed well
across the economic cycle. The insurance brokerage industry was
stable historically even during periods of economic shock, such as
the global financial crisis in 2008-2009 and the COVID-19 pandemic
in 2020. Some of the largest insurance brokers experienced only
low- to mid-single-digit organic declines in the 2008-2010
timeframe. Fitch believes industry stability stems from insurance
and benefits services being fairly essential across the cycle.
Also, the brokerage business model inherently has an adjustable
cost structure.
DERIVATION SUMMARY
NFP competes in a fragmented landscape of insurance brokerage and
benefits services providers that includes other local/regional
companies, national agents and large multi-national brokers. Fitch
rates numerous companies in the insurance brokerage industry that
are comparable in terms of scale, operating profile and business
model.
NFP maintains its position as the 13th largest U.S. insurance
broker with revenue of $2.2 billion in 2022.However, it remains
relatively small and has meaningfully higher financial leverage
versus larger global brokers such as Marsh & McLennan Companies,
Inc. (A-/Stable), Aon plc (BBB+/Stable), Willis Towers Watson plc
(BBB/Positive), Arthur J. Gallagher & Co. (BBB/Positive), among
others. Fitch also rates Navacord Corp. (B/Stable), which is
meaningfully smaller and concentrated within a single country but
similar to NFP is highly levered and is focused on an aggressive,
M&A-driven growth strategy.
The 'B' rating is reflective of NFP's strong historic growth
profile, solid profitability, and diversification among its
customers and business segments. This is offset by an aggressive,
debt-financed M&A strategy, high EBITDA leverage, and relatively
weak interest coverage.
KEY ASSUMPTIONS
- Organic revenue growth in the mid-single digit percentage range
over the ratings horizon plus contributions from incremental new
M&A through FY26;
- EBITDA margins estimated in the low- to mid-20% range;
- Cash taxes, restructuring and M&A expenses remain a use of cash
flow in the next few years;
- Fitch assumes NFP continues to execute on growth-driven M&A,
which remains the primary use of cash flow. Incremental M&A is
funded via internal cash flow and incremental debt;
- EBITDA leverage trends down toward the high-7.0x range over the
ratings horizon. SOFR assumed in the high-4% range over the ratings
horizon;
- Recovery Analysis: For entities rated 'B+' and below - where
default is closer and recovery prospects are more meaningful to
investors - Fitch undertakes a tailored, or bespoke, analysis of
recovery upon default for each issuance. The resulting debt
instrument rating includes a Recovery Rating (RR) graded from RR1
to RR6, and is notched from the IDR accordingly. In this analysis,
there are three steps: (i) estimating the distressed enterprise
value (EV); (ii) estimating creditor claims; and (iii) distribution
of value. Fitch assumes NFP would emerge from a default scenario
under the going concern approach versus liquidation. Key
assumptions used in the recovery analysis are as follows:
- GC EBITDA in the mid-$400 million range, or meaningfully below
the company's reported run-rate. This lower level of EBITDA
considers competitive and/or other pressures that could hurt future
earnings.
- EV Multiple assumes a 6.5x exit multiple, which Fitch believes is
validated based on: (i) comparable public company trading
multiples, current and historic across the cycle; (ii) industry M&A
and (iii) historic reorganization multiples.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- EBITDA leverage, defined as debt/EBITDA, is sustained below
6.5x;
- (CFO-Capex)/Debt sustained in low double digits.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- EBITDA leverage sustained above 8.0x with no clear deleveraging
path;
- Interest coverage, defined as EBITDA/interest paid, sustained
below 1.5x;
- CFO-Capex/Debt sustained near 1% or below, excluding M&A-related
costs;
- Deterioration in operating fundamentals that lead to weaker
revenue trends, margin underperformance, and compression of cash
flows.
LIQUIDITY AND DEBT STRUCTURE
Liquidity Profile: Fitch believes NFP's liquidity is adequate and
should enable it to invest for growth while also providing
sufficient downside protection for the rating category. The company
has more than $300 million of cash on its balance sheet as of June
2023 and an unutilized $440 million first lien senior secured
revolver as of June 30, 2023 that supports its overall liquidity
profile. Fitch also projects FCF could be modestly positive over
the forecast, although M&A and other one-time expenses as well as
higher interest expense will constrain cash flow generation.
Debt Structure: NFP's capital structure consists of both first
lien, senior secured and senior unsecured debt. Its first lien
senior secured debt includes: (i) a $440 million revolver; (ii)
term loans outstanding of $1.86 billion maturing in 2027; and (iii)
$1.25 billion of senior secured notes, pro forma for the recently
announced issuance. The term loan amortizes at 1% per annum.
Proceeds from NFP's newly announced senior secured issuance are
expected to be used for M&A in the near-term.
ISSUER PROFILE
NFP provides a full range of brokerage, consulting and advisory
services, including benefits, property and casualty, life insurance
and wealth management and retirement solutions. The company is
privately held by Madison Dearborn Partners, among others, and was
founded in 1998.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery
----------- ------ --------
NFP Holdings, LLC LT IDR B New Rating
NFP Corp. LT IDR B New Rating
senior
unsecured LT CCC+ New Rating RR6
senior secured LT BB- New Rating RR2
NOB HILL INN: Hires Kasolas, BMC Group as Administrative Agents
---------------------------------------------------------------
Nob Hill Inn City Plan Owners seeks approval from the U.S.
Bankruptcy Court for the Northern District of California to employ
Michael Kasolas Company, and BMC Group Inc. as administrative
agents.
The firms will provide these services:
a. assist in the preparation of a database which will address
the Debtor's needs both with respect to the Adversary Proceeding,
and thereafter, with respect to the case. The database must be
populated with available sources of information, including the
Consents, the Debtor's records, and the Tax Assessor's Rolls;
b. prepare reports of Consents to Judgment, which include copies
of the underlying Consents so that the reports are confirmable and
verifiable by both the Court and a subsequent title insurer;
c. prepare reports of non-responsive co-owner defendants. The
report must identify every means of contact used, and whether there
are additional means of contact available which have not been used;
where there are additional available means of contact, the report
must identify them such that they can be acted on; e.g., by
obtaining an Alias Summons and serving an additional address. Those
additional efforts must be tracked and calendared so that any
response or lack thereof can be properly administered; and
d. prepare reports identifying non-responsive defendant
timeshare co-owners for whom there are no other additional
available means of contact, which reports would support a request
for the entry of a Default Judgment.
Michael G. Kasolas will be paid $540 per hour, and for
administrative staff of $95 per hour
BMC Group's billing rates for all hours incurred range from $45 to
$175 per hour.
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
As 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 firms can be reached at:
Michael G. Kasolas, CPA
Michael Kasolas Company
P.O. BOX 27526
San Francisco, CA 94127-0526
Tel: (415) 992-5806
Fax: (415) 520-5443
Email: trustee@kasolas.net
- and -
BMC Group, Inc.
600 1st Avenue
Seattle, WA 98104
Telephone: (206) 499-2169
Email: tfeil@bmcgroup.com
About Nob Hill Inn City Plan Owners
Nob Hill Inn City Plan Owners Association is the owner of the Nob
Hill Inn, which is a 21-unit hotel and timeshare, located at 1000
Pine Street, San Francisco, CA valued $8.25 million.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Cal. Case No. 23-30368) on June 10,
2023. In the petition signed by Alfredo Terraza, chief financial
officer, the Debtor disclosed $8,537,769 in assets and $222,858 in
liabilities.
Judge Dennis Montali oversees the case.
Michael St. James, Esq., at St. James Law, P.C., represents the
Debtor as legal counsel.
NOBLE HOUSE: Court OKs $12MM DIP Loan from Wells Fargo
------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Houston Division, authorized Noble House Home Furnishings, LLC, on
an interim basis, to use cash collateral and obtain postpetition
financing consisting of a senior secured superpriority revolving
credit facility in the aggregate principal amount of up to $12
million in new money advances plus the roll-up of certain
prepetition obligations, pursuant to the terms and conditions of
the Senior Secured Super-Priority Debtor-In-Possession Credit
Agreement by the Debtors and Wells Fargo Bank, National
Association, as administrative agent.
The DIP Facility is due and payable through the earliest to occur
of:
(a) October 31, 2023;
(b) The date of termination of all of the Commitments pursuant
to Section 9.1;
(c) The date on which the Obligations become due and payable
pursuant to the Agreement, whether by acceleration or otherwise;
(d) The effective date of a Plan of Reorganization for the
Debtors;
(e) The date of a sale of all or substantially all of the
Debtors' assets (including, without limitation, under Section 363
and/or 365 of the Bankruptcy Code);
(f) The first Business Day on which the Interim Order expires
by its terms or is terminated, unless the Final Order has been
entered and become effective prior thereto;
(g) The date the Final Order is vacated, terminated,
rescinded, revoked, declared null and void or otherwise ceases to
be in full force and effect;
(h) The date of a conversion of any of the Chapter 11 Cases to
a case under Chapter 7 of the Bankruptcy Code or any Loan Party
will file a motion or other pleading seeking the conversion of the
Chapter 11 Cases to Chapter 7 of the Bankruptcy Code, unless
otherwise consented to in writing by the Agent; and
(i) The date of dismissal of any of the Chapter 11 Cases,
unless otherwise consented to in writing by the Agent.
The Debtors are required to comply with these milestones:
1. On the Petition Date or within one day thereafter, the
Debtors will have filed the DIP Motion;
2. On the Petition Date or within one day thereafter, the
Debtors will have filed a motion seeking, among other things,
authorization for the Debtors to enter into the Stalking Horse
Purchase Agreement and approval of certain deadlines and hearing
dates in connection with the sale of all or substantially all of
the Debtors' assets;
3. On or before 14 days after the Petition Date, the Debtors
will have obtained an order (in form and substance acceptable to
the DIP Agent) approving the Bid Procedures Motion that, among
other things, authorizes the Debtors to enter into the Stalking
Horse Purchase Agreement and establishes no later than October 18,
2023, as the deadline for the submission of bids for the sale of
all or substantially all of the Debtors' assets;
4. On or before 30 days after the Petition Date, the Debtors
will have obtained the Final Order;
5. On or before October 23, 2023, the Debtors will have, if
necessary, conducted an auction, and selected the winning bid for
the sale of all or substantially all of the Debtors' assets;
6. On or before October 25, 2023, the Debtors will have
obtained an order approving the Winning Bid; and
7. On or before October 31, 2023, the Debtors will have
consummated a sale of all or substantially all of the Debtors'
assets with sufficient cash proceeds on the closing date to cause
the DIP Obligations and the Prepetition ABL Obligations to be Paid
in Full.
It will be an Event of Default if the Debtors fail to comply with
any of the deadlines established in the Bid Procedures Order or if
a notice of termination is received by (or delivered from) the
Debtors in connection with a Stalking Horse Purchase Agreement or
any purchase agreement in connection with the Winning Bid.
The Prepetition ABL Agreement, dated December 3, 2021, provided
financial accommodations to certain Debtors and their affiliates,
with Wells Fargo Bank acting as the administrative agent. The
Prepetition ABL Lenders, along with various lenders, issued letters
of credit for the accounts of the Debtors, as per the Prepetition
ABL Documents and other agreements and documents.
The Prepetition ABL Facility provided the Debtors with up to $110
million in revolver commitments, including letters of credit
obligations. As of the Petition Date, the aggregate principal
amount outstanding was $70.390 million in outstanding revolving
loans and $3.5 million in issued and outstanding letter of credit
obligations. The Facility also included accrued and unpaid
interest, outstanding letters of credit, reimbursement obligations,
fees, expenses, disbursements, treasury, cash management, bank
product and derivative obligations, indemnification obligations,
and guarantee obligations.
As adequate protection for the use of cash collateral, the
Prepetition ABL Agent, for the benefit of itself and the
Prepetition ABL Parties, is granted continuing, valid, binding,
enforceable, and perfected postpetition security interests in and
liens on the DIP Collateral.
As further adequate protection of the interests of the Prepetition
ABL Parties in the Prepetition Collateral and solely to the extent
of any Diminution in Value of such interests in the Prepetition
Collateral, the Prepetition ABL Agent, on behalf of itself and the
Prepetition ABL Parties, is granted as and to the extent provided
by 11 U.S.C. section 507(b) an allowed superpriority administrative
expense claim in each of the Cases and any Successor Cases.
These events constitute an "Event of Default":
(i) The failure of the Debtors to perform, in any respect, any
of the terms, provisions, covenants, or obligations under the
Interim Order, including the failure to comply with the Case
Milestones or the Budget; or
(ii) The occurrence of an "Event of Default" under the Interim
Order or the DIP Agreement, or the failure of the Debtors to
perform, in any respect, any of the terms, provisions, covenants,
or obligations under the Interim Order.
A final hearing on the matter is set for October 4, 2023 at 3 p.m.
A copy of the Court's order and the Debtor's budget is available at
https://urlcurt.com/u?l=DSp9pw from PacerMonitor.com.
The Debtor projects total disbursements, on a weekly basis, as
follows:
$5,751,956 for September 16, 2023;
$5,767,015 for September 23, 2023;
$8,001,025 for September 30, 2023;
$7,827,602 for October 7, 2023;
$6,789,276 for October 14, 2023;
$5,986,222 for October 21, 2023; and
$6,454,189 for October 28, 2023.
About Noble House Home Furnishing LLC
Noble House Home Furnishing LLC and affiliates are distributors,
manufacturers and retailers of indoor and outdoor home furnishings
with distribution throughout e-commerce channels including partners
such as Amazon, WalMart, Costco, Wayfair, Overstock, Target and
Home Depot, fulfilling direct to consumer orders from its
distribution centers. Family-owned since its founding in 1992,
Noble House and its affiliated entities design, market and sell
products under several brands including Christopher Knight Home,
NobleHouse, LePouf, OkiOki, Best Selling, and GDFStudio. They also
sell through wholesale channels, primarily to the Big Box retailers
like TJMaxx, Home Goods, Marshalls, Ross Stores and others.
The Debtors sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 23-90773) on
September 11, 2023. In the petition signed by Gayla Bella, chief
financial officer, the Debtor disclosed up to $500 million in both
assets and liabilities.
Judge Christopher M. Lopez oversees the case.
The Debtors tapped Pachulsk Stang Ziehl & Jones LLP as legal
counsel and Epiq Corporate Restructuring, LLC, as claims and
noticing agent.
Wells Fargo Bank, as DIP Lender, is represented by:
Marshall Stoddard, Jr., Esq.
MORGAN, LEWIS & BOCKIUS LLP
300 S. Grand Avenue, Twenty-Second Floor
Los Angeles, CA 90071-3132
E-mail: marshall.stoddard@morganlewis.com
NOVAVAX INC: SK Bioscience, Two Others Report 6.4% Equity Stake
---------------------------------------------------------------
SK bioscience Co., Ltd., SK chemicals Co., Ltd., and SK discovery
Co., Ltd. disclosed in a Schedule 13G filed with the Securities and
Exchange Commission that as of Aug. 8, 2023, they beneficially
owned 6,500,000 shares of common stock of Novavax, Inc.,
representing 6.4 percent of the Shares outstanding.
The percentage was calculated based on 100,904,185 shares of Common
Stock consisting of (i) 94,404,185 shares of Common Stock
outstanding as of July 31, 2023 as set forth in the Issuer's Form
10-Q as filed with the Securities and Exchange Commission on Aug.
8, 2023 and (ii) 6,500,000 shares of Common Stock issued to SK
bioscience Co., Ltd. pursuant to a security subscription agreement
dated Aug. 8, 2023.
A full-text copy of the regulatory filing is available for free
at:
https://www.sec.gov/Archives/edgar/data/1000694/000119312523215381/d525102dsc13g.htm
About Novavax
Headquartered in Gaithersburg, Maryland, Novavax, Inc.
(www.novavax.com.), together with its wholly owned subsidiaries, is
a biotechnology company that promotes improved health globally
through the discovery, development, and commercialization of
innovative vaccines to prevent serious infectious diseases. The
Company's proprietary recombinant technology platform harnesses the
power and speed of genetic engineering to efficiently produce
highly immunogenic nanoparticle vaccines designed to address urgent
global health needs.
Tysons, Virginia-based Ernst & Young LLP, the Company's auditor
since 2014, issued a "going concern" qualification in its report
dated Feb. 28, 2023, citing that the Company has suffered recurring
losses from operations, has a working capital deficiency, and has
stated that substantial doubt exists about the Company's ability to
continue as a going concern.
OCEAN POWER: Incurs $7 Million Net Loss in First Quarter
--------------------------------------------------------
Ocean Power Technologies, Inc. filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q disclosing
a net loss of $7.04 million on $1.27 million of revenues for the
three months ended July 31, 2023, compared to a net loss of $5.85
million on $714,000 of revenues for the three months ended July 31,
2022.
As of July 31, 2023, the Company had $45.68 million in total
assets, $7.12 million in total liabilities, and $38.56 million in
total shareholders' equity.
Ocean Power said, "Our cash requirements relate primarily to
working capital needed to operate and grow our business including
funding operating expenses. We have experienced and continue to
experience negative cash flows from operations and net losses."
During the three months ended July 31, 2023, net cash flows used in
operating activities was $8.0 million, an increase of $2.9 million
compared to net cash used in operating activities during the three
months ended July 31, 2022 of $5.1 million. This reflects an
increase in net loss of $1.1 million, an earn out payment related
to MAR of $0.5 million, decrease in accrued expense of $0.8 million
primarily related to accrued bonus payout, and an increase in
inventory of $0.5 million.
Net cash provided by investing activities during the three months
ended July 31, 2023 was $5.0 million, compared to $6.4 million cash
provided by investing activities during the three months ended
July 31, 2022. The net cash of $5.0 million provided by investing
activities during the three months ended July 31, 2023 was
primarily due to the redemption of short-term investments of $11.7
million, partially offset by the purchase of short term investments
of $6.6 million and purchase of property and equipment of $0.1
million.
Net cash used in financing activities during the three months ended
July 31, 2023 was $2,000.
"Since our inception, the cash flows from customer revenues have
not been sufficient to fund our operations and provide the capital
resources for our business," the Company added. "As of July 31,
2023, our year to date revenues were $1.3 million, our year to date
net losses were $7.0 million, our year to date net cash used in
operating activities was $8.0 million and our accumulated deficit
was $287.1 million."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001378140/000149315223032485/form10-q.htm
About Ocean Power Technologies
Headquartered in Monroe Township, New Jersey, Ocean Power
Technologies, Inc. -- http://www.oceanpowertechnologies.com--
provides ocean data collection and reporting, marine power,
offshore communications, and Maritime Domain Awareness ("MDA")
products and consulting services. The Company offers its products
and services to a wide-range of customers, including those in
government and offshore energy, oil and gas, construction, wind
power and other industries. The Company is involved in the entire
life cycle of product development, from product design through
manufacturing, testing, deployment, maintenance and upgrades,
working closely with partners across its supply chain.
Ocean Power reported a net loss of $26.33 million for the fiscal
year ended April 30, 2023, a net loss of $18.87 million on $1.76
million for fiscal year ended April 30, 2022, a net loss of $14.76
million for the 12 months ended April 30, 2021, a net loss of
$10.35 million for the 12 months ended April 30, 2020, and a net
loss of $12.25 million for the 12 months ended April 30, 2019. As
of Jan. 31, 2023, the Company had $59.04 million in total assets,
$6.10 million in total liabilities, and $52.94 million in total
shareholders' equity.
OFF LEASE ONLY: Hits Chapter 11 Bankruptcy Protection
-----------------------------------------------------
Jonathan Randles of Bloomberg Law reports that Off Lease Only, a
used-car dealer majority owned by Cerberus Capital Management LP,
has filed bankruptcy and said it plans to wind down its business
because of "unprecedented changes to the automotive-retail
landscape."
The Florida-based company and its affiliates filed Chapter 11 on
Thursday, September 8, 2023, listing assets and liabilities each of
between $100 million and $500 million on its bankruptcy petition.
Off Lease Only explored other options before filing bankruptcy, but
ultimately decided to close the business because rising interest
rates and higher prices have weakened demand for used cars and made
them less affordable, according to the company.
About Off Lease Only
Off Lease Only operated five used car dealerships in Florida and
one in Texas. However, the Company sold cars to customers
throughout the United States. The Company ceased operations shortly
before the Petition Date and intends to wind down its business and
allow its floorplan lender to collect the vehicles securing its
loan during these Chapter 11 Cases.
Off Lease Only LLC and its affiliates sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case
No. 23-11388) on September 7, 2023. In the petition signed by
Leland Wilson, chief executive officer, Off Lease Only disclosed up
to $500 million in both assets and liabilities.
Judge Craig T. Goldblatt oversees the case.
The Debtors tapped Prokkauer Rose LL and Pachulski Stang Ziehl &
Jones LLp as co-counsel, FTI Consulting, Inc. as financial advisor,
Bofa Securities, Inc. as investment banker, and Stretto, Inc., as
claims and noticing agent and administrative advisor.
OILFIELD EQUIPMENT: Hires Spector & Cox PLLC as Counsel
-------------------------------------------------------
Oilfield Equipment Rental, LLC and its affiliate seek approval from
the U.S. Bankruptcy Court for the Eastern District of Texas to
employ Spector & Cox, PLLC as counsel.
The firm's services include:
a. providing the Debtors with legal advice with respect to their
powers and duties;
b. preparing and pursuing confirmation of a Chapter 11 plan;
c. preparing legal papers;
d. appearing in court and protecting the interests of the
Debtors; and
e. performing all other legal services for the Debtors which may
be necessary and proper in these Chapter 11 proceedings.
The firm will be paid at these rates:
Attorneys $300 to $395 per hour
Paralegals $115 per hour
The Debtors paid the firm a retainer of $23,476.
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Howard Marc Spector, Esq., a partner at Spector & Cox, 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:
Howard Marc Spector, Esq.
SPECTOR & COX, PLLC
12770 Coit Road, Suite 850
Dallas, TX 75251
Tel: (214) 365-5377
Fax: (214) 237-3380
Email: hspector@spectorcox.com
About Oilfield Equipment Rental, LLC
Oilfield Equipment Rental, LLC conducts business under the name
Rapid Flow Testing. The company is based in Midland, Texas.
Oilfield Equipment Rental filed a petition under Chapter 11,
Subchapter V of the Bankruptcy Code (Bankr. E.D. Texas Case No.
23-41325) on July 25, 2023, with $3,621,705 in assets and
$2,081,715 in liabilities. Nancy Fuller, member, signed the
petition.
Howard Marc Spector, Esq. of SPECTOR & COX, PLLC represents the
Debtor as legal counsel.
PECF USS: S&P Downgrades ICR to 'CCC', Outlook Negative
-------------------------------------------------------
S&P Global Ratings lowered all of its ratings by one notch on PECF
USS Intermediate Holding III Corp. (PECF), including the issuer
credit rating to 'CCC' from 'CCC+'.
The negative outlook reflects the more challenging macroeconomic
backdrop, rising interest rates, unsustainable debt leverage, and
weak interest coverage ratios at PECF.
A material reduction in the company's EBITDA and EBITDA margins,
along with significant increases in its debt and interest expense,
have hampered its credit metrics, which we expect will remain
unsustainable. Following its October 2021 recapitalization, PECF's
S&P Global Ratings-adjusted debt balances essentially doubled.
Additionally, roughly 80% of the company's debt was floating rate
as of June 2023, and it does not have interest rate hedges in
place. PECF's interest expense for the last-12-month (LTM) period
ended June 2023 was up over 70% compared with the same period ended
June 2022, as interest rates materially increased without the
offsetting benefit of hedges.
The company was unable to fully pass through the material cost
inflation (primarily for labor and fuel), which led it to sustain
weaker-than-expected EBITDA and EBITDA margins: its S&P Global
Ratings-adjusted EBITDA declined about 15% and EBITDA margins are
down about 450 basis points (bps) for the LTM period ended June
2023 compared with the prior period.
Additionally, the frequency of service requests by PECF's customers
reduced following a spike during the height of the COVID-19
pandemic. The combination led to S&P Global Ratings-adjusted EBITDA
interest coverage dropping to about 1x during this period, and we
expect it to remain around this level throughout 2023.
Additionally, the company's S&P Global Ratings-adjusted debt to
EBITDA weakened to about 11.5x for the LTM period ended June 2023,
from about 9.5x for the prior period.
S&PP said, "In our base-case forecast, we assume PECF's
weighted-average debt to EBITDA will remain above 10x. In 2023, we
expect the company's S&P Global Ratings-adjusted EBITDA to modestly
decline, compared with our previous expectations for modest growth.
This reflects ongoing inflationary cost pressures that the company
has not yet fully passed on, along with some top-line weakness and
certain costs that we do not add back to our EBITDA calculation.
"We believe that lower earnings, along with the full-year impact of
higher interest expense, will lead to moderately negative free cash
flow in 2023, compared with our previous expectations for flat to
slightly positive reported free cash flow. We believe the company
will prioritize preserving its liquidity position, and thus
anticipate a material drop in its capital expenditure (capex) and
acquisition spending in 2023.
"We expect PECF's liquidity position (nearly $125 million of cash
and revolver availability as of June 2023) will enable it to
continue making timely interest payments and have not factored any
below-par debt buybacks into our base case. We anticipate the
company's financial policies will remain aggressive given its
private-equity ownership and track record of supplementing its
organic growth with acquisitions. Additionally, the company's CEO,
CFO, and COO have all unexpectedly departed from the company in
recent months, which imparts a degree of unpredictability on PECF's
future financial policies.
"Our assessment of the company's business risk profile reflects its
limited diversity due to its focus on portable sanitation and its
material exposure to cyclical end markets. The overall level of
demand in the company's industry is strongly tied to the
residential and nonresidential construction markets (about 45% of
total revenue), which tend to be project-oriented. Weak
construction activity during past downturns significantly reduced
PECF's revenue and EBITDA, and we expect residential construction
activity will remain depressed in 2023. Portable sanitation is also
a niche industry (estimated at $6 billion).
"While we believe the company's increased scale, geographic
density, and efforts to expand into relatively less-cyclical
markets (e.g., industrials) better position it to weather a
potential economic slowdown, we still believe it is susceptible to
significant demand volatility in a market downturn. Somewhat
offsetting these risks are the company's leading position (several
times larger than its nearest competitor) as the only national
player in the niche portable sanitation market.
"PECF is one of the few participants capable of servicing national
brands across the U.S. Its expanding line of complementary
services, such as fencing and roll-off dumpsters, bolsters its
market position. We believe this strengthens PECF's value
proposition as a one-stop shop for site management needs,
particularly for national accounts. These factors support its good
operating performance and high customer retention rate. We believe
there is ample opportunity for PECF to continue to expand over the
next few years given its focus on improving its route density
(which boosts margins), the highly fragmented nature of its
industry, and its lack of a presence in about half of the U.S.
"The negative outlook reflects the more challenging macroeconomic
backdrop, rising interest rates, and significant cost inflation,
which have weakened PECF's credit measures in 2023. Specifically,
the company's S&P Global Ratings-adjusted debt to EBITDA increased
to about 11.5x for the LTM period ended June 2023, and we believe
its weighted-average debt leverage will remain above 10x.
"We expect the company's volumes will remain challenged in 2023 and
expect a moderate drop in its S&P Global Ratings-adjusted EBITDA
given ongoing inflationary cost pressures. We expect the company
will remain focused on preserving its liquidity position and thus
expect a material decline in its capex and acquisition spending in
2023. As part of its 2021 recapitalization, PECF raised an
additional $200 million unfunded equity commitment, which it can
use for general corporate purposes.
"We do not believe that the company will trigger its springing
covenants over the next year, anticipate it will not pursue any
debt buybacks that we would view as distressed exchanges, and note
it does not face material upcoming debt maturities, which are key
factors underpinning the rating."
S&P could lower its ratings on PECF in the next year if:
-- Its earnings deteriorate beyond S&P's expectations due to weak
end-market demand in its core residential and nonresidential
construction end markets, or it is unable to implement price
increases to offset its higher costs;
-- Its EBITDA margins decline modestly compared with S&P's
base-case assumptions;
-- The company undertakes a transaction that S&P views as a
distressed exchange;
-- It skips an interest payment;
-- Its liquidity weakens due to persistent negative free cash flow
generation, challenging its covenant compliance; or
-- It completes a larger-than-expected debt-funded acquisition or
a large dividend recapitalization.
If some of these scenarios to occur, S&P believes its debt to
EBITDA would consistently remain at 10x or above.
S&P could take a positive rating action on PECF in the next year
if:
-- Its volumes and pricing are stronger than S&P project such that
its revenue increases 10% and its EBITDA margins rise over 200 bps
relative to its base-case assumption. Under such a scenario, we
believe its weighted-average debt to EBITDA would approach 8x;
-- The company generates moderately positive free cash flow, which
it uses to reduce its debt;
-- The company's stronger free cash flow or an infusion of equity
allows it to improve its liquidity position; and
-- S&P believes that the company's financial policies support
maintaining its improved leverage levels even after incorporating
potential acquisitions and shareholder rewards.
PEGASUS HOME FASHIONS: U.S. Trustee Appoints Creditors' Committee
-----------------------------------------------------------------
The U.S. Trustee for Regions Region 3 and 9 appointed an official
committee to represent unsecured creditors in the Chapter 11 cases
of Pegasus Home Fashions, Inc. and its affiliates.
The committee members are:
1. International Paper
Attn: Ana Hernandez
6400 Poplar Avenue, Tower 4 7-024
Memphis, TN 38197
Phone: (901) 419-1845
Email: ana.hernandez@ipaper.com
2. Stein Fibers, LTD.
Attn: Sidney (Chip) Stein
4 Computer Drive West, Suite 200
Albany, NY 12205
Phone: (518) 322-7216
Email: chip@steinfibers.com
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Pegasus Home Fashions
Pegasus Home Fashions Inc. manufactures house furnishing products.
The Company offers pillows, memory foam, quilts, bedspreads,
blankets, throws, sheet sets, pet beds, furniture protectors, and
mattress pads. Pegasus Home Fashions serves customers in the United
States.
Pegasus Home Fashions sought relief under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Del. Case No. 23-11236) on August 24,
2023. In the petition filed by Timothy Boates, as chief executive
officer, the Debtor reports estimated assets and liabilities
between $100 million and $500 million each.
The Debtor is represented by Michael R. Nestor, Esq., at Young
Conaway Stargatt & Taylor.
PERMIAN RESOURCES: Fitch Rates New Sr. Unsec. Notes Due 2032 'BB-'
------------------------------------------------------------------
Fitch Ratings has assigned a 'BB-'/Rating Watch Positive (RWP)
rating to Permian Resources Operating, LLC's (Permian Resources or
PR) proposed senior unsecured notes due 2032. PR intends to use the
proceeds from the notes to repay revolver borrowings and for
general corporate purposes.
