/raid1/www/Hosts/bankrupt/TCR_Public/231207.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, December 7, 2023, Vol. 27, No. 340
Headlines
151 MILBANK: Court Approves Disclosure Statement
5E ADVANCED:To File for Chapter 11 After Reaching Deal With Lender
ADJ PROPERTIES: Court Approves Disclosure Statement
AFFORDABLE HOUSING: Seeks Court OK to Sell Real Property by Auction
AIR METHODS: Court Confirms Prepackaged Plan
ALPINEX OPCO: Midcap Financial Marks $1.4MM Loan at 62% Off
AMBROSIA BUYER: Midcap Financial Marks $21.4MM Loan at 86% Off
AMERICANAS SA: Banco Safra Wants to Block Recovery Plan
ARCHBISHOP OF BALTIMORE: Court OKs Cash Access on Final Basis
ARIS WATER: S&P Affirms 'B+' Issuer Credit Rating, Outlook Stable
ARMSTRONG NEW WEST: Objects to Ladder Plan, Seeks Dismissal
ARROW BUYER: Phillip Street Marks $997,000 Loan at 67% Off
ATLAS LITHIUM: Expects to Raise $10M From Registered Stock Offering
AVINGER INC: Nasdaq Sets Listing Deficiency Hearing for March 14
BERNER FOOD: 73% Markdown for $1.7MM Midcap Financial Loan
BLUE RACER: Fitch Affirms & Withdraws 'B+' LongTerm IDR
CAIDLAKE TRANSPORT: Joe Supple Named Subchapter V Trustee
CANOO INC: $21.3M Stock Offering Validly Authorized, Says Counsel
CAPSTONE BORROWER: Fitch Affirms B+ LongTerm IDR, Outlook Negative
CENTURI GROUP: Moody's Lowers CFR & First Lien Term Loan to Ba3
CHOBANI LLC: Moody's Ups CFR to 'B2' & Alters Outlook to Stable
COMMUNITY HEALTH: Completes Divestiture of 3 Hospitals for $294M
CORE SCIENTIFIC: Asks Court OK for $77 Mil. Bitcoin Mine Purchase
CQP HOLDCO: Moody's Rates New Senior Secured Term Loan B 'B1'
CREDIT ACCEPTANCE: S&P Rates $500MM Senior Unsecured Notes 'BB'
CWT GROUP: Fitch Assigns 'CCC+' LongTerm IDR
DOMTAR CORP: Moody's Cuts CFR to 'Ba3', Outlook Stable
EAGLE PURCHASER: Midcap Financial Marks $4.3MM Loan at 22% Off
EAGLE PURCHASER: Midcap Financial Marks $658,000 Loan at 50% Off
EDISON INTERNATIONAL: Fitch Assigns 'BB+' Rating on Jr. Sub. Notes
ELITE INVESTORS: Seeks Court Nod to Sell NJ Property for $1.25MM
ENVIVA INC: Inclusive Capital, Jeffrey Ubben Report 7.2% Stake
ENVIVA INC: Jeffrey Ubben Quits as Director
ESTUARY OYSTERS: Seeks Continued Cash Collateral Access
EVENT PROMOTION: Ongoing Operations to Fund Plan Payments
FANJOY CO: Proposes Immaterial Modifications to Plan
FINTHRIVE SOFTWARE: Moody's Lowers CFR to Caa2, Outlook Negative
FREE SPEECH: Jones Can Get $650K Salary While in Chapter 11
GABRIEL PARTNERS: Midcap Financial Marks $124,000 Loan at 82% Off
GALLERIA 2425: Case Summary & 20 Largest Unsecured Creditors
GALLUS DETOX: Joli Lofstedt Named Subchapter V Trustee
GAUCHO GROUP: Investor Converts Note Into Common Shares
GENESISCARE: Lender Opposes DIP Refinancing Motion
GET GREEN: Court OKs Interim Cash Collateral Access
GETTY IMAGES: Moody's Hikes CFR to B1 & Alters Outlook to Stable
GIRARDI & KEESE: Feds Say Tom's Profanity Proof of Competency
GOL LINHAS: Taps Seabury to Review Debt Loan
GRAFFITI BUYER: Midcap Financial Marks $1.3MM Loan at 70% Off
GS SEER GROUP: Midcap Financial Marks $4.6MM Loan at 33% Off
HELLO BELLO: Wants to Accept $65 Million Stalking Horse Bid
HIVE LLC: 77% Markdown for $2.3MM Midcap Financial Loan
HOWARD INTERVENTION: Case Summary & 19 Unsecured Creditors
HRO HOLDINGS: Midcap Financial Marks $26MM Loan at 33% Off
HUBBARD RADIO: Moody's Lowers CFR to Caa1 & Alters Outlook to Neg.
INSIGHT MANAGEMENT: Plan Filing Deadline Extended to Dec. 19
INSTALLED BUILDING: Moody's Ups CFR & First Lien Term Loan to 'Ba1
IVANTI SOFTWARE: BC Partners Marks $4MM Loan at 28% Off
J.B. POINDEXTER: Moody's Rates New Senior Unsecured Notes 'B2'
KC TRUCKING: Lucy Sikes Named Subchapter V Trustee
KINETIK HOLDINGS: Fitch Assigns 'BB+' Rating on Sr. Unsecured Notes
KINETIK HOLDINGS: Moody's Rates New Senior Unsecured Notes 'Ba1'
KL CHARLIE: Midcap Financial Marks $1.9MM Loan at 24% Off
LAKEPORT CF: Gets OK to Sell Assets to CORE for $185,189
LEBANON PLATINUM: Wins Continued Cash Collateral Access Thru Dec 22
LONG TERM CARE: T Series Marks $11-Mil. Loan at 17% Off
LPI LLC: People's Bank of Commerce Says Disclosures Inadequate
LUCKY BUCKS: BC Partners Marks $3.5MM Loan at 71% Off
MALIBU'S UNITED: Mark Sharf Named Subchapter V Trustee
MATRIX HOLDINGS: S&P Cuts ICR to 'SD' on Missed Interest Payment
MATRIX PARENT: Moody's Cuts CFR to 'Caa3', Outlook Negative
MATRIX PARENT: T Series Marks $10.7MM Loan at 39% Off
MAYVILLE HOLDINGS: Gets OK to Hire Kerkman & Dunn as Legal Counsel
MERX AVIATION: Midcap Financial Marks $106MM Loan at 24% Off
MI OPCO: Moody's Rates First Lien Loans Due 2026 'B2'
MKS INSTRUMENTS: Moody's Alters Outlook on 'Ba1' CFR to Negative
MONTROSE HOUSTON: Court OKs Cash Collateral Access Thru Jan 2024
MONTROSE HOUSTON: Unsecureds to Get 100% in 36 Months
N&H SADDLEBRED: Case Summary & One Unsecured Creditor
NEXTERA ENERGY: Fitch Affirms 'BB+' IDRs, Outlook Stable
NU STYLE LANDSCAPE: U.S. Trustee Appoints Creditors' Committee
OCEAN POWER: Registers for Sale $100 Million Worth of Securities
OCEANVIEW DEVELOPMENT: Ordered to File Plan by Feb. 29
OFFICE PROPERTIES: S&P Lowers ICR to 'CCC+' on Pressured Liquidity
OUTPUT SERVICES: EverView Exits Chapter 11 Bankruptcy
PAX THERAPY: U.S. Trustee Appoints Tamar Terzian as PCO
PEAK TAHOE: SMC Says Plan Disclosures Inadequate
PEAR THERAPEUTICS: Settles WARN Act Class Lawsuit
PENN HILLS SD: Moody's Raises Issuer Rating to 'B1', Outlook Pos.
PITNEY BOWES: S&P Downgrades ICR to 'B+' on Continued Losses
PIVOT3 INC: Runway Growth Marks $17.3MM Loan at 33% Off
POLARIS OPERATING: Gets Court Nod to Sell Assets by Auction
PONTOON BREWING: Leon Jones Named Subchapter V Trustee
POTTERS BORROWER: Moody's Affirms 'B2' CFR, Outlook Stable
PRECISION REFRIGERATION: 70% Markdown for $1.7MM Midcap Loan
PREDICTIVE TECHNOLOGY: Joli Lofstedt Named Subchapter V Trustee
PURDUE PHARMA: S.C. Questions Sacklers Shield in Opioid Pact
RECORDED BOOKS: Phillip Street Marks $471,000 Loan at 46% Off
REMARKABLE HEALTHCARE: U.S. Trustee Appoints Susan Goodman as PCO
RI-TAR ENTERPRISES: Case Summary & Eight Unsecured Creditors
ROAD LION: Seeks Cash Collateral Access
ROCHESTER MATH: Voluntary Chapter 11 Case Summary
ROCHESTER STEM: Voluntary Chapter 11 Case Summary
RSA SECURITY: BC Partners Marks $4MM Loan at 34% Off
RUBRIK INC: 91% Markdown for $1.2MM Phillip Street Loan
S&G HOSPITALITY: Seeks Cash Collateral Access Thru March 2024
SAMARCO MINERACAO: Davis Polk Served as Counsel to Creditors
SAN JORGE: Delays Disclosure Statement Hearing to Feb. 8
SISSON ENGINEERING: Stephen Darr Named Subchapter V Trustee
SJA WAPITI: Creditor Bay Point Sets Dec. 11 Auction
SMILEDIRECTCLUB INC: Align Asks Court to Reject Plan Disclosures
STEEL HUGGERS: Mark Dennis of SL Biggs Named Subchapter V Trustee
SUNOPTA INC: S&P Withdraws 'B' Long-Term Issuer Credit Rating
SUPERIOR ENVIRONMENT: 73% Discount for $553,000 Phillip Street Loan
THLP CO LLC: Midcap Financial Marks $4.4MM Loan at 72% Discount
TOP SHELV: Plan and Disclosures Due Feb. 16
TRAVELPORT WORLDWIDE: Receives $570-Mil. Equity Injection
TRENCH PLATE: 69% Markdown for $1.8MM Midcap Financial Loan
TW AUTOMATION: Court OKs Cash Collateral Access on Final Basis
TWO RIVERS FARMS: Voluntary Chapter 11 Case Summary
VARDIMAN BLACK: T Series Marks $5.6MM Loan at 16% Off
VARDIMAN BLACK: T Series Marks $6.7MM Loan at 16% Off
VARI-FORM INC: 95% Markdown for $2.1MM Midcap Financial Loan
VARI-FORM INC: 95% Markdown for $5.8MM Midcap Financial Loan
VERTIV GROUP: Moody's Upgrades CFR & Senior Secured Debt to Ba3
VILLAGE AT GERMANTOWN: Fitch Lowers IDR to 'BB-'
WATSONVILLE COMMUNITY HOSPITAL: Ex-Execs Siphoned $4 Million
WELLNESS PET: Moody's Cuts CFR to Caa2 & Alters Outlook to Negative
WESTERN GLOBAL AIRLINES: Exits Chapter 11 Bankruptcy
WESTLAKE SURGICAL: No Decline in Patient Care, PCO Report Says
WRENCH GROUP: Moody's Affirms 'B3' CFR, Outlook Remains Stable
XPO INC: Moody's Rates New Incremental $400MM 1st Lien Loan 'Ba1'
YELLOW CORP: To Sell Its Trucking Terminals to Estes for $1.9 Bil.
YEP COMMERCE: Wins Cash Collateral Access on Final Basis
[] Creditsafe Releases Retail Financial & Bankruptcy Outlook
[^] Recent Small-Dollar & Individual Chapter 11 Filings
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151 MILBANK: Court Approves Disclosure Statement
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Judge Julie A. Manning has entered an order approving the
Disclosure Statement explaining the Plan filed by 151 Milbank,
LLC.
Jan. 4, 2024, is fixed as the last day for returning written
ballots of acceptance or rejection of the Plan;
Jan. 9, 2024, at 12:00 p.m., is fixed as the hearing date to
consider confirmation of the Plan at the United States Bankruptcy
Court; 915 Lafayette Blvd., Bridgeport, Connecticut.
Written objections to the Plan must be filed with the Court no
later than Jan. 4, 2024.
The Report of Ballots and Administrative Expenses shall be filed
with the Court on or before Jan. 5, 2024.
About 151 Milbank
151 Milbank, LLC's business consists of the ownership, development,
and sale of four residential condominium units located at 151
Milbank Avenue in Greenwich, Connecticut.
151 Milbank filed for Chapter 11 bankruptcy protection (Bankr. D.
Conn. Case No. 15-51485) on Oct. 21, 2015, disclosing total assets
of $4.6 million and total liabilities of $4.4 million.
The case is assigned to Judge Alan H.W. Shiff.
The Debtor is represented by Thomas J. Farrell, Esq., at Hinckley
Allen and Snyder LLP, in Hartford, Connecticut.
5E ADVANCED:To File for Chapter 11 After Reaching Deal With Lender
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5E Advanced Materials, Inc. (Nasdaq: FEAM) (ASX: 5EA), a boron and
lithium company with U.S. government Critical Infrastructure
designation for its 5E Boron Americas Complex, on Dec. 6, 2023,
disclosed that it has entered into a Restructuring Support
Agreement ("RSA") with its primary lender and the holder of the
Company's senior secured convertible notes, BEP Special Situations
IV, LLC ("Lender"), along with new strategic investors ("New
Investors"), to restructure the Company's capital and secure new
capital (the "Transaction") that will enable the commencement of
initial mining operations and production of boric acid and
lithium.
Agreement Highlights
The Company has agreed to a funding package with its Lender and the
New Investors for the following:
-- The New Investors to commit up to US$25 million under the
Transaction and the terms of the Company's existing senior secured
convertible notes to be amended to reduce the conversion rate,
extend the maturity date by one year and increase the paid-in-kind
interest rate to ten percent (10%).
-- Bluescape Special Situations IV, LLC provided an option to
invest an additional US$10 million under the Transaction.
-- The New Investors to acquire 50% of the outstanding principal
amount of the convertible notes from the Lender under the RSA.
-- Pursuant to the previously announced Standstill Agreement,
the Lender has agreed to reduce the minimum required cash covenant
in the notes to zero until June 28, 2024. Upon the closing of the
Transaction, the Notes will be amended to provide for a minimum
required cash covenant of $7.5M USD beginning June 28, 2024.
The Transaction will further secure the Company's pathway to
operations and the extraction of boric acid and lithium at its 5E
Boron Americas complex. This comes on the heels of 5E's recent
authorization from the Environmental Protection Agency (EPA), to
begin In-Situ mining operations, helping facilitate the Company's
mission of becoming the leading domestic supplier and producer of
critical materials boron and lithium.
The Board of Directors have added Stefan Selig to the board,
effective December 5, 2023. Mr. Selig brings valuable experience
through his tenure as executive vice chairman of global corporate
and investment banking at Bank of America Merrill Lynch and as
President Obama's Under Secretary for International Trade at the
Department of Commerce, experience that the Company will look to
utilize as it engages more deeply in discussions with government
entities and advance additional financing conversations.
The Transaction is supported unanimously by the Board of Directors.
The closing of the Transaction remains subject to the satisfaction
of all remaining closing conditions, including the 5E stockholder
vote, to be held at the upcoming special stockholder meeting.
"We are pleased to finalize the Agreement with our existing Lender
and New Strategic Investors to strengthen our balance sheet and
enable the move to commence initial mining operations of boric acid
and lithium in the new year," said Susan Brennan, Chief Executive
Officer of 5E Advanced Materials. "With the recent receipt of
authorization from the EPA allowing 5E to begin in-situ mining,
2024 looks to be a transformational year for the Company and the
Transaction helps to secure our immediate future, providing 5E with
capital support while expanding our opportunities for additional
commercial and financing discussions."
The Company's legal advisors are Winston & Strawn LLP and
Pachulski, Stang, Ziehl and Jones LLP. The Company's financial
advisor is Province. The New Investors legal advisors are Latham &
Watkins LLP. The Lender's legal advisors are Kirkland & Ellis,
LLP.
Special Meeting of Stockholders
5E intends to file a preliminary proxy statement for a special
meeting of stockholders seeking approval of the Transaction. The
Transaction is crucial to strengthening the Company's balance
sheet, funding the Company's next phase of development, and
commencing mining operations for boric acid and lithium.
The Board of Directors view the Transaction as being in the best
interest of the Company and stockholders as a whole, and recommend
that all stockholders vote in favor of the Transaction at the
company's upcoming Special Meeting.
Contingency Considerations
The Company expects to implement the Transaction and restructuring
through an out-of-court restructuring. If the conditions precedent
to the out-of-court restructuring cannot be timely satisfied,
including approval by the Company's stockholders of certain
proposals, the Company expects to implement the restructuring
through bankruptcy in a pre-packaged Chapter 11 plan. The Company
believes that completing the out-of-court restructuring will allow
it to avoid possible disruptions of the business, preserve valuable
capital and avoid additional expenses, and other uncertainties that
would result from commencing the bankruptcy cases to effectuate the
pre-packaged Chapter 11 plan.
About 5E Advanced Materials
5E Advanced Materials, Inc. (Nasdaq: FEAM) (ASX: 5EA) is focused on
becoming a vertically integrated global leader and supplier of
boron specialty and advanced materials, complemented by lithium
co-product production. The Company's mission is to become a
supplier of these critical materials to industries addressing
global decarbonization, food and domestic security. Boron and
lithium products will target applications in the fields of electric
transportation, clean energy infrastructure, such as solar and wind
power, fertilizers, and domestic security. The business strategy
and objectives are to develop capabilities ranging from upstream
extraction and product sales of boric acid, lithium carbonate and
potentially other co-products, to downstream boron advanced
material processing and development. The business is based on its
large domestic boron and lithium resource, which is located in
Southern California and designated as Critical Infrastructure by
the Department of Homeland Security's Cybersecurity and
Infrastructure Security Agency.
ADJ PROPERTIES: Court Approves Disclosure Statement
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Judge Thomas J. Tucker has entered an order confirming the Third
Amended Plan of Reorganization of ADJ Properties, LLC, et al.
The judge also granted final approval to the the Disclosure
Statement as containing adequate information under the terms and
conditions of 11 U.S.C. Sec. 1125.
The Macomb County Treasurer will have an allowed secured claim in
the amount of $15,176 for unpaid prepetition personal property
taxes (the "Personal Property Tax Claim").
The Personal Property Tax Claim must be paid in full within 60
months of the Confirmation Date in equal monthly payments beginning
in the first full month after the Confirmation Date and will accrue
interest at the statutory rate of 12% per annum.
Paragraph 3.4.3 is modified to provide Huntington will retain its
liens in the same priority and to the same extent as such existed
on the Petition Date until its Class IV claim is paid in full and
to the extent not otherwise modified herein, the terms of the
mortgages, security agreements, and UCC financing statements are
incorporated and will provide and evidence Debtors'
post-confirmation obligations to Huntington.
Huntington, Vintage Food Services, Inc., ADJ Properties, LLC, ALJ
Properties, LLC and Jekielek must enter a stipulation to dismiss,
without prejudice, the matter styled as The Huntington National
Bank v. ADJ Properties, LLC, Vintage Food Services, Inc., ALJ
Properties, LLC, and Anthony A. Jekielek, pending in the Macomb
County Circuit Court (Case No. 2022-003119-CB) (the "Macomb County
Litigation").
The Debtors are authorized to enter into a consent judgment in
favor of Huntington and a consent order for the appointment of a
receiver (collectively, the "Consent Judgments"), to be held in
escrow by Huntington pending default under the Plan, as modified by
this Order, copies of the Consent Judgments have been filed as
exhibits in this case and will be executed by Vintage Food
Services, Inc., ADJ Properties, LLC, ALJ Properties, LLC and
Jekielek upon entry of this Order and provided to Huntington. The
Consent Judgments will be for joint and several liability against
Vintage Food Services, Inc., ADJ Properties, LLC, ALJ Properties,
LLC and Jekielek and will be in the amount of $3,624,895.23, less
any payments received by Huntington during the pendency of this
Chapter 11 proceeding or under the confirmed Plan, and also for the
appointment of a receiver over Vintage Food Services, Inc.'s, ADJ
Properties, LLC's and ALJ Properties, LLC's assets. In the event
Debtors and/or Vintage Food Services, Inc. fail to make the
required payments under the Plan or fail to comply with any other
obligation under the Plan, Huntington may immediately record the
Consent Judgments in Eastern District Federal Court in the State of
Michigan, or any state and/or federal court having jurisdiction
amending the case caption if need be, after providing written
notice in accordance with Section 12.1 of the Plan and
notwithstanding any of the assets of the Debtors re-vesting in the
Debtors.
There will be no discharge entered as to the claims of Huntington
until such time as the Class IV claims are paid in full.
The Debtors must pay all allowed Class V general unsecured claims
in full on or before the Effective Date.
The Debtors must pay to the United States Trustee all outstanding
quarterly fees under 28 U.S.C. Section 1930(a)(6) and that in the
event such fees are not paid the United States Trustee may object
to the closing of this case and the only defense to such objection
the Debtors may raise is the payment of such fees.
About ADJ Properties
ADJ Properties LLC and ALJ Properties, LLC, are each a Single Asset
Real Estate (as defined in 11 U.S.C. Sec. 101(51B)).
ADJ Properties LLC and ALJ Properties, LLC filed for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. E.D.
Mich. Case No. 22-48074 and 22-48075) on Oct. 17, 2022. In the
petition filed by Anthony Jekielek, as member, ADJ reported assets
and liabilities between $1 million and $10 million. The Debtors
are represented by attorneys at Strobl Sharp PLLC.
AFFORDABLE HOUSING: Seeks Court OK to Sell Real Property by Auction
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Affordable Housing Changemakers, LLC asked the U.S. Bankruptcy
Court for the Central District of California to approve the sale of
its real property to California-based developer Albert Otero or
another buyer with a better offer.
Mr. Otero offered $2.2 million for the property, which consists of
two adjoining parcels located at 3643 and 3647 Whittier Blvd., in
Los Angeles.
The property, which is Affordable Housing's sole asset, is being
sold "free and clear" of liens, claims and interests, according to
the company's attorney, Laila Masud, Esq., at Marshack Hays Wood,
LLP.
Although the company has already reached a deal with the proposed
buyer, it will still put the properties up for bidding to maximize
their value.
Under the proposed bid process, each bid submitted must be on terms
and conditions that are substantially the same or better than Mr.
Otero's $2.2 million offer. Moreover, each bid must be accompanied
with a $44,000 deposit. No crypto or other currencies will be
accepted.
An auction will be held on Dec. 12, at 11:00 a.m. At the auction,
the company will determine the amount of each increasing bid but
the initial bid will begin at $2.28 million or $1.14 million for
each parcel.
There is no break-up fee associated with the sale of the
properties.
Affordable Housing will use the proceeds from the sale to pay the
liens of Clearinghouse CDFI and ABS Properties, property taxes and
costs of the sale, according to the motion filed by the company in
court.
The sale motion is on the court's calendar for Dec. 12.
About Affordable Housing Changemakers
Affordable Housing Changemakers, LLC owns real property located at
3643 and 3647 Whittier Blvd., Los Angeles, Calif., valued at $5.27
million.
Affordable Housing Changemakers filed Chapter 11 petition (Bankr.
C.D. Calif. Case No. 23-13668) on June 13, 2023, with $5,275,000 in
assets and $2,898,291 in liabilities. Ana Morgan, member, signed
the petition.
Judge Vincent P. Zurzolo oversees the case.
Marshack Hays, LLP represents the Debtor as legal counsel.
AIR METHODS: Court Confirms Prepackaged Plan
--------------------------------------------
Air Methods Corporation, the leading air medical service provider
in the U.S., on Dec. 6, 2023, disclosed that the U.S. Bankruptcy
Court for the Southern District of Texas confirmed the Company's
prepackaged Plan of Reorganization (the "Plan"). Air Methods,
which has continued to operate normally throughout the
court-supervised restructuring process, expects to emerge from
Chapter 11 before the end of the year.
"We look forward to moving ahead with a substantially stronger
balance sheet and additional financial flexibility as we continue
providing industry-leading air medical service to our healthcare
partners, communities, customers and patients," said Chief
Executive Officer JaeLynn Williams. "With an optimal capital
structure, Air Methods will be even better positioned to continue
investing in our business and executing on our growth initiatives
-- including opening new greenfield bases, growing our frontline
team and going in-network with additional commercial insurers --
for the benefit of those we serve."
The Plan was unanimously approved by both classes entitled to vote
(the prepetition secured lenders and the prepetition unsecured
noteholders). Implementing the Plan confirmed by the Court will
reduce Air Methods' total debt by approximately $1.7 billion and
enable it to emerge from the court-supervised process with
sufficient liquidity to position the Company for success and
support the Company into the future, supported by the investment of
approximately $185 million of new capital by members of the ad hoc
group.
"We appreciate the support of our key financial stakeholders, which
has enabled us to reach this milestone on an expedited basis," said
Williams. "We also are grateful to our teammates for their
unwavering commitment to safely delivering outstanding patient
care, and we thank our partners for their ongoing support of Air
Methods and our key role in the nation's healthcare
infrastructure."
Additional information regarding the Company's court-supervised
process is available at www.AirMethodsRestructuring.com. Court
filings and other information related to the proceedings are
available on a separate website administrated by the Company's
claims agent, Epiq, at https://dm.epiq11.com/AirMethods.
Weil, Gotshal & Manges LLP is serving as legal advisor, Lazard is
serving as financial advisor and Alvarez & Marsal is serving as
restructuring advisor to Air Methods. Davis Polk & Wardwell LLP is
serving as legal advisor and Evercore Group, L.L.C. is serving as
financial advisor to the ad hoc group of lenders.