PR's Long-Term Issuer Default Rating (IDR) and issue-level ratings
were placed on RWP on Aug. 22, 2023 following the announcement that
PR entered into a definitive agreement to acquire Earthstone
Energy, Inc. (ESTE; B+/RWP) and all related subsidiaries. The
transaction is an all-stock deal valued at approximately $4.5
billion, including the assumption of all ESTE debt.
Fitch will resolve the Rating Watch upon closing of the transaction
which is expected to result in at least a one-notch upgrade to the
IDR, revolver and senior unsecured ratings. Fitch expects the
transaction to close by YE 2023.
KEY RATING DRIVERS
Notes Issuance Improves Liquidity: Fitch believes PR's proposed
unsecured note offering will improve its liquidity profile given
proceeds are expected to reduce revolver borrowings at both PR and
ESTE post-close. PR is expected to have over 80% availability under
its $2.0 billion reserve-based lending credit facility (RBL)
post-close and Fitch does not expect any material borrowings on the
facility thereafter. The company's maturity profile remains clear
until 2026 which provides ample time for the company to generate
FCF, reduce gross debt or execute M&A.
Credit-Friendly Acquisition; Issuance Improves Liquidity: Fitch
views the proposed $4.5 billion transaction favorably given the
stock-for-stock exchange between PR and ESTE at a fixed exchange
ratio of 1.446 shares, representing an 8% premium based on the
20-day volume weighted average share prices. Both companies
currently exhibit fairly conservative balance sheets which leads to
Fitch forecasted pro forma 2024 leverage of 1.1x, consistent with
similar-sized peers. The improved pro forma FCF profile will also
allow for continued debt reduction and accelerated shareholder
returns.
Enhanced Permian Footprint: The proposed acquisition will
materially enhance PR's size and scale with pro forma Permian net
acres of approximately 400,000, primarily in the Delaware, total
production of approximately 300 Mboepd (46% oil) and adds
significant core inventory in the Delaware basin which immediately
competes for capital. PR will retain its status as a pure-play
Permian producer which should drive operational improvements,
including improved drilling and completion efficiencies, lower
operating costs and G&A benefits, which should improve overall
returns.
Synergy Potential; Strong FCF: Fitch believes synergies associated
with the deal are achievable by YE 2024. Management has identified
approximately $175 million of estimated annual synergies, including
$115 million stemming from operational efficiencies and cost
savings, $30 million in G&A synergies and $30 million in cost of
capital savings via refinancing opportunities for ESTE's notes once
callable. Fitch believes the reduced cost structure should improve
post-base dividend FCF generation, which Fitch currently estimates
at over $500 million in 2024 at its $70/bbl WTI price assumption.
Adequate Hedge Profile: Fitch believes PR's hedge book supports
further reductions of the RBL and provides adequate downside
protection for the company's dividend. PR is currently hedging
approximately 30% of its 2H23 oil production at a weighted average
floor price of $82 WTI in addition to approximately 30% of its
natural gas production. The company's 2024 hedge coverage is
currently minimal, but Fitch expect management to increase 2024
hedge coverage to approximately 30% by transaction close.
Balanced Shareholder Returns: Management remains committed to
returning at least 50% of its post-base dividend FCF to
shareholders via variable dividends and share repurchases.
Post-close, PR plans to increase its quarterly base dividend by 20%
to $0.06/share and Fitch expects sustainable dividend growth over
the medium to long term. Fitch believes the dividend program is
supported by the company's asset, hedging and FCF profiles and also
provides flexibility to further strengthen the balance sheet over
time.
DERIVATION SUMMARY
PR's pro forma production profile of approximately 300 Mboepd (46%
oil) compares similarly to Civitas Resources, Inc. (BB/Positive;
270-290 pro forma the Hibernia and Tap Rock transactions) and
Endeavor Energy Resources, L.P. (BBB-/Stable; 258 Mboepd in 2Q22),
is larger than Murphy Oil Corporation (BB+/Stable; 191 Mboepd as of
2Q23), but trails APA Corporation (BBB-/Stable; 399 Mboepd as of
2Q23). The company has historically maintained Fitch-calculated
unhedged cash netbacks around the Permian peer average, which
should improve following operational enhancements and execution on
synergies.
Fitch forecasts 2024 pro forma leverage of approximately 1.1x,
which is consistent with Fitch's E&P peer group and could further
improve following debt reduction.
KEY ASSUMPTIONS
- WTI (USD/bbl) of $75 in 2023, $70 in 2024, $65 in 2025 and $60 in
2026 and $57 thereafter;
- Henry Hub (USD/mcf) of $3.00 in 2023, $3.50 in 2024, $3.00 in
2025 and $2.75 thereafter;
- Base interest rates applicable to the company's outstanding
variable rate debt obligations reflects current SOFR forward
curve;
- Proposed acquisition closes as contemplated by YE 2023;
- Single-digit production growth throughout the forecast;
- Growth-linked capex throughout the rating case.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Fitch expects to resolve the RWP upon completion of the
contemplated transactions under the proposed terms;
- Average daily production approaching 175Mboepd while maintaining
economic inventory and reserve life;
- Realization of operational savings that improves unit costs,
netbacks and enhances FCF generation;
- Mid-cycle EBITDA leverage sustained below 2.0x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Inability to generate FCF and failure to reduce RBL borrowings
that materially erodes the liquidity profile;
- Loss of operational momentum leading to average daily production
approaching 125Mboepd;
- Deviation from stated conservative financial and capital
allocation policy;
- Mid-cycle EBITDA leverage sustained above 2.5x.
LIQUIDITY AND DEBT STRUCTURE
Improved Liquidity: Fitch expects PR's pro forma liquidity profile
will improve following the proposed note issuance given proceeds
will be used to reduce RBL borrowings at PR and ESTE. Management
has secured an additional $500 million of commitments from lenders
which will increase the pro forma aggregate commitment amount from
$1.5 billion to $2.0 billion post-close. Fitch expects the
company's credit facility will be less than 20% drawn at close and
is further supported by Fitch's forecast of over $500 million of
post-base dividend FCF in 2024.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
ISSUER PROFILE
Pro forma the announced Earthstone acquisition, PR will remain a
pure-play Permian basin operator with approximately 400,000 total
net acres and 300 Mboepd of oil-weighted production.
Entity/Debt Rating Recovery
----------- ------ --------
Permian Resources
Operating, LLC
senior
unsecured LT BB- New Rating RR4
PH BEAUTY III: Moody's Raises CFR to Caa1, Outlook Stable
---------------------------------------------------------
Moody's Investors Service upgraded pH Beauty Holdings III, Inc.'s
Corporate Family Rating to Caa1 from Caa2, and its Probability of
Default Rating to Caa1-PD from Caa2-PD. Moody's also upgraded the
company's senior secured first lien credit facility ratings to B3
from Caa1, and its senior secured second lien term loan rating to
Caa3 from Ca. The rating outlook is stable.
The upgrades reflect pH Beauty's improved operating performance and
better liquidity, including positive free cash flow and successful
revolving credit facility extension to June 2025, though the size
of the revolver is reduced to $15 million from $25 million
previously. pH Beauty's improved performance was primarily driven
by easing freight costs, recovery in cosmetic accessories, and
recent category expansion to skincare with its Byoma brand.
Upgrades:
Issuer: pH Beauty Holdings III, Inc.
Corporate Family Rating, Upgraded to Caa1 from Caa2
Probability of Default Rating, Upgraded to Caa1-PD from Caa2-PD
Backed Senior Secured 1st Lien Bank Credit Facility, Upgraded to
B3 from Caa1
Backed Senior Secured 2nd Lien Bank Credit Facility, Upgraded to
Caa3 from Ca
Outlook Actions:
Issuer: pH Beauty Holdings III, Inc.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
The Caa1 CFR reflects pH Beauty's small scale, improved but still
weak credit metrics including a high debt-to-EBITDA leverage at
7.8x for the 12-month ending June 30, 2023, and refinancing risk.
Moody's expects pH Beauty's debt-to-EBITDA to decline to below 7.0x
in the next 12-18 months as the company continues to introduce new
products, expand its distribution channels, and grow its
international business. Moody's views the company's risk of a debt
restructuring over the next year has declined with the rebound in
earnings and improved liquidity with the revolver paydown and
extension providing the company with some leeway to execute its
growth initiatives. Nevertheless, refinancing risk remains elevated
and the cost of addressing the 2025 and 2026 maturities could raise
cash interest and contribute to negative free cash flow that is not
be manageable at current earnings levels. Further earnings
improvement or an equity injection may thus be necessary to avoid a
distressed exchange or other restructuring. The maturities consist
of a $15 million revolver that expires in June 2025, a $270 million
term loan that matures in September 2025 and a $70 million second
lien term loan that matures in September 2026.
The majority of pH Beauty's products (besides Byoma) are not
mainstream beauty categories such as skincare and color cosmetics,
and Moody views those accessories are more discretionary. Consumers
are more likely to cut spending on beauty tools/accessories such as
makeup brushes, as well as spending on sunless tanning products and
bath accessories in an economic downturn. Moreover, the cosmetic
accessories and facial skin care industries are highly competitive
with many branded product companies that are significantly larger,
more diverse, financially stronger, and which have much greater
investment capacity. pH Beauty's rating is supported by the
company's strong brand name recognition in niche markets,
recovering demand in beauty and cosmetics, and the company's recent
category expansion to skincare.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's view that pH Beauty will
continue to improve its credit metrics over the next 12-18 months,
including reducing its debt-to-EBITDA to below 7x. Moody's also
expects the company to generate modest free cash flow and maintain
at least adequate liquidity over the next year.
The ratings could be downgraded if earnings do not continue to
improve or if pH Beauty's liquidity weakens, including failure to
generate positive free cash flow or proactively address the 2025
and 2026 maturities. A downgrade could also occur if the risk of a
distressed exchange or other debt restructuring increases for any
reason, or if recovery prospects weaken.
The ratings could be upgraded if pH Beauty materially improves its
operating performance and reduces its financial leverage, such that
debt-to-EBITDA sustained below 6.0x. In addition, the company would
need to successfully address its 2025 and 2026 maturities at a
manageable interest cost that allows the company to generate
consistent and stronger free cash flow.
The principal methodology used in these ratings was Consumer
Packaged Goods published in June 2022.
pH Beauty is a designer of cosmetic accessories, bath accessories,
sunless tanning and facial skin care products. Key brands include
Real Techniques, EcoTools, Freeman, Tan-luxe, Isle of Paradise,
Tanologist, and BYOMA. Yellow Wood Partners acquired the company in
2017 and the company acquired Paris Presents in 2018. pH Beauty
generates roughly $300 million in annual revenues.
PLATINUM BEAUTY: Files Emergency Bid to Use Cash Collateral
-----------------------------------------------------------
Platinum Beauty Bar and Spa, LLC asks the U.S. Bankruptcy Court for
the Middle District of Georgia, Macon Division, for authority to
use cash collateral on an emergency basis to continue its
operations in accordance with the proposed budget.
The Debtor proposes to use cash collateral for general operational
and administrative expenses.
The Debtor took out a loan backed by the U.S. Small Business
Administration to purchase a building and begin a buildout in 2021
and hoped to open in early 2022. Just as the Debtor began
renovating the building, supply chain shortages and the
skyrocketing price of lumber put them significantly behind schedule
and over budget. The Debtor was finally able to open in December of
2022. The Debtor has been successful since opening, but its SBA
loan contained an adjustable rate and rising interest rates meant
that the Debtor's debt service payment doubled since the inception
of the loan.
As a result of all of this, the Debtor was unable to make its debt
service payments and the bank instituted foreclosure proceedings.
The Debtor is a borrower with Citizens Bank on an SBA loan. The
Lender asserts a security interest in the Debtor's tangible and
intangible personal property pursuant to the Loan Agreement and UCC
Financing Statement No. 122-2021-001576 filed with the Rockdale
County, Georgia Clerk of Superior Court on September 14, 2021. The
Debtor asserts the balance owed to the Lender is approximately $1.1
million.
To the extent that any interest that the Lender may have in the
cash collateral is diminished, the Debtor proposes to grant the
Lender a replacement lien in post-petition collateral of the same
kind, extent, and priority as the liens existing pre-petition,
except that the Adequate Protection Lien will not extend to the
proceeds of any avoidance actions received by the Debtor or the
estate pursuant to chapter 5 of the Bankruptcy Code.
A copy of the motion is available at https://urlcurt.com/u?l=GY2S6P
from PacerMonitor.com.
About Platinum Beauty Bar and Spa, LLC
Platinum Beauty Bar and Spa, LLC is a full-service spa in Conyers,
Georgia. The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Ga. Case No. 23-51222) on September 1,
2023. In the petition signed by Rebecca Davis, sole member, the
Debtor disclosed up to $10 million in both assets and liabilities.
William Rountree, Esq., at Rountree, Leitman, Klein & Geer, LLC,
represents the Debtor as legal counsel.
POLARIS OPERATING: Taps Okin Adams Bartlett Curry as Legal Counsel
------------------------------------------------------------------
Polaris Operating, LLC and its affiliates seek approval from the
U.S. Bankruptcy Court for the Southern District of Texas to employ
Okin Adams Bartlett Curry, LLP as counsel.
The firm will render these services:
(a) advise the Debtors with respect to their rights, duties,
and powers in the Chapter 11 cases;
(b) assist and advise the Debtors in their consultations
relative to the administration of the Chapter 11 cases;
(c) assist the Debtors in analyzing the claims of their
creditors and in negotiating with such creditors;
(d) assist the Debtors in the analysis of and negotiations
with any third-party concerning matters relating to, among other
things, the terms of a plan of reorganization or sale of
substantially all of the Debtors' assets;
(e) represent the Debtors at all hearings and other
proceedings;
(f) review and analyze all applications, orders, statements of
operations and schedules filed with the court and advise the
Debtors as to their propriety;
(g) assist the Debtors in preparing pleadings and applications
as may be necessary in furtherance of the Debtors' interests and
objectives; and
(h) perform such other legal services as may be required and
are deemed to be in the interests of the Debtors in accordance with
the Debtors' powers and duties as set forth in the Bankruptcy
Code.
The hourly rates of the firm's counsel and staff are as follows:
Christopher Adams, Partner $700
John Thomas Oldham, Associate $495
J. Kelley Killorin Edwards, Associate $425
Legal Assistants $140
In addition, the firm will seek reimbursement for expenses
incurred.
Okin Adams received an initial retainer from Debtors in the total
amount of $100,000.
As of the petition date, Okin Adams was not owed any fees and
expenses by the Debtors and is holding $29,147.50 as a remaining
retainer in the client trust account.
Christopher Adams, Esq., a partner at Okin Adams, 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:
Christopher Adams, Esq.
Okin Adams Bartlett Curry LLP
1113 Vine Street, Suite 240
Houston, TX 77002
Telephone: (713) 228-4100
Facsimile: (346) 247-7158
Email: cadams@okinadams.com
About Polaris Operating
Polaris Operating, LLC and affiliates are privately held
independent oil and gas companies focused on acquiring, optimizing,
and developing conventional oil and gas properties with
redevelopment and new development opportunities. The Debtors' core
area of operations is in the Texas Panhandle, specifically in
Moore, Potter and Roberts counties, where they own and operate
hundreds of shallow oil and gas wells with a significant amount
infrastructure including gathering systems, power lines, disposal
wells, workover rigs and water trucks.
Polaris Operating, LLC and affiliates sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Texas Lead Case
No. 23-32810) on July 28, 2023. In the petition signed by
Christopher Czuppon, chief executive officer, Polaris Operating
disclosed $10 million to $50 million in both assets and
liabilities.
Judge Christopher M. Lopez oversees the cases.
The Debtors tapped Okin Adams Bartlett Curry LLP as counsel and
Stout Risius Ross, LLC as restructuring advisor. Donlin, Recano &
Company, Inc. is the notice, claims and balloting agent.
POLARIS OPERATING: Taps Stout Risius Ross as Restructuring Advisor
------------------------------------------------------------------
Polaris Operating, LLC and its affiliates seek approval from the
U.S. Bankruptcy Court for the Southern District of Texas to employ
Douglas Brickley as chief restructuring officer and Stout Risius
Ross, LLC as restructuring advisor.
Mr. Brickley as CRO will render these services:
(a) negotiate the terms of any debtor-in-possession financing
or agreement regarding the use of cash collateral on behalf of the
Debtors;
(b) investigate and prepare the Debtors' go-forward business
and restructuring strategies;
(c) direct and confer with all retained estate professionals;
(d) communicate with creditors of the Debtors and meeting with
representatives of such constituencies;
(e) prepare statements of financial affairs, schedules, first
day motions and other regular motions and reports required by the
court or which Debtors are otherwise obligated to prepare and
provide;
(f) review payments or transfers by or for the benefit of the
Debtors to ensure compliance with the Bankruptcy Code and
applicable orders of the court;
(g) negotiate bidding procedures and advise the Debtors on the
terms of any proposed sale of their assets;
(h) formulate and prosecute any plan of reorganization or
liquidation for the Debtors;
(i) retain additional estate professionals as the CRO deems
advisable in furtherance of the foregoing, subject to the
requirements of the Bankruptcy Code and Bankruptcy Rules; and
(j) take any and all other actions that are necessary or
appropriate to manage and operate the Debtors pursuant to the
Engagement Letter, the Bankruptcy Code, and applicable orders of
the court.
Stout as restructuring advisor will render these services:
(a) assist in the review of reports or filings as required by
the court or the U.S. Trustee;
(b) review the Debtors' financial information;
(c) review and analyze the reporting regarding cash collateral
and any debtor-in-possession financing arrangements and budgets;
(d) assist with reviewing any potential cost containment
opportunities proposed by the Debtors;
(e) assist with reviewing any potential asset redeployment
opportunities proposed by the Debtors;
(f) review and analyze assumption and rejection issues
regarding executory contracts and leases;
(g) review and analyze the Debtors' proposed business plans
and the business and financial condition of the Debtors generally;
(h) assist in evaluating reorganization strategy and
alternatives available;
(i) review and analyze the Debtors' financial projections and
assumptions;
(j) review and analyze enterprise, asset, and liquidation
valuations;
(k) assist in preparing documents necessary for confirmation
of any plan, proposed asset sales, and proposed use of cash and/or
financing;
(l) advise and assist the Debtors in negotiations and meetings
with creditors and other parties-in-interest;
(m) review and provide analysis on potential tax consequences
to the bankruptcy estates of any reorganization and/or proposed
transactions;
(n) assist with the claims resolution procedures;
(o) provide forensic accounting and litigation consulting
services and expert witness testimony regarding confirmation and/or
transactional issues, avoidance actions or other matters; and
(p) other such functions as requested by the Debtors to assist
in the Chapter 11 case.
The hourly rates of the firm's professionals are as follows:
Managing Director $675 - $750
Director $520 - $575
Manager/Senior Manager $395 - $450
Analyst/Associates $300 - $345
Administrative Personnel $125 - $175
In addition, the firm will seek reimbursement for expenses
incurred.
On July 24, 2023, Stout received an initial retainer from the
Debtors in the total amount $50,000.
Mr. Brickley 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:
Douglas J. Brickley
Stout Risius Ross, LLC
1000 Main Street, Suite 3200
Houston, TX 77002
Telephone: (713) 225-9580
Facsimile: (713) 225-9588
Email: dbrickley@stout.com
About Polaris Operating
Polaris Operating, LLC and affiliates are privately held
independent oil and gas companies focused on acquiring, optimizing,
and developing conventional oil and gas properties with
redevelopment and new development opportunities. The Debtors' core
area of operations is in the Texas Panhandle, specifically in
Moore, Potter and Roberts counties, where they own and operate
hundreds of shallow oil and gas wells with a significant amount
infrastructure including gathering systems, power lines, disposal
wells, workover rigs and water trucks.
Polaris Operating, LLC and affiliates sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Texas Lead Case
No. 23-32810) on July 28, 2023. In the petition signed by
Christopher Czuppon, chief executive officer, Polaris Operating
disclosed $10 million to $50 million in both assets and
liabilities.
Judge Christopher M. Lopez oversees the cases.
The Debtors tapped Okin Adams Bartlett Curry LLP as counsel and
Stout Risius Ross, LLC as restructuring advisor. Donlin, Recano &
Company, Inc. is the notice, claims and balloting agent.
PORTUGUESE BEND: Hires Kogan Law Firm APC as Counsel
----------------------------------------------------
Portuguese Bend Distilling, LLC seeks approval from the U.S.
Bankruptcy Court for the Central District of California to employ
Kogan Law Firm, APC as counsel.
The firm will provide these services:
a. advise the Debtor regarding matters of bankruptcy law,
including the rights and remedies of the Debtor in regard to its
assets and with respect to the claims of creditors;
b. advise the Debtor with respect to its rights, powers, duties
and obligations as a debtor-in-possession in the administration of
the Bankruptcy Case, the management of its business affairs and the
management of its properties or other assets;
c. advise and assist the Debtor with respect to compliance with
the requirement of the U.S. Trustee;
d. represent the Debtor in any proceedings or hearings in the
Bankruptcy Case or before the U.S. Trustee;
e. prepare and file pleadings, applications, motions and other
paper and conduct examinations incidental to administration of the
Chapter 11 Case;
f. advise and assist the debtor-in-possession in the
negotiation, formulation, presentation, confirmation and
implementation of a Chapter 11 plan of reorganization and any and
all matters relating thereto; and
g. perform any and all other legal services as requiested by the
Debtor in connection with the Chapter 11 case.
The firm will be paid at these rates:
Michael Kogan, Esq. $600 per hour
Associate $350 to $400 per hour
Paralegals $260 to $320 per hour
The Debtor paid the firm a retainer of $50,000.
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Michael Kogan, Esq., a principal of Kogan Law Firm, 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:
Michael S. Kogan, Esq.
KOGAN LAW FIRM, APC
1849 Sawtelle Blvd., Suite 700
Los Angeles, CA 90025
Tel: (310) 954-1690
Email: mkogan@koganlawfirm.com
About Portuguese Bend Distilling, LLC
Portuguese Bend Distilling, LLC operates a bar, restaurant and
craft distillery at 300 N. Promenade, Long Beach, Calif.
The Debtor filed Chapter 11 petition (Bankr. C.D. Calif. Case No.
23-15416) on Aug. 23, 2023, with $1 million to $10 million in both
assets and liabilities. Judge Vincent P. Zurzolo oversees the
case.
Michael S. Kogan, Esq., at Kogan Law Firm, APC serves as the
Debtor's bankruptcy counsel.
PRIZE MANAGEMENT: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Prize Management, LLC
PO Box 758
Rich Square, NC 27869
Chapter 11 Petition Date: September 14, 2023
Court: United States Bankruptcy Court
Eastern District of North Carolina
Case No.: 23-02681
Debtor's Counsel: William P. Janvier, Esq.
STEVENS MARTIN VAUGHN & TADYCH, PLLC
2225 W Millbrook Road
Raleigh, NC 27612
Tel: (919) 582-2300
Email: wjanvier@smvt.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by Alton Williams, Jr., 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/CXCANGY/Prize_Management_LLC__ncebke-23-02681__0001.0.pdf?mcid=tGE4TAMA
PROAMPAC PG: Moody's Rates Amended 1st Lien Term Loan 'B3'
----------------------------------------------------------
Moody's Investors Service assigned a B3 rating to ProAmpac PG
Borrower LLC's amended & extended senior secured first lien term
loan and a B3 rating to the amended & extended senior secured first
lien revolving credit facility. ProAmpac's B3 corporate family
rating, B3-PD probability of default rating, and all other ratings
are unchanged. The outlook is stable.
The transaction extends the maturity of ProAmpac's term loan and
the expiration of its revolver from 2025 to 2028, which Moody's
views as credit positive as it extends the company's maturity
profile. ProAmpac expects to use excess proceeds to reduce
outstanding borrowings on the revolving credit facility. The next
nearest maturity is $100 million of first lien term notes due
November 2025 (unrated).
Assignments:
Issuer: ProAmpac PG Borrower LLC
Backed Senior Secured 1st Lien Term Loan, Assigned B3
Backed Senior Secured 1st Lien Revolving Credit Facility, Assigned
B3
RATINGS RATIONALE
ProAmpac's B3 CFR reflects high leverage, an aggressive financial
policy, and execution risk related to its acquisitive growth
strategy. Further challenges to the rating include operating in the
competitive, fragmented packaging industry, which can make margin
expansion challenging without meaningful investment in the
business. Additionally, only 50-55% of the business is under
long-term contracts, which means lower switching costs for
remaining customers.
The rating also reflects a high percentage of ProAmpac's sales to
relatively stable end markets, including food and beverage, lawn
and garden, e-commerce, and healthcare (-80% of sales). ProAmpac
has long-term customer relationships with many blue-chip names and
will continue its focus on producing higher margin products that
serve stable customer end markets.
The stable outlook reflects the expectation of slowing, but stable
growth in most of ProAmpac's end markets, which will support modest
de-leveraging and solid free cash flow generation.
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
Governance considerations are material to ProAmpac's rating.
Governance factors Moody's considers for ProAmpac include its track
record of an aggressive growth strategy and maintenance of very
high leverage. In recent history, the company completed several
debt-funded acquisitions that have raised integration and execution
risks.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if ProAmpac fails to improve credit
metrics or engages in material debt funded acquisitions or dividend
distributions. Specifically, the rating could be downgraded if
total adjusted debt to EBITDA is sustained above 6.5x, EBITDA to
interest coverage is below 2.0x, and free cash flow to debt is
below 2.5%.
An upgrade to the ratings would be dependent upon an improvement in
credit metrics, employment of a less aggressive financial policy
and the maintenance of good liquidity. Specifically, the ratings
could be upgraded if total adjusted debt to EBITDA is sustained
below 5.75x; EBITDA to interest coverage is above 3.0x; and free
cash flow to debt is above 3.5%.
Headquartered in Cincinnati, Ohio, ProAmpac PG Borrower LLC is a
manufacturer of flexible plastic packaging products serving
customers primarily in the food, retail, healthcare, and industrial
end markets. ProAmpac is majority owned and controlled by PPC
Partners.
The principal methodology used in these ratings was Packaging
Manufacturers: Metal, Glass and Plastic Containers published in
December 2021.
PROAMPAC PG: S&P Affirms 'B-' Issuer Credit Rating, Outlook Stable
------------------------------------------------------------------
S&P Global Ratings affirmed its 'B-' issuer credit rating on
flexible packaging solutions company ProAmpac PG Intermediate LLC.
At the same time, S&P affirmed its 'B-' issue-level rating on the
company's senior secured credit facilities, which comprise a $350
million revolving credit facility and a $2.085 billion first-lien
term loan. The '3' recovery rating is unchanged.
The stable outlook reflects S&P's expectation that ProAmpac will
maintain positive free operating cash flow (FOCF) and reduce its
leverage to the 7.0x-7.5x range by expanding its sales pipeline,
successfully integrating its ongoing acquisitions, and improving
its operating margins.
ProAmpac plans to amend and extend (A&E) its First-lien term loan
due November 2025 to September 2028. Additionally, the company
plans to extend the maturity of its $350 million revolving credit
facility to June 2028 from August 2025.
The A&E transaction will push out ProAmpac's next debt maturity to
2028, which eliminates its near term refinancing risk. As part of
the transaction, the company will also pay down $20 million of the
outstanding borrowings on its revolving credit facility, which will
reduce its post-transaction balance to $53 million. S&P said,
"While ProAmpac will take on minimal incremental debt from the
transaction, the higher interest expense on the new debt will
increase the burden on its cash flows, though we forecast it will
generate positive FOCF of $20 million-$30 million in 2023 on its
improving operating performance, limited merger and acquisition
(M&A) activity, and neutral working capital."
ProAmpac outperformed S&P's previous EBITDA and free-cash-flow
expectations by focusing on capital preservation and balance sheet
management in the second half of 2022. This heightened focus helped
it offset weaker volumes amid destocking trends that hit the sector
in the second half of 2022. ProAmpac improved its working capital
through by selling down its inventory and halting M&A activity,
generating S&P Global Ratings-adjusted FOCF of $23 million for full
year 2022. This outperformance improved the company's credit
metrics, including reducing its leverage to just over 8x in 2022.
In a leverage-neutral transaction, ProAmpac also issued a $100
million first-lien term loan in the first quarter to pay down the
outstanding balance on its revolver.
S&P said, "We expect ProAmpac will continue to deleverage and
improve its credit metrics through 2023 as its volume declines
reverse in the second half of the year. Industry-wide destocking
significantly affected the company's volumes in the first half of
the year, though we expect some normalization through the back
half, which will likely support an improvement in its credit
metrics. ProAmpac's volumes have been more affected by de-stocking
in certain segments than in others. While the company's lawn and
garden segment saw weaker demand following a peak during the
coronavirus pandemic, it was able to partially offset this weakness
with the resilient demand in its flexible packaging and fiber
divisions. We forecast ProAmpac will improve its leverage to the
7.0x-7.5x range in 2023 supported by its improving operating
performance as the headwinds from volatile resin prices, supply
chain issues, and labor shortages continue to reverse.
"The stable outlook reflects our expectation that ProAmpac will
maintain positive FOCF and reduce its leverage to the 7.0x-7.5x
range by expanding its sales pipeline, successfully integrating its
ongoing acquisitions, and improving its operating margins.
"We could lower our ratings on ProAmpac if its capital structure
becomes unsustainable. Additionally, we could lower the rating if a
prolonged decline in its operating performance constrains its
liquidity position such that its interest coverage falls below
1.5x, it generates negative FOCF on a sustained basis and its cash
flows are insufficient to meet its ongoing debt obligations, or it
breaches the springing senior net leverage covenant and we see no
near-term prospects for a remedy.
"We could raise our ratings on ProAmpac if it reduces its debt
leverage below 7.0x on a sustained basis while generating
consistent, positive FOCF. In conjunction with any improvement in
its credit metrics, we would expect the company and its sponsor to
maintain financial policies that support a higher rating after
incorporating potential leveraging events, such as shareholder
rewards or acquisitions."
PROOFPOINT INC: Fitch Affirms LongTerm IDR at 'B', Outlook Stable
-----------------------------------------------------------------
Fitch Ratings has affirmed Proofpoint, Inc.'s Long-Term Issuer
Default Rating (IDR) at 'B'. The Rating Outlook is Stable. Fitch
has also affirmed the $300 million secured revolving credit
facility (RCF) and $2.6 billion first-lien secured term loan at
'BB-'/'RR2'. The $800 million second-lien secured term loan is not
being rated.
Fitch's ratings are supported by Proofpoint's highly recurring
revenues that translate into resilient cash flow generation. As a
private equity owned company, Fitch expects financial leverage to
remain elevated, as equity owners optimize ROE over debt reduction.
Fitch estimates gross leverage to be approximately 6.6x in 2023 and
declining to below 6.0x in 2024, driven by EBITDA growth due to
continuing revenue growth and implementation of operational
optimization. The operating profile and financial metrics are
consistent with a 'B' IDR.