About Air Methods Corporation
Founded in 1980, Air Methods is a provider of air medical emergency
services in the United States, providing more than 100,000
transports per year while offering clinical quality, safety, and
life-saving care to patients across the country. Headquartered in
Greenwood Village, Colorado, the Company operates a fleet of
approximately 390 helicopters and fixed-wing aircraft serving 47
states from over 275 bases located in 40 different states.
Air Methods Corporation and its affiliates sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Lead Case
No. 23-90886) on Oct. 24, 2023. In the petition signed by
Christopher J. Brady, as authorized signatory, Air Methods
disclosed up to $10 billion in both assets and liabilities.
Judge Marvin Isgur oversees the case.
Weil, Gotshal & Manges LLP serves as the Debtors' legal counsel.
Lazard Freres $ Co. LLC is the Debtors' investment banker, and
Alvarez & Marsal is the financial advisor. Epiq Corporate
Restructuring, LLC, is the claims, noticing & solicitation agent
and administrative advisor.
ALPINEX OPCO: Midcap Financial Marks $1.4MM Loan at 62% Off
-----------------------------------------------------------
MidCap Financial Investment Corporation has marked its $1,489,000
loan extended to Alpinex Opco, LLC to market at $573,000 or 38% of
the outstanding amount, as of September 30, 2023, according to
Midcap Financial's Form 10-Q Report for the Quarterly period ended
September 30, 2023, filed with the Securities and Exchange
Commission.
Midcap Financial is a participant in a First Lien Secured
Debt-Revolver Loan to Alpinex Opco, LLC. The loan accrues interest
at a rate of 1% (SOFR+626) per annum. The loan matures on December
27, 2027.
Midcap Financial Investment Corporation is a Maryland corporation
incorporated on February 2, 2004. It is a closed-end, externally
managed, non-diversified management investment company that has
elected to be treated as a business development company under the
Investment Company Act of 1940. Apollo Investment Management, L.P.
is the investment adviser and an affiliate of Apollo Global
Management, Inc. and its consolidated subsidiaries (AGM). Apollo
Investment Administration, LLC, an affiliate of AGM, provides,
among other things, administrative services and facilities for
Midcap.
AMBROSIA BUYER: Midcap Financial Marks $21.4MM Loan at 86% Off
--------------------------------------------------------------
MidCap Financial Investment Corporation has marked its $21,429,000
loan extended to Ambrosia Buyer Corp to market at $3,086,000 or 14%
of the outstanding amount, as of September 30, 2023, according to
Midcap Financial's Form 10-Q Report for the Quarterly period ended
September 30, 2023, filed with the Securities and Exchange
Commission.
Midcap Financial is a participant in a Second Lien Secured Debt
Loan to Ambrosia Buyer Corp. The loan accrues interest at a rate of
8% per annum. The loan matures August 28, 2025.
Midcap Financial Investment Corporation is a Maryland corporation
incorporated on February 2, 2004. It is a closed-end, externally
managed, non-diversified management investment company that has
elected to be treated as a business development company under the
Investment Company Act of 1940. Apollo Investment Management, L.P.
is the investment adviser and an affiliate of Apollo Global
Management, Inc. and its consolidated subsidiaries (AGM). Apollo
Investment Administration, LLC, an affiliate of AGM, provides,
among other things, administrative services and facilities for
Midcap.
Ambrosia Buyer, Corp. is a distributor of food service equipment
and supplies in North America, providing all non-food products used
by restaurants and other food service operators.
AMERICANAS SA: Banco Safra Wants to Block Recovery Plan
-------------------------------------------------------
Danielle Chaves of Bloomberg News reports that Valor, Banco Safra
filed a petition to block Americanas S.A.'s recovery plan. In its
40-page petition, said that Banco Safra alleges the
unconstitutionality and illegality of a series of clauses in the
current recovery plan. Safra didn't join the agreement between
Brazilian retailer's trio of shareholders and Bradesco, BTG
Pactual, Itau Unibanco and Santander Brasil.
About Americanas SA
Americanas was one of the largest diversified retail chains in
Brazil, with a wide platform of physical stores, robust e-commerce,
fintech, and has just entered into the niche food retail. It is
listed on B3, being indirectly controlled by billionaire Jorge
Paulo Lemann, Carlos Alberto Sicupira and Marcel Telles.
The retailer nosedived in January 2023 after becoming mired in an
accounting scandal. The firm filed for bankruptcy at a court in
Rio de Janeiro on Jan. 19, 2023.
Americanas sought protection under Chapter 15 of the Bankruptcy
Code (Bankr. S.D.N.Y. Case No. 23-10092) on Jan. 25, 2023. White &
Case LLP, led by John K. Cunningham, is the U.S. counsel.
ARCHBISHOP OF BALTIMORE: Court OKs Cash Access on Final Basis
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The U.S. Bankruptcy Court for the District of Maryland authorized
Roman Catholic Archbishop of Baltimore to use cash collateral on a
final basis in accordance with the budget.
The Debtor is permitted to use cash collateral through and
including closing of the Chapter 11 Case to pay only (a) reasonable
and necessary expenses to be incurred in the ordinary course in
connection with the operation of its organization and fulfillment
of its religious mission, (b) administrative expenses incurred in
connection with the Chapter 11 Case, and (c) such other payments as
may be authorized by separate order of the Court.
As adequate protection, PNC Bank, National Association, the Debtor
will continue making payments in the ordinary course for those
amounts owed under the Prepetition Obligations.
The Trustee, for the benefit of PNC, and PNC (with respect to the
PNC Obligations) are granted, pursuant to 11 U.S.C. Sections 361
and 363(e), replacement security interests in and liens on the
Debtor's postpetition property which, but for the commencement of
the Chapter 11 Cases, would constitute Prepetition Collateral
subject to validly perfected, non-avoidable Prepetition Liens as of
the Petition Date, and continuing in the proceeds thereof
(including sweep accounts of the Debtor or its affiliates to which
funds may be transferred) in the same priority as the Prepetition
Liens, with such Adequate Protection Liens being deemed perfected
as of the Petition Date.
PNC is also granted an allowed superpriority administrative expense
claim as provided for in 11 U.S.C. Section 507(b) against the
Debtor.
The events that constitute an "Event of Default" include:
a. any Event of Default under the PNC Loan Agreement, other than
one caused by the commencement of the Chapter 11 Case;
b. any Event of Default under the Trust Indenture or Bond Loan
Agreement, other than one caused by the commencement of the Chapter
11 Case;
c. any Event of Default under the Guaranty, other than one caused
by the commencement of the Chapter 11 Case;
d. the Debtor challenges the validity of the Prepetition
Obligations;
e. the Debtor challenges the validity or priority of the
Prepetition Liens;
f. any action by the Debtor in contravention of the Final Order,
including, without limitation, the use of cash collateral in a
manner not authorized by the Final Order; and
g. the appointment of a Chapter 11 trustee.
A copy of the order is available at https://urlcurt.com/u?l=JMX9sd
from PacerMonitor.com.
About Roman Catholic Archbishop of Baltimore
Roman Catholic Archbishop of Baltimore is a non-profit religious
institution that maintains its principal place of business at 320
Cathedral Street, Baltimore, Maryland 21201. Consistent with Canon
Law and Maryland law, the RCAB holds property, including real
property, as a corporation sole for the purposes of erecting
churches, parsonages, burial grounds, or schools according to the
discipline and government of the Roman Catholic Church, with all
such property to be used only for such purposes.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Md. Case No. 23-16969) on September 29,
2023. In the petition signed by William E. Lori, archbishop, the
Debtor disclosed up to $500 million in assets and up to $1 billion
in liabilities.
Judge Michelle M. Harner oversees the case.
YVS LAW, LLC and HOLLAND & KNIGHT LLP represent the Debtor as legal
counsel.
KEEGAN LINSCOTT & ASSOCIATES, PC is the financial and restructuring
advisor and EPIQ CORPORATE RESTRUCTURING LLC is the claims,
noticing, and balloting agent.
ARIS WATER: S&P Affirms 'B+' Issuer Credit Rating, Outlook Stable
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S&P Global Ratings affirmed its 'B+' issuer credit rating on
Texas-based Aris Water Solutions Inc., a water infrastructure
midstream company. The outlook is stable.
S&P said, "At the same time, we affirmed our 'B+' issue-level
rating on Aris' $400 million senior unsecured notes. Our '4'
recovery rating is unchanged, indicating our expectation for
average (30%-50%; rounded estimate: 40%) recovery in the event of
default."
The stable outlook reflects S&P's expectation that Aris will
modestly grow volumes across its systems in the near term while
maintaining S&P Global Ratings-adjusted leverage in the 3.0x-3.5x
range through 2025.
A strong commodity price environment will continue to support
modest water volume growth and relatively stable earnings, with
anticipated S&P Global Ratings-adjusted EBITDA in the $155
million-170 million range over our forecast period. S&P said, "We
expect Aris will decrease growth capital expenditure (capex) from
current levels over the next two years as it adjusts to upstream
operators more tempered drilling and completion expectations and
will generate free operating free cash flow (FOCF) of $20
million-$50 million through our forecast period. We expect the
resulting S&P Global Ratings-adjusted debt to EBITDA to be
approximately 3.3x in fiscal 2023 and will remain in the 3.0x-3.5x
range in 2024 and 2025. Because of our expectation for sustained
leverage under 4.0x, S&P Global Ratings' assessment of the
company's financial risk profile improves to significant from
aggressive. Our debt calculation includes an adjustment for tax
receivable agreement (TRA) liabilities of about $98 million as of
Sept. 30, 2023."
The springing maturity on the company's credit facility could
pressure liquidity in early 2025. In October 2023 the company
extended the maturity of its revolving credit facility to 2027 and
upsized the facility to $350 million. The expiration date is
subject to a springing maturity provision 91 days prior to the $400
million of senior notes due April 1, 2026. Given the magnitude of
the maturity compared with S&P Global Ratings' projection of the
company's future cash flow, S&P expects it will need to pursue
refinancing to address its capital structure in the near term. If
the senior notes remain outstanding by January 2025, the credit
facility will become current and could pressure liquidity.
The stable outlook reflects S&P's view that Aris will maintain
moderate volume growth across its systems in the near term. It
expects leverage of approximately 3.3x in 2023 and between
3.0x-3.5x in 2024 and 2025.
S&P could lower the rating if S&P Global Ratings-adjusted leverage
increases to above 5x on a sustained basis. This could occur if:
-- A sharp decline in crude oil prices leads to sustained reduced
drilling activity;
-- The company pursues a more aggressive financial policy;
TRA liabilities increase; or
-- More rigorous environmental or regulatory factors impair
operations.
S&P could also lower the rating if the company fails to address its
debt maturity profile such that its revolving credit facility
becomes current and pressures liquidity.
Although unlikely at this time, S&P could take a positive rating
action if the company:
-- Significantly increases size, scale, and geographic footprint;
and
-- Sustains leverage below 4x.
ARMSTRONG NEW WEST: Objects to Ladder Plan, Seeks Dismissal
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Debtors AC NW Retail Investment LLC and Armstrong New West Retail
LLC filed an objection to (i) confirmation of the Liquidating Plan
proposed by Ladder Capital Finance LLC, Ladder Capital Finance I
LLC, and LMezz 250 W90 LLC, and (ii) approval of the Disclosure
Statement explaining the Ladder Plan.
The Debtors also join in the motion of the United States Trustee
for an order dismissing the Chapter 11 Cases, and the motion by the
U.S. Trustee for the appointment of a chapter 11 trustee, or
alternatively, dismissal of these bankruptcy cases.
A hearing is scheduled for Dec. 12, 2023.
In its objections to the Ladder Plan and Disclosure Statement, the
Debtors raise these issues:
A. Ladder's Failure to Value the Property:
* Armstrong is a single asset real estate debtor, with the
Property as its most significant asset. AC NW is the sole
shareholder of Armstrong, with its interest in Armstrong being its
only asset.
* Here, the Ladder Disclosure Statement fails to provide any --
let alone adequate -- information about the value of the Property.
Without that information, there is no way to ascertain whether the
Ladder Plan is in the best interests of the Debtors' creditors and
interest holders, and more specifically if the Ladder Entities are
getting a windfall, or less than what they are having the Property
transferred to them under the Ladder Plan. This information is
necessary to determine whether the Ladder Plan complies with the
Bankruptcy Code and can be confirmed.
B. Ladder's Failure to Explain and Justify Compromising the
Disputed Ladder Claim:
* The Ladder Disclosure Statement fails to include any
discussion on the merits of either the Debtors' or Ladder's
arguments related to the Ladder Disputed Claim. Without any
disclosure it is impossible to ascertain whether it is appropriate
for the full value of the Property going to Ladder as provided for
under the Ladder Plan.