KEY RATING DRIVERS
Leader in Niche Cybersecurity Industry: In the highly fragmented
enterprise cybersecurity industry, Proofpoint has been a recognized
leader in enterprise email security and compliance with products
that protect against threats across email, web, networks, cloud
applications, data governance and data retention enforcement.
Secular Tailwind Supporting Growth: Proofpoint benefits from the
growing cybersecurity industry, which is forecasted to have CAGR in
the teens in a normal economic environment. The importance of
cybersecurity has been elevated in recent years with increasing
complexity of IT networks and continued digitalization of
information. High profile cybersecurity breaches have also
heightened awareness for more comprehensive cybersecurity
solutions. Fitch believes these factors will benefit subsegment
leaders such as Proofpoint as part of the overall solution.
Highly Recurring Revenue with High Retention: Over 95% of
Proofpoint's revenue is recurring in nature, with over 90% gross
retention rates. The strong revenue retention implies sticky
products supported by Proofpoint's platform of cybersecurity
products, which solidify its market position. The high revenue
retention and recurring revenue enhances the predictability of
Proofpoint's financial performance and maximizes the lifetime value
of customers.
Diversified Customer Base: Proofpoint serves approximately 8,000
customers across diverse industry verticals including financial
services, healthcare, TMT, industrial, and manufacturing. The broad
exposure effectively reduces Proofpoint's customer concentration
risks and reduces revenue volatility through economic cycles. Fitch
views such characteristics favorably as it reduces
industry-specific risks.
Operational Improvements: Since the acquisition by Thoma Bravo in
2021, the company has undergone significant operational
optimization to enhance its operational efficiency to levels
comparable to industry peers. Through 2022, the company has
successfully executed on a significant portion of the plan and is
tracking inline against expectations. This has substantially
reduced the risks as the company continues to execute on the
remaining plan. Fitch expects improvements in operational
performance should lead to FCF margin expansion approaching
industry peers.
Elevated Leverage Profile with Deleveraging Capacity: Fitch
estimates Proofpoint's gross leverage will be elevated at 6.6x for
2023, as the company executes on its operational improvements.
Fitch forecasts the gross leverage to decline to below 6.0x in
2024. Despite the further deleveraging capacity projected beyond
2023 supported by the company's FCF generation, Fitch expects
limited deleveraging as Proofpoint's private equity ownership would
likely prioritize ROE maximization over debt prepayment. These
could include acquisitions to broaden Proofpoint's market position
and dividend payments.
DERIVATION SUMMARY
Proofpoint operates in the sub-segment of the fragmented
cybersecurity industry. The broader enterprise security market has
been growing supported by greater awareness around security
breaches and the increasing complexity of IT networks and
applications. While the company had been growing at rates
significantly higher than industry average as a public company, its
profitability as measured by EBITDA and FCF margins had been below
those of industry peers. As part of the plan to be acquired by
Thoma Bravo in 2021, the company devised plan to execute on
operational efficiency improvements to close the profitability gap
with industry peers.
Within the broader enterprise security market, peers include Gen
Digital Inc. (BB+/Negative). Proofpoint has smaller scale and lower
EBITDA margins than Gen Digital Inc. Proofpoint also has higher
financial leverage.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Organic revenue growth in the mid-teens and decelerates to the
low-teens;
- EBITDA margins expanding to near comparable industry peers by
2023;
- Deferred RSU payments spread out between 2021-2028 with the
single year peak in 2022;
- Capex intensity of approximately 4% per year;
- Aggregate acquisitions totaling $550 million through 2026.
KEY RECOVERY RATING ASSUMPTIONS
- The recovery analysis assumes that Proofpoint would be
reorganized as a going-concern in bankruptcy rather than
liquidated.
- Fitch has assumed a 10% administrative claim. Going-Concern (GC)
Approach
- The GC EBITDA estimate reflects Fitch's view of a sustainable,
post-reorganization EBITDA level that should be approaching
industry norm while incorporating the risks associated with
necessary operational improvements, upon which Fitch bases the
enterprise valuation.
- An enterprise value (EV) multiple of 7x EBITDA is applied to the
GC EBITDA to calculate a post-reorganization EV. The choice of this
multiple considered the following factors:
- The median reorganization enterprise value/EBITDA multiple for
the 71 TMT bankruptcy cases that had sufficient information for an
exit multiple estimate to be calculated was 5.9x. Of these
companies, only three were in the Software sector: Allen Systems
Group, Inc.; Avaya, Inc.; and Aspect Software Parent, Inc., which
received recovery multiples of 8.4x, 8.1x, and 5.5x, respectively.
- The highly recurring nature of Proofpoint's revenue and mission
critical nature of the product support the high-end of the range.
- After applying the 10% administrative claim, adjusted EV of
$2.356 billion is available for claims by creditors resulting in
'BB-'/'RR2' recovery rating for the $2.6 billion secured first lien
debt.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Success to fully execute on planned operational improvements;
- Fitch's expectation of EBITDA leverage remaining below 5.5x;
- (CFO-capex)/debt above 8%.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Failure to fully execute on planned operational improvements;
- Fitch's expectation of EBITDA leverage remaining above 7x;
- (CFO-capex)/debt below 3% on a sustained basis;
- Negative revenue growth reflecting erosion in market position for
core products;
- EBITDA interest coverage sustained below 1.5x.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: The company's liquidity is projected to be
adequately supported by over $650 million cash on balance sheet at
the end of 1Q23, $300 million undrawn RCF, and projected FCF
generation after 2023 as operational improvement plans are
executed.
Debt Structure: Proofpoint has $2.6 billion of secured first lien
debt due 2028 and $800 million of secured second lien debt due
2029. Upon successful execution of operational efficiency
improvements, Fitch expects Proofpoint to generate ample FCF to
make its required debt payments.
ISSUER PROFILE
Proofpoint is a leading cybersecurity and compliance company
serving large and mid-sized organizations with a focus around
protecting employees from IT security threats and compliance risks.
The company's products are designed to be people-centric security
and compliance programs, and are primarily cloud-delivered.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Proofpoint, Inc. LT IDR B Affirmed B
senior secured LT BB- Affirmed RR2 BB-
PUERTO RICO: Syncora, Goldentree Seek Receiver to Repay Bondholders
-------------------------------------------------------------------
Michelle Kaske of Bloomberg News reports that GoldenTree Asset
Management and Syncora Guarantee are seeking a court-appointed
receiver for Puerto Rico's bankrupt power utility that would repay
bondholders as island officials aim to slash the agency's debt by
75%.
The firms, which manage or insure nearly $1 billion of the
utility's bonds, filed a notice of appeal to the US Court of
Appeals for the First Circuit court in Boston after Judge Laura
Taylor Swain, who is overseeing the bankruptcy of Puerto Rico's
Electric Power Authority, last month denied their request to lift a
stay and appoint a receiver.
About Puerto Rico
Puerto Rico is a self-governing commonwealth in association with
the United States. The chief of state is the President of the
United States of America. The head of government is an elected
Governor. There are two legislative chambers: the House of
Representatives, 51 seats, and the Senate, 27 seats. The
governor-elect is Ricardo Antonio "Ricky" Rossello Nevares, the son
of former governor Pedro Rossello.
In 2016, the U.S. Congress passed PROMESA, which, among other
things, created the Financial Oversight and Management Board and
imposed an automatic stay on creditor lawsuits against the
government, which expired May 1, 2017.
The members of the oversight board are: (i) Andrew G. Biggs, (ii)
Jose B. Carrion III, (iii) Carlos M. Garcia, (iv) Arthur J.
Gonzalez, (v) Jose R. Gonzalez, (vi) Ana. J. Matosantos, and (vii)
David A. Skeel Jr.
On May 3, 2017, the Commonwealth of Puerto Rico filed a petition
for relief under Title III of the Puerto Rico Oversight,
Management, and Economic Stability Act ("PROMESA"). The case is
pending in the United States District Court for the District of
Puerto Rico under case number 17-cv-01578. A copy of Puerto Rico's
PROMESA petition is available at
http://bankrupt.com/misc/17-01578-00001.pdf
On May 5, 2017, the Puerto Rico Sales Tax Financing Corporation
(COFINA) commenced a case under Title III of PROMESA (D.P.R. Case
No. 17-01599). Joint administration has been sought for the Title
III cases.
On May 21, 2017, two more agencies -- Employees Retirement System
of the Government of the Commonwealth of Puerto Rico and Puerto
Rico Highways and Transportation Authority (Case Nos. 17-01685 and
17-01686) -- commenced Title III cases.
U.S. Chief Justice John Roberts named U.S. District Judge Laura
Taylor Swain to preside over the Title III cases.
The Oversight Board has hired as advisors, Proskauer Rose LLP and
O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets as municipal investment
banker, and Ernst & Young, as financial advisor.
Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose LLP; and Hermann D. Bauer, Esq.,
at O'Neill & Borges LLC are onboard as attorneys.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains the case web site
https://cases.primeclerk.com/puertorico
Jones Day is serving as counsel to certain ERS bondholders.
Paul Weiss is counsel to the Ad Hoc Group of Puerto Rico General
Obligation Bondholders.
R&R PLASTERING: Seeks to Hire Alicia Macias, CPA as Accountant
--------------------------------------------------------------
R&R Plastering, Inc. seeks approval from the U.S. Bankruptcy Court
for the Central District of California to employ Alicia Macias, CPA
as accountant.
The firm's services include:
-- review monthly accounting statements;
-- prepare monthly accounting statements; and
-- assist the Debtor to accounting matter such as preparation of
income and expense reports, financial statements, tax returns and
other accounting services.
The firm will be paid at these rates:
Accounting Services $100 per hour
Bookkeeping Services $50 per hour
Administrative Work $50 per hour
The firm will charge a flat fee of $375 per return for business and
fiduciary returns.
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
As 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:
Alicia Marcias
14623 Hawthorne Blvd., Ste 405
Lawndale, CA 90260
Tel: (310) 973-8918
About R&R Plastering, Inc.
R&R Plastering, Inc., filed a Chapter 11 bankruptcy petition
(Bankr. C.D. Calif. Case No. 23-13739) on June 15, 2023, with as
much as $1 million in both assets and liabilities. Judge Sheri
Bluebond oversees the case.
The Debtor is represented by Anthony O. Egbase, Esq., at A.O.E. Law
Associates APC.
RIALTO BIOENERGY: Panel Hires Continental Economics as Consultant
-----------------------------------------------------------------
The official committee representing unsecured creditors of Rialto
Bioenergy Facility, LLC seeks approval from the U.S. Bankruptcy
Court for the Southern District of California to employ Continental
Economics, Inc. as valuation consultant.
Continental Economics will analyze and provide an expert report
reviewing the methodologies used in the valuation reports in
preparation for the valuation trial.
The firm will charge $595 per hour for the required professional
report, plus expenses.
Jonathan Lesser, Ph.D., a member of Continental Economics,
disclosed in a court filing that his firm is a "disinterested
person" pursuant to Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Jonathan A. Lesser, Ph.D.
Continental Economics, Inc.
16 Entranosa Lane, Edgewood, NM 87015
Telephone: (505) 286-1332
Mobile: (917) 975-5766
Email: info@continentalecon.com
About Rialto Bioenergy Facility
Rialto Bioenergy Facility, LLC owns and operates a multi-feedstock
bioenergy facility in Rialto, Calif., which converts organic waste,
such as food waste, yard waste, and biosolids into carbon-negative
renewable natural gas, with capability to also generate renewable
electricity and soil amendment or fertilizer. The facility, the
largest in North America and valued at $196.6 million, utilizes
anaerobic digestion technology to convert the organic waste
received from waste haulers into renewable natural gas.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Cal. Case No. 23-01467) on May 25,
2023, with $100 million to $500 million in both assets and
liabilities. Yaniv Scherson, vice president, signed the petition.
Judge Christopher B. Latham oversees the case.
The Debtor tapped Ron Bender, Esq., at Levene, Neale, Bender, Yoo
and Golubchik, LLP as bankruptcy counsel; B. Riley Securities, Inc.
as financial advisor; and GlassRatner Advisory & Capital Group, LLC
as valuation consultant.
UMB Bank, N.A. as Indenture Trustee is represented by Nahal
Zarnighian, Esq., at Ballard Spahr, LLP.
The U.S. Trustee for Region 15 appointed an official committee to
represent unsecured creditors in the Debtor's Chapter 11 case. The
committee tapped Brinkman Law Group, PC as legal counsel and
Continental Economics, Inc. as valuation consultant.
ROLL: BICYCLE: Wins Interim Cash Collateral Access
--------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Ohio, Eastern
Division, authorized roll: Bicycle Company, LLC to use cash
collateral on an interim basis in accordance with the budget.
The Debtor requires the use of cash collateral to fund their
operations.
Fifth Third Bank, National Association is the first lienholder. The
Other Lien Claimants are Glick.biz, LLC, Friedl Bohm and Tucker
Bohm.
As previously reported by the Troubled Company Reporter, the
obligations owed by the Debtors arise out of the Debtors' two debt
facilities with Fifth Third consists of: (i) a term loan facility
in the original principal amount of $950,000, dated November 30,
2021, and having an interest rate of 4.18% per annum, and (ii) a
revolving line of credit facility in the original principal amount
of $500,000, dated January 5, 2022, and having a monthly interest
rate of 0.230% in excess of the prime rate (which is presently
8.5%). As of the Petition Date, the outstanding balances on the
Fifth Third Term Loan and the Fifth Third LOC Loan were $747,384
and $496,077, respectively.
In 2016 and 2017, Bicycle entered into a series of agreements with
three parties: Friedl Bohm, Tucker Bohm and Glick.biz, LLC, whereby
each of the Investor Noteholders lent varying sums of monies to
roll: Bicycle under separate secured credit facilities which were
evidenced by a series of promissory notes issued in 2016 and 2017.
To secure the obligations of roll: Bicycle under the Original
Notes, roll: Bicycle executed and delivered to the Investor
Noteholders a Note Purchase and Security Agreement dated October
13, 2016 and a Note Purchase and Security Agreement dated October
26, 2017. Pursuant to the Purchase Agreements and to secure its
obligations under the Original Notes, roll: Bicycle granted the
Investment Noteholders a security interest in virtually all assets
of Bicycle.
As of the Petition Date, the amounts owed to each of the Investor
Noteholders by roll: Bicycle are: $76,402 to T. Bohm, $152,079 to
F. Bohm, and $152,079 to Glick.
The court said that the Debtors are authorized to make the adequate
protection payments to Fifth Third in the amount set forth in the
Budget during the Second Interim Period, which amounts have been
adjusted by agreement of the Debtors and Fifth Third.
Notwithstanding the foregoing, nothing in the order prevents either
the Debtors or Fifth Third from altering their position or
proposing a new amount of adequate protection for a period beyond
the Second Interim Period.
A final hearing on the matter is set for October 6, 2023 at 10
a.m.
A copy of the court's order and the Debtor's budget is available at
https://urlcurt.com/u?l=By78uO from PacerMonitor.com.
The Debtor projects total beginning cash balance, on a weekly
basis, as follows:
$117,379 for the week ending September 16, 2023;
$188,440 for the week ending September 23, 2023; and
$203,334 for the week ending September 30, 2023.
About roll: Bicycle Company, LLC
roll: Bicycle Company, LLC sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. S.D. Ohio Case No. 2:23-bk-53016)
n August 31, 2023. In the petition signed by Stuart Hunter, chief
executive officer, the Debtor disclosed up to $10 million in both
assets and liabilities.
Judge John E. Hoffman, Jr. oversees the case.
James A. Coutinho, Esq., at Allen Stovall Neuman & Ashton LLP,
represents the Debtor as legal counsel.
ROYAL CARIBBEAN: Moody's Ups CFR to B1, Alters Outlook to Positive
------------------------------------------------------------------
Moody's Investors Service upgraded the ratings of Royal Caribbean
Cruises Ltd. including its corporate family rating to B1 from B2
and probability of default rating to B1-PD from B2-PD. Moody's also
upgraded Royal Caribbean's senior unsecured rating to B1 from B3,
backed senior unsecured rating to Ba3 from B2, and senior secured
rating to Ba1 from Ba3. There is no change to the company's
speculative grade liquidity rating of SGL-3. The outlook,
previously stable, was changed to positive.
"The upgrade to B1 reflects Moody's expectation that increased
capacity, stronger pricing and improved cost controls will enable
Royal Caribbean to lower debt/EBITDA to around 5x at the end of
2023," said Pete Trombetta, Moody's Vice President-Senior Analyst.
Royal Caribbean continues to use free cash flow to reduce its total
debt – the company paid down about $2 billion of debt this year
through the end of August using cash and cash flow. Improved cash
flow will be driven by demand strength, low double-digit net yield
improvement in 2023 compared to 2019 along with 8% capacity growth
in 2024.
The positive outlook reflects Moody's expectation that further
capacity growth and strong booking trends will enable Royal
Caribbean to reduce debt/EBITDA to below 4.5x by the end of 2024.
Upgrades:
Issuer: Royal Caribbean Cruises Ltd.
Corporate Family Rating, Upgraded to B1 from B2
Probability of Default Rating, Upgraded to B1-PD from B2-PD
Senior Unsecured Regular Bond/Debenture, Upgraded to B1 from B3
Backed Senior Unsecured Regular Bond/Debenture, Upgraded to Ba3
from B2
Senior Secured Regular Bond/Debenture, Upgraded to Ba1 from Ba3
Backed Senior Secured Regular Bond/Debenture, Upgraded to Ba1 from
Ba3
Affirmations:
Issuer: Royal Caribbean Cruises Ltd.
Commercial Paper, Affirmed NP
Outlook Actions:
Issuer: Royal Caribbean Cruises Ltd.
Outlook, Changed To Positive From Stable
RATINGS RATIONALE
Royal Caribbean's B1 corporate family rating reflects its solid
market position as the second largest global ocean cruise operator
based upon capacity and revenue. Further support comes from Royal
Caribbean's brand strength and good diversification by geography,
brand, and market segment. The company also benefits from the
favorable value proposition of a cruise vacation, as well as a
group of loyal cruise customers that collectively will support a
base level of demand. Several developments will help increase the
number of new to cruise customers including desireable new ships
with differntiated onboard offerings, itineraries that inlcude the
company's private island, CocoCay, and the development of
additional drive-to ports in the US, which enables more customers
to avoid the additional cost of flying to their cruise. Royal
Caribbean's ratings are constrained by the need for continued
strength in pricing and bookings in order to generate sufficient
free cash flow to materially reduce debt. Demand is highly seasonal
and capital intensity is also significant. Other risks include
customers' alternative vacation options, the cruise industry's
exposure to economic and industry cycles, weather-related incidents
and geopolitical events.
Royal Caribbean's liquidity is adequate with cash of about $725
million and an undrawn $3 billion revolver at June 30, 2023. $760
million of the company's revolver expires in April 2024 and the
balance expires in April 2025. The company's liquidity will be
constrained by the reduced commitment if it is not extended
further. The company is subject to fixed charge coverage and net
debt to capitalization maintenance covenants. Moody's expect the
company will maintain adequate covenant cushion over the next 12
months. The company's access to alternate sources of liquidity is
modest as the majority of its assets are pledged or support
guaranteed debt, although there remains the potential to sell some
ships or a brand.
The Ba1 senior secured rating, three notches above the corporate
family rating, reflects the substantial amount of unsecured debt
and claims in the capital structure. Of total debt and claims of
about $22 billion in Moody's Loss Given Default for
Speculative-Grade Companies methodology, about $20 billion is
unsecured. The Ba3 rating on the backed senior unsecured rating –
including a one notch positive override – reflects the guarantee
of RCI Holdings LLC. The B1 rating on the senior unsecured notes
reflects either their structural or effective subordination to the
secured debt in the capital structure.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if debt/EBITDA is maintained below
4.5x with EBITA/interest expense approaching 3x. The ratings could
be downgraded if the company's liquidity weakens or if Moody's
expects that debt/EBITDA will remain above 5.0x beyond 2024.
Royal Caribbean (operating under the name Royal Caribbean Group) is
a global vacation company that operates three wholly-owned cruise
brands, including Royal Caribbean International, Celebrity Cruises
and Silversea. Net revenue for the 12 months ended June 30, 2023
was about $9.5 billion.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
RVR DEALERSHIP: Moody's Cuts CFR & $800MM Secured Term Loan to B2
-----------------------------------------------------------------
Moody's Investors Service downgraded RVR Dealership Holdings, LLC's
("RV Retailer") corporate family rating to B2 from B1, its
probability of default rating to B2-PD from B1-PD and its $800
million senior secured term loan rating to B2 from B1. The outlook
remains stable.
The downgrades reflect Moody's expectation that RV Retailer's
lease-adjusted debt/EBITDA will remain elevated around 5.1x at the
end of 2024 as it recovers from discounting of overstocked RVs in
2023 with limited gross margin expansion going forward as consumer
demand remains tempered by high interest rates and persistent
inflation.
Downgrades:
Issuer: RVR Dealership Holdings, LLC
Corporate Family Rating, Downgraded to B2 from B1
Probability of Default Rating, Downgraded to B2-PD from B1-PD
Senior Secured Term Loan B, Downgraded to B2 from B1
Outlook Actions:
Issuer: RVR Dealership Holdings, LLC
Outlook, Remains Stable
RATINGS RATIONALE
RV Retailer's B2 CFR reflects Moody's view that business conditions
for RV retailing will remain challenging in 2023 as well as the
highly cyclical nature of RV demand. The B2 CFR also reflects RV
Retailer's projected modest interest coverage with lease-adjusted
EBIT-to-interest coverage trending down in 2023 to approximately
1.5x before recovering to about 2.3x in 2024. RV Retailer also has
a moderately high leverage profile with lease adjusted
debt-to-EBITDA expected by Moody's to peak at 7.3x in 2023, but to
recover in 2024 to about 5.1x. Moody's expects the improvement in
2024 credit metrics to be driven by a healthier supply environment
for new RVs that aligns more closely with underlying demand,
resulting in more stable, though still subdued, gross margins.
While subdued, Moody's expects new RV margins in 2024 to be
supported by OEM invoice price reductions and decontenting. In
response to the high demand for RVs experienced during the
pandemic, the RV industry overproduced 2022 model year RVs, which
began to negatively impact new RV profitability in late 2022, but
has become more pronounced in 2023 due to heavy discounting.
A reduction in operating expenses is also poised to benefit its
recovery in 2024 as RV Retailer's initiative to unify branding
across its dealership network under the Blue Compass RV banner will
largely be complete by the end of 2023 and incentive compensation
related to selling aged inventory will decline.
The B2 CFR is also supported by RV Retailer's solid market share as
the second largest RV retailer in a highly fragmented segment and
its diversified revenue streams between new and used vehicles,
finance & insurance and parts & service.
While Moody's expects RV Retailer to focus on prudently managing
its existing store base and inventories of new and used vehicles
over the next 12-18 months, the rating is constrained by governance
considerations, including the potential for debt-funded
acquisitions of RV dealerships and/or debt-funded dividends over
the longer term.
The stable outlook reflects Moody's expectation for adequate
liquidity and for a recovery in credit metrics in 2024, including
modestly positive free cash flow as the industry realigns supply
with demand.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if liquidity weakens for any
reason. The ratings could also be downgraded if there are operating
performance declines or if a more aggressive financial strategy is
adopted. Quantitatively, the ratings could be downgraded if
debt-to-EBITDA is sustained above 5.75x or EBIT/interest expense is
sustained below 1.75x.
The ratings could be upgraded if revenue and earnings grow
consistently and if at least good liquidity is maintained,
including sustained and solid positive free cash flow.
Quantitatively, the ratings could be upgraded if debt/EBITDA is
sustained below 4.5x and EBIT/interest expense is sustained above
3.0x through an industry cycle and RVR maintains financial policies
that support metrics at these levels.
Headquartered in Florida, RV Retailer operates 106 dealerships in
33 with a significant presence in Texas. The company is among the
top two RV dealership groups in the country. For the LTM period
ending June 30, 2023, revenue was approximately $3.0 billion. The
company is majority owned by Redwood Capital.
The principal methodology used in these ratings was Retail
published in November 2021.
S&G HOSPITALITY: Hires Carpenter Lipps LLP as Counsel
-----------------------------------------------------
S&G Hospitality, Inc. and its affiliates seek approval from the
U.S. Bankruptcy Court for the Southern District of Ohio to
Carpenter Lipps LLP as counsel.
The firm will provide these services:
a. advise the Debtors with respect to their rights, powers and
duties in this case;
b. advise and assist the Debtors in the preparation of their
petition, schedules, and statement of financial affairs;
c. assist and advisethe Debtors in connection with the
administration of this case;
d. analyze the claims of the creditors in these cases, and
negotiate with such creditors;
e. investigate the acts, conduct, assets, rights, liabilities
and financial condition of the Debtors and the Debtors' business;
f. advise and negotiate with respect to the sale of any or all
assets of the Debtors;
g. investigate, file and prosecute litigation of behalf of the
Debtors;
h. propose a plan of reorganization;
i. appear and represent the Debtors at hearings, conferences,
and other proceedings;
j. prepareand/or review motions, applications, orders, and other
filings filed with the Court;
k. institute or continue any appropriate proceedings to recover
assets of the estate; and
l. perform any and all such other legal services as may be
required that are in the best interest of the estate or its
creditors.
The firm will be paid at these rates:
David Beck, Partner $440 to $550 per hour
Joshua Peterson, Partner $320 to $400 per hour
Steven Oldham, Senior Managing Counsel $296 to $370 per hour
Scott Mackenzie, Associate $160 to $200 per hour
The firm will be paid a retainer in the amount of $50,000.
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
David Beck, a partner at Carpenter Lipps LLP, 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:
David Beck, Esq.
CARPENTER LIPPS LLP
280 North High Street, Suite 1300
Columbus, Ohio 43215
Tel: (614) 365-4100
Fax: (614) 365-9145
E-mail: beck@carpenterlipps.com
About S&G Hospitality, Inc.
S&G Hospitality, Inc. is part of the traveler accommodation
industry.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Ohio Case No. 23-52859) on August 18,
2023. In the petition signed by AbijitVasani, president, the Debtor
disclosed up to $10 million in assets and up to $1 million in
liabilities.
Judge Mina NamiKhorrami oversees the case.
David Beck, Esq., at Carpenter Lipps LLP, reprents the Debtor as
legal counsel.
S&W BLUE JAY: Hires Elkins Kalt Weintraub Reuben as Counsel
-----------------------------------------------------------
S&W Blue Jay Way, LLC seeks approval from the U.S. Bankruptcy Court
for the Central District of California to employ Elkins Kalt
Weintraub Reuben Gartside LLP as counsel.
The firm's services include:
a. advising the Debtor with respect to its duties, powers, and
responsibilities, in the Debtor's bankruptcy case;
b. ensuring that the Debtor complies with the Bankruptcy Code,
the Bankruptcy Rules, and the Local Bankruptcy Rules;
c. advising the Debtor with respect to the various options
available for resolution of the bankruptcy case, including the sale
of the Property, liquidation of the Debtor's other assets, andthe
filing of a plan of reorganization;
d. preparing on behalf of the Debtor all legal documents as may
be necessary;
e. examining and advising the Debtor on claims and causes of
action that may belong to the Debtor's estate; and
f. performing such other legal services as may be required by
the Debtor.
The firm's attorneys will be paid $625 per hour for Roye Zur, Esq.,
and $725 for Michael Gottfried.
The firm will be paid a retainer in the amount of $65,000.
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Roye Zur, Esq., a partner at Elkins Kalt Weintraub Reuben Gartside
LLP, 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:
Roye Zur, Esq.
ELKINS KALT WEINTRAUB
Reuben Gartside LLP
10345 W. Olympic Blvd.
Los Angeles, CA 90064
Telephone: (310) 746-4400
Facsimile: (310) 746-4499
Email: rzur@elkinskalt.com
About S&W Blue Jay Way
S&W Blue Jay Way is a Single Asset Real Estate (as defined in 11
U.S.C. Section 101(51B)).
S&W Blue Jay Way, LLC filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No.
23-10672) on August 4, 2023. The petition was signed by Lisa
Strickland as authorized signatory on behalf of 1966 BJW, LLC, as
managing member of S&W Blue Jay Way, LLC. At the time of filing,
the Debtor estimated $10 million to $50 million in assets and $1
million to $10 million in liabilities.
Judge Ronald A. Clifford III presides over the case.
Roye Zur, Esq. at Elkins Kalt Weintraub Reuben Gartside LLP
represents the Debtor as counsel.
SAM'S PLACE: Amends Unsecureds & Priority Tax Claims Pay
--------------------------------------------------------
Sam's Place Lottery & Tobacco, Inc., submitted an Amended Plan of
Reorganization dated September 7, 2023.
Under the Plan, the Debtor provides for distributions to creditors
its disposable income over the 3 years after the Effective Date.
Class 3 consists of Priority Tax Claims. All priority tax Claims in
Class 3 of all taxing authorities, shall include only pre-Petition
taxes and interest accrued to the Petition Date only, and shall not
include any penalties. Such penalties do not include any trust fund
tax penalties which may have been assessed against the Debtor. All
such Claims shall have credited against such Claim any post
Petition payments as to each such Claim.
All Priority Tax Claims in Class 3 shall be paid in full on or
before 5 years after the Petition Date, together with interest at
the rate of 7% per annum, which interest shall begin to accrue as
of the Effective Date of the Plan. Such payments will be made on a
regular monthly basis, and each such payment shall begin in the
first calendar month after the Effective Date of the Plan.
Nothing contained herein shall require any entity which has an
Administrative Claim which may be owed to any governmental entity
for taxes to file a Claim, unless the Court enters an
Administrative Bar Date Order. Until paid, Administrative Claims,
if any, of a taxing authority, shall accrue interest at the rate of
7% per annum.
Nothing contained herein shall require any entity which has an
Administrative Claim which may be owed to any governmental entity
for taxes to file a Claim, unless the Court enters an
Administrative Bar Date Order. Until paid, Administrative Claims,
if any, of a taxing authority, shall accrue interest at the rate of
7% per annum.
Class 7 includes all other Claim holders of the Debtor who are not
otherwise classified under the Plan, including all general
unsecured creditors, as well as including any Claim of Newtek Small
Business Finance, LLC, BayFirst National Bank and any r Merchant
Capital Companies.
Beginning 6 months after the Effective Date, the general unsecured
creditors in Class 7 shall be paid 5% of each allowed Class 7
Claim, payable in 3 equal annual installments of 1.67% each.
Nonetheless, on the first and second anniversaries of the first
payment to be made under this Section to unsecured creditors, the
amount of each of the next 2 annual payments shall remain at the
same percentage or be adjusted upward to reflect any increase in
the actual net disposable income of the Debtor for 12 months prior
to the second and third required payments under this Section.