* Here, there is no agreement between the Debtors and Ladder to
compromise the Disputed Ladder Claim. In fact, it is self-serving
for the Ladder Entities to resolve the dispute to its own claim by
filing a hostile plan. The Ladder Entities attempt to dodge this
issue by proposing unimpaired treatment to all creditors, which
ties into the issue that the Ladder Plan's characterization of all
creditors being unimpaired is illusory.
C. The Ladder Plan is Not Feasible:
* The Ladder Disclosure Statement contains a chart of the claims
in these Chapter 11 Cases, with a disclosure that "there can be no
assurances that Claims will be allowed by the Bankruptcy Court in
the amount set forth below…the aggregate amount of Allowed Claims
may be significantly lowered from the amount set forth below as a
result of objections to claims..." What the Ladder Disclosure
Statement fails to include is total of the aggregate of the Claims,
which is necessary to understand whether the Plan Fund is
sufficient to pay all claims in full, as required under the Ladder
Plan.
* Here, the Ladder Disclosure Statement provides that the Ladder
Plan will be funded from the Plan Fund, which is defined in Section
1.62 of the Ladder Plan as "the Debtors' remaining cash on hand
which was entirely derived from the BBB Settlement Sum." After
disbursement of the payments provided for in the Cash Collateral
Stipulation and Order the Plan Fund is estimated at $946,243 (based
on the remaining BBB Settlement Sum).
* As set forth in the Ringel Declaration, the total claims to be
paid under the Ladder Plan are $3,442,401, which would result in a
$2,496,158 shortfall. So, the Ladder Plan is either not feasible,
or the creditors are not "unimpaired" as the Ladder Plan and Ladder
Disclosure Statement represent.
D. The Ladder Plan Violates the "Liquidation" Requirement of Sec.
1129(a)(7):
* The Ladder Plan and Ladder Disclosure Statement violate 11
U.S.C. Sec. 1129(a)(7), known as "best interests of creditors"
test. This test requires that each holder of an impaired claim or
interest either accept the plan or receive under the plan not less
than it would receive in a chapter 7 liquidation.
* First, the Ladder Disputed Claims has not been resolved,
except as the Ladder Entities improperly attempt to resolve it
under the Ladder Plan. Without the Ladder Disputed Claim being
resolved, it is impossible to ascertain how much they should
receive on account of their claim.
* Additionally, without any value assigned to the Property, it
is impossible to know what exactly Ladder is getting under the
Ladder Plan. Are the Ladder Entities getting $17 million in value
under the Plan? Are the Ladder Entities getting $37 million under
the Plan?
* Knowing the value of the Disputed Ladder Claim and the value
of the Property are two critical facts necessary to understand
whether the Ladder Plan can be confirmed.
D. The Ladder Plan and Ladder Disclosure Statement Improperly
Elevate the LMezz Claim :
* The Ladder Plan provides that all ownership interests in
Armstrong are transferred to LMezz "but not impacting or offsetting
the LMezz Guaranty Judgment." The Ladder Plan's failure to impact
or offset the LMezz Guaranty Judgment, which arises solely from the
guaranty of payment on the LMezz Claim clearly alters the "legal,
equitable, or contractual rights" of the LMezz Guaranty Judgment
debtor and improperly elevate the LMezz Claim.
* The Ladder Plan as proposed would permit LMezz to recoup twice
on account of the LMezz Claim, first from the equity in the
Property, then second from the LMezz Guaranty Judgment debtor.
Accordingly, the classification and treatment of the LMezz Claim
violates the liquidation requirement of Section 1129(a)(7).
Dismissal Motion
The Debtors assert that the Motion to Dismiss should be granted:
* As set forth in detail in the Ringel Declaration, since March,
2023 when the Debtors lost their $21.5 million offer on the
Property, they had wanted to consent to dismissal of these Chapter
11 Cases. The Debtors did not suddenly change their position,
rather the Debtors' position is finally being conveyed to the
Court.
* Here, it would be more efficient for the disputes between the
Debtors and the Ladder Entities to be adjudicated in the State
Court. The nature of the disputes are not grounded in the
Bankruptcy Code, and instead focuses claims against each other
relative to the loan documents, which are the basis for the
Disputed Ladder Claims. Further, the Chapter 11 Cases have stalled
and languished while the Debtors and the Ladder Entities attempted
to resolve or adjudicate the Disputed Ladder Claim,w which in going
on 7 years.
* Alternatively, factor (2) may be satisfied merely when another
forum "available to protect the interests of both parties" exists.
In re Paper I Partners, L.P., 283 B.R. at 679. Here, not only is
the State Court an adequate alternative forum, it is the
appropriate forum. Because the adjudication of the Disputed Ladder
Claim can be adjudicated in the State Court and this Court has not
yet had any evidentiary hearings or otherwise on the Disputed
Ladder Claim, neither party is prejudiced by dismissal of these
Chapter 11 Cases.
* Here, the Debtors' Chapter 11 Cases were filed under similar
circumstances. The Debtors filed for bankruptcy relief in order to
stop the UCC sale of Mezz Debtor's interests in Armstrong (a
back-door foreclosure) and to litigate the amount that Ladder and
LMess asserted they were owed. As stated in section (B) the claims
at issue in the Debtors' Chapter 11 Cases can be adjudicated under
state law and would result in substantially the same relief as
would result in bankruptcy court.
* Until the Ladder Entities filed their self-serving
unconfirmable Ladder Plan, the Ladder Entities had previously
supported a dismissal of the Chapter 11 Cases, arguing that the
proceedings were a "two-party dispute." Now the Ladder Entities
have changed their position and instead are aggressively pursuing
confirmation of the Ladder Plan so they can take control of the
Property. Thus, factor (7) weighs in favor of dismissal.
Attorneys for the Debtors:
Julie Cvek Curley, Esq.
KIRBY AISNER & CURLEY, LLP
700 Post Road, Suite 237
Scarsdale, NY 10583
Tel: (914) 401-9500
About AC NW Retail Investment and
Armstrong New West Retail
Armstrong New West Retail, LLC owns a commercial condominium unit
located at 250 West 90th St., N.Y. The property is a
20,000-square-foot space that was occupied by Atlantic and Pacific
Tea Company until March 2016 under its Food Emporium brand.
Armstrong is 100% owned by AC NW Retail Investment, LLC, which is
100% owned by Benjamin Ringel.
AC NW Retail Investment and Armstrong New West Retail filed Chapter
11 petitions (Bankr. S.D.N.Y. Case Nos. 16-23085 and 16-23086) on
Aug. 9, 2016. Benjamin Ringel, sole equity member, signed the
petitions.
At the time of the filing, AC NW Retail estimated its assets at $10
million to $50 million and liabilities at $1 million to $10
million. Armstrong estimated its assets and liabilities at $10
million to $50 million.
Judge Robert D. Drain oversees the cases.
The Debtors tapped Julie Cvek Curley, Esq., at Kirby Aisner &
Curley LLP as bankruptcy counsel and the Law Offices of Lawrence J.
Berger, P.C. as special real estate tax counsel.
ARROW BUYER: Phillip Street Marks $997,000 Loan at 67% Off
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Phillip Street Middle Market Lending Fund LLC has marked its
$997,000 loan extended to Arrow Buyer, Inc. (dba Archer
Technologies). to market at $329,000 or 33% of the outstanding
amount, as of September 30, 2023, according to Phillip Street's
Form 10-Q for the Quarterly period ended September 30, 2023, filed
with the Securities and Exchange Commission.
Phillip Street is a participant in a First Lien Senior Secured Debt
Loan to Arrow Buyer, Inc. (dba Archer Technologies). The loan
accrues interest at a rate of 12.42% (S +7%) per annum. The loan
matures on January 31, 2029.
Phillip Street Middle Market Lending Fund LLC is a Delaware Limited
Liability Company formed on July 13, 2022. The Company has elected
to be regulated as a business development company under the
Investment Company Act of 1940, as amended. In addition, the
Company intends to elect to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as
amended, commencing with its taxable year ended December 31, 2022.
The Company commenced operations on October 6, 2022. On November 2,
2022, the Company's initial investors (other than the Initial
Member funded the initial portion of their capital commitment to
purchase units of the Company’s limited liability interest.
Archer Technologies provides governance, risk and compliance (GRC)
software. Archer Technologies primarily operates in the United
States.
ATLAS LITHIUM: Expects to Raise $10M From Registered Stock Offering
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Atlas Lithium Corporation disclosed in a Form 8-K filed with the
Securities and Exchange Commission that it entered into two
securities purchase agreements dated Nov. 29, 2023, with certain
accredited investors pursuant to which the Company agreed to sell
and issue 167,954 shares of its common stock, par value $0.001 per
share to each Investor in a registered direct offering at a
purchase price of $29.77 per share. The proceeds from the
Registered Offering are expected to be $10,000,000.
The Registered Shares were offered pursuant to a prospectus
supplement dated Dec. 1, 2023, and a base prospectus dated Sept.
18, 2023, which is part of a registration statement on Form S-3
(Registration No. 333-274223) that was declared effective by the
SEC on Sept. 18, 2023.
The Investors in the Registered Offering were also the Buyers under
the Offtake Agreements.
Offtake and Sales Agreements
Atlas Lithium further disclosed that on Nov. 29, 2023, the Company,
as seller, entered into Offtake and Sales Agreements with each of
Sichuan Yahua Industrial Group Co., Ltd. and Sheng Wei Zhi Yuan
International Limited. a subsidiary of Shenzhen Chengxin Lithium
Group Co., Ltd., pursuant to which the Seller agreed, for a period
of five years, to sell to each Buyer 60,000 dry metric tonnes of
lithium concentrate per year, subject to Seller's authority to
increase or decrease such quantity by up to 10% each year. The
price for the Product is determined according to a formula as set
forth in the Offtake Agreements.
Each Buyer agreed to pre-pay to Seller $20.0 million for future
deliveries of the Product after Seller obtains customary licenses.
Each Pre-Payment Amount will be used to offset against such Buyer's
future payment obligations for the Product.
The Offtake Agreements are terminable (i) by Seller in the event of
a change in control of Seller during the term of such agreements,
or (ii) by the non-defaulting party in an event of default under
such agreements.
About Atlas Lithium
Atlas Lithium Corporations formerly Brazil Minerals, Inc. is a
mineral exploration and development company with lithium projects
and exploration properties in other critical and battery minerals,
including nickel, rare earths, graphite, and titanium, to power the
increased demand for electrification. The Company's current focus
is on developing its hard-rock lithium project located in Minas
Gerais State in Brazil at a well-known, premier pegmatitic district
in Brazil. The Company intends to produce and sell lithium
concentrate, a key ingredient for the global battery supply chain.
Atlas Lithium reported a net loss of $5.66 million in 2022, a net
loss of $4.03 million in 2021, a net loss of $1.55 million in 2020,
a net loss of $2.08 million in 2019, a net loss of $1.85 million in
2018, a net loss of $1.89 million in 2017, a net loss of $1.74
million in 2016, and a net loss of $1.88 million in 2015. For the
nine months ended Sept. 30, 2023, the Company reported a net loss
of $25.60 million.
AVINGER INC: Nasdaq Sets Listing Deficiency Hearing for March 14
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Avinger, Inc. disclosed in a Form 8-K filed with the Securities and
Exchange Commission that on Nov. 28, 2023, it requested and was
granted a hearing before the Nasdaq Hearings Panel, which hearing
has been scheduled for March 14, 2024.
The Company's request for a hearing stayed any further action by
The Nasdaq Stock Market LLC with respect to the Company's listing
at least until the hearing is held and any extension that may be
granted by the Panel has expired. At the hearing, the Company will
request the continued listing of its securities on Nasdaq pursuant
to an extension to regain and sustain compliance with the
applicable minimum $2.5 million stockholders' equity requirement
for continued listing on The Nasdaq Capital Market, as set forth in
Nasdaq Listing Rule 5550(b)(1).
The Company said it is taking definitive steps to ensure its
compliance with the Equity Rule and all other applicable criteria
for continued listing on Nasdaq. There can be no assurance,
however, that the Panel will grant the Company's request for
continued listing or that the Company will evidence compliance
within any extension period that may be granted by the Panel.
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.
BERNER FOOD: 73% Markdown for $1.7MM Midcap Financial Loan
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MidCap Financial Investment Corporation has marked its $1,792,000
loan extended to Berner Food & Beverage, LLC to market at $492,000
or 27% of the outstanding amount, as of September 30, 2023,
according to Midcap Financial's Form 10-Q for the Quarterly period
ended September 30, 2023, filed with the Securities and Exchange
Commission.
Midcap Financial is a participant in a First Lien Secured
Debt-Revolver Loan to Berner Food & Beverage, LLC. The loan accrues
interest at a rate of 1% (SOFR+565) per annum. The loan matures on
July 30, 2026.