The Debtor intends to continue to operate its tobacco store,
lottery sales and convenience store business throughout Central
Pennsylvania. The Debtor believes that the operations of the Debtor
will be sufficient to fund payments under the Plan.
The Debtor retains the right to sell any of its Assets. The Debtor
is not required to sell any Assets. In the event that a sale
occurs, payment will be made to Celtic Bank to the extent of its
secured Claim under this Plan, and then to the SBA, to the extent
of its secured Claim under this Plan.
A full-text copy of the Amended Plan dated September 7, 2023 is
available at https://urlcurt.com/u?l=kN20HX from PacerMonitor.com
at no charge.
Debtor's Counsel:
Robert E. Chernicoff, Esq.
Cunningham, Chernicoff & Warshawsky , P.C.
320 N 2nd St
Harrisburg, PA 17110
Phone: +1 717-260-3527
Fax: 717-238-4809
About Sam's Place Lottery & Tobacco
Sam's Place Lottery & Tobacco, Inc., is engaged in the operation of
retail tobacco, lottery and convenience stores. The Debtor sought
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr.
M.D. Pa. Case No. 23-00874) on April 20, 2023. In the petition
signed by Michael A. Somers, its president, the Debtor disclosed up
to $10 million in both assets and liabilities.
Judge Henry W. Van Eck oversees the case.
Robert E. Chernicoff, Esq., at Cunningham, Chernicoff and
Warshawsky PC, represents the Debtor as legal counsel.
SAND RIDGE: Case Summary & Seven Unsecured Creditors
----------------------------------------------------
Debtor: Sand Ridge Development Assn., Inc.
2326 Hwy 305
Rich Square, NC 27869-9427
Chapter 11 Petition Date: September 14, 2023
Court: United States Bankruptcy Court
Eastern District of North Carolina
Case No.: 23-02678
Judge: Hon. David M. Warren
Debtor's Counsel: William P. Janvier, Esq.
STEVENS MARTIN VAUGHN & TADYCH, PLLC
2225 W Millbrook Road
Raleigh, NC 27612
Tel: (919) 582-2300
Email: wjanvier@smvt.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Alton Williams, Jr. as president.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/DHKLI3A/Sand_Ridge_Development_Assn_Inc__ncebke-23-02678__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's Seven Unsecured Creditors:
Entity Nature of Claim Claim Amount
1. Alton Williams Jr $47,505
1021 East Lawn Dr.
Teaneck, NJ 07666
2. Frances Irwin Berg Accountant- $500
605 Bauer Court Preparing Taxes
Elmont, NY 11003
3. Joanne Drew Franchise Tax- $1,090
PO Box 758 Phone-Penalties-
Rich Square, NC 27869 Interest
4. Joe Wilson Rascoe $205,782
519 Barrus Mill Road
Jackson, NC 27845
5. Leroy Scott $321,041
PO Box 177
Pleasant Hill, NC 27866
6. Sarah Pickett Credit Card $3,004
602 19th Street Payment
Butner, NC 27509
7. Shenna Barr $371,116
14 Holly Lane
Garfield, NJ 07026
SEALED AIR: Moody's Affirms 'Ba1' CFR & Alters Outlook to Negative
------------------------------------------------------------------
Moody's Investors Service affirmed Sealed Air Corp.'s (Sealed Air)
Ba1 corporate family rating and Ba1-PD probability of default
rating. Moody's also affirmed all existing instrument ratings of
Sealed Air Corp. and Sealed Air Limited. At the same time, Moody's
downgraded Sealed Air Corp.'s Speculative Liquidity Rating to SGL-3
from SGL-2. Moody's changed Sealed Air's outlook to negative from
stable.
The negative outlook reflects weakening demand in Sealed Air's
protective segment, which weakens the company's profit and credit
metrics.
"Quarterly sales volume of Protective segment has been on the
year-on-year decline, suppressing Sealed Air's profit," said Motoki
Yanase, VP - Senior Credit Officer at Moody's.
"Given the modest economic growth Moody's is expecting for 2024, it
may take time for the company to restore its profit and credit
metrics appropriate for the rating," added Yanase
Affirmations:
Issuer: Sealed Air Corp.
Corporate Family Rating, Affirmed Ba1
Probability of Default Rating, Affirmed Ba1-PD
Senior Secured Bank Credit Facility, Affirmed Baa2
Senior Secured Regular Bond/Debenture, Affirmed Baa2
Senior Unsecured Regular Bond/Debenture, Affirmed Ba2
Issuer: Sealed Air Limited
Senior Secured Bank Credit Facility, Affirmed Baa2
Downgrades:
Issuer: Sealed Air Corp.
Speculative Grade Liquidity Rating, Downgraded to SGL-3 from
SGL-2
Outlook Actions:
Issuer: Sealed Air Corp.
Outlook, Changed To Negative From Stable
Issuer: Sealed Air Limited
Outlook, Changed To Negative From Stable
RATINGS RATIONALE
Sales volume in Sealed Air's Protective segment has declined by
around 20% year-on-year since the fourth quarter of 2022,
reflecting weaker demand from industrial end users that the segment
serves. Given the segment's weakness, quarterly EBITDA, including
Moody's standard adjustments, has also been lower than the last
year's for the first and second quarter of 2023.
Meanwhile, total debt has increased by around $1.3 billion, or over
one-third, between December 2022 and June 2023, mainly due to the
debt-funded acquisition of Liquibox, which closed in February 2023.
Despite additional profit from Liquibox, Moody's expects Sealed
Air's leverage could remain around mid-4x in the end of 2024,
exceeding its downgrade guidance of 4.25x.
The affirmation of the Ba1 CFR reflects Moody's expectation of some
degree of improvement in leverage. Moody's expect the company will
reduce total debt levels, mainly via the pay down of borrowing
under the revolver or the securitization facility, with free cash
flow generated in 2024. Moody's expects the company's EBITDA to be
largely flat for the next 12-18 months considering modest
improvement in the protective segment coupled with the more stable
food segment that provides plastic packaging to meet and
groceries.
The downgrade of Sealed Air's speculative grade liquidity rating to
SGL-3 from SGL-2 reflects weaker cash flow generation for 2023 due
to lower profit and additional spending on a US tax settlement. As
a result, Moody's expects the company's free cash flow (after
dividends) could turn negative in 2023. The company also has an
upcoming maturity of $424 million senior notes due December 2024.
As of June 2023, the company had over $800 million availability
under the revolver, which provides support to its liquidity.
The negative outlook reflects Moody's expectation that Sealed Air's
credit metrics will trend weakly against the range assumed for the
Ba1 CFR due to weak sales from its protective segment and negative
free cash flow in 2023.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A ratings upgrade requires a commitment to an investment grade
financial profile including an unencumbered capital structure.
Additionally, an upgrade would require a sustainable improvement in
credit metrics. Specifically, the ratings could be upgraded if debt
to EBITDA is below 3.5x, EBITDA margin is above 22% and free cash
flow to debt is above 12%.
The ratings could be downgraded if there is deterioration in credit
metrics, the competitive environment or liquidity. Lack of
improvement in the company's liquidity profile or a large, debt
financed acquisition or shareholder return could lead to a
downgrade. Specifically, the ratings could be downgraded if debt to
EBITDA is above 4.25x, EBITDA margin is below 18% or FCF to debt
drops below 8%.
The principal methodology used in these ratings was Packaging
Manufacturers: Metal, Glass and Plastic Containers published in
December 2021.
Headquartered in Charlotte, North Carolina, Sealed Air (NYSE: SEE)
is a global manufacturer of automated packaging equipment, services
and sustainable materials for various food, e-commerce, and
industrial applications. Sealed Air reports in two segments, Food
and Protective, and reported revenues of about $5.5 billion as of
the twelve months that ended June 2022.
SKIN LOGIC: Hires VerStandig Law Firm as Bankruptcy Counsel
-----------------------------------------------------------
Skin Logic, LLC seeks approval from the U.S. Bankruptcy Court for
the Eastern District of Virginia to employ VerStandig Law Firm,
LLC, doing business as The Belmont Firm, as bankruptcy counsel.
The firm will provide these services:
(a) prepare and file all necessary pleadings, motions, and
other court papers, on behalf of the Debtor;
(b) negotiate with creditors, equity holders, and other
interested parties;
(c) represent the Debtor in any adversary proceedings,
contested matters, and other proceedings before this honorable
court;
(d) prepare a plan of reorganization on behalf of the Debtor;
and
(e) tend to such other and further matters as are necessary
and appropriate in the prism of this case.
The firm will be paid at these rates:
Partner $450 per hour
Associate $200 per hour
Paralegal $100 per hour
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Maurice VerStandig, Esq., an partner at VerStandig Law Firm,
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:
Maurice B. VerStandig, Esq.
THE BELMONT FIRM
9812 Falls Road, #114-160
Potomac, MD 20854
Phone: (301) 444-4600
Email: mac@mbvesq.com
About Skin Logic, LLC
Skin Logic, LLC provides medical aesthetics and skin enrichment
medical services. The Company offers consultations and clinical
treatments conducted by medical aestheticians, massage therapists,
aesthetic nurse practitioners, plastic surgeons, and other licensed
professionals.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Va. Case No. 23-11352) on August 24,
2023. In the petition signed by Valeria Gunkova, managing member,
the Debtor disclosed $2,475,296 in total assets and $19,101,671 in
total liabilities.
Maurice Verstandig, Esq., at The Belmont Firm, represents the
Debtor as legal counsel.
SONIDA SENIOR: Incurs $12.2 Million Net Loss in Second Quarter
--------------------------------------------------------------
Sonida Senior Living, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $12.21 million on $62.85 million of total revenues for the three
months ended June 30, 2023, compared to a net loss of $7.41 million
on $59.64 million of total revenues for the three months ended June
30, 2022.
For the six months ended June 30, 2023, the Company reported net
income of $11.93 million on $124.93 million of total revenues
compared to a net loss of $24.09 million on $118.12 million of
total revenues for the six months ended June 30, 2022.
As of June 30, 2023, the Company had $642.11 million in total
assets, $686.86 million in total liabilities, $45.98 million in
redeemable preferred stock, and a total shareholders' deficit of
$90.73 million.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1043000/000162828023029270/snda-20230630.htm
About Sonida
Sonida Senior Living, Inc., (formerly known as Capital Senior
Living Corporation), is an owner-operator of senior housing
communities in the United States. The Company and its predecessors
have provided senior housing since 1990. As of Dec. 31, 2022, the
Company operated 72 senior housing communities in 18 states with an
aggregate capacity of approximately 8,000 residents, including 62
senior housing communities that the Company owned and 10
communities that the Company third-party managed.
Dallas, Texas-based RSM US LLP, the Company's auditor since 2022,
issued a "going concern" qualification in its report dated March
30, 2023, citing that the Company has suffered from recurring
losses from operations and total current liabilities exceed total
current assets. This raises substantial doubt about the Company's
ability to continue as a going concern.
SOUTHFIELD VENTURES: Seeks to Hire Simon PLC as Special Counsel
---------------------------------------------------------------
Southfield Ventures, LLC seeks approval from the U.S. Bankruptcy
Court for the Eastern District of Michigan to employ Simon PLC
Attorneys & Counselors as special counsel.
The firm will represent the Debtor in a matter involving the
termination of a lease of commercial real property.
The hourly rates of the firm's counsel and staff are as follows:
Frank R. Simon $450
Steven A. Morris $410
Paralegals $250
The firm received a $9,000 retainer from Ascent Realty, an entity
owned by the Debtor's principal.
Frank Simon, Esq., an attorney at Simon PLC, disclosed in a court
filing that his firm is a "disinterested person" as defined in
Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Frank R. Simon, Esq.
Simon PLC Attorneys & Counselors
37000 Woodward Ave., Suite 250
Bloomfield Hills, MI 48304
Telephone: (248) 720-0290
Email: fsimon@simonattys.com
About Southfield Ventures
Southfield Ventures, LLC is a single asset real estate (as defined
in 11 U.S.C. Sec. 101(51B)). The company is based in Southfield,
Mich.
Southfield Ventures filed a Chapter 11 petition (Bankr. E.D. Mich.
Case No. 23-42948) on March 31, 2023, with $1 million to $10
million in both assets and liabilities. Ernest Charles Barreca,
principal at Southfield Ventures, signed the petition.
Judge Thomas J. Tucker oversees the case.
The Debtor tapped Robert N. Bassel, Esq., a practicing attorney in
Clinton, Mich., as bankruptcy counsel and Frank R. Simon, Esq., at
Simon PLC Attorneys & Counselors as special counsel.
SPIRIT AEROSYSTEMS: Moody's Confirms 'B2' CFR, Outlook Negative
---------------------------------------------------------------
Moody's Investors Service has confirmed the B2 corporate family
rating and B2-PD probability of default rating of Spirit
AeroSystems, Inc. Concurrently, Moody's confirmed the Ba2 rating on
the first lien senior secured debt, the B3 rating on the second
lien senior secured debt and the Caa1 rating on the senior
unsecured notes. Spirit's SGL-3 speculative grade liquidity rating
is unchanged. The rating outlook is negative. This concludes the
review for downgrade initiated on June 23, 2023.
The confirmation of the CFR and other ratings reflects Moody's
expectations of steady and gradually improving operating
performance over the next 12 to 24 months as build rates on the MAX
move upwards. The negative outlook reflects heightened near-term
execution risk relating to the ramp up of the 737 MAX, as well as
the risk that supply chain issues or quality issues could hamper
future increases in production rates. The negative outlook also
reflects the large amount of second lien debt, roughly $1.2
billion, that matures in April 2025.
The following is a summary of the rating actions:
Confirmations:
Issuer: Spirit AeroSystems, Inc.
Corporate Family Rating, Confirmed at B2
Probability of Default Rating, Confirmed at B2-PD
Backed Senior Secured First Lien Bank Credit Facility, Confirmed
at Ba2
Backed Senior Secured First Lien Regular Bond/Debenture, Confirmed
at Ba2
Senior Secured Second Lien Regular Bond/Debenture, Confirmed at
B3
Backed Senior Unsecured Regular Bond/Debenture, Confirmed at Caa1
Outlook Actions:
Issuer: Spirit AeroSystems, Inc.
Outlook, Changed To Negative From Rating Under Review
RATINGS RATIONALE
The B2 corporate family rating reflects Spirit's weak credit
metrics, mixed track record of execution, and near-term challenges
relating to the ramp up in production of key aerospace programs.
The rating also reflects Moody's expectations of limited cash
generation through 2025 and the company's short-dated capital
structure, with $1.2 billion of notes maturing in early 2025.
Debt-to-EBITDA as of June 2023 is very high at more than 10x.
However, Moody's expects leverage to decline meaningfully to below
6x over the next 18 months as Spirit continues to increase
production on its most important program, the 737 MAX.
Moody's recognizes Spirit's considerable scale as a strategically
important supplier in the aerostructures market. The company
maintains a sustainable competitive position underpinned by its
life-of-program production agreements and long-term contracts on
key Boeing and Airbus platforms. The rating also reflects Spirit's
position as the largest independent supplier of aerostructures to
Boeing, and the company's role as the sole provider of the Boeing
737 fuselage and critical parts for other aircraft programs.
The negative outlook reflects heightened near-term execution risk
relating to the ramp up of the 737 MAX, as well as the risk that
supply chain issues or quality issues could hamper future increases
in production rates.
The SGL-3 speculative grade liquidity rating denotes Moody's
expectations of adequate liquidity over the next 12 months. Cash as
of June 2023 totaled $525 million. Moody's expects Spirit to have
negative free cash flow approaching $250 million in 2023, although
Moody's notes that this includes one-time benefits from the
termination of a pension plan as well as customer advances. Moody's
anticipates improved cash generation during 2024, although free
cash generation will be limited with FCF-to-debt either flat or in
the low single-digits. The majority of Spirit's debt (83%) is
fixed-rate and floating-rate represents a modest portion (17%), so
interest rate risk is limited. Spirit does not have a revolving
credit facility at this time.
The Ba2 rating on Spirit's first lien senior secured debt is three
notches above the B2 CFR. This reflects their seniority and first
lien security interest in substantially all of the company's
assets. The B3 rating on the second lien senior secured notes
reflects their second priority claim in substantially all assets of
the company. The Caa1 rating for the company's senior unsecured
notes reflects their first loss position and lack of security.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to a ratings upgrade include improved
execution across commercial programs, particularly the 737 MAX,
strengthened liquidity, and expectations of sustained earnings
growth.
Factors that could lead to a ratings downgrade include delays in
the ramp up of narrow-body aircraft production rates (particularly
the 737MAX). An inability to refinance Spirit's second lien notes
well in advance of their April 2025 maturity could also result in a
downgrade. Expectations of weakening liquidity or a further
weakening of earnings could also result in downward rating
pressure.
Headquartered in Wichita, Kansas, Spirit AeroSystems, Inc. is a
subsidiary of publicly traded Spirit AeroSystems Holdings, Inc.
(NYSE: SPR). The company designs and manufactures aerostructures
for commercial aircraft. Components include fuselages, pylons,
struts, nacelles, thrust reversers and wing assemblies, principally
for Boeing but also for Airbus and others. Revenues for the twelve
months ended June 2023 were approximately $5.4 billion.
The principal methodology used in these ratings was Aerospace and
Defense published in October 2021.
SPIRIT AIRLINES: Fitch Alters Outlook on 'B+' LongTerm IDR to Neg.
------------------------------------------------------------------
Fitch Ratings has revised the Rating Outlook for Spirit Airlines to
Negative from Stable and affirmed Spirit's Long-term Issuer Default
Rating at 'B+'. Fitch has also affirmed Spirit IP Cayman Ltd.'s and
Spirit Loyalty Cayman Ltd.'s senior secured debt at 'BB+'/'RR1'.
The Outlook revision incorporates Fitch's view that various
headwinds may drive profitability and leverage metrics to remain
outside of Fitch's negative sensitivities through YE 2024 or
longer. Aircraft availability and air traffic control issues are
having a greater impact on Spirit relative to some competitors,
limiting the company's post-pandemic margin recovery. Longer-term,
Fitch believes that Spirit's low-cost structure and its ability to
stimulate demand will drive margins closer to pre-pandemic levels.
However, the timeline for improvement is uncertain given various
industry headwinds. Should Spirit exhibit improving aircraft
utilization and margin trends over the next 6-12 months, the
Outlook may be revised to Stable, whereas continued
underperformance may drive a downgrade.
Spirit's rating is independent of its pending acquisition by
JetBlue. Should the acquisition close, Fitch will likely equalize
the two ratings. JetBlue is currently rated 'BB-'/Negative. The
Spirit acquisition may drive a downgrade of JetBlue's rating,
likely by one notch.
EETC Ratings:
Fitch has affirmed the 2017-1 class AA and class A certificates and
the 2015-1 class A certificates. Fitch has affirmed Spirit's 2015-1
and 2017-1 class B certificates at 'BBB-'.
The class AA and class A certificates are derived through Fitch's
top-down approach, while the class B certificates are notched off
of the underlying airline rating. The class AA and A certificates
continue to be supported by healthy levels of
overcollateralization. Loan-to-values for both the 2017-1 and
2015-1 transactions improved slightly, and base values for the
A321s and A320s in these portfolios have performed in line with
Fitch's standard depreciation assumptions over the last year. The
debt has continued to amortize, leading to slightly improved
collateral coverage.
KEY RATING DRIVERS
Delayed Improvement in Profitability: Ongoing operating
inefficiencies and softer than expected domestic fares are driving
weaker than expected margins in 2023. Fitch expects Spirit's EBIT
margins to trend back towards the upper single digits over time,
but the timeframe for improvement faces some unknowns. Pilot
availability, which had been a constraint earlier in 2023, has
improved, but issues with Pratt & Whitney engine availability and
air traffic control constraints (ATC) are largely out of Spirit's
control. Spirit's aircraft utilization has suffered from poor
availability of its Pratt & Whitney powered A320 NEOs. Pratt
engines continue to experience more frequent maintenance events
relative to prior generation engines, leaving aircraft out of
service.
RTX, the maker of the Pratt engines, recently announced a new
maintenance issue that will require more than 1,000 engines
globally to be taken out of service and inspected. Spirit is the
largest operator of the Pratt Geared Turbofan (GTF) engine in the
US, and reports that it will pull seven NEO aircraft from service
for inspections after Labor Day. These issues will have a material
impact on Q3 earnings and are likely to persist well into 2024.
Fitch expects RTX to compensate airlines for the most recent
issues, but the timing and magnitude of such reimbursements is
unknown at this time.
Improving Utilization: Improving profitability largely rests on the
airline's ability to fully utilize its assets. Spirit's average
daily aircraft utilization for Q2 2023 was 11.3 hours/day, which
represents an improvement over results in 2022, but remains below
pre-pandemic levels that were consistently over 12 hours.
Utilization should rise as pilot availability issues wane, but
engine maintenance may continue to present a drag. Fitch expects
Spirit to generate modestly negative EBIT margins in 2023 and
low-to-mid single digit margins in 2024 compared to low-to-mid
teens margins generated prior to the pandemic.
Unit Cost Pressures: Cost pressures have hit Spirit harder than
most U.S. carriers. This was driven in part by pilot constraints
earlier this year but continues based on Pratt & Whitney engine
issues, investments in operational reliability and ATC constraints.
Spirit's non-fuel unit costs remain more than 30% above 2019
levels, versus competitors whose costs are up in the teens over the
same period. Fitch expects CASM trajectory to improve in 2024 as
aircraft utilization levels improve, contributing to rebounding
margins, though the pace of improvement remains uncertain.
Headwinds include the contract ratified by Spirit's pilot union in
January 2023, which includes pay increases of more than 30% over
two years. Despite pressures, Spirit's low cost structure remains a
competitive advantage. Cost Per Available Seat Mile excluding fuel
(CASM-ex) remains more than 30% below its closest competitor,
allowing the company to stimulate demand with low fares.
Weaker Near-term Domestic Leisure Demand: Domestic and short haul
international leisure demand has shown some softness relative to
Fitch's prior expectations. Airlines are reporting exceptionally
strong long-haul international demand over the summer. With many
travelers prioritizing overseas trips, domestic fares have come
down, particularly when compared to unusually high levels seen in
the summer of 2022. Fitch expects the balance of demand to shift
back towards the domestic market after the peak summer travel
season once pent-up demand wanes. However, travel patterns have
been difficult to predict coming out of the pandemic, creating some
uncertainty. Spirit reported total revenue per flight segment
(including ancillaries) down 8.9% yoy in the second quarter. These
levels are still 13% above the same quarter in 2019, but the gains
are almost entirely driven by ancillary revenues, while Spirit's
base fares are nearly flat over the four-year period.
Moderating Growth Plans: Spirit maintains an aggressive growth
strategy, but has dialed back growth plans for the coming years to
prioritize margin improvement and cash flow production. Spirit
recently announced an agreement with Airbus to reduce its planned
2024 deliveries by 11 aircraft and to smooth out the schedule for
remaining deliveries over a longer time period. Fitch believes the
change mitigates some level of execution risk and should allow the
company to focus on maturing existing markets. However, capacity
growth is still expected to remain high relative to competitors.
Spirit states that its fleet plans would drive a high teens
percentage growth in capacity in 2024 setting aside the recently
identified GTF engine issues. Spirit's fleet has grown to 198
aircraft up from 145 prior to the pandemic, and the company has
another 133 aircraft to be delivered through the end of 2029
including 104 on order with Airbus and another 29 under direct
operating leases.
Limited FCF: Fitch expects FCF to be around break-even in 2023 as
operating margins remain below historical averages. Spirit plans to
use sale-leaseback financing or direct operating leases the for the
bulk of its aircraft deliveries, limiting its upfront capital
expenditures, and potentially allowing FCF to turn positive in
2024. However, aircraft lease expenditures are expected to increase
materially through the forecast period, keeping pressure on
Spirit's lease adjusted leverage. Fitch expects Spirit's total
adjusted leverage to remain above levels that support the 'B+'
rating through 2024 before trending lower in 2025. Adjusted
leverage may approach 4x by the end of Fitch's forecast period in
2026.
EETC Ratings:
Class AA and A certificate Ratings: Stress scenario LTVs have
remained roughly in line with its prior review due to relatively
stable asset values and continued principal amortization. The
2017-1 class AA certificates hold sufficient headroom to pass its
'AA' stress scenario, which results in a loan-to-value (LTV) ratio
of 89.6%, improving from 93% in its prior review. Under the 'A'
level stress scenario, the LTV for Spirit's 2015-1 class A
certificates is calculated at 85.7%, roughly in line with its last
review (86.9%), whereas the 2017-1 class A certificates decreased
to 86.0% from 89.2%. Fitch expects both transaction's LTVs to
improve over their lifespans due to the pace of their amortization
profiles.
Fitch has incorporated updated appraisal data since its prior
review. The 2015-1 and 2017-1 transactions are both exposed to
2016-2018 vintage A320 and A321 aircraft, the values for which
performed in line with its base expectations. A320 values declined
at an annualized rate of 4.8%, while the A321-200 aircraft declined
at 5.2%-5.8%, under Fitch's base depreciation rate of 6%/year.
Under the 'AA' and 'A' stress scenarios, Fitch assumes a 45% and
25% stress rate for the collateral in the pools, respectively.
These represent the mid-points of Fitch's stress ranges for tier 1
aircraft. Fitch utilizes the mid-point of the range for both the
A321-200 and A320-200 as both planes have large in-service fleets
with a wide variety of users. Positive factors are offset by the
growing proportion of the in-service fleet that now consists of
new-technology A320 NEOs.
Class B Certificate Ratings: Fitch notches subordinated tranche
EETC ratings from the airline's Issuer Default Rating (IDR) based
on three primary variables: 1) the affirmation factor (0-3 notches)
2) the presence of a liquidity facility, (0-1 notch) and 3)
recovery prospects (0-1 notch). The four-notch uplift from Spirit's
'B+' IDR reflects a moderate-to-high affirmation factor (+2
notches), the benefit of a liquidity facility (+1 notch), and solid
recovery prospects in a stress scenario (+1).
Affirmation Factor: Fitch chose not to assign the maximum +3 notch
affirmation factor uplift for these two transactions. While Fitch
views the likelihood of affirmation in a distress scenario to be
high, the uplift is limited by the shrinking proportion of Spirit's
total fleet represented by the two transactions as Spirit continues
to grow. The collateral aircraft are also becoming marginally less
attractive as Spirit takes delivery of more A320 and A321 NEOs,
which are more fuel efficient.
Although Spirit's fleet is growing, the two EETCs still make up a
sizeable proportion of Spirit's assets, supporting the +2-notch
uplift. The Spirit 2015-1 pool contains 15 aircraft, which makes up
around 8% of the company's current fleet. The 2017-1 pool contains
12 aircraft, or around 7% of Spirit's fleet. The two pools also
contain 17 A321s, which represents more than half of Spirit's (30)
owned A321s as of August 2023. The A321's larger size allows Spirit
to add capacity on denser routes without necessarily adding
additional frequencies. The larger gauge of the A321 also leads to
a lower cost per available seat mile compared to its smaller
cousins, which is key to Spirit's low-cost strategy
Good Quality Collateral Pools: Spirit's 2015-1 transaction is
collateralized by 15 aircraft, consistent of 12 2016-2017 vintage
A321s and three 2016 vintage A320s. The 2017-1 transaction consists
of 12 aircraft, including seven 2017-2018 vintage A320s and five
2018 vintage A321s. Fitch considers both the A320 and the A321 to
be tier 1 aircraft.
DERIVATION SUMMARY
Spirit's 'B+' rating is in line with competitors such as American
Airlines and United Airlines and is one notch lower than low-cost
competitor JetBlue. Fitch views Spirit as being relatively weaker
than the other 'B+' rated airlines due to higher near-term leverage
due to a slower rebound in operating margins post-pandemic. Fitch
also believes that Spirit's financial flexibility is weaker than
either United or American as the larger airlines have more ready
access to debt markets and larger bases of unencumbered assets.
These weaknesses are partly offset by Spirit's lower cost structure
which generally allow the company to generate profits on lower fare
levels and to stimulate demand.
KEY ASSUMPTIONS
- Fitch's base case incorporates capacity and traffic growing by
mid-teens percentages in 2023, and low double digits thereafter.
- Fitch expects modestly lower RASM in 2023 compared to 2022
reflecting current trends and difficult year-over-year comparisons
after a sharp increase in 2022. RASM is expected to expand modestly
beyond 2023.
- Jet Fuel is assumed at $2.85/gallon for 2023, declining modestly
thereafter.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Consummation of the acquisition by JetBlue in a credit conscious
manner.
Standalone Spirit Airlines Upgrade Sensitivities:
- Adjusted debt/EBITDAR sustained below 4.5x;
- FFO fixed-charge coverage sustained around 2.5x;
- Improving operational stability leading FCF to trend towards
neutral or higher and EBITDA trending towards pre-pandemic levels.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Completion of the acquisition by JetBlue in a manner leading
credit or operating metrics remaining above levels commensurate
with the current rating.
Standalone Spirit Airlines Downgrade Sensitivities:
- Adjusted debt/EBITDAR sustained above 5x beyond 2024;
- EBITDAR margins sustained in the low double-digit range;
- FFO fixed-charged coverage sustained at 1.5x or below;
- Liquidity declining toward 10%of LTM revenue.
EETC Sensitivities:
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
Class AA and A Certificates:
The class AA and A certificate ratings are primarily based on a
top-down analysis based on the value of the collateral. Ratings
upgrades may be driven by stable or increasing values for the A321
and A320 along with continued principal amortization leading to
improved collateral coverage.
Underlying airline credit quality is a secondary consideration.
Positive rating actions could be driven by an upgrade of Spirit's
corporate credit rating
Class B certificate ratings: The class B certificates are linked to
Spirit's corporate rating. Therefore, if Spirit were upgraded to
'BB-' the class B certificates would be upgraded as well.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
Class AA and A certificates:
Negative rating actions could be driven by an unexpected decline in
collateral values. Senior tranche ratings could also be affected by
a perceived change in the affirmation factor or deterioration in
the underlying airline credit. The transaction ratings may be
impacted in the future by pressures on A320 CEO family values or
changes in value stress rates utilized in Fitch's models as the
A320 NEO family becomes a more dominant presence in the global
aircraft market
The class B certificates are linked to Spirit's corporate rating.
Therefore, if Spirit were downgraded to 'B' the class B
certificates would be downgraded as well. Fitch currently views the
Affirmation Factor for each Spirit EETC as moderate to high. This
could weaken over time as the collateral aircraft age and become a
smaller portion of Spirit's total fleet. Negative actions could be
driven by lower recovery prospects driven by weaker aircraft
values.
LIQUIDITY AND DEBT STRUCTURE
Sufficient Liquidity: As of June 30, 2023, Spirit had cash and cash
equivalents of $1,110.7 million plus $109.4 million in short-term
investments. The company also has full availability under $300
million revolving credit facility which matures in March 2024.
Total liquidity is equal to 27% of LTM revenue at Q2 2023. Spirit's
short-term investments consist of U.S. treasury and government
agency securities with maturities of less than 12 months.
Spirit's total liquidity (cash + ST investments) as a percentage of
revenue is roughly equal to where it stood prior to the pandemic.
While Fitch views Spirit's liquidity balance as sufficient in the
current environment, the company's financial flexibility is reduced
compared to pre-pandemic levels as it has already raised debt
against its most valuable assets.
Fitch views Spirit's upcoming debt maturities as manageable given
its cash on hand. Spirit also plans to utilize sale-leasebacks for
upcoming deliveries, allowing operating cash flow to be directed
towards debt payments. Maturities total $336.6 million in 2023 and
$222.1 million in 2024. Maturities become material in 2025 when the
company's $1,110 million, 8% secured notes come due. Fitch's base
case anticipates that the company will build cash through 2024,
allowing the 2025 maturity to be at least partly paid down, though
Spirit is likely to refinance a portion of the outstanding debt.
EETC:
2017-1:
The AA, A, and B certificates benefit from dedicated 18-month
liquidity facilities which will be provided by Commonwealth Bank of
Australia, New York Branch (A+/F1/Sta).
2015-1:
The class A and B certificates feature an 18-month liquidity
facility provided by Natixis (A+/F1/Negative).
ISSUER PROFILE
Spirit Airlines, Inc. (Spirit) is a Florida based ultra low cost
air carrier. The airline utilizes low base fares to stimulate
travel demand. The company has a fleet of 198 Airbus aircraft and
serves destinations throughout the U.S., Caribbean and Latin
America.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Spirit Airlines,
Inc. LT IDR B+ Affirmed B+
Spirit Loyalty
Cayman Ltd.
senior secured LT BB+ Affirmed RR1 BB+
Spirit IP Cayman
Ltd.
senior secured LT BB+ Affirmed RR1 BB+
Spirit Airlines
Pass Through Trust
Certificates
Series 2017-1
senior secured LT AA- Affirmed AA-
senior secured LT A Affirmed A
senior secured LT BBB- Affirmed BBB-
Spirit Airlines
Pass Through Trust
Certificates
Series 2015-1
senior secured LT A Affirmed A
senior secured LT BBB- Affirmed BBB-
SSG LLC: Seeks Court Nod to Sell Inventory
------------------------------------------
SSG, LLC asked the U.S. Bankruptcy Court for the Northern District
of Georgia to approve the sale of its properties.
The properties up for sale include the company's inventory stored
at its warehouse in Jonesboro, Ga.
SSG leases the facility from Ridgewood Group GA, LLC. Following
SSG's Chapter 11 filing, the landlord commenced legal action to
evict the company from the premises.
By conducting the sale, SSG hopes to clear out up to 5,000 to
10,000 square feet of leased space in the premises.
The sale will be conducted at the Jonesboro warehouse and will be
open to the general public. The inventory to be sold consists of
furniture, restaurant supplies, electronic appliances and other
properties.
All transactions at the sale will be completed by credit card
through SSG's Clover merchant account. Each credit card transaction
will include merchant fees, which the company estimates to be
approximately 4%.
"The sale will allow [SSG] to commence clearing out and reducing
its occupancy of the premises and generate funds for the estate,"
the company's attorney, Leslie Pineyro, Esq., said, adding that the
sale will allow items to be sold at the "highest and best price."
About SSG LLC
SSG LLC filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. N.D. Ga. Case No. 23-58340) on Aug. 30,
2023, with up to $10 million in both assets and liabilities. Tamara
Miles Ogier, Esq., at Ogier, Rothschild & Rosenfeld, PC has been
appointed as Subchapter V trustee.
Judge Sage M. Sigler oversees the case.
Leslie Pineyro, Esq., at Jones & Walden, LLC, represents the Debtor
as legal counsel.
STAGE LIGHTING: Bid to Use Cash Collateral Denied as Moot
---------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida,
Jacksonville Division, denied as moot the motion to use cash
collateral filed by Stage Lighting Store, LLC for the reasons
stated in court.
As previously reported by the Troubled Company Reporter, the Debtor
operates five Vystar business accounts (3 checking and 2 savings)
and one Chase business account. The Debtor generates cash on a
point-of-sale basis. Revenues and receivables are constantly being
deposited in the Debtor's operating accounts.
To ensure monies would not be offset by Vystar upon filing, the
Debtor has on hand $24,000 in cash. The Debtor has $2,261 in its
Chase account and $571 spread across its Vystar accounts.
The Debtor believes Fox Capital Group Inc. may allege an interest
in cash collateral as it has levied on the Debtor's bank account.
The collateral securing payment to Fox has a value of around
$26,832.
A copy of the order is available at https://urlcurt.com/u?l=EL3hDO
from PacerMonitor.com.
About Stage Lighting Store, LLC
Stage Lighting Store, LLC is a stage lighting equipment supplier
for school play, professional production, event venue, and church
service needs.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Fla. Case No. 23-01061) on May 11,
2023. In the petition signed by its owner Russell Behrens, the
Debtor disclosed $226,028 in assets and $1,395,986 in liabilities.
Judge Jason A. Burgess oversees the case.
Donald M. DuFresne, Esq., at Parker & Dufresne, P.A., represents
the Debtor as legal counsel.
STRUDEL HOLDINGS: Seeks to Hire Yetter Coleman as Special Counsel
-----------------------------------------------------------------
Strudel Holdings LLC and AVR AH LLC seek approval from the U.S.
Bankruptcy Court for the Southern District of Texas to employ
Yetter Coleman LLP as special counsel.
The firm will represent the Debtors in a lawsuit filed on March 6,
2023, in the Supreme Court of New York, New York County against
Nineteen77 Capital Solutions A LP, Bermudez Mutari, LTD, Wilmington
Trust, N.A., and UBS O'Connor LLC and an adversary proceeding in
the U.S. Bankruptcy Court for the Southern District of Texas, Case
No. 23-09003.
Yetter Coleman will continue to be compensated for its services and
reimbursed for its expenses by one or more of the non-debtor
Plaintiffs but not by the Debtors' estates.
Timothy McConn, Esq., a partner at Yetter Coleman, 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:
Timothy S. McConn, Esq.
Yetter Coleman LLP
8111 Main St., Suite 4100
Houston, TX 77002
Telephone: (713) 632-8000
Facsimile: (713) 632-8002
Email: tmcconn@yettercoleman.com
About Strudel Holdings
Strudel Holdings LLC and AVR AH LLC are engaged in activities
related to real estate.
Strudel Holdings LLC and AVR AH LLC filed their voluntary petitions
for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Texas Lead Case No. 23-90757) on July 27, 2023. The petitions were
signed by Douglas Brickley as chief restructuring officer. At the
time of filing, Strudel Holdings estimated $10 million to $50
million in assets and $100 million to $500 million in liabilities.
AVR AH estimated $100 million to $500 million in both assets and
liabilities.
Judge Christopher M. Lopez presides over the cases.
The Debtors tapped Joshua W. Wolfshohl, Esq., at Porter Hedges LLP
as bankruptcy counsel; Timothy S. McConn, Esq., at Yetter Coleman
LLP as special counsel; and Stout Risius Ross, LLC as financial
advisor. Douglas J. Brickley, managing director at Stout Risius
Ross, serves as chief restructuring officer.
SUNOCO LP: Moody's Rates New $500MM Senior Unsecured Notes 'Ba3'
----------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to Sunoco LP's
(SUN) proposed $500 million senior unsecured notes due 2028. SUN's
other ratings, including its Ba2 Corporate Family Rating, and
stable outlook were unchanged.
Net proceeds from this debt offering will be used to repay
borrowings under SUN's revolving credit facility.
"The proposed notes will provide incremental liquidity cushion and
flexibility to fund potential bolt-on acquisitions," said John
Thieroff, Moody's Senior Credit Officer.
Assignments:
Issuer: Sunoco LP
Senior Unsecured Regular Bond/Debenture, Assigned Ba3
RATINGS RATIONALE
The proposed notes will rank pari passu with its existing senior
unsecured notes and have the same Ba3 rating. The unsecured notes
are rated one notch below the Ba2 CFR, reflecting the substantial
size of the secured revolving credit facility, which has a priority
claim to SUN's assets over the notes. The $1.5 billion revolver is
secured by substantially all of SUN's assets.
SUN has good liquidity as indicated by its SGL-2 Speculative Grade
Liquidity rating, principally a function of its $1.5 billion
secured revolving credit facility. At June 30, 2023, SUN had $239
million of cash on hand and $990 million drawn on its credit
facility. The facility is primarily used to fund acquisitions and
SUN periodically issues notes to term out borrowings. Moody's
doesn't expect the company to need to rely on the revolver in any
material way to fund operations or its capital program as SUN will
generate positive free cash flow. Moody's expects the company to
comfortably comply with the credit facility's requirement to
maintain a net leverage ratio of not more than 5.5x and an interest
coverage of not less than 2.25x. SUN's next upcoming debt maturity
is its $600 million 6% notes due in 2027. The revolver expires in
April 2027.
SUN's Ba2 CFR benefits from its position as one of the largest
distributors of motor fuels in the US, the strength of its Sunoco
retail brand and the geographic reach and revenue stability
accruing from its dominant business, wholesale motor fuel
distribution. SUN generates a relatively stable margin, solidified
in recent years by largely exiting retail fuel and merchandise
while growing its presence in more predictable midstream
businesses, such as terminals and storage tanks. SUN also benefits
from its ability to capitalize on its scale in the highly
fragmented wholesale motor fuels distribution business.
The company will continue to be acquisitive, with an appetite for
logistics assets such as terminals and storage tanks that support
the distribution business in the company's more attractive markets.
Moody's expects that SUN will adhere to its stated long-term
leverage target of around 4x (about 4.5x including Moody's standard
operating lease adjustments) and that acquisitions will be funded
in a way that doesn't cause leverage to rise above 4.5x. SUN's
exposure to volumetric risk in the wholesale distribution of motor
fuels leaves it vulnerable to shifts in market demand and a
long-term secular decline in motor fuels consumption. As a
distributor with a large network, SUN is well positioned to shift
to cleaner fuels as demand for them grows; however, the
accelerating electrification of the transport sector could be
disruptive to SUN's operations longer term.
SUN's stable outlook reflects Moody's expectation of moderate
volumetric growth in demand for motor fuels into 2024 and adjusted
leverage in the neighborhood of 4.5x.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
A rating upgrade could be considered if SUN's growth and
acquisition activity remains biased toward more stable midstream
activities, with adjusted debt/EBITDA below 3.5x while maintaining
strong distribution coverage. Ratings could be downgraded if
leverage is consistently maintained above 4.5x or distribution
coverage falls below 1x.
The principal methodology used in this rating was Midstream Energy
published in February 2022.
Dallas, Texas-based Sunoco LP (SUN) is a master limited partnership
with core operations that include the distribution of motor fuel to
approximately 10,000 convenience stores, independent dealers,
commercial customers and distributors located in more than 40 U.S.
states and territories as well as refined product transportation
and terminalling assets. SUN's general partner is owned by Energy
Transfer LP (ET, Baa3 positive), which also owns 34% of SUN's
common units. SUN is headquartered in Dallas, Texas.
SUNOCO LP: S&P Assigns 'BB' Rating on New Senior Unsecured Notes
----------------------------------------------------------------
S&P Global Ratings assigned its 'BB' issue-level rating and '3'
recovery rating to Sunoco LP's and Sunoco Finance Corp.'s proposed
$500 million senior unsecured notes due in 2028. The '3' recovery
rating indicates its expectation for meaningful (50%-70%; rounded
estimate: 65%) recovery in the event of a payment default.
The company intends to use the net proceeds to repay a portion of
its revolving credit facility, which matures April 7, 2027. As of
June 30, 2023, there was $990 million drawn.
Sunoco LP's general partner, Sunoco GP LLC, is 100% owned by Energy
Transfer Operating L.P., a wholly owned subsidiary of Energy
Transfer L.P. (ET), which owns 100% of Sunoco's incentive
distribution rights, the noneconomic general partner interest, and
a significant portion of the partnership's limited partner units.
Although ET controls Sunoco through this interest, S&P assesses
Sunoco on a stand-alone basis because we believe several factors
insulate creditors from ET: its substantial third-party limited
partnership ownership, limited business interactions between ET and
Sunoco, and partnership agreement provisions that provide some
protection to its creditors. S&P views Sunoco LP as nonstrategic to
ET.
SUPERTRANSPORT LLC: Seeks Cash Collateral Access
------------------------------------------------
Supertransport, LLC asks the U.S. Bankruptcy Court for the Western
District of Missouri for authority to use cash collateral and
provide adequate protection.
The U.S. Small Business Administration asserts a senior perfected
security interest in all cash, cash equivalents, and account
receivables generated by the Debtor.
The Debtor proposes to use the cash collateral that existed as of
the filing of the petition and in exchange, grant the SBA a
replacement lien on the post-petition cash collateral, which is
made up of future bank deposits, accounts receivable and other cash
assets.
Further, the Debtor proposes to pay the SBA as an adequate
protection payment the sum of $150 per month, commencing on October
1, 2023, and by the 1st of each month thereafter until the Plan of
Reorganization is confirmed.
The Debtor will not use the cash collateral to pay prepetition
debt, other than interest only to the secured lenders who have
liens on specific commercial trucks and trailers, and also, only as
ordered by the Court. The Debtor is proposing to surrender a number
of trucks/trailers and is not offering to pay interest only on
those loans which are associated with the surrendered
trucks/trailers. A notice of abandonment will be filed shortly.
A copy of the motion is available at https://urlcurt.com/u?l=287mLb
from PacerMonitor.com.
About Supertransport, LLC
Supertransport, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. W.D. Mo. Case No. 23-41241) on September 6,
2023. In the petition signed by Marcus Mueller, member, the Debtor
disclosed $660,200 in assets and $1,966,322 in liabilities.
Erlene W. Krigel, Esq., at Krigel & Krigel, PC, represents the
Debtor as legal counsel.
TAHOE LAKE: Unsecured Creditors to Recover 5% over 60 Months
------------------------------------------------------------
Tahoe Lake Love filed with the U.S. Bankruptcy Court for the
Eastern District of California a Plan of Reorganization for Small
Business dated September 7, 2023.
Since 2018, the Debtor has been in the business of operating a
shot-term rental business. Debtor provide management services to
owners of rental units, which includes cleaning, maintenance,
advertising, and overseeing the bookings. Debtor also provides boat
rental services.
The Plan Proponent's financial projections show that the Debtor
will have projected disposable income of $51.30. The final Plan
payment is expected to be paid on January 2029.
Non-priority unsecured creditors holding allowed claims will
receive distributions, which the proponent of this Plan has valued
at approximately 5 cents on the dollar. This Plan also provides for
the payment of administrative and priority claims.
Class 3A consists of the Claim of Marie Walther. Debtor is a party
to a Short-Term Rental Agreement with Marie Walther for property
located at 438 Beaver St., Kings Beach, CA 96143. Debtor agrees to
provide management services for the property. Debtor wishes to
assume the services for the property. Debtor wishes to assume the
services for the property. Debtor wishes to assume the agreement
and cure pre-petition arrears in full. Debtor proposes a cure
payment of $669.44 due on the effective date, and followed by five
consecutive monthly payments of $669.44 to cure the pre-petition
arrears. This Class is impaired.
Class 3B consists of General Unsecured Creditors. Debtor proposes a
5% repayment to its general unsecured creditors over 60 months,
with the first payment due on the effective date, and followed by
59 consecutive equal monthly payments thereafter until the holder
of each allowed claim receives its 5% pro rata distribution from
the Debtor. This Class is impaired.
Class 4 consists of Equity security holders of the Debtor. Alison
Lee is the principal and 100% equity shareholder of the Debtor. She
will retain her interest in the Debtor after confirmation.
Distribution to creditors under this Plan will be funded primarily
from the following sources: (a) the Debtor's cash on hand on the
Effective Date and (b) the net income derived from the continued
operation of the Debtor's business.
This plan proposes to pay creditors using the net disposable income
of the debtor over the five-year period after the Effective Date.
This plan will allow non-insider general unsecured creditors (Class
3) to recover 5% more than if the Debtor's assets were sold in a
hypothetical Chapter 7 liquidation and the proceeds paid out to
each Creditor respective creditors. Debtor believes that this Plan
represents the best possible return to holders of claims. The
Debtor believes that this plan will successfully reorganize the
Debtor and that the confirmation of this Plan is in the best
interests of the Debtor, its creditors, and equity interest holder.
A full-text copy of the Plan of Reorganization dated September 7,
2023 is available at https://urlcurt.com/u?l=C5J9eA from
PacerMonitor.com at no charge.
Attorney for the Plan Proponent:
Michael Jay Berger, Esq.
Law Offices of Michael Jay Berger
9454 Wilshire Blvd., 6th Floor
Beverly Hills, CA 90212-2929
Telephone: (310) 271-6223
Facsimile: (310) 271-9805
Email: michael.berger@bankruptcypower.com
About Tahoe Lake Love
Tahoe Lake Love has been in the business of operating a shot-term
rental business.
The Debtor filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. E.D. Calif. Case No. 23-21903) on June 9,
2023, with up to $50,000 in assets and up to $1 million in
liabilities. David Sousa has been appointed as Subchapter V
trustee.
Judge Christopher D. Jaime oversees the case.
Michael Jay Berger, Esq., at the Law Offices of Michael Jay Berger,
represents the Debtor as bankruptcy counsel.
TPT GLOBAL: Unit Signs Settlement Deal With Information Security
----------------------------------------------------------------
TPT Strategic, Inc., a majority owned subsidiary of TPT Global
Tech, Inc., has entered into a Settlement Agreement and Mutual
Release with Everett Lanier and Information Security and Training,
LLC.
As disclosed in a Form 8-K filed with the Securities and Exchange
Commission, the Settlement Agreement compromises, settles, and
otherwise resolves all claims, compensation claims, benefit claims,
or allowances, ownership of TPT Strategic Series B Preferred Stock,
and all other potential claims between the parties or their
officers, directors, shareholders, or representatives arising from
or relating to Second Parties' activities during the period from
approximately 2022 to September 11, 2023, except as to those rights
specifically set forth in the Settlement Agreement.
TPT Strategic and the Second Parties have reached a settlement of
certain matters, any payables to or from TPT Strategic from or to
Second Parties of TPT Strategic which would be a claim, and certain
stock ownership of TPT Strategic by the Second Parties.
Certain matters have arisen regarding Second Parties that had not
previously been disclosed to TPT Strategic by Second Parties and
still have not been fully disclosed on the advice of counsel to
Second parties, and such matters could materially affect the
financials and business of TPT Strategic, and it is deemed grounds
for the rescission of the acquisition of Information and Security
Training LLC, by TPT Strategic, which occurred in 2022, and the
release and cancellation of the Series B Preferred Stock of TPT
Strategic issued to Everett Lanier, and the release by TPT
Strategic of any claim of ownership to Information and Security
Training LLC.
About TPT Global Tech
TPT Global Tech Inc. (OTC:TPTW) based in San Diego, California, is
a technology holding company based in San Diego, California. It was
formed as the successor of two U.S. corporations, Ally Pharma US
and TPT Global, Inc. The Company operates in various sectors
including media, telecommunications, Smart City Real Estate
Development, and the launch of the first super App, VuMe Live
technology platform.
TPT Global reported a net loss attributable to the Company's
shareholders of $61.50 million for the year ended Dec. 31, 2022,
compared to a net loss attributable to the Company's shareholders
of $4.02 million for the year ended Dec. 31, 2021. As of Dec. 31,
2022, the Company had $1.05 million in total assets, $34.02 million
in total liabilities, $58.25 million in mezzanine equity, and a
total stockholders' deficit of $91.21 million.
Draper, UT-based Sadler, Gibb & Associates, LLC, the Company's
auditor since 2016, issued a "going concern" qualification in its
report dated May 16, 2023, citing that the Company has suffered
recurring losses from operations and has a net capital deficiency
that raise substantial doubt about its ability to continue as a
going concern.
UETEK: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------
Debtor: UETEK
13521 Benson Avenue
Chino, CA 91710
Business Description: UETEK is a wholesaler of grocery and related
products.
Chapter 11 Petition Date: September 14, 2023
Court: United States Bankruptcy Court
Central District of California
Case No.: 23-14201
Debtor's Counsel: Sean A. OKeefe, Esq.
OKEEFE & ASSOCIATES LAW CORPORATION, PC
26 Executive Park
Suite 250
Irvine, CA 92614
Tel: (949) 334-4135
Fax: (949) 209-2625
Email: sokeefe@okeefelawcorporation.com
Total Assets: $779,202
Total Liabilities: $1,976,556
The petition was signed by Hsiang Woodby as chief executive
officer, secretary, chief financial officer.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
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/RECQNRY/UETEK__cacbke-23-14201__0001.0.pdf?mcid=tGE4TAMA
US FOODS: Moody's Rates New 2028/2032 Unsecured Notes 'B2
----------------------------------------------------------
Moody's Investors Service assigned B2 ratings to US Foods, Inc.'s
proposed senior unsecured notes due 2028 and senior unsecured notes
due 2032. The company's existing ratings are unchanged, including
its Ba3 corporate family rating, Ba3-PD probability of default
rating, Ba3 senior secured bank facility rating, B2 senior
unsecured global notes rating, and SGL-1 speculative-grade
liquidity rating. The Ba3 senior secured notes rating will be
withdrawn upon close of the transaction. The rating outlook is
stable.
Proceeds from the new notes will be used to redeem all of the
company's existing $1 billion 6.25% senior secured notes due 2025.
The transaction is expected to slightly increase interest expense,
by less than $10 million.
Moody's took the following rating actions for US Foods, Inc.:
Senior Unsecured Global Notes, Assigned B2
RATINGS RATIONALE
US Foods' Ba3 CFR is supported by the company's scale and market
position as a top 3 player with national reach in US food
distribution, with diversified operations across multiple end
markets. US Foods has opportunities to grow profitability by
executing on its 2022-2025 strategic plan, which includes market
share gains, and margin expansion from vendor price negotiation,
process standardization, routing optimization and increased private
label penetration. Moody's expects these structural benefits to
mitigate near-term challenges in the industry, including modest
volume declines and gross profit pressure from volatile food
prices. In addition, US Foods should also continue to benefit from
a recovery in hospitality and healthcare volumes, which still lag
pre-pandemic levels. In Q2 2023, net leverage declined to 3.0x net
debt/EBITDA, meeting the upper end of US Foods' target 2.5-3.0x
range as a result of both earnings growth and debt repayment.
Moody's expects leverage to decline further over the next 12-18
months from 3.7x Moody's-adjusted debt/EBITDA as of July 1, 2023,
driven by organic case volume growth and modest margin improvement.
Moody's projects very good liquidity over the next 12-18 months,
including strong positive free cash flow and ample availability
under the $2.3 billion asset-based revolver.
US Foods' CFR is constrained by the fragmented and highly
competitive nature of the food distribution industry. The company's
low operating margin reflects both industry competition and
inefficiencies in its operations, which the company is addressing
with its strategic initiatives. In addition, while US Foods has
significantly reduced leverage over the past 2 years, it employed
an aggressive acquisition strategy in the past, highlighted by the
debt-funded acquisitions of SGA's Food Group of Companies and Smart
Foodservice.
The stable outlook reflects Moody's expectations for very good
liquidity and continued earnings growth.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if US Foods generates sustained
earnings growth, reflecting increasing market share and margin
expansion in line with the company's strategic plan.
Quantitatively, the ratings could be upgraded if Moody's-adjusted
debt/EBITDA is maintained under 3.75 times and EBITA/interest
expense above 3.25 times. An upgrade would also require maintaining
a balanced financial strategy and very good liquidity.
The ratings could be downgraded if US Foods' operating performance
declines or the company adopts a more aggressive financial
strategy, including debt-financed acquisitions or debt-financed
share repurchases. Quantitatively, the ratings could be downgraded
if Moody's-adjusted debt/EBITDA is sustained above 4.5 times or
EBITA/interest expense below 2.5 times. A sustained deterioration
in liquidity for any reason could also lead to a downgrade.
Headquartered in Rosemont, Illinois, US Foods, Inc. (US Foods) is a
leading North American broadline foodservice distributor, with
revenue of around $35 billion as of twelve months ended July 1,
2023. The company serves the restaurant, healthcare, hospitality,
education, and other end markets.
The principal methodology used in these ratings was Distribution
and Supply Chain Services published in February 2023.
VALLEY PORK: Hires Cutler Law Firm P.C. as Counsel
--------------------------------------------------
Valley Pork LLC seeks approval from the U.S. Bankruptcy Court for
the Southern District of Iowa to employ Cutler Law Firm, P.C., as
counsel to handle its Chapter 11 bankruptcy case.
The firm will be paid at these rates:
Robert C. Gainer $350 per hour
Associates $190 per hour
Paralegal $100 per hour
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Robert C. Gainer, a partner at Cutler Law Firm, P.C, 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 C. Gainer, Esq.
CUTLER LAW FIRM, P.C
1307 50th St,
West Des Moines, IA 50266
Tel: (515) 223-6600
Fax: (515) 223-6787
Email: rgainer@cutlerfirm.com
About Valley Pork, LLC
Valley Pork, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Iowa Case No. 23-01125-11) on August
30, 2023. In the petition signed by Casey Westphalen, managing
director of Business Solution, the Debtor disclosed up to $50
million in both assets and liabilities.
Robert C. Gainer, Esq., at Cutler Law Firm, represents the Debtor
as legal counsel.
VALLEY PORK: Hires Ms. Westphalen of Nutriquest Business as CRO
---------------------------------------------------------------
Valley Pork LLC seeks approval from the U.S. Bankruptcy Court for
the Southern District of Iowa to employ Casey Westphalen of
Nutriquest Business Solutions, LLC, as chief restructure officer.
The firm will provide these services:
a. consult the Debtor in the negotiations with any of its
creditors, including but not limited to Farm Credit Services of
America and Waukon State Bank (collectively, whether named or not,
the "Creditors");
b. represent the interests of the Debtor in negotiations with
its Creditors and the establishment of a bankruptcy plan;
c. represent and act on behalf of the Debtor in carrying out the
bankruptcy plan, including but not limited to the reorganization of
Client or the liquidation of its assets as subsequently determined
by the bankruptcy plan and as approved by the bankruptcy Court;
and
d. all accounting and other similar work related to or arising
out of the foregoing
The firm will be paid at these rates:
President $450 per hour
Director $350 per hour
CFO $250 per hour
Controller $200 per hour
Staff Accountant $145 per hour
The firm will be paid a retainer in the amount of $20,000.
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Casey Westphalen, a managing director at Nutriquest Business
Solutions, LLC, 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:
Casey Westphalen
Nutriquest Business Solutions, LLC
3782 Ninth Street SW
Mason City, IO 50401
Tel: (712) 249-5194
Email: casey@nutriquest.com
About Valley Pork, LLC
Valley Pork, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Iowa Case No. 23-01125-11) on August
30, 2023. In the petition signed by Casey Westphalen, managing
director of Business Solution, the Debtor disclosed up to $50
million in both assets and liabilities.
Robert C. Gainer, Esq., at Cutler Law Firm, represents the Debtor
as legal counsel.
VANTAGE TRAVEL: Committee Seeks to Hire Dentons as Counsel
----------------------------------------------------------
The official committee of unsecured creditors of Vantage Travel
Service, Inc. seeks approval from the U.S. Bankruptcy Court for the
District of Massachusetts to employ Dentons Bingham Greenebaum LLP
and, Dentons US LLP, as counsels.
The firm will provide these services:
a. advise the Committee with respect to its rights, duties, and
powers in this case;
b. assist and advise the Committee in its consultations with the
Debtor relating to the administration of this case;
c. assist the Committee in analyzing the claims of the Debtor's
creditors, the Debtor's capital structure, and in negotiating with
the holders of claims and, if appropriate, equity interests;
d. assist the Committee's investigation of the acts, conduct,
assets, liabilities, and financial condition of the Debtor and
other parties involved with the Debtor and of the operation of the
Debtor's business;
e. assist the Committee in its analysis of, and negotiations
with the Debtor or any other third party concerning matters related
to, among other things, the assumption or rejection of certain
leases of non-residential real property and executory contracts,
asset dispositions, financing transactions, and the terms of a plan
of reorganization or liquidation for the Debtor;
f. assist and advise the Committee as to its communications, if
any, to the general creditor body regarding significant matters in
this case;
g. represent the Committee at all hearings and other
proceedings;
h. review, analyze, and advise the Committee with respect to
applications, orders, statements of operations, and schedules filed
with the Court;
i. assist the Committee in preparing pleadings and applications
as may be necessary in furtherance of the Committee's interests and
objectives; and
j. perform such other services as may be required and are deemed
to be in the interests of the Committee in accordance with the
Committee's powers and duties as set forth in the Bankruptcy Code.
The firm will be paid at these rates:
Andrew Helman, Partner (Portland/Boston) $590 per hour
James R. Irving, Partner (Louisville) $630 per hour
Lauren Macksoud, Partner (NYC) $875 per hour
Gina Young, Managing Associate (Louisville) $400 per hour
Jacob Margolies, Associate (Louisville) $350 per hour
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
As 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:
Andrew C. Helman, Esq.
DENTONS BINGHAM GREENEBAUM LLP
One Beacon Street, Suite 25300
Boston, MA 02108
Tel: (207) 619-0919
Email: andrew.helman@dentons.com
- and -
Gina M. Young, Esq.
Jacob S. Margolies, Esq.
DENTONS BINGHAM GREENEBAUM LLP
3500 PNC Tower
101 South Fifth Street
Louisville, KY 40202
Tel: (502) 587-3545
Email: gina.young@dentons.com
jacob.margolies@dentons.com
About Vantage Travel Service, Inc.
Vantage Travel Service, Inc. is a travel agency providing deluxe
international tours. Its travel offerings include trips on river
and ocean-going vessels owned by affiliated, non-debtor entities,
as well as river, ocean-going and land-based tours booked with
third-party operators.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Mass. Case No. 23-11060) on June 29,
2023. In the petition signed by Gregory DelGreco, authorized
officer, the Debtor disclosed up to $10 million in assets and up to
$500 in liabilities.
Judge Janet E. Bostwick oversees the case.
Michael J. Goldberg, Esq., at Casner & Edwards, LLP, represents the
Debtor as legal counsel.
An ad hoc committee of customers is represented by Andrew C.
Helman, Esq., at DENTONS BINGHAM GREENEBAUM LLP.