Midcap Financial Investment Corporation is a Maryland corporation
incorporated on February 2, 2004. It is a closed-end, externally
managed, non-diversified management investment company that has
elected to be treated as a business development company under the
Investment Company Act of 1940. Apollo Investment Management, L.P.
is the investment adviser and an affiliate of Apollo Global
Management, Inc. and its consolidated subsidiaries (AGM). Apollo
Investment Administration, LLC, an affiliate of AGM, provides,
among other things, administrative services and facilities for
Midcap.
Berner Food & Beverage is a supplier of shelf-stable, dairy-based
food and beverage products to large CPG companies, emerging
beverage brands, and private label retailers nationwide.
BLUE RACER: Fitch Affirms & Withdraws 'B+' LongTerm IDR
-------------------------------------------------------
Fitch Ratings has affirmed and withdrawn Blue Racer Midstream,
LLC's 'B+' Long-Term Issuer Default Rating (IDR) and 'BB+'/'RR1'
senior secured rating. In addition, Fitch has affirmed and
withdrawn Blue Racer's 'BB-'/'RR3' senior unsecured rating. The
Rating Outlook is Stable.
Blue Racer's ratings have been withdrawn for commercial reasons.
KEY RATING DRIVERS
Small Size, Single Basin Exposure: Blue Racer's ratings reflect the
company's small size, as measured by annual EBITDA. Fitch expects
Blue Racer's EBITDA to be around $300 million over the forecast
period. Additionally, the company's assets are focused in a portion
of a single producing region. Fitch views small scale, single-basin
focused midstream service providers with high geographic, customer
and business line concentration as consistent with a 'B' category
IDR. Given its size and concentrated exposures, small events or
variations from expectations, including a lower commodity
price-driven reduction in Appalachian volumes or a significant
operating or production event with one of its major counterparties,
could have outsized impacts on expected cash flows.
A partially offsetting factor, the ratings favorably reflect Blue
Racer's advantaged position within some of the lowest break-even
cost gas production regions in the Appalachian Basin.
Volumetric Risks: Blue Racer generates roughly 80% of its
revenue/product margin from fixed-fee contracts, however, only a
small portion of those contracts also have volume assurance
provisions. Consequently, Blue Racer is exposed to volumetric risks
associated with the domestic production of natural gas and natural
gas liquids (NGLs). Natural gas prices have remained at depressed
levels through most of 2023 thus far, however, the near-term
pricing picture is supported by the expected in-service of the
Mountain Valley Pipeline in the coming months (for the Appalachian
basin specifically) and, more broadly, the next wave of LNG export
projects to begin operations in 2024-2026. Reading through to
volumes, given the basin is takeaway constrained, Fitch does not
expect large production growth from Blue Racer's main customers.
However, the globally competitive breakeven costs realized in the
Utica and Marcellus formations mean large volume declines are not
reasonable to assume for Blue Racer, in Fitch's view. Fitch expects
some volume improvement in 2023-2025, compared to 2021-2022 levels,
which is supported by near-term guidance from Blue Racer's large
public customers.
MVCs and Direct Commodity Price Exposure: Blue Racer's credit
profile benefits from contracts with minimum volume commitments
(MVCs) and volumetric demand payments. Revenues from these revenue
assurance-type contracts make up around 30% of Blue Racer's
expected revenue/product margins. These contracts provide
visibility into future cash flow and supports higher credit quality
at Blue Racer. These contracts also expose Blue Racer to heighted
counterparty risk, especially given a relatively concentrated
customer profile.
Roughly 15%-20% of Blue Racer's revenue/product margins come from
some form of commodity price-exposed businesses, where the company
receives either natural gas or the related NGLs as payment for
providing its services. Fitch notes that these arrangements have
some downside protections built in for Blue Racer and Fitch would
not expect this to be a large loss making endeavor for the company,
however, it does represent a source of cash flow variability on an
ongoing basis.
Counterparty Credit Quality Improvement: The ratings recognize that
Blue Racer is exposed to lower rated or unrated counterparties,
with more than 50% of projected 2023 revenue from 'B' category or
unrated producers. At the same time, the credit quality of the E&P
producers has further improved versus last year.
Tug Hill, one of the previously non-rated producers, which accounts
for around 12% of expected 2023 revenue, was acquired by EQT Corp.
(BBB-/Stable). Southwestern Energy Co (SWN; BB+/Positive), which
Fitch upgraded in 2022 and has a Positive Outlook, is expected to
add roughly 8% of revenues in 2023. Most revenues are from
dedicated acreage contracts that provide a fixed fee but are
subject to volume risk. As such, counterparty and volumetric risks
are overriding concerns.
Moderating Leverage Profile: Fitch considers Blue Racer's leverage
to be appropriate in the context of rated single-region G&P
companies. EBITDA leverage was relatively elevated in 2022 at 4.7x,
compared to 4.3x to 4.5x in 2020-2021. However, leverage is
projected to decrease to around 4.0x in 2023 as volume growth from
new contracts support positive yoy comparisons. Fitch estimates
that Blue Racer's EBITDA leverage will fall below 4.0x in 2024,
consistent with prior expectations. Consequently, Fitch expects the
dividend distributions to increase in 2024. Leverage is projected
to increase slightly above 4.0x in 2025 and 2026, assuming a
moderation in the commodity markets in line with Fitch's commodity
price forecast.
Sponsor Support: The Williams Companies, Inc. (BBB/Stable)
increased its ownership share in Blue Racer in November 2020 to 50%
from the original 29% interest. Additionally, Williams assumed
operatorship of the Blue Racer system in 2023. Fitch believes the
relationship provides opportunities to improve the utilization of
Blue Racer's assets. While no direct rating linkage exists, Fitch
views Blue Racer's relationship with Williams as supportive of Blue
Racer's credit quality.
DERIVATION SUMMARY
Blue Racer's peers are smaller, single-basin gathering and
processing companies. M6 ETX Holdings II MidCo LLC (B+/Stable) is a
peer insofar as it is a small natural gas-focused G&P company with
operations in a single producing region. M6 is also similar to Blue
Racer in that it derives a portion of EBITDA from price and volume
assured contracts but also retains some direct commodity price
exposure. Medallion Midland Acquisition, LP (B+/Stable) is also a
single-basin gathering peer, however, Medallion gathers crude oil,
compared to natural gas at Blue Racer and M6. M6 operates in the
East Texas portion of the Haynesville and Medallion operates in the
Permian, while Blue Racer's assets are in the Appalachian Basin.
M6 generates roughly 20%-25% of EBITDA from take-or-pay-type
contracts, compared to the approximately 30% of revenue Blue Racer
generates under MVC contracts or volumetric demand payments.
Roughly 10%-15% of M6's gross margin is expected to come from
directly commodity price exposed activities, compared to around
15%-20% at Blue Racer. As to annual EBITDA, M6 is expected to be
roughly 1/3 smaller than Blue Racer over the forecast period.
Leverage at M6 is expected to trend down from around 4.5x to below
3.5x over the forecast period, compared to around 4.0x at Blue
Racer. Counterparty credit quality is slightly better at M6, with
ExxonMobil making up a sizable portion of its take-or-pay
commitments. With largely similar Business and Financial Profiles,
Blue Racer and M6 are rated at the same IDR-level.
Medallion gathers a different commodity in a different basin but
has a similarly high percentage of its business operating under
fixed-fee but volume exposed agreements. Similar to M6, Medallion
is expected to generate roughly 1/3 less EBITDA compared to Blue
Racer
From a counterparty exposure, Fitch believes Medallion has slightly
less risk. From a leverage perspective, Fitch expects Medallion and
Blur Racer to have around 4.0x over the forecast period.
With largely similar Business and Financial Profiles, Blue Racer,
M6 and Medallion are rated at the same IDR-level.
KEY ASSUMPTIONS
- Production levels in the Appalachian basin consistent with the
Fitch price deck for natural gas and crude oil prices;
- Blue Racer volumes improve in 2023-2025, compared to 2021-2022
levels;
- Capex ranging from $80 million to $105 million per year over the
forecast period;
- Cash available for distribution (CAFD) paid out to owners under
the current dividend policy that reflect the bond covenants under
the 2025 senior notes and limit dividend to $98 million if leverage
is higher than 4.0x;
- Base interest rate applicable to the company's outstanding
borrowings on its revolving credit facility reflects the Fitch
Global Economic Outlook.
RECOVERY ANALYSIS
For the Recovery Rating, Fitch utilized a going-concern (GC)
approach with a 6x EBITDA multiple which approximates the multiple
seen in recent reorganizations in the energy sector. There have
been a limited number of bankruptcies and reorganizations within
the midstream space but in the limited sample (such as bankruptcies
of Azure Midstream and Southcross Holdco) the reorganization
multiples were between 5x and 7x by Fitch's estimates.
In its Bankruptcy Case Study Report, "Energy, Power and Commodities
Bankruptcies Enterprise Value and Creditor Recoveries", published
in Sept. 2022 the median enterprise valuation exit multiple for the
51 energy cases with sufficient data to estimate was 5.3x, with a
wide range of multiples observed.
The recovery analysis assumes a default driven by Blue Racer's
inability to refinance the revolver at maturity in April 2025 due
to a very depressed commodity price environment. The GC EBITDA is
estimated around $250 million, unchanged from the previous recovery
analysis, and is less than 2023 EBITDA given the assumed
post-bankruptcy scenario where contract renewal rate and throughput
volumes would be less favorable. Fitch calculated administrative
claims to be 10%, and fully drew down the revolving credit
facility, which are the standard assumptions.
RATING SENSITIVITIES
Rating sensitivities are not applicable, as the ratings have been
withdrawn.
LIQUIDITY AND DEBT STRUCTURE
Liquidity Adequate: Blue Racer's liquidity is supported by its $750
million first-lien secured revolver, which had $338 million drawn
as of Sept. 30, 2023. The revolver maturity is April 2025 and the
company has $600 million in unsecured notes due in December 2025,
as well as $300 million of unsecured notes maturing in July 2026.
Fitch expects growth capital spending, while minimal, will be
funded with borrowings under the revolving credit facility or
retained cash. Under the indentures of the senior notes issued in
December 2020, Blue Racer is restricted from making cash
distributions to its owners other than permitted tax distributions
and distributions not to exceed the greater of 50% of net income or
$98.0 million in any one calendar year, plus an additional $25
million in the aggregate since Dec. 23, 2020 until consolidated
leverage ratio is less than or equal to 4.0x. If Blue Racer's total
leverage is less than or equal to 4.0x, the board has discretion to
distribute up to the full amount of the cash available. Cash
available for distribution is defined as cash EBITDA less
maintenance capex less debt service.
Blue Racer is required to maintain a consolidated total leverage
ratio, as defined in the credit agreement, not to exceed 5.25x and
consolidated secured debt/EBITDA not to exceed 3.0x. The
consolidated total leverage has a step-down provision to 5.0x
starting as of March 31, 2024. Additionally, Blue Racer is required
to maintain a consolidated interest coverage ratio of no less than
2.5x. Blue Racer complied with these covenants as of Sept. 30,
2023, and Fitch expects that Blue Racer will remain in compliance
with these covenants over the forecast period.
ISSUER PROFILE
Blue Racer is a joint venture formed to acquire, own, develop and
operate natural gas gathering, treating, compression, processing,
and transmission assets in the Appalachian area of West Virginia
and Ohio. The primary focus is in the Utica shale and a smaller
portion in the Marcellus Shale.
ESG CONSIDERATIONS
Blue Racer has an Environmental, Social and Corporate Governance
(ESG) Relevance Score of '4' for Group Structure as the company has
a complex group structure. This has a negative impact on the credit
profile, and is relevant to the rating 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 Prior
----------- ------ -------- -----
Blue Racer
Midstream, LLC LT IDR B+ Affirmed B+
LT IDR WD Withdrawn B+
senior secured LT BB+ Affirmed RR1 BB+
senior secured LT WD Withdrawn BB+
senior unsecured LT BB- Affirmed RR3 BB-
senior unsecured LT WD Withdrawn BB-
Blue Racer Finance
Corp.
senior unsecured LT BB- Affirmed RR3 BB-
senior unsecured LT WD Withdrawn BB-
CAIDLAKE TRANSPORT: Joe Supple Named Subchapter V Trustee
---------------------------------------------------------
The Acting U.S. Trustee for Region 4 appointed Joe Supple, Esq., at
Supple Law Office, PLLC as Subchapter V trustee for Caidlake
Transport, Inc.
Mr. Supple will be paid an hourly fee of $350 for his services as
Subchapter V trustee and will be reimbursed for work-related
expenses incurred.
Mr. Supple declared that he is a disinterested person according to
Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Joe M. Supple, Esq.
Supple Law Office, PLLC
801 Viand Street
Point Pleasant, WV 25550
Phone: 304-675-6249
Email: joe.supple@supplelawoffice.com
About Caidlake Transport
Caidlake Transport, Inc., a company in Chapmanville, W.Va., filed
Chapter 11 petition (Bankr. S.D. W.Va. Case No. 23-20198) on Nov.