VIASAT INC: Moody's Rates New Secured 1st Lien Term Loan 'Ba3'
--------------------------------------------------------------
Moody's Investors Service has assigned a Ba3 rating to Viasat,
Inc.'s new senior secured first lien term loan B and a Caa1 rating
to its new senior unsecured notes. The company's B2 corporate
family rating, B2-PD probability of default rating, Ba3 senior
secured first lien term loan B and senior secured notes rating,
Caa1 senior unsecured notes rating, SGL-1 speculative grade
liquidity rating, and stable outlook remain unchanged. Also, in the
Inmarsat restricted group, the B1 rating on Connect Finco Sarl's
senior secured credit facilities and senior secured notes, and
stable outlook remain unchanged.
Proceeds from the new debt issue will be used to repay the bridge
financing that was part of the funding for the Inmarsat acquisition
[1].
Assignments:
Issuer: Viasat, Inc.
Senior Secured Term Loan B, Assigned Ba3
Senior Unsecured Regular Bond/Debenture, Assigned Caa1
RATINGS RATIONALE
Viasat's B2 CFR is constrained by: (1) the anomaly with its
Viasat-3 F1 satellite, which limits its ability to combat
competitive pressures in the fixed broadband business together with
potential delayed launch and operational risks of its Viasat-3 F2
and F3 satellites; (2) the anomaly with its Inmarsat-6 F2
satellite, which was intended to provide increased capacity and
redundant coverage; (3) ongoing negative free cash flow generation
due to periodic satellite construction in order to remain
competitive while business risk is rising from evolving technology
and increasing supply of satellites; (4) high consolidated
financial leverage (starting Debt/EBITDA of 5.8x for the
combination with Inmarsat), although Moody's expects the metric to
be sustained below 5.5x by the end of fiscal 2025 (ending March 31,
2025) despite uncertain global macroeconomic growth; and (5)
increasing competition in the aviation and maritime businesses. The
rating benefits from: (1) its largest scale among rated peers in
the satellite space, which is further enhanced by the Inmarsat
acquisition; (2) increased recurring revenue and margins, together
with improved segment and geographic diversification; (3) good long
term growth prospects due to rising demand for voice and data
connectivity globally; and (4) very good liquidity.
Viasat standalone has three classes of debt - (1) unrated
Export-Import Bank (Ex-Im) credit facility ($49 million remaining)
that expires in October 2025; (2) Ba3-rated $600 million secured
notes due 2027, $700 million secured term loan B due 2029, and new
$616.7 million secured term loan B due 2030, and unrated $647.5
million revolving credit facility that expires in 2028; (3)
Caa1-rated unsecured notes ($700 million due 2025, $400 million due
2028 and new $733.4 million due 2031). The Ex-Im facility is
secured by first-priority lien on the ViaSat-2 satellite. The
secured term loans, notes and revolving credit facility benefit
from a security package that provides first access to realization
proceeds other than those coming from the ViaSat-2 satellite, but
with secondary claims on the satellite. Moody's rates these
instruments Ba3, two notches above the CFR due to their
preferential access to realization proceeds and loss absorption
cushion provided by the unsecured notes. In turn, Moody's rates the
unsecured notes Caa1, two notches below the CFR, to reflect their
junior ranking and the size of secured debt ranking above them in
the capital structure.
There is no cross guarantee or cross default between Viasat and
Inmarsat debt. Inmarsat is ring-fenced, with no upstream
distribution of cash flow to Viasat, and that allows the pari-passu
secured revolving credit facility, secured term loan B and secured
notes to be rated B1. Also, Inmarsat's debt does not benefit from
loss absorption cushion provided by Viasat's unsecured notes.
As proposed, the new term loan is expected to provide covenant
flexibility that if utilized could negatively impact creditors.
Notable terms include the following: (1) incremental debt capacity
up to the sum of (a) the greater of (i) $1,420 million and (ii) an
amount equal to 100% of consolidated EBITDA on a pro forma basis,
plus (b) an unlimited amount subject to 3x first lien net leverage
(on a pari passu basis). The maturity date of any incremental term
loan shall be no earlier than the latest maturity date of existing
term loan; (2) the credit agreement permits the transfer of assets
to unrestricted subsidiaries, up to the carve-out capacities,
subject to "blocker" provisions which prohibit (i) the designation
of any restricted subsidiary as an unrestricted subsidiary if it
owns any assets (including satellites) that are material to the
ordinary course operations of the borrower; and (ii) the transfer
of such material assets (including any satellite) to an
unrestricted subsidiary; (3) only material US subsidiaries must
provide guarantees whether or not wholly-owned, eliminating the
risk that guarantees will be released because they cease to be
wholly-owned; and (4) the credit agreement is expected to provide
some limitations on up-tiering transactions, including the
requirement that each affected lender consents to any amendment or
waiver that subordinates (i) the obligations to any other debt or
(ii) the lien to any lien securing any other debt. The builder
basket includes an accumulated credit of 50% of Consolidated Net
Income, predating from April 1, 2016. The above are proposed terms
and the final terms of the credit agreement may be materially
different.
Viasat has very good liquidity (SGL-1) through the next twelve
months to August 31, 2024 with sources approximating $3.5 billion
while it has uses of about $445 million in this timeframe. Sources
include cash and cash equivalents of $2.1 billion at June 30, 2023,
full availability under the company's new $647.5 million revolving
credit facility that expires in August 2028, and full availability
under Inmarsat's $700 million revolving credit facility that
expires in December 2024. Cash uses comprise Moody's expected free
cash flow consumption of about $415 million through the next twelve
months, mainly due to capital spending on new satellite
construction and customer premise equipment, and about $30 million
amortization payment on its Ex-Im credit facility and term loan B.
Viasat's revolver is subject to leverage and coverage covenants and
Moody's expects cushion to exceed 15% through the next four
quarters. Inmarsat's revolver is subject to a leverage covenant
when drawings exceed 40% of the commitment and Moody's does not
expect the covenant to be applicable through the next four
quarters. The combined company has limited flexibility to generate
liquidity from asset sales.
The outlook is stable because Moody's expects the company to
demonstrate good operating performance and sustain consolidated
financial leverage below 5.5x within 24 months after closing the
Inmarsat acquisition despite the potential that the Viasat-3 F1
satellite may not provide any contribution. The stable outlook also
assumes that the company will complete construction and launch of
the Viasat-3 F2 and F3 satellites by the end of calendar 2024.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Viasat's ratings could be upgraded if it successfully constructs,
launches and obtains normal operation of its Viasat-3 F2 and F3
satellites, and sustains consolidated FCF/Debt towards 5%,
Debt/EBITDA below 5x and EBITDA-Capex/Interest towards 2x.
Viasat's ratings could be downgraded if there is significant
deterioration in the Inmarsat or Viasat businesses, or if it
sustains consolidated Debt/EBITDA above 6.5x, EBITDA-Capex/Interest
below 1x or FCF/Debt below 0%.
The principal methodology used in these ratings was Communications
Infrastructure published in February 2022.
Viasat, headquartered in Carlsbad, California, operates a consumer
satellite broadband internet business, an in-flight connectivity
business, and provides satellite and related communications,
networking systems and services to government and commercial
customers. Inmarsat operates a satellite communications network
using L-band, Ka-band and S-band spectrum, and provides voice and
data services to customers on land, at sea and in the air.
VIASAT INC: S&P Assigns 'BB' Rating on $617MM Term Loan B
---------------------------------------------------------
S&P Global Ratings assigned its 'BB' issue-level rating and '2'
recovery rating to Viasat Inc.'s $617 million secured term loan B
due 2030. The '2' recovery rating indicates S&P's expectation for
substantial (70%-90%; rounded estimate: 85%) recovery in a
simulated default scenario. At the same time, S&P assigned its 'B'
issue-level rating and '6' recovery rating to the $733 million
unsecured notes due 2031 (coupon expected to be 7.5%). The '6'
recovery rating reflects S&P's expectation for negligible (0%-10%;
rounded estimate: 0%) recovery in a simulated default. The company
plans to use the proceeds to repay the unsecured bridge facility.
This transaction is neutral for the company's credit metrics, as it
will not be receiving any cash nor will its debt balance or
interest expense change. S&P is closely monitoring the company's
mitigation efforts following the July 2023 anomaly on the first of
three planned Viasat-3 satellites (F1) and expect a more fulsome
update in November 2023 when Viasat announces third quarter
earnings.
S&P said, "We believe Viasat's pace of deleveraging will now be
slower as additional in-home broadband capacity will be unavailable
over at least the next 18 months. Still, we believe the company's
in-flight connectivity backlog will be largely unaffected by the
failure of Viasat-3 F1, which provides a credible mid-single-digit
EBITDA growth trajectory. Therefore, we project that debt to EBITDA
will remain below our 5x downside trigger, peaking at around 4.6x
in fiscal 2024.
"We remain focused on the company's ability to reach an inflection
point on cash flow. Our 'BB-' issuer credit rating is predicated on
the company being able to generate sustained positive free
operating cash flow (FOCF) in 2026 and beyond. Management provided
guidance in August 2023 that it will still be able to generate
positive FOCF in the second half of calendar 2025 despite the
Viasat-3 anomaly and contingency plans.
"We will continue to monitor the company's capital spending plans
and ability to execute on contingency plans. If the timing our
amount of FOCF is weaker than our current forecast, such that the
path toward positive cash flow becomes more uncertain, we could
take a negative rating action."
Since August 2023, the I6-F2 satellite (which was part of the
Inmarsat fleet) experienced an unexpected anomaly. This problem
will have a much smaller impact than the high-capacity Viasat-3
loss, as I6-F2 was primarily to be used for spare L-band capacity
to create network redundancy. Furthermore, this satellite was fully
insured and will improve Viasat's near-term cash position.
Therefore, S&P does not expect a material impact to the company's
credit profile as a result of this failure. However, S&P recognizes
satellite insurance will become more expensive and potentially
difficult to obtain and Viasat-3 F3 is not yet insured (Viasat-3 F2
is insured).
VIAVI SOLUTIONS: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
----------------------------------------------------------------
Fitch Ratings has affirmed Viavi Solutions Inc.'s (VIAVI) Long-Term
Issuer Default Rating (IDR) at 'BB'. Fitch has also affirmed
VIAVI's senior unsecured notes at 'BB'/'RR4'. The Rating Outlook is
Stable.
VIAVI's ratings reflect its leadership position in wireless and
wireline test and measurement sub-sectors. In addition, relative to
peers, the company's anti-counterfeiting pigments business provides
a notable end market diversification benefit. While performance in
fiscal 2023 resulted in EBITDA leverage increasing above Fitch's
downgrade sensitivity, VIAVI's FCF profile, visibility on debt
reduction and normalized forecast EBITDA leverage support the
current rating level.
KEY RATING DRIVERS
Leverage Temporarily Above Downgrade Sensitivity: At fiscal YE23,
VIAVI's EBITDA leverage was 3.6x, compared to 2.1x at fiscal YE22
and a downgrade sensitivity of 3.5x. A 14% yoy decrease in revenue
and EBITDA margin contraction from 25% to 19% is primarily
attributable for the increase. Near-term debt reduction visibility
from the repayment of $96 million outstanding 2024 convertible
notes and the limitation on continuous end market spending
deferrals in the Network Enablement segment, provides visibility
that the increased leverage is temporary and not structural to
VIAVI's credit profile. Fitch forecasts EBITDA leverage lowering
below 3x by fiscal YE24 and towards approximately 2.5x at the end
of its forecast period.
Financial Structure Support: Forecast annual FCF of approximately
$150 million provides flexibility to make discretionary
improvements to VIAVI's balance sheet. VIAVI has a recent history
of coming to negotiated agreements with convertible note holders to
settle notes early. Further flexibility from FCF uses is provided
by VIAVI not having a common dividend program and utilizing the
more discretionary in nature share repurchases for shareholder
returns.
Additionally, FCF visibility benefits from lower expected capital
spending requirements with the completion of VIAVI's Arizona
facility build out. A current cash balance of approximately $0.5
billion, which is materially above a reasonable minimum cash
balance required to manage operational volatility, provides an
additional layer of financial resource to support VIAVI's capital
structure if required.
Strong Market Position: VIAVI is a top five provider in the test
and measurement space and enjoys leading market positions in
wireline cable, access, metro and transport, fiber, wireless
RAN-to-core, as well as land-mobile and military radio, navigation,
communication and transponders. Additionally, VIAVI is a leader in
anti-counterfeiting pigment materials as well as 3D sensing optical
filters and diffusers used in mobile phones.
Segment End Market Diversification: VIAVI's revenue composition
includes about 72% from the Network and Service Enablement
segments, inclusive of core test and measurement and network
optimization, and approximately 28% attributed to the highly
entrenched Optical Security and Performance Products segment, which
primarily provides the anti-counterfeiting pigments needed for
physical currency.
These segments' drivers are reasonably uncorrelated and while both
experienced declines in 2023 that if persist in 2024 in conjunction
with other credit factors could affect the rating, the differences
in end users and demand factors provides diversification benefits
to VIAVI's credit profile. For example, the counter cyclicality of
the anti-counterfeiting business, which is concentrated, is driven
in weaker economic environments by fiscal and monetary stimulus
support programs that drive bank note growth. If organic revenue
decline persists for fiscal 2024, in conjunction with other credit
quality factors, it may affect the rating.
Technology Trends Support Demand: VIAVI benefits from exposure to
both development and field deployment of wireless and wireline
communication technologies. Increased fiber deployment in homes,
data centers and wireless backhaul increases demand for VIAVI's
test and measurement offerings applicable to client manufacturing
operations and its network management solutions, while development
of 800 Gbit/s and 1.6 Tbit/s ethernet speeds support demand for
module prototype and lab-test solutions.
Transition to 5G wireless has benefited VIAVI through relationships
with service providers that provide demand growth as their networks
are built out, while 6G development supports deeper engagement with
key wireless equipment providers.
The company's 3D sensing offering for mobile phone applications has
grown in the iOS ecosystem and the potential for eventual adoption
within android-based phones may significantly expand market
potential. Growth from advanced driver assisted systems automotive
applications should also support demand for VIAVI's optical filters
and diffusers.
DERIVATION SUMMARY
VIAVI is a competitor of Keysight Technologies, Inc. ('BBB'/Stable)
in its Network Enablement segment. Keysight enjoys larger overall
revenue scale of over $5 billion compared to $1.1 billion during
their respective most recent fiscal years, as well as higher
operating EBITDA margins above 30% compared with closer to 20% for
VIAVI. VIAVI has historically maintained a fairly conservative
capitalization between 2x -3x with EBITDA leverage in fiscal 2023
of 3.6x being an outlier. This compared to EBITDA leverage of 1.1x
for Keysight in their most recent fiscal year end.
Coherent Corp. ('BB'/Stable) is a competitor of VIAVI's in the
optical security and performance products segment, which produces
optical filters used in 3D sensing. Coherent generates revenue over
$5 billion similarly to Keysight, but with the exception of VIAVI's
lower 2023 EBITDA margins, are historically closer to VIAVI's
EBITDA margins in the mid 20's. Gross leverage is currently higher
for VIAVI due to its 2023 performance, but financial policies are
similar and Fitch expects leverage levels outside of M&A increases
to be generally comparable.
Equally rated TTM Technologies, Inc ('BB'/Stable), which
manufactures printed circuit boards, generates roughly twice the
revenue of VIAVI, but has a lower EBITDA margin structure. EBITDA
leverage for TTM's most recent fiscal year end of 3.2x, while lower
than VIAVI's fiscal 2023 EBITDA leverage, has in recent years been
higher than VIAVI's.
KEY ASSUMPTIONS
- 2024 revenues approximately in line with 2023 reflecting
continued reserved service provider spend. Forecast revenues
benefit modestly from 5G infrastructure buildout, fiber upgrade
cycle, as well as testing and development of 6G wireless and 800
gigabit/1.6 terabit ethernet.
- Forecast revenue informed by Fitch "Global Economic Outlook -
June 2023" global GDP forecast;
- EBITDA margins improve from 2023 reflecting operating expense
restructuring undertaken. Forecast margins remain in line with some
benefit from improved operating leverage in line with revenue
growth;
- Capital spending is reduced from 2023 levels to reflect more
maintenance level spending post completion of the Arizona facility
build, no near-term capital projects;
- Annual share repurchases approximately equivalent to 50% of FCF
with current $300 million authorization being met and increased. No
dividends paid;
- 2024 convertible repaid in 2024, 2026 convertible maturity
refinanced with a $250 million unsecured note at higher rate
informed by current spread and forward curve;
- Base interest rates applicable to the company's outstanding
variable rate debt obligations reflects current SOFR forward
curve.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- EBITDA Leverage sustained below 2.5x;
- Sustained organic mid-single digit growth;
- Evidence of a decrease in revenue and EBITDA margin volatility.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- EBITDA Leverage sustained above 3.5x;
- Neutral FCF margins;
- Trend of zero, or declining, organic revenue;
- Shift to a more aggressive financial policy.
LIQUIDITY AND DEBT STRUCTURE
Cash Holdings Supplemented by ABL Facility: VIAVI had $507 million
in cash and cash equivalents, excluding approximately $15 million
of short-term investments and $4.5 million of restricted cash at
July 1, 2023. The company has access to drawings on its ABL
revolving credit facility, which had $172.5 million borrowing
available and matures on Dec. 30, 2026.
ISSUER PROFILE
VIAVI is a provider of network test, monitoring and assurance
solutions as well as optical solutions for hard currency
anti-counterfeiting pigments and 3D sensing.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Viavi Solutions Inc. LT IDR BB Affirmed BB
senior unsecured LT BB Affirmed RR4 BB
VISTRA OPERATIONS: Fitch Rates $1BB Unsec. Notes Due 2031 'BB'
--------------------------------------------------------------
Fitch Ratings has assigned a 'BBB-'/'RR1' rating to Vistra
Operations Company LLC's proposed $500 million of senior secured
notes due in 2033 and a 'BB'/'RR4' rating to its $1 billion of
senior unsecured notes due in 2031. The 'RR1' Recovery Rating
denotes outstanding recovery and the 'RR4' Recovery Rating denotes
average recovery in the event of default.
The Long-Term Issuer Default Rating (IDR) for Vistra Operations and
its parent company, Vistra Corp. (Vistra) is 'BB'. The Rating
Outlook is Stable. The net proceeds from the issuance will be used
to finance a portion of Energy Harbor's (BB+/Rating Watch Negative)
acquisition costs and for general corporate purposes. If the
acquisition does not close, the company plans to use the proceeds
to refinance upcoming maturities.
The new senior secured notes will be pari passu with Vistra
Operations' existing first lien debt. Vistra Operations' first lien
secured debt receives an upstream guarantee from the asset
subsidiaries under Vistra Operations, which consists of a
substantial portion of property, assets and rights owned by Vistra
Operations.
KEY RATING DRIVERS
Energy Harbor Acquisition Increases Leverage: Vistra's current
ratings reflect higher EBITDA leverage for 2023 and beyond driven
debt issuances to finance the Energy Harbor acquisition.
Acquisition financing is also pushing out Vistra's previous debt
paydown plans.
While management still aspires to achieve investment-grade leverage
metrics and is targeting net debt/EBITDA leverage below 3.0x, the
goal has been pushed back by a few years. Fitch expects an
improvement in pro forma EBITDA over time as a result of improved
energy margins at Energy Harbor following the roll off of below
market hedges and merger synergies from the integration. However,
the trajectory of credit metrics will largely be driven by
management's financial policy.
Deleveraging Capacity: Per Fitch's calculations, Vistra's 2022
EBITDA leverage was 4.5x, as increased liquidity requirements due
to higher than average collateral requirements resulted in higher
short-term debt. Over the forecast period, total pro forma
consolidated leverage is expected to decline as collateral
requirements are reversed and assuming some of the FCF is allocated
for debt paydown.
Fitch projects total consolidated leverage post acquisition to
trend toward 3.5x in 2025-2026, which is later than previously
expected. Fitch's leverage calculations reflect 50% debt allocated
to $2 billion preferred stock. Fitch assigned a 50% equity credit
to the preferred stock based on the ability to defer dividend
payments for at least up to five years.
Steps to Support Liquidity: Vistra has taken multiple steps to
bolster its liquidity to meet rising collateral requirements as
natural gas and power prices climbed substantially in 2022. Higher
power prices are positive for Vistra's EBITDA and FCF generation;
however, these tend to drive up collateral needs depending on the
hedged profile of the company. Liquidity has improved in 2023 with
the release of collateral as natural gas and power prices have
fallen from their highs in 2022 and hedges have settled. In
addition, the recent issuance of P-Caps provides additional
liquidity and reduces debt issuance at the parent.
Acquisition Provides Diversification: Acquisition of Energy
Harbor's 4GW of nuclear assets located in PJM provides
diversification from Vistra's concentration in the Electric
Reliability Council of Texas (ERCOT) market; a credit positive in
Fitch's view. In addition, the acquisition adds material and
predictable carbon-free cash flows in PJM (energy + capacity
revenues), with a revenue floor supported by nuclear production tax
credits (PTCs). The mechanism will be in effect for eight years and
the floor price increases with inflation. This regulatory support
forms a key credit strength for the acquisition of the nuclear
assets.
Fitch also views favorably the acquisition of the retail book as it
supports Vistra's integrated model, although most of the EBITDA is
expected to come from generation. Energy Harbor's assets, including
synergies from integration, should contribute about 20% of Vistra's
consolidated EBITDA by 2025.
Near-term Earnings Visibility: Vistra (without Energy Harbor) is
well hedged for 2023 to 2025 (~98% hedged for 2023 and 95% hedged
for 2024 and about 60% for 2025), providing increased confidence in
Vistra's Ongoing Operations Adjusted EBITDA expectations. The
addition of Energy Harbor's nuclear assets provides additional
revenue security supported by nuclear PTCs. The Inflation Reduction
Act (IRA) approved a subsidy that effectively provides a floor of
$43.75/MWh starting in 2024 to the energy prices realized by
nuclear power assets providing a high degree of revenue visibility
for those assets.
In addition, Vistra's retail business provides revenue stability
with relatively high renewal rates and stable margins, in
particular given its strong presence in Texas. Retail margins in
the commercial and industrial segments generally remain range-bound
during commodity cycles, and residential retail margins are usually
countercyclical, given the length and stickiness of the customer
contracts. TXU Energy Company LLC, Vistra's largest retail
electricity operation in Texas, has demonstrated strong brand
recognition, tailored customer offerings and effective customer
service, which are driving high customer retention.
Texas Market Reforms: In January 2023, Public Utility Commission of
Texas (PUCT) adopted a Performance Credit Mechanism (PCM) to
financially compensate resources for their availability during
ERCOT's tightest system condition. Subsequently, several bills were
passed in the 2023 Texas Legislation sessions to address market
reliability. House Bill 1500 caps the net cost of PCM to consumers
at $1 billion, creates minimum performance requirements for
generators and requires ERCOT to create a new service for
dispatchable resources to provide flexibility to address intra-hour
operational challenges.
At the same time, Senate Bill 2627 would create a fund to provide
up to $5 billion of low interest rate loans and completion bonuses
to new dispatchable generation in Texas. The creation of the fund
depends on the approval of a constitutional amendment by voters in
November 2023.
Fitch views any market reforms that incentivize dispatchable
generation as potentially positive for Vistra. However, any move
toward state solutions for back-up generation could distort market
pricing and would be detrimental to incumbent generators. Fitch
does not project any benefit from PCM to Vistra as the ultimate
structure is not clear and potential implementation could take
several years.
DERIVATION SUMMARY
Vistra is well-positioned relative to Calpine Corporation
(B+/Stable) and NRG Energy (BB+/Stable) in terms of size, scale and
geographic and fuel diversity. Vistra is the largest independent
power producer in the country, with approximately 37GW of
generation capacity compared with Calpine's 26GW. Vistra's
generation capacity is well-diversified by fuel, compared with
Calpine's natural gas-heavy portfolio.
Vistra's portfolio is less diversified geographically, with more
than 70% off its consolidated EBITDA coming from operations in
Texas, while Calpine's fleet is more geographically diversified
across PJM, Texas and California. The addition of Energy Harbor
will provide diversification from Texas and larger presence in PJM,
a credit positive. In addition, Energy Harbor's nuclear fleet
supported by the federal nuclear PTC program provides a high degree
of revenue visibility for the next decade. NRG's acquisition of
Vivint will continue the company's transformation from its origins
as a power generator and provide additional revenue channels,
further diversifying NRG's revenue stream compared to Vistra.
Vistra, like NRG benefits from its ownership of large and well
entrenched retail electricity businesses in Texas, compared to
Calpine, which has a smaller retail business. Calpine's younger and
predominant natural gas fired fleet bears less operational and
environmental risk compared to Vistra's portfolio that also has
nuclear and coal generation assets. In addition, Calpine's EBITDA
is more resilient to changes in natural gas prices and heat rates
as compared to its peers. NRG is short generation compared to
Vistra and Calpine, and serves load from sources other than its own
generation.
Fitch projects Vistra's leverage to remain in the range of
3.5x-4.0x in 2024-2026, which compares favorably to Calpine's
leverage, which is forecasted to remain in the range of 4.5x-5.0x.
Fitch expects NRG to allocate free cash flow to maintain leverage
within rating thresholds of 3.0x-3.5x beyond 2023.
KEY ASSUMPTIONS
- Acquisition of Energy Harbor for $3 billion cash and a 15% equity
interest in Vistra Vision;
- Hedged generation in 2023-2026 per management's guidance;
- Power prices in key markets such as PJM and ERCOT at a discount
to current forward prices;
- Annual retail load of approximately 100TWH for Vistra and about
25TWH for Energy Harbor;
- Capacity revenues per past auction results; future PJM capacity
auctions in-line with the last auction results;
- Total capex of about $5.4 billion over 2023-2026 including Vistra
Vision;
- Share repurchases of approximately $4.0 billion over 2023-2026;
- Common dividends of about $300 million annually;
- Run rate synergies of about $125 million by 2025;
- Issuance of about $1.4 billion of project finance debt over the
forecast period consolidated on the Vistra's balance sheet.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- While Fitch does not anticipate positive rating actions in the
near to medium term, demonstrated EBITDA leverage lower than 3.5x
on a sustainable basis coupled with track record of stable EBITDA
generation and continued emphasis on an integrated wholesale retail
platform could lead to a positive rating action.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- EBITDA leverage above 4.0x on a sustained basis;
- Weaker power demand and/or higher than expected supply depressing
wholesale power prices and capacity auction outcomes in its core
regions;
- Unfavorable changes in regulatory constructs and markets;
- Lack of access to adequate liquidity to meet collateral
requirements;
- An aggressive growth strategy that diverts a significant
proportion of FCF toward merchant generation assets and/or
overpriced retail acquisitions.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: As of June 30, 2023, the company had
approximately $2.4 billion of liquidity available consisting of
$643 million of cash in hand and around $1.8 billion was available
under various revolving facilities. There were no short-term
borrowings outstanding under the commodity-linked facility and the
revolving credit facility as of June 30, 2023. Vistra's revolving
credit facility agreement has a $3.175 billion commitment expiring
in April 2027.
The commodity-linked facility matures in October 2023 and has
aggregate available commitment limit of $1.35 billion. As of June
30, 2023, the borrowing base under the facility was $326 million,
which is lower than the facility limit of $1.35 billion. The
reduction in the borrowing base is due to a decrease in commodity
prices and the settlement of existing hedges and would increase in
size in a rising commodity price environment in accordance with the
terms of the facility.
ISSUER PROFILE
Vistra is the largest independent power generator in the U.S. with
approximately 37 GW of capacity. Vistra Retail is one of the
largest retail providers in the country with roughly 100 TWHs of
load and approximately four million customers.
Criteria Variation
Variation from Criteria: Fitch looks to its Corporate Rating
Criteria dated Oct. 28, 2022, which outlines and defines a variety
of quantitative measures used to assess credit risk. As per
criteria, Fitch's definition of Total Debt is all encompassing.
However, Fitch's criteria is designed to be used in conjunction
with experienced analytical judgment, and as such, adjustments may
be made to the application of the criteria that more accurately
reflects the risks of a specific transaction or entity.
Fitch does not consider the P-Caps as debt, which is a variation
from the Corporate Rating Criteria's definition of Total Debt.
Absent the exercise of the issuance right, P-Caps are treated as
off-balance sheet for analytical purposes and excluded from Fitch's
leverage and interest coverage metrics. If Vistra Operations were
to exercise issuance rights, the amount of debt issued to the trust
would be included in Vistra's total debt calculation and therefore
its credit metrics.
ESG CONSIDERATIONS
Vistra has an ESG Relevance Score of '4', for Exposure to
Environmental Impacts due to exposure to deficiencies in ERCOT's
energy only market construct caused by extreme weather events,
which has a negative impact on the credit profile, and is relevant
to the ratings in conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery
----------- ------ --------
Vistra Operations
Company, LLC
senior secured LT BBB- New Rating RR1
senior unsecured LT BB New Rating RR4
WATAUGA FAMILY: Seeks to Tap Helms Tax Strategy as Accountant
-------------------------------------------------------------
Watauga Family Dentistry PLLC seeks approval from the U.S.
Bankruptcy Court for the Northern District of Texas to employ Helms
Tax Strategy, PLLC as its accountant.
The firm will provide bookkeeping services to the Debtor including
quarterly reconciliations, quarterly financials, biweekly payroll,
and quarterly or year-end financial tax form filing.
The firm will charge a fixed fee of $450 per month for its services
effective Aug. 21.
Caleb Helms, CPA, a member of Helms Tax Strategy, 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:
Caleb Helms, CPA
Helms Tax Strategy PLLC
5921 Lovell Ave., Ste. A
Fort Worth, TX 76107
Telephone: (817) 732-8597
Facsimile: (817) 732-0758
Email: office@helmstaxstrategy.com
About Watauga Family Dentistry
Watauga Family Dentistry, PLLC filed Chapter 11 petition (Bankr.
N.D. Tex. Case No. 23-42515) on Aug. 28, 2023, with up to $500,000
in assets and up to $1 million in liabilities. William Oliver,
director, signed the petition.
Judge Edward L. Morris oversees the case.
The Debtor tapped Robert C. Lane, Esq., at The Lane Law Firm, PLLC
as bankruptcy counsel and Caleb Helms, CPA, at Helms Tax Strategy,
PLLC as accountant.
WATAUGA FAMILY: Taps The Lane Law Firm as Bankruptcy Counsel
------------------------------------------------------------
Watauga Family Dentistry, PLLC seeks approval from the U.S.
Bankruptcy Court for the Northern District of Texas to employ The
Lane Law Firm, PLLC as its counsel.
The Debtor requires legal counsel to:
(a) assist, advise, and represent the Debtor relative to the
administration of the Chapter 11 case;
(b) assist, advise, and represent the Debtor in analyzing its
assets and liabilities, investigating the extent and validity of
lien and claims, and participating in and reviewing any proposed
asset sales or dispositions;
(c) attend meetings and negotiate with representatives of
secured creditors;
(d) assist the Debtor in the preparation, analysis, and
negotiation of any plan of reorganization and disclosure
statement;
(e) take all necessary action to protect and preserve the
interests of the Debtor;
(f) appear, as appropriate, before the bankruptcy court, the
appellate courts, and other courts in which matters may be heard;
and
(g) perform all other necessary legal services.