14, 2023, with $1 million to $10 million in assets and $500,001 to
$1 million in liabilities. Robbie Cline, president, signed the
petition.
Judge B. McKay Mignault oversees the case.
The Debtor tapped Joseph W. Caldwell, Esq., at Caldwell & Riffee as
its legal counsel.
CANOO INC: $21.3M Stock Offering Validly Authorized, Says Counsel
-----------------------------------------------------------------
Canoo Inc. filed a Form 8-K with the Securities and Exchange
Commission attaching as exhibit the opinion of Kirkland & Ellis LLP
relating to the validity of the shares to be offered pursuant to
the Company's prospectus supplement dated Dec. 1, 2023.
Kirkland & Ellis is acting as special counsel to Canoo in
connection with the registration by the Company of the offer and
sale of up to $21,276,600 of its common stock, par value $0.0001
per share, consisting of up to 212,766,000 shares pursuant to the
terms of the Pre-Paid Advance Agreement, dated July 20, 2022
between the Company and YA II PN, Ltd., as modified by the Side
Letter, dated Oct. 5, 2022, the Supplemental Agreement, dated Nov.
9, 2022, the Supplemental Agreement, dated Dec. 31, 2022, the
Supplemental Agreement, dated Sept. 11, 2023, and the Supplemental
Agreement, dated Nov. 21, 2023. The Shares are being offered and
sold pursuant to a Registration Statement on Form S-3 (Registration
No. 333-266666) filed by the Company with the Securities and
Exchange Commission on Aug. 8, 2022 under the Securities Act of
1933, as amended, including a base prospectus dated Aug. 18, 2022
and the prospectus supplement dated Dec. 1, 2023.
Kirkland & Ellis said, "Based upon and subject to the foregoing
qualifications, assumptions and limitations and the further
limitations set forth below, we are of the opinion that the Shares
are duly authorized, and when the Shares are registered by the
Company's transfer agent and delivered against payment of the
agreed consideration therefor, all in accordance with the
Agreement, the Shares will be validly issued, fully paid and
non-assessable."
About Canoo
Torrance, California-based Canoo Inc. -- www.canoo.com -- is a
mobility technology company with a mission to bring electric
vehicles to everyone and provide connected services that improve
the vehicle ownership experience. The Company is developing a
technology platform that it believes will enable the Company to
rapidly innovate and bring new products, addressing multiple use
cases, to market faster than its ompetition and at lower cost.
Canoo reported a net loss and comprehensive loss of $487.69 million
for the year ended Dec. 31, 2022, compared to a net loss and
comprehensive loss of $346.77 million for the year ended Dec. 31,
2021. As of Dec. 31, 2022, the Company had $496.47 million in total
assets, $259.90 million in total liabilities, and $236.57 million
in total stockholders' equity.
Los Angeles, California-based Deloitte & Touche LLP, the Company's
auditor since 2021, issued a "going concern" qualification in its
report dated March 30, 2023, citing that the Company has suffered
recurring losses from operations, has generated recurring negative
cash flows from operating activities, and expects to continue to
incur net losses and negative cash flows from operating activities
in accordance with its ongoing activities. These matters raise
substantial doubt about the Company's ability to continue as a
going concern.
CAPSTONE BORROWER: Fitch Affirms B+ LongTerm IDR, Outlook Negative
------------------------------------------------------------------
Fitch Ratings has affirmed Capstone Borrower, Inc.'s (dba Cvent)
Long-Term Issuer Default Rating (IDR) at 'B+'. Fitch has also
affirmed Capstone's existing first lien revolver, Term Loan B and
secured notes at 'BB'/'RR2'. Capstone's proposed fungible add-on
first lien Term Loan B is rated 'BB'/'RR2'. The Rating Outlook has
been revised to Negative from Stable.
Proceeds from the proposed add-on Term Loan B will be used to fund
two pending acquisitions, for fees associated with the
transactions, and the remaining proceeds will be for general
corporate purposes.
Capstone's 'B+' IDR reflects Cvent's strong recurring revenues at
over 94% and its net dollar retention rate at 110% for the LTM
ending Sept. 30, 2023. The rating also considers Fitch's concern
that FCF is expected to be negative this year and in 2024 due to
one-time items and then return to positive FCF which should grow
over the rating horizon. It also reflects expectations that
leverage can fall over the next several quarters as EBITDA
increases. As a private equity owned company, Fitch does have
concerns that the sponsor could prioritize growth via debt funded
acquisitions or shareholder returns rather than debt reduction.
The Negative Outlook reflects concerns for the increased debt
burden which will weaken the company's CFO less capex to debt ratio
and increase leverage. Previously, Fitch had stated that it may
take negative rating action if CFO less capex to debt was below 7%
on a sustained basis and Fitch now projects this to be negative in
2023 and 2024 due to one-time items before becoming positive and in
the mid-single digits.
Additionally, leverage is forecasted higher than previously
anticipated particularly given the small EBITDA contributions from
the planned acquisitions which will not be immediately accretive.
Fitch previously stated that if leverage was above 5.5x on a
sustained basis, it could take negative rating action. Fitch
forecasts leverage at the end of 2024 to be close to that leverage
target, however, with successful execution of its cost cutting
plan, leverage has the potential to decline to below 5.0x by the
end of 2025. If the company can increase CFO less capex to debt and
decrease leverage below 5.5x over the next several quarters, the
Outlook could be revised to Stable. If it cannot, the rating may be
downgraded.
KEY RATING DRIVERS
Weaker CFO Less Capex to Debt: Between 2018 and 2022, Cvent had
capitalized software development costs that averaged 8% of revenues
which is significantly higher than its peers. For this reason,
Fitch focuses on Capstone's FCF margins and (CFO-capex)/debt since
the capitalized software development costs are captured with capex.
(CFO-capex)/debt was very strong at 28.5% in 2021 and 31.8% in
2022, reflecting the company's low debt. Fitch expects this ratio
to be negative in 2023 and 2024 due to the one-time items until it
rises to high single digits or double digits in 2025 and 2026,
again based on Capstone's ability to grow and expand EBITDA
margins.
FCF margins have been over 10% over the last two years and now it
is expected to be negative in 2023 and 2024 due to one-time items.
The ability to increase to high single digits or double digits is
contingent upon Capstone's ability to execute its growth and cost
savings plan. The company is forecasted to generate positive FCF in
2025 and beyond.
Elevated Leverage to Decline: Pro forma for the incremental term
loan, Fitch projects leverage at the end of 2023 to be high at
around 6.8x. Capstone's first full quarter thus far was 3Q23 which
showed EBITDA margin improvement and with additional cost
optimization, Fitch projects margins to expand in 2024 and 2025.
This along with revenue growth should decrease leverage which Fitch
projects to be in the range of 5.5x to 6.0x by the end of 2024 and
below 5.0x at the end of 2025, barring any additional leveraging
transactions. Fitch does not assume debt repayments outside of
mandatory amortization payments.
Moderate Execution Risk: Capstone's adjusted EBITDA margins
averaged 21.1% between 2018 and 2022 and ranged from a high of
25.9% in 2020 and a low of 18% in 2022. With Blackstone as its new
sponsor, it has already improved margins in 3Q23. Additional cost
efficiencies are expected to come from a right sized workforce,
offshoring, and improved procurement practices. Failure to
successfully execute on its cost savings plan will hurt the credit
profile.
Large and Diverse Customer Base: Capstone has approximately 22,000
customers globally with the majority based in North America which
accounted for 87% of revenues. Approximately 50% of its contracts
are multi-year and the company has a strong net retention rate of
110% for the LTM ending Sept. 30, 2023. Revenues streams are
somewhat diverse with the Events cloud segment accounting for 70%
of 2022 revenues. The Hospitality cloud segment generated 30% of
2022 revenues. This segment includes its Cvent Supplier Network
(CSN) which has over 302,000 hotels and venues.
End Markets Offer Opportunities: Prior to the pandemic, Capstone
offered software solutions for in-person meetings and events. With
the pandemic, it pivoted its offerings to suite its customer's
needs and its software solutions fit virtual, in-person and hybrid
meetings and events. Capstone is a leader for these flexible SaaS
solutions. Fitch expects both segments to have growth over the
forecast horizon.
DERIVATION SUMMARY
Capstone Borrower's 'B+' Long-Term IDR reflects its strong market
position as a leader in meeting, events and hospitality cloud
solutions. The company has strong recurring revenues at 94% and net
retention rates of 110% for the LTM ending Sept. 30, 2023. In
addition, it has a large and diversified customer base with no
meaningful customer concentration. When Cvent was taken private,
its leverage became significant. With revenue growth and cost
optimization, leverage is forecasted to decline.
While not direct peers, Capstone Borrower's credit profile is
comparable to other software providers that have been taken private
including Quartz AcquireCo. (Qualtrics, B+/Stable), Constant
Contact (B/Stable), Magenta Buyer (B-/Stable) and QBS Parent, Inc.
(dba Quorum Business Solutions, CCC+). Cvent's operating profile
and credit profile are consistent with other 'B+' rated software
companies.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Capstone
Borrower
- Revenue growth in the low to mid-double digits over the next
couple of years followed by high single digits;
- Adjusted EBITDA margins expanding to the mid- to upper-20's over
the forecast horizon;
- Capex and capitalized software development costs are
approximately 8% of revenues;
- No assumptions are made for dividends to the sponsor.
KEY RECOVERY RATING ASSUMPTIONS
Fitch's recovery analysis assumes Capstone Borrower would be
reorganized as a going-concern (GC) entity in bankruptcy rather
than liquidated. Fitch has also assumed a 10% administrative claim.
Fitch forecasts that the company's GC EBITDA is $145 million. To
arrive at this, Fitch assumes that its smaller competitors such as
Hopin and Bizzabo expand and enhance their offerings and win over
existing Cvent customers. As a result, operating efficiencies are
lost, reducing the company's EBITDA margins.
An enterprise value (EV) multiple of 7.0x EBITDA is applied to the
GC EBITDA to calculate a post-reorganization EV. The choice of this
multiple considered the historical bankruptcy case study exit
multiples for technology peer companies, which ranged from 2.6x to
10.8x. Of these companies, only five were in the Software sector:
Allen Systems Group, Inc. (8.4x); Avaya Inc. (2017: 8.1x and 2023:
7.5x); Aspect Software Parent, Inc. (5.5x), Sungard Availability
Services Capital, Inc. (4.6x) and Riverbed Technology Software
(8.3x).
Fitch arrived at an EV of just over $1 billion and after applying a
10% administrative claim, an adjusted EV of $914 million is
available for claims by creditors. Fitch assumes a full draw on
Capstone Borrower's $115 million revolver. The resulting recovery
for the secured revolver, secured term loan, and secured notes is
'RR2' which results in the instrument rating being notched up two
from the IDR to 'BB'.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to a rating
affirmation and Stable Outlook
- (CFO - capex)/debt expected to be 7% or higher on a sustained
basis;
- Fitch's expectation of EBITDA leverage sustaining below 5.5x as a
result of weakness in market position or failure to execute on
operational optimization.
Factors that could, individually or collectively, lead to positive
rating action/upgrade
- (CFO - capex)/debt expected to be 10% or higher on a sustained
basis;
- Fitch's expectation of EBITDA leverage sustaining below 4.0x;
- Sufficient financial flexibility for company to pursue strategic
actions without significant deviation in credit metrics.
Factors that could, individually or collectively, lead to negative
rating action/downgrade
- (CFO - capex)/debt below 7% on a sustained basis;
- Fitch's expectation of EBITDA leverage sustaining above 5.5x as a
result of weakness in market position or failure to execute on
operational optimization;
- Erosion in revenue retention rates resulting in organic revenue
growth sustaining near or below 0%.
LIQUIDITY AND DEBT STRUCTURE
Sufficient Liquidity: Fitch expects Capstone Borrower to maintain
adequate liquidity over the rating horizon. As of Sept. 30, 2023,
the company has $239 million of cash on the balance sheet and a
fully undrawn $115 million secured revolver due 2030. In addition,
the company had approximately $66 million of short-term investments
on the balance sheet.
Debt Structure: As of Sept. 30, 2023, Capstone Borrower has an
undrawn $115 million secured revolver, a $500 million secured term
loan and $400 million of secured notes. There is an interest rate
swap in place for $200 million of the floating rate debt.
Capstone Borrower is aiming to secure an additional fungible add-on
Term Loan B. Proceeds will be used to finance the acquisitions of
Falcon and Expo, covering all related fees and expenses of the
transaction, and funding remaining cash to the balance sheet.