The hourly rates of the firm's counsel and staff are as follows:
Robert C. Lane, Partner $550
Joshua D. Gordon, Partner $500
Associate Attorneys $425
Bankruptcy Paralegals/Legal Assistants $150 - $190
In addition, the firm will seek reimbursement for expenses
incurred.
Lane received various payments from May 11 to 22 for its retainer
from the Debtor totaling $25,000.
Mr. Lane disclosed in a court filing that his firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
Robert C. Lane, Esq.
Joshua D. Gordon, Esq.
A. Zachary Casas, Esq.
The Lane Law Firm, PLLC
6200 Savoy, Suite 1150
Houston, TX 77036
Telephone: (713) 595-8200
Facsimile: (713) 595-8201
Email: notifications@lanelaw.com
joshua.gordon@lanelaw.com
zach.casas@lanelaw.com
About Watauga Family Dentistry
Watauga Family Dentistry, PLLC filed Chapter 11 petition (Bankr.
N.D. Texas Case No. 23-42515) on Aug. 28, 2023, with up to $500,000
in assets and up to $1 million in liabilities. William Oliver,
director, signed the petition.
Judge Edward L. Morris oversees the case.
The Debtor tapped Robert C. Lane, Esq., at The Lane Law Firm, PLLC
as bankruptcy counsel and Caleb Helms, CPA, at Helms Tax Strategy
PLLC as accountant.
WAYFORTH LLC: Court OKs Interim Cash Collateral Access
------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Virginia,
Richmond Division, authorized Wayforth, LLC to use cash collateral
on an interim basis in accordance with the budget.
As previously reported by the Troubled Company Reporter, prior to
the Petition Date, the Debtor executed a Promissory Note Purchase
Agreement, dated August 16, 2023, pursuant to which the Debtor made
the following notes:
a. Secured Promissory Note dated August 16, 2023 held by LE
Livible Investments, LLC in the amount of $175,000;
b. Secured Promissory Note dated August 16, 2023 held by HF
Direct Investments Pool, LLC in the amount of $175,000;
c. Secured Promissory Note dated August 31, 2023 held by LE
Livible Investments, LLC in the amount of $430,000; and
d. Secured Promissory Note dated August 31, 2023 held by HF
Direct Investments Pool, LLC in the amount of $430,000.
The court said the Prepetition Secured Parties are entitled to
adequate protection under 11 U.S.C. Sections 361, 363, and 507 to
the extent of any diminution in value of the Prepetition Collateral
during the Chapter 11 case. Adequate protection will include: (i)
first priority senior liens on all unencumbered assets of the
Debtor and second priority junior liens on all encumbered assets of
the Debtor pursuant to 11 U.S.C. Section 361(2) and (ii)
superiority administrative expense claims under 11 U.S.C. Section
507(b).
A final hearing on the matter is set for October 4, 2023 at 10
a.m.
A copy of the court's order and the Debtor's budget is available at
https://urlcurt.com/u?l=VXZ3O2 from PacerMonitor.com.
The Debtor projects $188,957 in beginning net cash balance and
$180,000 in total employee benefit expenses for the week ending
September 16, 2023.
About WayForth, LLC
WayForth, LLC delivers personalized moving and move management
services for life and business in Central Virginia.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Va. Case No. 23-33000) on September 1,
2023. In the petition signed by Craig Shealy, manager, the Debtor
disclosed up to $10 million in both assets and liabilities.
Judge Kevin R. Huennekens oversees the case.
Kutak Rock LLP represents the Debtor as legal counsel.
WESTERN GLOBAL: $75MM DIP Loan from DKB Partners Has Final OK
-------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware authorized
Western Global Airlines, Inc. and affiliates to use cash collateral
and obtain postpetition financing, on an final basis.
The Debtors obtained up to $75 million in principal amount of
senior secured postpetition financing from DKB Partners LLC on a
superpriority basis. The funding constitutes a new money delayed
draw term loan facility and includes a "roll up" on a cashless
dollar-for-dollar basis of $25.7 million that was borrowed and
incurred by the Debtors, and is due and owing, under a Prepetition
Credit Agreement.
DKB Partners LLC, or an institution selected by the Required DIP
Lenders and reasonably acceptable to the Borrower, is the Agent
under the DIP Facility.
Up to $61 million of DIP Loans was made available following the
entry of the Interim Order, which amount includes the Prepetition
Credit Agreement Roll-Up. The remaining $14.3 million of DIP
Commitments will be available and funded following entry of the
Final Order.
The DIP facility is due and payable through the earliest of:
1. 120 days from the Petition Date;
2. 35 days after the entry of the Interim DIP Order unless the
Final DIP Order is entered approving the DIP Facility;
3. The date on which all or substantially all of the assets of
the Debtors are sold (pursuant to section 363 of the Bankruptcy
Code or otherwise);
4. The effective date of a chapter 11 plan in the Cases;
5. The date the Bankruptcy Court orders the conversion of the
Cases of any of the Debtors to a chapter 7 liquidation or the
dismissal of the Case of any Debtor; and
6. As directed by the Required DIP Lenders, during the
occurrence and continuance of an Event of Default.
Interest at a rate per annum equal to Adjusted Term SOFR + 9.0%
will accrue from and including the date the DIP Loans are made to
but excluding the date of any repayment thereof and will be payable
in arrears on the last business day of each month. Interest will
also be payable (i) concurrently with any prepayment of any
principal amount, whether voluntary or mandatory, to the extent
accrued and unpaid on the principal amount prepaid, and (ii) at
maturity, including on the Scheduled Maturity Date.
The Debtors are required to comply with several milestones,
including:
1. No later than the Petition Date, the Debtors will file with
the Bankruptcy Court a motion in form and substance acceptable to
the Required DIP Lenders seeking approval of the DIP Facility, the
Term Sheet, the DIP Loans, and all fees, expenses, indemnification,
and other obligations contemplated thereunder;
2. On or before the date that is 3 calendar days after the
Petition Date, the Bankruptcy Court will have entered the Interim
DIP Order in form and substance acceptable to the Required DIP
Lenders;
3. As promptly as possible, but in no event later than 5
business days after the Petition Date, the Debtors will have filed
any necessary pleadings or motions to obtain an order or orders
from the Bankruptcy Court in form and substance acceptable to the
Required DIP Lenders finding and determining that none of the funds
held in the Debtors' deposit accounts are subject to garnishment on
account of the action styled Trans-Caribbean Cargo Corporation v.
Western Global Airlines, LLC, Case No. 2023-014843-CA-01 and all
such funds are available for the Debtors to use as cash collateral
in the ordinary course of business, consistent with past
practices;
4. No later than 15 calendar days after the Petition Date, the
Debtors will have filed the joint chapter 11 plan of the Debtors
and accompanying disclosure statement, in each case in form and
substance acceptable to the Required DIP Lenders and, if
applicable, the DIP Agent (solely as to its rights, indemnities,
duties and obligations thereunder); and
5. No later than 35 calendar days after the Petition Date, the
Bankruptcy Court will have entered the Final DIP Order in form and
substance acceptable to the Required DIP Lenders and, if
applicable, the DIP Agent.
The events that constitute an "Event of Default" include:
1. Failure to pay any principal of any DIP Loan when due;
2. Failure to pay interest, fees or other amounts owed under
the DIP Facility within three business days of when due; and
3. Failure to comply with affirmative covenants relating to
maintaining the existence of the Borrower, the Milestones, the
negative covenants or compliance with the the applicable Budget
(subject to Permitted Variances).
The Debtors have an immediate and critical need to obtain
postpetition financing under the DIP Facility and to use cash
collateral, among other things, to fund working capital
requirements, costs, and expenses of administration of the Chapter
11 Cases and fees and expenses relating to the DIP Facility during
the pendency of the Chapter 11 Cases.
The Debtors are authorized to utilize the proceeds of the DIP
Facility to (i) pay general corporate or working capital
requirements, (ii) pay the costs and expenses of administration of
the Chapter 11 Cases, including the fees and expenses of
professionals associated with the Chapter 11 Cases, including the
Upfront Fee and Exit Fee, (iii) pay fees and expenses relating to
the DIP Facility during the pendency of the Chapter 11 Cases, (iv)
provide Adequate Protection, and (v) to effectuate the Prepetition
Credit Agreement Roll-Up on a cashless basis.
The Prepetition Lenders will receive, to the extent of diminution
in value of their Prepetition Collateral, as adequate protection:
1. Payment of accrued and unpaid reasonable and documented
fees and expenses of the Prepetition Lenders' professionals,
including, but not limited to, Young Conaway Stargatt & Taylor,
LLP, Daugherty, Fowler, Peregrin, Haught & Jenson, P.C., as FAA
counsel, and, if deemed necessary by the Prepetition Lenders, a
financial advisor;
2. Section 507(b) claim against the DIP Collateral that is
junior to the DIP Claims and the Carve-Out;
3. Replacement liens on the Prepetition Collateral that are
junior to the DIP Liens and the Carve-Out; and
4. Additional liens on the DIP Collateral that is not
Prepetition Collateral that are junior to the (i) DIP Liens, (ii)
the Prior Liens and (iii) and the Carve-Out.
A copy of the order is available at https://urlcurt.com/u?l=RIpEv7
from Stretto, the claims agent.
About Western Global Airlines, Inc.
Western Global Airlines, Inc. provides contracted air cargo
transportation services ranging from ACMI (Aircraft, Crew,
Maintenance, and Insurance) to Full Service, on a global scale. WGA
is a high-tech air cargo platform serving customers in e-commerce,
express, freight forwarding, logistics, nonprofit, and governmental
organizations.
The Debtor and affiliates sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No. 23-11093) on
August 7, 2023. In the petition signed by James K. Neff, chief
executive officer, the Debtor disclosed up to $500 million in
assets and up to $1 billion in liabilities.
Judge Karen B. Owens oversees the case.
The Debtors tapped Weil, Gotshal & Manges LLP as general bankruptcy
counsel, Richards, Layton & Finger, P.A. as local bankruptcy
counsel, Evercore Group L.L.C. as investment banker, FTI
Consulting, Inc. as provider of interim management and financial
advisory services. and Stretto, Inc. as claims, noticing, and
solicitation agent.
DKB Partners LLC, as DIP Lender and Prepetition Lender, is
represented by Young Conaway Stargatt & Taylor, LLP. Daugherty,
Fowler, Peregrin, Haught and Jenson, P.C., serves as DOT/FAA
counsel for the DKB DIP Lender.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, serves as counsel to
the Ad Hoc Group of DIP Lenders and Certain Creditors. Ducera
Partners LLC, serves as financial advisor for the Funding Group DIP
Lenders. Landis Rath & Cobb LLP, is the Delaware counsel for the
Funding Group DIP Lenders. PIRINATE Consulting Group, LLC, is the
strategic advisor to the Funding Group DIP Lenders.
WEWORK INC: Completes 1-for-40 Reverse Stock Split
--------------------------------------------------
WeWork Inc. announced that it has completed the 1-for-40 reverse
stock split of its outstanding shares of Class A Common Stock and
Class C Common Stock.
The reverse stock split became effective at 4:01 p.m. Eastern Time
on Sept. 1, 2023, and the Company's Class A Common Stock began
trading on a split-adjusted basis at the market open on Sept. 5,
2023. The reverse stock split was effected to enable the Company
to regain compliance with the $1.00 per share minimum closing price
required to maintain continued listing on the New York Stock
Exchange. The Company does not expect the reverse stock split to
impact its current or future business operations.
The Company's Class A Common Stock will continue to trade under the
symbol "WE," and the new CUSIP number for the Company's Class A
Common Stock following the reverse stock split is 96209A401.
Stockholders owning shares of Class A Common Stock or Class C
Common Stock via a bank, broker, or other nominee will have their
positions automatically adjusted to reflect the reverse stock split
and will not be required to take further action in connection with
the reverse stock split, subject to their brokers' particular
processes.
About WeWork Inc.
New York, NY-based WeWork Inc. (NYSE: WE) -- wework.com -- is a
global flexible workspace provider, serving a membership base of
businesses large and small through its network of 779 Systemwide
Locations, including 622 Consolidated Locations as of December
2022.
WeWork reported a net loss of $2.29 billion for the year ended
Dec.31, 2022, a net loss of $4.63 billion for the year ended Dec.
31, 2021, a net loss of $3.83 billion in 2020, and a net loss of
$3.77 billion in 2019. As of Dec. 31, 2022, the Company had $17.86
billion in total assets, $21.31 billion in total liabilities, and a
total deficit of $3.43 billion.
WHEELS UP: Gets Additional $15M Under Amended Promissory Note
-------------------------------------------------------------
Wheels Up Experience Inc. and Delta Air Lines, Inc. have entered
into a Third Amendment to Secured Promissory Note to increase the
aggregate principal amount of the Note by up to an additional $15.0
million, of which the additional $15.0 million was received by the
Company on Sept. 6, 2023.
As previously disclosed by Wheels Up in a Current Report on Form
8-K filed with the U.S. Securities and Exchange Commission on Aug.
21, 2023, the Company entered into the First Amendment to Secured
Promissory Note, dated as of Aug. 15, 2023, with Delta, as payee,
and the Second Amendment to Secured Promissory note, dated as of
Aug. 21, 2023, which in each case amended the Secured Promissory
Note, dated Aug. 8, 2023, with Delta.
The Note Third Amendment brought the total principal amount under
the Amended Note up to $60.0 million. The Third Amendment does not
contain any additional material covenants or terms or amend any
material covenants or terms set forth in the Note.
About Wheels Up
Headquartered in New York, Wheels Up is a provider of on-demand
private aviation in the U.S. and one of the largest private
aviation companies in the world. Wheels Up offers a complete
global aviation solution with a large, modern and diverse fleet,
backed by an uncompromising commitment to safety and service.
Customers can access membership programs, charter, aircraft
management services and whole aircraft sales, as well as unique
commercial travel benefits through a strategic partnership with
Delta Air Lines. Wheels Up also offers freight, safety and security
solutions and managed services to individuals, industry, government
and civil organizations.
Wheels Up reported a net loss of $555.55 million in 2022, a net
loss of $197.23 million in 2021, and a net loss of $85.40 million
in 2020.
Wheels Up said in its Form 10-Q for the period ended June 30, 2023,
that "The Company had cash and cash equivalents of $151.8 million
and a working capital deficit of $720.8 million as of June 30,
2023. Net cash used in operating activities was $411.7 million for
the six months ended June 30, 2023, and the Company has experienced
recurring losses from operations for the six months ended June 30,
2023. Further, the Company's Note Purchase Agreement and the
Indentures...and related guarantees contain a liquidity covenant
that requires the Company to maintain minimum Adjusted Available
Liquidity of $125.0 million as of the end of each fiscal quarter,
and the Company's Letter Agreement contains a liquidity covenant
that requires the Company (excluding Air Partner Limited and its
subsidiaries) to maintain available cash of at least $5.0 million
on any date...These conditions, as well as current cash and
liquidity projections, raise substantial doubt about our ability to
continue as a going concern for any meaningful period of time after
the date of this filing."
WILLIAMS INDUSTRIAL: Chapter 11 Sale to Energy Solutions Okayed
---------------------------------------------------------------
Alex Wittenberg of Law360 reports that a Delaware bankruptcy judge
on Thursday, September 8, 2023, approved Williams Industrial
Services Group's plan to sell most of its business to stalking
horse bidder Energy Solutions Inc. for $60 million, advancing a
Chapter 11 sale process the judge previously panned as
"unsatisfactory."
About Williams Industrial Services Group Inc.
Williams Industrial Services Group (NYSE American: WLMS) --
http://www.wisgrp.com/-- is a provider of infrastructure related
services to blue-chip customers in energy and industrial end
markets, including a broad range of construction maintenance,
modification, and support services.
William Industrial and 13 of its affiliates sought relief under
Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No.
23-10961) on July 22, 2023. In the petition filed by its president
and CEO, Tracy D. Pagliara, William Industrial reported total
assets of $114,461,000 and total liabilities of $89,831,000 as of
March 31, 2023.
The Hon. Thomas Horan oversees the cases.
The Debtors tapped Thompson Hine LLP as bankruptcy counsel; and
Chipman Brown Cicero & Cole LLP as local bankruptcy counsel. G2
Capital Advisors LLC is the financial advisor to the Debtors,
Greenville & Co. Inc is the investment banker, while Epiq
Bankruptcy Solutions LLC is the notice and claims agent.
WORLDPAY: Fitch Puts BB First-Time LongTerm IDR, Outlook Stable
---------------------------------------------------------------
Fitch Ratings has assigned a first-time 'BB' Long-Term Issuer
Default Rating (IDR) to Boost Newco Borrower, LLC (dba Worldpay).
The Rating Outlook is Stable. In addition, Fitch has assigned
'BBB-'/'RR1' issue-level ratings to the company's USD and EUR
senior secured term loans. Notching on the senior secured
instruments is in line with Fitch's "Corporates Recovery Ratings
and Instrument Ratings Criteria" and reflects the agency's
assessment that these instruments are Category 1 first liens, which
implies a rating two notches above the IDR.
Worldpay has operated as a division of Fidelity National
Information Services, Inc. (FIS; 'BBB') since 2019. It is in the
process of being spun off from FIS by early 2024 and will be
jointly owned by FIS and private equity firm GTCR, with GTCR having
majority ownership.
Despite recent execution issues and underperformance relative to
payment industry peers, Fitch believes Worldpay remains well
positioned in the industry and should see improved operating trends
in the coming years. The company benefits from its broad scale as
one of the largest payment processing companies globally, has deep
relationships with many of the largest North American and European
merchants and banks, and benefits from diversification across
regional and end-market channels.
KEY RATING DRIVERS
Scale Critical in Payments: Fitch views Worldpay's scale as a
differentiator and credit positive. The company is the largest
merchant acquirer globally, handling more than $2 trillion in
payment transactions annually in nearly 150 countries (although
more than 70% of revenue is from North America). Scale is important
in payments and enables the company to serve some of the largest
merchants in North America and Europe.
The payments industry was very active with M&A in recent years,
although this slowed in 2022/2023 due to weaker capital market
conditions. Fitch projects M&A will be a key sector theme in the
years ahead given disruption and attractive industry dynamics,
including highly recurring revenues and strong FCF generation.
Leverage Supported by Cash Flow: Fitch expects EBITDA leverage to
be in the mid-4.0x range in the near term, which is moderately high
for the rating but supported by the company's scale and stable cash
generation. M&A is a key component of management's strategy that
could lead to elevated leverage over time, but Fitch expects the
company would target quick debt reduction following any deals that
increase leverage meaningfully. Sustained leverage meaningfully in
excess of 4.75x could lead to negative rating action over time,
although the company is focused on maintaining leverage at levels
appropriate for the mid-'BB' rating category.
Beneficiary of Electronic Payments Shift: Worldpay sits at the
intersection of a payments industry shift away from cash to
electronic forms of payment, which Fitch believes will continue to
provide a revenue tailwind. The company operates part of the
"plumbing" of electronic payments - when a consumer uses a
credit/debit card in a store or on a website, it is a technology
provider enabling this transaction. According to The Nilson Report,
card usage was approximately 77% of 2021 U.S. payment volumes and
continues to take share from cash and checks. Global card usage
varies meaningfully by country but will continue to capture
payments share in the future.
FCF Dynamics: Higher leverage as a standalone entity will lead to
lower FCF, but Fitch projects Worldpay will continue to generate
positive FCF even with higher interest expense. Fitch projects FCF
will be in the $200 million to $500 million range annually from
2024-2026 and FCF margins will be in the mid-single digit range as
a percentage of revenue. While this level of profitability provides
some capacity for Worldpay to gradually de-lever, the company's
focus on growth and reinvestment in its business makes this
unlikely in the near term. Fitch does not expect any near-term
shareholder dividends.
Cyclicality: Worldpay is highly dependent upon consumer spending,
particularly in the U.S. where it derives more than 70% of its
revenue. This brings inherent cyclicality, although industry
fundamentals held up reasonably well during the 2008-2009 downturn
and came back quickly following the 2020 pandemic. FIS' Merchant
Solutions segment (largely Worldpay) experienced 9% organic revenue
declines during 2020, although it rebounded quickly with 19% growth
in 2021. Vantiv and Worldpay, which were standalone companies prior
to their 2017 merger, each grew in 2009.
Fitch believes the payments landscape was materially different at
that time (e.g., more competition today, higher card usage
penetration), and the company could see more revenue pressure
during future economic downturns.
M&A Risk: Fitch views debt-funded M&A as a key risk. Worldpay was
capital constrained under its umbrella, and it can operate with
higher leverage and more ability to spend as a standalone entity.
Fitch believes growth investments will be both organic and via
acquisitions. Fintech remains very active with deal activity,
albeit with a more balanced approach to financing deals using both
debt and equity given changing capital market conditions. Some of
the industry's largest deals in recent years - FIS-Worldpay,
Fiserv-First Data, Block-Afterpay - were largely equity financed at
relatively high valuations.
Competitive Landscape: Fitch views Worldpay's end markets as highly
competitive, and this could impact the IDR over time. The company
is an industry leader in payments processing. However, there is
meaningful tech disruption and pricing competition from both
"legacy" fintechs, large technology providers, as well as younger,
software-centric fintech companies. Key competitors include
JPMorgan (via its Chase Paymentech business), Fiserv, Adyen,
PayPal, Block, and Stripe, among many others. Its competitive moat
varies by industry channel but is expected to remain reasonably
strong over the ratings horizon.
Regulatory Risk: One key industry risk includes any meaningful
changes to credit card interchange fees that would alter the
payments value chain. Interchange fees are paid by merchants and
can range from the low-$1.00 to mid-$3.00 range for credit cards
(much lower for debit) per $100 transaction, depending upon channel
and card type. U.S. and European regulators have for nearly two
decades pressured and litigated against banks and payment networks
(e.g., Visa, Mastercard) to reduce interchange fees. Fitch believes
if there were ever a "reset" lower on interchange, this could hurt
many players across the payments value chain including Worldpay.
DERIVATION SUMMARY
Worldpay's ratings and Outlook are supported by the company's high
mix of recurring revenue, sticky customer base, market leadership
in its core businesses, and predictable cash flow generation.
Rating constraints include fragmentation in the payments segment,
technological risks over time, and acquisition risk surrounding
large-scale M&A.
Worldpay's business profile and certain financial metrics compare
well versus Fitch-rated industry peers Global Payments Inc.
(BBB/Stable), although it is expected to operate with meaningfully
higher leverage in the next few years under private ownership.
Competitor PayPal Holdings, Inc. (A-/Stable) is much larger,
operates with meaningfully lower leverage and is growing faster
given its e-commerce and digital payments exposure.
Block, Inc. (BB/Positive) is smaller in terms of EBITDA and has
lower margins but exhibits rapid growth in both its payments and
apps businesses. Fitch believes the company's operating
fundamentals including stable/growing EBITDA & margins, reasonable
leverage, and solid FCF generation position the company well in the
'BB' rating category.
KEY ASSUMPTIONS
- Organic revenue growth in the mid-single digit range in the next
few years with incremental contribution from M&A;
- EBITDA margins remain relatively stable in the high-30% range,
with modest pressure in 2024 due to standalone costs following the
separation from FIS;
- Capex near 9.0% of revenue;
- Excess cash flow used primarily for growth investments and M&A,
which are also assumed to be partially debt-financed;
- EBITDA leverage remains in the mid-4.0x range in the near term
but could be moderately higher as the company executes on M&A;
- Floating rate debt assumes SOFR of 5% from 2024-2026.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- EBITDA leverage, or debt/EBITDA, sustained below 4.0x;
- Improved fundamentals including higher than projected growth in
key metrics such as revenue, EBITDA and/or FCF;
- (CFO-Capex)/Debt expected to be sustained at 8% or above.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
--EBITDA leverage sustained above 4.75x;
- FCF margins projected to be sustained in the low-single digit
percentage or lower levels;
- Significant fundamental shifts in the business that negatively
affect revenue, EBITDA and/or FCF;
- A significantly lower level of financial flexibility could also
lead Fitch to reassess the rating.
LIQUIDITY AND DEBT STRUCTURE
Solid Liquidity: Worldpay should have a solid liquidity position
upon separation from FIS, with positive CF generation expected in
the business and an undrawn revolving credit facility. The company
is expected to have: (i) nearly $400 million of unrestricted cash
on its balance sheet upon spin-off; (ii) roughly $1.1 billion of
settlement cash, which supports its core business of payment flows;
and (iii) full capacity on a new $1 billion senior secured
revolver. Fitch projects the company could generate $200-$500
million per year in FCF through 2026, although 2024 may be
negatively impacted from one-time costs post separation from FIS.
Debt Profile: The company's debt capital structure is expected to
include secured debt instruments across multiple currencies (USD
and EUR) that will each be pari passu and include a first lien on
substantially all assets of the company. Fitch expects its initial
debt to include: (i) $3.4 billion of USD senior secured term loans;
(ii) $1 billion of EUR senior secured term loans; and (iii) a $1
billion senior secured revolving credit facility. The revolver is
projected to be undrawn upon separation from FIS.
ISSUER PROFILE
Worldpay is one of the world's largest payment technology and
merchant acquirer companies. Following its separation from FIS, it
will be jointly owned by FIS and private equity firm GTCR.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery
----------- ------ --------
Boost Newco
Borrower, LLC LT IDR BB New Rating
senior secured LT BBB- New Rating RR1
YAK TIMBER: Seeks Cash Collateral Access Thru Oct 29
----------------------------------------------------
Yak Timber, Inc. asks the U.S. Bankruptcy Court for the District of
Alaska for authority to use cash collateral in accordance with the
budget, through October 29, 2023 and provide adequate protection.
Under the Interim Budget, the Debtor starts with $3,000 in cash and
will end with over $1 million.
The Interim Budget allows the Debtor to perform three separate
contracts: (1) a contract for the delivery of three loads of logs
with International Forest Products, which will be paid upfront and
generate $67,500 for each load (total $202,500); (2) a contract to
haul salt for $200,000, and (3) a contract to deliver scrap to
Washington State.
The Debtor is currently indebted to AgWest Farm Credit PCA in
connection with five loans originated between June 23, 2020 and
January 10, 2022.
Over the past four months, the Debtor and Farm Credit have been
arguing over the use of cash collateral. The Debtor has been
required to provide written budgets, replacement liens, valid
insurance, marine certifications, inspections, and monthly adequate
protection payments.
On August 29, 2023, Farm Credit filed a Notice of Conditional
Termination of Right to Use Cash Collateral, citing concerns about
insurance coverage, budgetary reporting failures, late adequate
protection payments, and potential conservation land designations
on Khantaak Island.
The Debtor has filed an application to appoint Dorsey & Whitney as
special counsel to resolve the issue. The City and Borough of
Yakutat voted against re-designating the disputed timberlands,
allowing the Debtor to continue logging operations in fall 2023.
The Debtor proposes to provide adequate protection liens to the
Lender on all categories and property, including prepetition
security interests and liens, effective upon the Petition Date.
These liens will secure any diminished value of the Lender's
collateral.
The Debtor also plans to protect Farm Credit by making monthly
protection payments of $65,000, providing timely budget and
financial reporting, maintaining adequate insurance, and allowing
inspections and appraisals upon request. Farm Credit's interests
are further protected by the Debtor's operation and maintenance of
its collateral.
A copy of the motion is available at https://urlcurt.com/u?l=raPEA2
from PacerMonitor.com.
About Yak Timber
Yak Timber Inc., a timber company in Yakutat, Alaska, sought
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.
Alaska Case No. 23-00080) on May 11, 2023. In the petition signed
by its chief executive officer, Marvin Adams, the Debtor disclosed
up to $50 million in both assets and liabilities.
Judge Gary Spraker oversees the case.
Terry P. Draeger, Esq., at Beaty & Draeger, Ltd., is the Debtor's
legal counsel.
YELLOW CORP: Hires Alvarez & Marsal as Financial Advisors
---------------------------------------------------------
Yellow Corporation and its affiliates seek approval from the U.S.
Bankruptcy Court for the District of Delaware to employ Alvarez &
Marsal North America, LLC as financial advisors.
The firm's services include:
a. assistance in the development of an initial cash flow
forecast;
b. assistance in the continued development and management of a
13-week cash flow forecast as well as assistance in the management
of liquidity;
c. assistance to the Debtors in their contingency planning
efforts, including a Chapter 11 filing;
d. assistance to the Debtors with information and analyses
required pursuant to the Debtors' debtor-in-possession ("DIP")
financing;
e. assistance to the Debtors in the preparation of
financial-related disclosures required by the Court, including the
Debtors' Schedules of Assets and Liabilities, Statements of
Financial Affairs and Monthly Operating Reports;
f. assistance in financing issues including assistance in
preparation of reports and liaison with creditors;
g. assistance in preparing information and analysis required for
asset sales and for a disclosure statement and chapter 11 plan;
h. assistance in winding down the Debtors business operations;
i. assistance in bankruptcy specific tax and compensation
matters;
j. report to the Board of Yellow Corporation; and
k. other activities as approved by the Debtors' board of
directors and management, and as agreed to by the firm.
The firm will be paid at these rates:
Managing Directors $1,025 to 1,375 per hour
Directors $775 to 975 per hour
Analysts/Associates $425 to 775 per hour
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
The firm received from the Debtors $1,400,000 as a retainer in
connection with preparing for and conducting the filing of these
Chapter 11 cases.
Brian Whittman, a managing director at Alvarez & Marsal North
America, disclosed in court filings that his firm is a
"disinterested person" as that term is defined in section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
Brian Whittman
ALVAREZ & MARSAL NORTH AMERICA, LLC
540 West Madison Street Suite 1800
Chicago, IL 60661
Tel: (646) 642-4605
Email: bwhittman@alvarezandmarsal.com
About Yellow Corporation
Yellow Corporation -- www.myyellow.com -- operates logistics and
less-than-truckload (LTL) networks in North America, providing
customers with regional, national, and international shipping
services throughout. Yellow's principal office is in Nashville,
Tenn., and is the holding company for a portfolio of LTL brands
including Holland, New Penn, Reddaway, and YRC Freight, as well as
the logistics company Yellow Logistics.
Yellow Corporation and 23 affiliates concurrently filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del. Lead Case No. 23-11069) on August 6, 2023, before
the Hon. Craig T. Goldblatt. As of March 31, 2023, Yellow Corp had
$2,152,200,000 in total assets against $2,588,800,000 in total
liabilities. The petitions were signed by Matthew A. Doheny as
chief restructuring officer.