Fitch notes that there are $1.25 billion of preferred shares
(unrated) held above Capstone Borrower, Inc. at Capstone TopCo,
Inc. Per Fitch's criteria, these instruments are treated as debt at
the HoldCo, Capstone TopCo. The preferreds are not considered debt
of Capstone Borrower per adjustment seven of Fitch's Corporate
Criteria.
ISSUER PROFILE
Capstone Borrower, Inc. (dba Cvent) offers meetings, events, and
hospitality software solutions to approximately 22,000 customers.
Approximately 53% of Fortune 500 companies use Cvent. For its
hospitality offerings, it offers over 302,000 venues for the Cvent
Supplier Network.
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
----------- ------ -------- -----
Capstone Borrower,
Inc. LT IDR B+ Affirmed B+
senior secured LT BB Affirmed RR2 BB
CENTURI GROUP: Moody's Lowers CFR & First Lien Term Loan to Ba3
---------------------------------------------------------------
Moody's Investors Service downgraded Centuri Group, Inc.'s
Corporate Family Rating to Ba3 from Ba2 and Probability of Default
Rating to Ba3-PD from Ba2-PD, with a negative outlook. Previously,
the ratings were on review for downgrade. Moody's also downgraded
the company's $1.145 billion senior secured first lien term loan B
due 2028 and $400 million senior secured revolving credit facility
rating to Ba3 from Ba2.
"The one-notch downgrade reflects removal of group support from its
investment-grade parent, Southwest Gas Holdings, and uplift
previously assigned to the rating following the decision to
separate Centuri," said Domenick R. Fumai, Moody's Vice President
and lead analyst for Centuri Group, Inc.
RATINGS RATIONALE
The downgrade of Centuri's CFR to Ba3 considers the removal of
support from ownership by its investment-grade parent, Southwest
Gas Holdings, Inc. (SWX; Baa2 stable) following the determination
to separate the company in an IPO or possible spin-off. Previously,
Moody's had factored a one-notch uplift to the CFR given the
importance of Centuri to Southwest Gas and despite the absence of a
legally binding parent support agreement, a high degree of implied
support existed from SWX. On December 4, SWX announced it will
pursue an IPO sometime during the spring or summer of 2024. The
timing is also dependent upon the successful transition of a new
CEO at Centuri after the current CEO, Paul Daily's decision to
retire next year. The execution of the IPO is subject to market
conditions, completion of the SEC's review and final Board approval
to proceed with the transaction. Following the IPO, SWX plans to
further reduce ownership in Centuri through sales into the market,
exchange offers or a combination. The company also retains
strategic flexibility to separate Centuri through a tax-free
spin-off of all or part of Centuri in the event market conditions
are not conducive to an IPO or seconardy sales by SWX following an
IPO.
Governance considerations were a key driver of this rating action;
however, there were no changes to any of Centuri Group's ESG
scores. The main governance consideration is the lack of control
and separation from the parent; however, financial strategy and
risk management are expected to be unchanged as the company has
indicated that proceeds from an IPO, if successful, will be applied
towards debt reduction.
The Ba3 rating is underpinned by its strong market position as a
utility infrastructure services company. Multi-year master service
agreements (MSAs), which account for approximately 82% of revenue
as of LTM September 30, 2023, allow for a highly visible revenue
stream as customers issue future work authorizations that include
fairly specific details related to performing a job. Centuri also
benefits from favorable contract pricing agreements that reduce
volatility in both gross profit and earnings, with roughly 54% of
the contracts structured as unit price agreements that have a set
price per units of work as well as time and materials contracts
that make up 23% of the contracts. Centuri's rating also benefits
from long-term relationships with highly-rated utilities.
The Ba3 rating considers the increased leverage and weaker credit
metrics following the Riggs Distler acquisition compared to
historical performance. Moody's Debt/EBITDA, including standard
adjustments for operating leases, measured 4.4x for the LTM period
ended September 30, 2023, which is indicative of the "Ba" rating
category and is expected to improve towards 4.0x in FY 2024. Funds
from operations (cash flow from operations before working capital
changes) to total debt (FFO/Debt) is projected to be about 14%
while interest coverage as measured by EBITDA/interest expense
remains around 3.0x next year. The rating is also constrained by
lack of scale based on revenue compared to competitors in the
construction industry such as Quanta Services, Inc. (Baa3 stable)
and MasTec, Inc. (Baa3 negative). The credit profile is further
tempered by an acquisitive growth strategy that has included
several M&A transactions since 2014. Moody's also views customer
concentration as another limiting factor in the rating with the top
10 customers representing about half of sales.
LIQUIDITY
Centuri has good liquidity comprised of about $33 million of cash
on the balance sheet and $180 million of availability under its
$400 million revolving credit facility as of September 30, 2023.
Moody's expects the company to have cash of $25 million, revolver
availability of $260 million and generate free cash flow of $50
million in 2024.
STRUCTURAL CONSIDERATIONS
The Ba3 ratings for the $1.145 billion senior secured term loan and
revolving credit facility are in line with the Ba3 CFR given the
preponderance of secured debt in the capital structure with no loss
absorption from less junior debt. The $400 million revolving credit
facility was recently amended and contains a maximum net leverage
ratio covenant of 5.5x with step-downs to 5.0x at the end of 2024
and minimum interest coverage ratio of 2.0x that steps up to 2.5x
in 2025. The amendment also reduces the leverage covenant based on
net IPO proceeds.
The negative outlook reflects the lack of clarity regarding the
ultimate capital structure, including the timing and amount of
proceeds from an IPO towards debt reduction if it is successful,
possible spin-off, strategic direction under a new CEO as well as
the financial policy as an independent company.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade the rating if the IPO is successful resulting
in absolute debt reduction such that Debt/EBITDA is maintained
below 2.75x, funds from operations to total debt (FFO/Debt) is
consistently in excess of 25%, the company maintains a conservative
financial policy and there is no change in strategy under the new
CEO.
Moody's would likely downgrade the rating if the IPO is
unsuccessful or the proceeds are insufficient resulting in
Debt/EBITDA sustained above 4.5x, funds from operations to total
debt (FFO/Debt) is maintained below 15%, a deterioration in its
liquidity profile, another large debt-financed acquisition, or a
loss of major customer.
Centuri Group, Inc., headquartered in Phoenix, AZ, is a
comprehensive utility services company that provides replacement
and installation work to gas and electric utilities in North
America. The company is a subsidiary of Southwest Gas Holdings,
Inc., which also owns Southwest Gas Corporation, a regulated gas
utility. The company operates in two key segments across the US and
Canada: Gas Utility and Electric Utility. Centuri reported revenue
of $3.0 billion for the last twelve months ended September 30,
2023.
The principal methodology used in these ratings was Construction
published in September 2021.
CHOBANI LLC: Moody's Ups CFR to 'B2' & Alters Outlook to Stable
---------------------------------------------------------------
Moody's Investors Service upgraded the ratings of Chobani, LLC
including the company's Corporate Family Rating to B2 from B3,
Probability of Default Rating to B2-PD from B3-PD, and senior
unsecured notes rating to Caa1 from Caa2. Moody's affirmed the B1
rating on the company's existing first lien senior secured debt
consisting of a revolving credit facility, term loan, and senior
secured notes. Moody's assigned a B1 rating to the proposed $550
million non-fungible incremental term loan. The rating outlook was
changed to stable and was previously positive.
The B1 ratings on the first lien senior secured debt reflect
Moody's expectation for the proceeds from the $550 million
incremental term loan to be used to fund the La Colombe
acquisition. If the La Colombe acquisition does not close as
anticipated, Chobani plans to use the term loan proceeds to repay
the outstanding $530 million unsecured notes due April 2025.
Moody's would view the refinancing of the 2025 unsecured notes as
credit positive as it would be relatively leverage neutral and it
would extend the maturity profile. However, such a refinancing
transaction could result in the B1 rating on the first lien senior
secured debt being downgraded because this debt would then
represent a majority of the debt in the capital structure, with no
unsecured debt to absorb loss in the event of a default.
The rating upgrades reflect that Chobani's credit profile has
improved meaningfully over the last 12-18 months because
debt/EBITDA (on a Moody's adjusted basis) has declined to 3.5x as
of September 30, 2023 compared to approximately 9x as of the end
June 2022. Chobani also generated positive free cash flow of more
than $200 million over the nine month period ended September 30,
2023 after two years of negative free cash flow. Deleveraging and
stronger free cash flow generation reflect Chobani's solid earnings
growth over this period. Chobani's revenue and EBITDA (on a Moody's
adjusted basis) grew 29% and 68%, respectively, in the second half
of 2022 compared to the second half of 2021, and revenue and EBITDA
grew 14% and more than 100%, respectively, in the nine month period
ended September 2023 compared to the prior year nine month period.
Chobani's earnings growth over this period was partly driven by
pricing that was put in place in mid-2022 to offset cost inflation.
Pricing started aligning with higher costs in 3Q22 when cost
inflation began to moderate. Prices for milk, a key input for
yogurt, have also declined materially in 2023, though other input
costs have increased modestly. Earnings improvement also reflects
volume growth across the portfolio including oat milk, creamers and
yogurt. Chobani reported double digit volume growth in 3Q23. The
company entered the oat milk and creamer market in December 2019
and has been rapidly gaining market share. Yogurt still made up
roughly 81% of Chobani's sales for the nine month period ended
September 30, 2023 and the company is performing well in the
category. Within yogurt, the company is benefiting from
distribution gains and innovation. Chobani's profitability is also
improving because of better plant productivity.
Moody's views Chobani's planned acquisition of La Colombe as credit
negative because it will increase Chobani's projected debt/EBITDA
meaningfully to a projected 5.0x (on a Moody's adjusted basis) for
the year ended 2023 compared to Moody's expectation of 3.4x
debt/EBITDA for the standalone business. La Colombe is a US coffee
roaster selling cold pressed espresso and lattes on tap at their 32
cafes, as well as ready-to-drink (RTD) versions in retail channels.
Chobani is funding the $900 million acquisition with a $550 million
non-fungible incremental term loan, $44 million of cash from the
balance sheet, and the conversion of Keurig Dr Pepper Inc.'s
("KDP") equity stake in La Colombe into Chobani equity. La Colombe
is majority owned by Hamdi Ulukaya who is also the controlling
shareholder in Chobani. In August 2023, KDP invested $300 million
in La Colombe in exchange for a 33% equity stake. Simultaneously,
KDP entered into a sales and distribution agreement for La Colombe
RTD coffee and a licensing, manufacturing and distribution
agreement for La Colombe branded K-Cup pods. The transition of La
Colombe RTD coffee distribution to KDP and the launch of La Colombe
branded K-Cup pods is expected to begin in late 2023/early 2024.
Moody's expects La Colombe to contribute negative EBITDA in 2023.
The company's operating performance is being negatively impacted
this year because of the early termination of its former
distribution relationship earlier in the year. This resulted in
significant volume declines on the single serve business, while
volumes of other businesses that were not impacted by the
distribution shift, including multi-serve and roasted coffee, are
projected to grow at a double digit rate in 2023. There is also
execution risk related to integrating and improving profitability
of the acquired business, although La Colombe will only make up 8%
of pro forma consolidated sales and a much smaller portion of
profits. This risk is partially mitigated by restructuring actions
La Colombe has already taken this year to reduce costs, and because
of the $15 million of cost synergies that Chobani expects to
generate over the first 2 years. Moody's also expects that the
partnership with KDP will result in improved distribution as KDP
has strong capabilities in the retail channel and RTD coffee is an
important distribution opportunity for KDP. The acquisition will
diversify Chobani's product portfolio modestly because it adds a
RTD coffee platform, and reduces yogurt concentration to roughly
75% of sales. RTD coffee is a high growth category that Moody's
expects to grow at a mid-single digit rate.
Moody's forecasts debt/EBITDA leverage to decline from 5.0x at the
end of 2023E (pro forma for the La Colombe acquisition) to 4.4x by
the end of 2024. The projected deleveraging reflects Moody's
expectation of low double digit EBITDA growth driven by continued
volume growth and margin expansion in Chobani's core yogurt and
modern food businesses. Moody's expects La Colombe to generate
double digit top line growth behind distribution gains, and that
profitability will improve modestly but still contribute very
little until distribution scales further in 2025. In 2025, Moody's
expects further deleveraging supported by projected mid-single
digit EBITDA growth. This reflects Moody's expectation of increased
profitability at La Colombe because of execution on cost synergies
and increased distribution. Moody's also expects modest earnings
growth in Chobani's current core business. There is some downside
risk to Moody's forecast because consumers remain pressured and the
company could face volume pressure, pushback on pricing, higher
milk costs, or an increased promotional environment that would
negatively impact profitability. Additionally, there is execution
risk in Chobani's ability to turn around operating performance of
the acquired La Colombe business.