Kirkland & Ellis LLP is serving as the Company's restructuring
counsel, PachulskiStangZiehl& Jones LLP is serving as the Company's
Delaware local counsel, Kasowitz, Benson and Torres LLP is serving
as special litigation counsel, Goodmans LLP is serving as the
Company's special Canadian counsel, Ducera Partners LLC is serving
as the Company's investment banker, and Alvarez and Marsal is
serving as the Company's financial advisor. Epiq Bankruptcy
Solutions serves as claims and noticing agent.
Milbank LLP, serves as counsel to certain investment funds and
accounts managed by affiliates of Apollo Capital Management, L.P.
White & Case LLP, serves as counsel to Beal Bank USA.
Arnold & Porter Kaye ScholerLLP, serves as counsel to the United
States Department of the Treasury.
Alter Domus Products Corp., the Administrative Agent to the DIP
Lenders, is represented by Holland & Knight LLP.
YELLOW CORP: Hires Ducera Partners as Investment Banker
-------------------------------------------------------
Yellow Corporation and its affiliates seek approval from the U.S.
Bankruptcy Court for the District of Delaware to Ducera Partners
LLC as investment banker.
The firm will provide these services:
a. General Financial Advisory and Investment Banking Services.
Ducera shall: (1)familiarize itself with the business, operations,
financial condition, financial statements, business plans,
forecasts, and capital structure of the Debtors; (2) assist with
the evaluation of the Debtors' debt capacity and alternative
capital structures in light of its projected financial performance;
and (3) provide such other advisory services as are customarily
provided in connection with the analysis and negotiation of any of
the transactions contemplated by the Engagement Letter.
b. Financing Services. Ducera shall: (1) provide financial
advice to the Debtors in connection with the structure and
effectuation of a Financing, identify potential Investors and, at
the Debtors' request, contact and solicit such Investors; and (2)
assist with the arrangement of a Financing, including identifying
potential sources of capital, assisting in the due diligence
process, and negotiating the terms of any proposed Financing;
provided, however, it is understood that nothing contained in the
Engagement Letter shall constitute an express or implied commitment
by Ducera to act in any capacity or to underwrite, place or
purchase any financing or securities,
which commitment shall only be set forth in a separate
underwriting, placement agency or other appropriate agreement
relating to the Financing.
c. Sale Services. If requested by the Debtors, Ducera shall:
(1) provide financial advice to the Debtors in structuring,
evaluating and effectuating a Sale, identify potential
counterparties and, at the Debtors' written (email to be
sufficient) request, contact and solicit potential acquirers; and
(2) assist with the arrangement and execution of a Sale, including
identifying potential buyers or parties in interest, assisting in
the due diligence process, and negotiating the terms of any
proposed Sale.
d. Restructuring Services. If requested by the Debtors, Ducera
shall: (1) analyze various Restructuring scenarios and the
potential impact of these scenarios on the value of the Debtors and
the recoveries of those stakeholders impacted by the Restructuring;
(2) provide strategic advice with regard to restructuring or
refinancing the Debtors' Existing Obligations; (3) provide
financial advice and assistance to the Debtors in developing a
Restructuring; (4) in connection therewith, provide financial
advice and assistance to the Debtors in structuring any new
securities to be issued under a Restructuring; and (5) assist the
Debtors and/or participate in negotiations with entities or groups
affected by the Restructuring.
The firm will be paid at as follows:
(a) Retainer and Monthly Advisory Fee: for services rendered in
accordance with subparagraph 10(a) of this Application:
(1) a one-time nonrefundable fee of $500,000, which shall be
earned, due, and payable upon execution of the Engagement Letter
and shall be credited against the Financing Fee as set forth
therein (the "Retainer Fee"); plus,
(2) commencing as of June 1, 2023, the Debtors shall pay
Ducera a non-refundable monthly cash fee of $200,000, due and
payable on the first day of each and every month during the Term
(as defined in the Engagement Letter) (the "Monthly Advisory
Fee").
(b) Financing Fee: for services rendered in accordance with
subparagraph 10(b) of this Application, a financing fee, which
shall be earned, due, and payable upon (and subject to the
occurrence of) the closing of a Financing (the "Financing Fee").
The Financing Fee shall be:
(1) 1 percent of the face amount of senior secured debt
(including, but not limited to, revolving credit and asset backed
lending facilities) Raised;
(2) 3 percent of the face amount of any unsecured and junior
secured debt Raised; and
(3) 5 percent of any equity capital, convertible, or hybrid
capital, including warrants, or similar contingent equity
securities Raised.
(c) Transaction Fee: for services rendered in accordance with
subparagraph 10(c) and subparagraph 10(d) of this Application, a
transaction fee, which shall be due and payable upon consummation
of a Sale or a Restructuring (the "Transaction Fee"). The
Transaction Fee shall be calculated as the greater of:
(1) In the event of a Restructuring, a fee of $15,000,000 due
and payable upon consummation of a Restructuring; and
(2) In the event of a Sale, including through a 363 Sale, a
fee equal to the Transaction Value multiplied by the Applicable Fee
percentage reflected in the chart below:
Transaction Value Percentage
-- less than $200 million 2 percent
-- between $200 million and $300 million 1.650 percent
-- between $300 million and $400 million 1.5 percent
-- between $400 million and $500 million 1.4 percent
-- between $500 million and $600 million 1.3 percent
-- between $600 million and $700 million 1.2 percent
-- between $700 million and $800 million 1.15 percent
-- between $800 million and $900 million 1.1 percent
-- between $900 million and $1.0 billion 1.05 percent
-- between $1.0 billion and $1.25 billion 1 percent
-- between $1.25 billion and $1.5 billion 0.925 percent
-- between $1.5 billion and $1.75 billion 0.85 percent
-- between $1.75 billion and $2.0 billion 0.775 percent
-- in excess of $2.0 billion 0.7 percent
(d) Discount: the Debtors shall receive a discount of $100,000,
per month against the greater of the Transaction Fee and the
Financing Fee for each month commencing after payment of the sixth
(6) Monthly Advisory Fee (the "Ducera Discount"); provided,
however, that: (i) the Ducera Discount shall only apply if any and
all outstanding invoices for Monthly Advisory Fees have been paid
before, or in connection with, the consummation of a Transaction,
Sale or Financing; (ii) that no Monthly Advisory Fee shall be
credited more than once; and (iii) in no event shall the aggregate
fees be reduced below zero.
The firm will be paid a retainer in the amount of $500,000.
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Cody Kaldenberg, a partner at Ducera Partners LLC, 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:
Cody Kaldenberg
Ducera Partners LLC
11 Times Square, 36th Floor,
New York, NY 10036
Tel: (212) 671-9700
About Yellow Corporation
Yellow Corporation -- www.myyellow.com -- operates logistics and
less-than-truckload (LTL) networks in North America, providing
customers with regional, national, and international shipping
services throughout. Yellow's principal office is in Nashville,
Tenn., and is the holding company for a portfolio of LTL brands
including Holland, New Penn, Reddaway, and YRC Freight, as well as
the logistics company Yellow Logistics.
Yellow Corporation and 23 affiliates concurrently filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del. Lead Case No. 23-11069) on August 6, 2023, before
the Hon. Craig T. Goldblatt. As of March 31, 2023, Yellow Corp had
$2,152,200,000 in total assets against $2,588,800,000 in total
liabilities. The petitions were signed by Matthew A. Doheny as
chief restructuring officer.
Kirkland & Ellis LLP is serving as the Company's restructuring
counsel, PachulskiStangZiehl& Jones LLP is serving as the Company's
Delaware local counsel, Kasowitz, Benson and Torres LLP is serving
as special litigation counsel, Goodmans LLP is serving as the
Company's special Canadian counsel, Ducera Partners LLC is serving
as the Company's investment banker, and Alvarez and Marsal is
serving as the Company's financial advisor. Epiq Bankruptcy
Solutions serves as claims and noticing agent.
Milbank LLP, serves as counsel to certain investment funds and
accounts managed by affiliates of Apollo Capital Management, L.P.
White & Case LLP, serves as counsel to Beal Bank USA.
Arnold & Porter Kaye ScholerLLP, serves as counsel to the United
States Department of the Treasury.
Alter Domus Products Corp., the Administrative Agent to the DIP
Lenders, is represented by Holland & Knight LLP.
YELLOW CORP: Hires Epiq as Administrative Advisor
-------------------------------------------------
Yellow Corporation and its affiliates seek approval from the U.S.
Bankruptcy Court for the District of Delaware to employ Epiq
Corporate Restructuring, LLC as administrative advisor.
The firm will provide these services:
a. assist with, among other things, solicitation, balloting, and
tabulation of votes, and prepare any related reports, as required
in support of confirmation of a chapter 11 plan, and in connection
with such services, process requests for documents from parties in
interest, including, if applicable, brokerage firms, bank
back-offices, and institutional holders.
b. prepare an official ballot certification and, if necessary,
testify in support of the ballot tabulation results.
c. assist with the preparation of the Debtors' schedules of
assets and liabilities and statements of financial affairs and
gather data in conjunction therewith.
d. provide a confidential data room, if requested.
e. manage and coordinate any distributions pursuant to a chapter
11 plan.
f. provide such other processing, solicitation, balloting and
other administrative services described in the Engagement
Agreement, but not included in the Section 156(c) Application, as
may be requested from time to time by the Debtors, the Court, or
the Office of the Clerk of the Bankruptcy Court.
The firm will be paid at these hourly rates:
Analyst Waived
IT/Programming $60-$88
Project Managers/Consultants/Directors $80- $185
Solicitation Consultant $185
Executive Vice President, Solicitation $195
Executives No Charge
The firm will be paid a retainer in the amount of $25,000.
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Kate Mailloux, a senior director at Epiq Corporate Restructuring,
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:
Kate Mailloux
EPIQ CORPORATE RESTRUCTURING, LLC
777 Third Avenue, 12th Floor
New York, NY 10017
Tel: (646) 282-2532
Email: kmailloux@epiqglobal.com
About Yellow Corporation
Yellow Corporation -- www.myyellow.com -- operates logistics and
less-than-truckload (LTL) networks in North America, providing
customers with regional, national, and international shipping
services throughout. Yellow's principal office is in Nashville,
Tenn., and is the holding company for a portfolio of LTL brands
including Holland, New Penn, Reddaway, and YRC Freight, as well as
the logistics company Yellow Logistics.
Yellow Corporation and 23 affiliates concurrently filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del. Lead Case No. 23-11069) on August 6, 2023, before
the Hon. Craig T. Goldblatt. As of March 31, 2023, Yellow Corp had
$2,152,200,000 in total assets against $2,588,800,000 in total
liabilities. The petitions were signed by Matthew A. Doheny as
chief restructuring officer.
Kirkland & Ellis LLP is serving as the Company's restructuring
counsel, PachulskiStangZiehl& Jones LLP is serving as the Company's
Delaware local counsel, Kasowitz, Benson and Torres LLP is serving
as special litigation counsel, Goodmans LLP is serving as the
Company's special Canadian counsel, Ducera Partners LLC is serving
as the Company's investment banker, and Alvarez and Marsal is
serving as the Company's financial advisor. Epiq Bankruptcy
Solutions serves as claims and noticing agent.
Milbank LLP, serves as counsel to certain investment funds and
accounts managed by affiliates of Apollo Capital Management, L.P.
White & Case LLP, serves as counsel to Beal Bank USA.
Arnold & Porter Kaye ScholerLLP, serves as counsel to the United
States Department of the Treasury.
Alter Domus Products Corp., the Administrative Agent to the DIP
Lenders, is represented by Holland & Knight LLP.
YELLOW CORP: Hires Ernst & Young as Tax Services Provider
---------------------------------------------------------
Yellow Corporation and its affiliates seek approval from the U.S.
Bankruptcy Court for the District of Delaware to employ Ernst &
Young LLP as tax services provider.
The firm will provide these services:
(a) Bankruptcy Tax Services:
-- Advise the Debtors' personnel in developing an
understanding of the tax issues and options related to Debtors'
chapter 11 filing, taking into account Debtors' specific facts and
circumstances, for US federal and state & local purposes.
-- Advise on the federal and state & local income tax
consequences of proposed chapter 11 plans including, if necessary,
assisting in the preparation of IRS ruling requests regarding the
tax consequences of alternative chapter 11 plan structures and tax
opinions.
-- Understand and advise on the tax implication of a chapter
11 plan and restructuring alternatives that Debtors are evaluating
with existing creditors that may result in a change in the equity,
capitalization and ownership of the shares of Debtors and its
assets.
-- Gather information, prepare section 382 calculations and
apply the appropriate federal and state & local tax law to historic
information regarding changes in the ownership of Debtors' stock to
indicate whether any of the shifts in stock ownership may have
caused an ownership change that will restrict the use of tax
attributes (such as net operating loss, capital loss, credit carry
forwards, and built in losses) and the amount of any such
limitation.
-- Prepare tax calculations for Debtors' review and apply the
appropriate federal and state & local tax law to determine the
amount of tax attribute reduction related to debt cancellation
income and modeling of tax consequences of such reduction.
-- Update the draft tax basis balance sheets and draft
computations of stock basis as of certain relevant dates for
purposes of analyzing the tax consequences of alternative chapter
11 plan structures.
-- Analyze federal and state & local tax treatment of the
costs and fees incurred by the Debtors in connection with the
bankruptcy proceedings, including tax return disclosure and
presentation.
-- Analyze federal and state & local tax treatment of interest
and financing costs related to debt subject to automatic stay, and
new debt incurred, including tax return disclosure and
presentation.
-- Analyze federal and state & local tax consequences of
restructuring and rationalization of inter-company accounts, and
upon written request, we will analyze tax impacts of transfer
pricing and related cash management.
-- Analyze federal and state & local tax consequences of
restructuring in the U.S. or internationally during bankruptcy,
including tax return disclosure and presentation.
-- Analyze federal and state & local tax consequences of
potential bad debt and worthless stock deductions, including tax
return disclosure and presentation.
-- Analyze federal and state & local tax consequences of
employee benefit plans, as requested in writing.
-- Advise Debtor personnel on the accounting and tax aspects
of the bankruptcy tax process and procedure lifecycle, the typical
tax issues, options and opportunities related to a Chapter 11
filing, the typical impact of a Chapter 11 filing on a corporate
tax department's operations, and leading practices for addressing
such impact areas while operating in bankruptcy.
-- Assist with various tax, compliance, audit, notices, tax
account registration/deregistration, business licensing, tax
accrual or tax working capital analysis and voluntary disclosure
issues arising in the ordinary course of business while in
bankruptcy, including (if or as applicable) but not limited to:
federal or state & local income/franchise tax, sales and use tax,
value added taxes, property tax, employment taxes, and severance
tax.
-- Scope, assist and advise on the potential for seeking tax
refunds, including but not limited to: federal or state & local
income/franchise tax, sales and use tax, value added taxes,
property tax, employment taxes, severance tax, excise tax, credit &
incentive agreements, annual reports, business licenses, other
miscellaneous taxes or regulatory fees and unclaimed property. Any
findings-based fee services to claim and secure tax refunds
identified will be subject to a separate Statement of Work mutually
agreed to by the parties.
-- Provide documentation, as appropriate or necessary, of tax
matters, tax analysis, opinions, recommendations, conclusions and
correspondence for any proposed restructuring alternative,
bankruptcy tax issue, audit or claim resolution issues, or other
tax matter described above.
(b) Tax Compliance Services:
-- Provide tax compliance services to the Debtors for the tax
year ending December 31, 2022, and provision assistance for the
2023 tax year.
-- Prepare Debtors' US federal, state, local, Canadian, and
Puerto Rican income returns, franchise returns, and related
estimated tax calculations (2023 estimates) and extensions.
-- Provide general tax consulting services in tax specialty
practices including federal, international, state, and local
taxes.
-- Prepare the appropriate Forms 3115, Changes of Accounting
Methods, for changes that are required as part of normal
operations.
-- Prepare certain information and summaries for Debtors'
personnel use in its 2023 quarterly and annual tax accounting
computations.
-- Coordinate and handle administrative examinations/audits by
U.S. federal, state, local, Canadian, and Puerto Rican taxing
authorities.
-- Prepare Forms 990 and K-120 for Yellow Freight System
Employees' Club.
-- Prepare Form 1120-F and foreign bank account reporting
requirements.
-- Prepare amended tax returns (federal, state, and local) as
necessary as part of finalized Revenue Agent Reports or carryback.
-- Prepare estimated excise tax payments and tax filings for
foreign insurance premiums.
-- Provide Debtors with copies of, or reports compiled from,
workpapers for each tax return prepared by EY LLP.
-- Provide business license and annual report compliance
services for filings due between September 1, 2023, and December
31, 2023.
(c) Transfer Pricing Services:
-- Perform an analysis of the Debtors' international
intercompany transactions involving the various affiliates.
-- Advise on whether the intercompany transactions analysis,
in conjunction with previous transfer pricing reports prepared by
EY LLP, is in compliance with reasonableness requirements of
applicable law for the purposes of avoiding potential transfer
pricing penalties for FY 2022.
-- Provide the Debtors with updated FY 2023 memorandums with a
financial update in the FY 2023 memorandums using comparable
company searches with the same methods selected in the FY 2021
Domestic Transfer Pricing Memos for various pre-existing domestic
intercompany transactions.
(d) ERC Services:
-- Assist in the analytics, quantification and documentation
of the impact of the COVID-19 pandemic on Eligible Employers and
qualified wages paid in 2020.
-- Request the information from the Debtors necessary for the
Debtors to claim and substantiate the ERC in 2020.
-- Conduct more detailed interviews of key personnel (e.g.,
operations, human resources, etc.) familiar with the impact of the
COVID-19 pandemic on the Debtor's operations, as necessary.
-- Survey employees of the Debtor-selected employee groups for
purposes of documenting when services were or were not performed as
it relates to the ERC for the agreed upon time frame, as
necessary.
-- Review, advise the Debtors, and document potential ERC
eligibility by employee based on the information obtained from the
Debtors.
-- Assist the Debtors in tracking wages from the date of
initial impact through projected end date and calculate the ERC.
-- Provide support to prepare necessary forms and supporting
documentation related to claiming the ERC and provide such
information for the Debtors' review and approval prior to claiming
the ERC.
-- Work directly with the Debtors and/or, upon authorization,
payroll provider to review filing of Forms 941-X.
-- Prepare written federal tax advice, which will include a
summary of applicable facts and assumptions; qualification of the
Debtors' potential eligibility under the CARES Act, CAA and ARPA;
ERC calculations with related methodology; and a summary of
recommended documentation to assist the Debtors in substantiating
employer eligibility and Qualified Wages for each location.
The firm will be paid at these rates:
(a) Bankruptcy Tax Services:
Partner/Principal $1,450 per hour
Managing Director $1,350 per hour
Senior Manager $1,050 per hour
Manager $950 per hour
Senior $660 per hour
Staff $440 per hour
b) Tax Compliance Services:
-- EY LLP will charge a total fee of $1,700,000 for the Tax
Compliance Services. $850,000 of this fee has previously been paid,
with $850,000 remaining to be invoiced.
-- The fees for additional compliance services will be based
on the actual time that EY LLP's professionals spend performing
them, billed at the following rates:
Partner/Managing Director $800 per hour
Senior Manager $700 per hour
Manager $600 per hour
Senior $500 per hour
Staff $400 per hour
Client Service Associate $300 per hour
(c) Transfer Pricing Services:
-- EY LLP will charge a total fee of $91,670 for the Transfer
Pricing Services. $84,500 of this fee has previously been paid,
with $9,270 remaining to be invoiced.
(d) ERC Services:
Partner/Managing Director $825 per hour
Executive Director $775 per hour
Senior Manager $725 per hour
Manager $625 per hour
Senior $450 per hour
Staff $275 per hour
Jason Carlstedt, a partner at Ernst & Young LLP, 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:
Jason Carlstedt, CPA
ERNST & YOUNG LLP
1635 N. Waterfront Parkway, Suite 220,
Wichita, KS 67206
Tel: (316) 636-4900
About Yellow Corporation
Yellow Corporation -- www.myyellow.com -- operates logistics and
less-than-truckload (LTL) networks in North America, providing
customers with regional, national, and international shipping
services throughout. Yellow's principal office is in Nashville,
Tenn., and is the holding company for a portfolio of LTL brands
including Holland, New Penn, Reddaway, and YRC Freight, as well as
the logistics company Yellow Logistics.
Yellow Corporation and 23 affiliates concurrently filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del. Lead Case No. 23-11069) on August 6, 2023, before
the Hon. Craig T. Goldblatt. As of March 31, 2023, Yellow Corp had
$2,152,200,000 in total assets against $2,588,800,000 in total
liabilities. The petitions were signed by Matthew A. Doheny as
chief restructuring officer.
Kirkland & Ellis LLP is serving as the Company's restructuring
counsel, PachulskiStangZiehl& Jones LLP is serving as the Company's
Delaware local counsel, Kasowitz, Benson and Torres LLP is serving
as special litigation counsel, Goodmans LLP is serving as the
Company's special Canadian counsel, Ducera Partners LLC is serving
as the Company's investment banker, and Alvarez and Marsal is
serving as the Company's financial advisor. Epiq Bankruptcy
Solutions serves as claims and noticing agent.
Milbank LLP, serves as counsel to certain investment funds and
accounts managed by affiliates of Apollo Capital Management, L.P.
White & Case LLP, serves as counsel to Beal Bank USA.
Arnold & Porter Kaye ScholerLLP, serves as counsel to the United
States Department of the Treasury.
Alter Domus Products Corp., the Administrative Agent to the DIP
Lenders, is represented by Holland & Knight LLP.
YELLOW CORP: Hires Pachulski Stang Ziehl as Co-Counsel
------------------------------------------------------
Yellow Corporation and its affiliates seek approval from the U.S.
Bankruptcy Court for the District of Delaware to employ Pachulski
Stang Ziehl & Jones LLP as co-counsel.
The firm's services include:
a. providing legal advice regarding local rules, practices, and
procedures;
b. reviewing and commenting on drafts of documents to ensure
compliance with local rules, practices, and procedures;
c. filing documents as requested by co-counsel, Kirkland & Ellis
LLP and Kirkland & Ellis International LLP (collectively,
"Kirkland"), and coordinating with the Debtors' claims agent for
service of documents;
d. preparing agenda letters, certificates of no objection,
certifications of counsel, and notices of fee applications and
hearings;
e. preparing hearing binders of documents and pleadings, and
printing of documents and pleadings for hearings;
f. appearing in Court and at any meeting of creditors on behalf
of the Debtors in its capacity as co-counsel with Kirkland;
g. monitoring the docket for filings and coordinating with
Kirkland on pending matters that need responses;
h. preparing and maintaining critical dates memoranda to monitor
pending applications, motions, hearing dates, and other matters and
the deadlines associated with same; distributing critical dates
memoranda with Kirkland for review and any necessary coordination
for pending matters;
i. handling inquiries and calls from creditors and counsel to
interested parties regarding pending matters and the general status
of these Chapter 11 Cases, and, to the extent required,
coordinating with Kirkland on any necessary responses; and
j. providing additional administrative support to Kirkland, as
requested.
The firm will be paid at these rates:
Partners $995 to $1,995 per hour
Of Counsel $875 to $1,525 per hour
Associates $725 to $895 per hour
Paraprofessionals $495 to $545 per hour
The firm has received payments from the Debtors during the year
prior to the Petition Date in the amount of $191,712 in connection
with its prepetition representation of the Debtors.
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
In accordance with Appendix B-Guidelines for Reviewing Applications
for Compensation and Reimbursement of Expenses Filed under 11
U.S.C. Sec. 330 for Attorneys in Larger Chapter 11 Cases, the
following is provided in response to the request for additional
information:
Question: Did you agree to any variations from, or
alternatives to, your standard or customary billing
arrangements for this engagement?
Response: No.
Question: Do any of the professionals included in this
engagement vary their rate based on the geographic
location of the bankruptcy case?
Response: No.
Question: If you represented the client in the 12 months
prepetition, disclose your billing rates and
material financial terms for the prepetition
engagement, including any adjustments during the 12
months prepetition. If your billing rates and
material financial terms have changed postpetition,
explain the difference and the reasons for the
difference.
Response: The firm represented the client during the 12-month
period prepetition. The material financial terms
for the prepetition engagement remained the same,
as the engagement was hourly-based subject to
economic adjustment. The billing rates and material
financial terms for the postpetition period remain
the same as the prepetition period subject to an
annual economic adjustment. The standard hourly
rates of the firm are subject to periodic
adjustment in accordance with the firm's practice.
Question: Has your client approved your prospective budget
and staffing plan, and, if so for what budget
period?
Response: The Debtors and the firm expect to develop a
prospective budget and staffing plan to comply with
the U.S. Trustee's requests for information and
additional disclosures, recognizing that in the
course of these large Chapter 11 Cases there may be
unforeseeable fees and expenses that will need to
be addressed by the Debtors and the firm.
Laura Davis Jones, a partner at Pachulski Stang Ziehl & Jones LLP,
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:
Laura Davis Jones, Esq.
PACHULSKI STANG ZIEHL & JONES LLP
919 N. Market Street, 17th Floor
P.O. Box 8705
Wilmington, DE 19899-8705 (Courier 19801)
Tel: (302) 652-4100
Fax: (302) 652-4400
E-mail: ljones@pszjlaw.com
dgrassgreen@pszjlaw.com
jmorris@pszjlaw.com
pkeane@pszjlaw.com
About Yellow Corporation
Yellow Corporation -- www.myyellow.com -- operates logistics and
less-than-truckload (LTL) networks in North America, providing
customers with regional, national, and international shipping
services throughout. Yellow's principal office is in Nashville,
Tenn., and is the holding company for a portfolio of LTL brands
including Holland, New Penn, Reddaway, and YRC Freight, as well as
the logistics company Yellow Logistics.
Yellow Corporation and 23 affiliates concurrently filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del. Lead Case No. 23-11069) on August 6, 2023, before
the Hon. Craig T. Goldblatt. As of March 31, 2023, Yellow Corp had
$2,152,200,000 in total assets against $2,588,800,000 in total
liabilities. The petitions were signed by Matthew A. Doheny as
chief restructuring officer.
Kirkland & Ellis LLP is serving as the Company's restructuring
counsel, PachulskiStangZiehl& Jones LLP is serving as the Company's
Delaware local counsel, Kasowitz, Benson and Torres LLP is serving
as special litigation counsel, Goodmans LLP is serving as the
Company's special Canadian counsel, Ducera Partners LLC is serving
as the Company's investment banker, and Alvarez and Marsal is
serving as the Company's financial advisor. Epiq Bankruptcy
Solutions serves as claims and noticing agent.
Milbank LLP, serves as counsel to certain investment funds and
accounts managed by affiliates of Apollo Capital Management, L.P.
White & Case LLP, serves as counsel to Beal Bank USA.
Arnold & Porter Kaye ScholerLLP, serves as counsel to the United
States Department of the Treasury.
Alter Domus Products Corp., the Administrative Agent to the DIP
Lenders, is represented by Holland & Knight LLP.
[^] BOOK REVIEW: The Phoenix Effect
-----------------------------------
Nine Revitalizing Strategies No Business Can Do Without
Authors: Carter Pate and Harlann Platt
Publisher: John Wiley & Sons, Inc.
Softcover: 244 Pages
List Price: $27.95
Review by Gail Owens Hoelscher
Buy a copy for yourself and one for a colleague on-line at
http://amazon.com/exec/obidos/ASIN/0471062626/internetbankrupt
Think of all the managers of faltering companies who dream of
watching those companies rise from the ashes all around them! With
a record number of companies failing in 2001, and another
record-setting year expected for 2002, there are a lot of ashes
from which to rise these days.
Carter Pate and Harlan Platt highly value strong leadership able to
sharpen a company's focus and show the way to the future. They
believe that all too often, appropriate actions required to improve
organizations are overlooked because upper management either isn't
aware of the seriousness of the issues they face or they don't know
where to turn for accurate information to best address their
concerns. In the Phoenix Effect, the authors present their ideas to
"confront, comprehend, and conquer a company's ills, big and
small."
These ideas are grouped into nine steps: (i) Find out whether the
company needs a tune-up, a turnaround, or crisis management. Locate
the source of "the pain." (ii) Analyze the true scope of the
company's operations. Decide whether to stay in the same
businesses, withdraw from existing businesses, or enter new ones.
(iii) Hold the company to its mission statement. If it strives to
be "the most environmentally friendly." Figure out how. (iv) Manage
scale. Should the company grow, stay the same size, or shrink? (v)
Determine debt obligations and work toward debt relief. (vi) Get
the most from the company's assets. Eliminate superfluous assets
and evaluate underused assets. (vii) Get the most from the
company's employees. Increase output and lower workforce costs.
(viii) Get the most from the
company's products. Turn out products that are developed and
marketed to fill actual, current customer needs. (ix) Produce the
product. Search for alternate ways to create the product: owning or
leasing facilities, outsourcing, etc.
The authors believe that "how you're doing is where you're going."
They assert that the "one fundamental source of life in companies,
as in people, is the capacity for self-renewal, the ability to
excite your team for game after game. to go for broke season after
season." This ability can come from "(g)enetics, charisma, sheer
luck, stock options -- all crucial, yes, but the best renewal
insurance is a leader who always knows exactly how his or her
company is doing."
There are a lot of books written on this topic. Pate and Platt
successfully bridge the gap between overgeneralization and too
detail. They are equally adept at advising on how to go about
determining a business's scope and arguing for Monday rather than
Friday for implementing layoffs. They don't dwell on sappy
motivational techniques. They don't condescend to the reader or
depend too much on folksy vernacular and cliche. Their message is
clear: your company's phoenix, too, can rise from its ashes.
Carter Pate has served on the Board of multiple public companies.
During his two decades as a Partner at PricewaterhouseCoopers, he
held several global leadership positions, including being the
Global Managing Partner of the Advisory Services Practice,
Healthcare Practice and the Government practice. He subsequently
served as the CEO of Providence Service Corporation (revenue $1.5B)
and as the CEO of MV Transportation, one of the largest privately
held transportation companies.
Dr. Harlan D. Platt is a professor of Finance and Insurance at
Northeastern University. He is president of 911RISK, Inc., which
specializes in developing analytical models to predict corporate
distress. He received a Ph.D. from the University of Michigan, and
holds a B.A. degree from Northwestern University.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
On Thursdays, the TCR delivers a list of recently filed
Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
The Sunday TCR delivers securitization rating news from the week
then-ending.
TCR subscribers have free access to our on-line news archive.
Point your Web browser to http://TCRresources.bankrupt.com/and use
the e-mail address to which your TCR is delivered to login.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Philadelphia, Pa., USA.
Randy Antoni, Jhonas Dampog, Marites Claro, Joy Agravante,
Rousel Elaine Tumanda, Joel Anthony G. Lopez, Psyche A. Castillon,
Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and
Peter A. Chapman, Editors.
Copyright 2023. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $975 for 6 months delivered via
e-mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Peter A.
Chapman at 215-945-7000.
*** End of Transmission ***