RATINGS RATIONALE
Chobani's B2 CFR reflects its high concentration in the highly
competitive yogurt category, and execution risk associated with
Chobani's high-paced innovation strategy, which is a key component
of its plan for driving sales and earnings growth. The credit
profile also reflects high governance risks including an aggressive
financial policy and concentrated control by the founder who also
holds key senior executive roles including the CEO and chairman
positions. Chobani has historically operated with high financial
leverage partly because of large debt funded investments and
historically weak free cash flow. Chobani's credit metrics have
improved over the last 12-18 months because of strong operating
performance, with debt/EBITDA leverage declining to 3.5x (on a
Moody's adjusted basis) as of September 30, 2023. The planned La
Colombe acquisition will increase projected debt/EBITDA leverage to
5.0x by the end of 2023. Thereafter, Moody's expect debt/EBITDA
leverage to decline over the next 12-18 months. There is some
downside risk to Moody's forecast because consumers remain
pressured and the company could face volume pressure, pushback on
pricing, higher milk costs, or an increased promotional environment
that would negatively impact profitability. There is some cushion
within the financial leverage expectations for the B2 CFR to absorb
a modest decline in earnings. Chobani's credit profile is supported
by its leading share in the US Greek yogurt category, strong brand
equity that supports the company's expansion into adjacent
categories, and good growth opportunities in the company's modern
food categories, including oat milk and creamers.
Chobani's very good liquidity is supported by positive projected
free cash flow, a sizable cash balance, an undrawn revolver and
limited debt repayment needs over the next 12 months. Chobani's
cash balance of $165 million as of September 30, 2023 ($121 million
pro forma for the La Colombe acquisition) and $144 million of
availability on its $150 million revolver (net of $6 million
letters of credit outstanding) provide strong coverage of cash
needs including term loan amortization. A $75 million receivables
trade facility was undrawn as of September 30, 2023 and was last
renewed on December 21, 2022. A renewal of this facility would
further bolster liquidity. The $150 million revolver was amended in
February 2023, with the maturity extended to February 2028 for $125
million of the commitment, with the remaining $25 million
commitment expiring at the original maturity date of April 2024.
The February 2028 extended maturity springs to 91 days prior to the
earlier of the term loan maturity date (October 2027) and the
stated maturity of the unsecured notes (April 2025). Based on the
current debt maturity profile, the revolver maturity would spring
from February 2028 to January 2025 if the unsecured notes maturity
was not addressed by then. Moody's projects Chobani will generate
more than $200 million of positive free cash flow in fiscal 2023 as
a standalone entity. The forecast excludes the impact of the La
Colombe acquisition because Moody's expects the transaction to
close towards the end of 2023. In 2024, Moody's projects free cash
flow to decline to $150-$175 million, reflecting higher interest
expense because of the $550 million of incremental debt to finance
the La Colombe acquisition and still little expected profit
contribution from the acquired business. Moody's also projects
capital expenditures to increase in 2024 to support capacity
expansion. Projected free cash flow will sufficiently cover the
required $10 million annual term loan amortization (pro forma for
the financing transaction).
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectation that Chobani will
successfully integrate La Colombe and that earnings will continue
to improve. The stable outlook also reflects Moody's expectation
for debt/EBITDA leverage to decline below 5x over the next 12-18
months, and for Chobani to generate free cash flow of more than
$150 million in 2024.
A rating downgrade could occur if operating performance weakens due
to revenue declines or significant EBITDA margin deterioration,
liquidity deteriorates, free cash flow is not maintained at a
comfortably positive level, or the financial policy becomes more
aggressive. Quantitatively, a downgrade could occur if debt/EBITDA
is above 6.0x.
A rating upgrade could occur if Chobani improves product
diversification, sustainably grows earnings supported by consistent
revenue and EBITDA margin expansion, sustains debt/EBITDA below
4.5x and generates consistent and solid free cash flow.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Consumer
Packaged Goods published in June 2022.
COMPANY PROFILE
Chobani, LLC, based in New Berlin, New York, is a leading
manufacturer of Greek yogurt, as well as other dairy and non-dairy
milk products sold under the "Chobani" master brand. Chobani
generated revenue of approximately $2.3 billion in the LTM period
ended September 30, 2023. Projected revenue for 2023 pro forma for
the La Colombe acquisition is approximately $2.5 billion. The
company is majority owned by CEO and founder Hamdi Ulukaya. The
Healthcare of Ontario Pension Plan ("HOOPP") is also a major
investor.
COMMUNITY HEALTH: Completes Divestiture of 3 Hospitals for $294M
----------------------------------------------------------------
Community Health Systems, Inc. announced that certain subsidiaries
of the Company have completed the divestiture of Bravera Health
Brooksville (120 licensed beds) in Brooksville, Florida, Bravera
Health Spring Hill (124 licensed beds) in Spring Hill, Florida, and
Bravera Health Seven Rivers (128 licensed beds) in Crystal River,
Florida, along with their associated assets, physician clinic
operations and outpatient services, to Tampa General Hospital and
certain of its affiliates for approximately $294 million in cash,
inclusive of estimated working capital and other purchase price
adjustments. The transaction was effective Dec. 1, 2023.
About Community Health Systems Inc.
Community Health Systems, Inc. -- http://www.chs.net-- is a
publicly traded hospital company and an operator of general acute
care hospitals in communities across the country. CHS subsidiaries
own or lease 71 affiliated hospitals with approximately 12,000 beds
and operate more than 1,000 sites of care, including physician
practices, urgent care centers, freestanding emergency departments,
occupational medicine clinics, imaging centers, cancer centers and
ambulatory surgery centers.
As of Sept. 30, 2023, the Company had $14.67 billion in total
assets, $15.56 billion in total liabilities, $329 million in
redeemable noncontrolling interests in equity of consolidated
subsidiaries, and a total stockholders' deficit of $1.22 billion.
* * *
As reported by the TCR on March 3, 2023, Moody's Investors Service
downgraded CHS/Community Health Systems, Inc.'s ("Community")
Corporate Family Rating to Caa1 from B3. Moody's said the
downgrade of Community's ratings reflects a significant increase in
the company's financial leverage and the uncertainty associated
with the company's ability to generate positive free cash flow
given the tough operating environment.
CORE SCIENTIFIC: Asks Court OK for $77 Mil. Bitcoin Mine Purchase
-----------------------------------------------------------------
Crypto mining company Core Scientific is asking a Texas bankruptcy
court to approve a planned $77.1 million purchase of equipment from
bitcoin firm Bitmain Technologies, saying the deal will augment its
mining rate and help it exploit an auspicious market environment
for the digital currency.
The Debtors since inception have been involved in the mining of
digital assets for their own account through specialized machines
and subsequently selling the digital assets. A critical aspect of
the Debtors' business plan is to optimize and expand their existing
self-mining operation to take advantage of the improving
bitcoin-specific macroeconomic environment. To implement this
goal, the Debtors (and Reorganized Debtors, post-emergence) seek to
acquire additional new miners to (i) replace old miners at the
Debtors' existing facilities to increase the self-mining hash rate
and (ii) fill open capacity at the Debtors' facilities that are
currently under construction, thereby improving the overall mining
efficiency and capacity of the Debtors' miner fleet.
Accordingly, the Debtors seek Bankruptcy Court approval to enter
into and perform under an Asset Purchase Agreement, dated Sept. 5,
2023, by and between Core and Bitmain Technologies Delaware
Limited, amended by an Amendment to the APA, dated Nov. 6, 2023.
Under the Asset Purchase Agreement, the Debtors will purchase
27,000 units of S19j XP Miners from Bitmain, which will be
delivered prior to the date of the Debtors' emergence from these
chapter 11 cases for a purchase price of $77.1 million,
approximately $53.9 million of which will be paid in the common
equity of the Reorganized Debtors at Plan Value and $23.1 million
will be paid in cash. The effectiveness of the APA is subject to
the occurrence of the Effective Date of the Plan and the Purchase
Price will be paid following the Effective Date.
Entry into the Asset Purchase Agreement provides significant
benefits to the Debtors by allowing the Reorganized Debtors to
acquire efficient miners at a competitive rate in furtherance of
their business plan and to preserve liquidity by paying primarily
in equity.
About Core Scientific
Core Scientific, Inc. (OTCMKTS: CORZQ) is the largest U.S.
publicly-traded Bitcoin mining company in computing power. Core
Scientific, which was formed following a business combination in
July 2021 with blank check company XPDI, is a large-scale operator
of dedicated, purpose-built facilities for digital asset mining
colocation services and a provider of blockchain infrastructure,
software solutions and services. Core mines Bitcoin, Ethereum and
other digital assets for third-party hosting customers and for its
own account at its six fully operational data centers in North
Carolina (2), Georgia (2), North Dakota (1) and Kentucky (1). Core
was formed following a business combination in July 2021 with XPDI,
a blank check company.
In July 2022, one of the Company's largest customers, Celsius
Mining LLC, filed for Chapter 11 bankruptcy in New York. With low
Bitcoin prices depressing mining revenue to a record low, Core
Scientific first warned in October 2022 that it may have to file
for bankruptcy if the company can't find more funding to repay its
debt that amounts to over $1 billion. Core Scientific did not make
payments that came due in late October and early November 2022 with
respect to several of its equipment and other financings, including
its two bridge promissory notes.
Core Scientific and its affiliates filed petitions for relief under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No.
22-90341) on Dec. 21, 2022. As of Sept. 30, 2022, Core Scientific
had total assets of US$1.4 billion and total liabilities of US$1.3
billion.
Judge David R. Jones oversees the cases.
The Debtors hired Weil, Gotshal & Manges, LLP, as legal counsel;
PJT Partners, LP as investment banker; and AlixPartners, LLP as
financial advisor. Stretto is the claims agent.
A group of Core Scientific convertible bondholders is working with
restructuring lawyers at Paul Hastings. Meanwhile, B. Riley
Commercial Capital, LLC, as administrative agent under the
Replacement DIP facility, is represented by Choate, Hall & Stewart,
LLP.
On Jan. 9, 2023, the U.S. Trustee for Region 7 appointed an
official committee to represent unsecured creditors in the Debtors'
Chapter 11 cases. The committee tapped Willkie Farr & Gallagher,
LLP, as legal counsel and Ducera Partners, LLC as investment
banker.
The U.S. Trustee for Region 7 appointed an official committee of
equity security holders. The equity committee is represented by
Vinson & Elkins, LLP.
CQP HOLDCO: Moody's Rates New Senior Secured Term Loan B 'B1'
-------------------------------------------------------------
Moody's Investors Service assigned B1 ratings to CQP Holdco LP's
proposed $2,000 million senior secured term loan B and up to $700
million senior secured notes. The company's existing ratings are
unchanged, including CQP Holdco's B1 Corporate Family Rating. The
outlook is stable.
The proceeds from the new term loan and new notes will be used to
refinance the existing term loan.
"This refinancing will allow CQP Holdco additional financial
flexibility, as the company aims to extend the maturity of the term
loan and to marginally reduce its costs, while keeping its leverage
stable," said Elena Nadtotchi, Moody's Senior Vice President.
RATINGS RATIONALE
CQP Holdco's new senior secured term loan, new senior secured notes
and its existing senior secured notes are rated B1, at the same
level as the B1 CFR. The term loan and the notes represent all of
the debt of the company, rank pari passu, and benefit from the
first-lien pledge of CQP Holdco's equity interests in Cheniere
Energy Partners, L.P. (CQP, Ba1 stable).
CQP Holdco's B1 CFR is supported by the predictability and
recurring nature of the long-dated, contractually derived cash flow
distributed through CQP (Ba1 stable) to CQP Holdco, which holds a
41% limited partner (LP) stake in CQP. The market value of its
investment in CQP approximates $12.3 billion (as of December 1,
2023), allowing for good collateral coverage of its debt, with a
34% loan-to-value on CQP Holdco's $4.1 billion in secured debt.
The stability and magnitude of this cash flow stream is tempered by
the significant extent to which CQP Holdco's secured debt is
structurally subordinated to CQP's debt and project debt that has
financed CQP's principal asset, the Sabine Pass liquefied natural
gas (LNG) export facility (Sabine Pass Liquefaction, LLC or SPL,
Baa2 stable). CQP Holdco's rating is further supported by the
substantial governance rights it maintains over CQP's operations
and strategic planning by virtue of its majority membership on the
CQP Executive Committee of the Board of Directors, and the
significant extent of its influence on the CQP Board itself.
The stable outlook on CQP Holdco's ratings mirrors the stable
outlook on CQP's ratings and reflects Moody's expectation that
distributions from CQP will continue to support the debt and
leverage profile of CQP Holdco.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade of CQP's ratings or a significant further reduction in
CQP Holdco's leverage could lead to an upgrade of CQP Holdco's
ratings. A deterioration in the financial performance of CQP Holdco
caused by a blockage of distributions from SPL or CQP to CQP Holdco
or the downgrade of either SPL or CQP would likely cause a
downgrade of CQP Holdco's ratings.
CQP Holdco LP is jointly owned by Blackstone Infrastructure
Partners and Brookfield Infrastructure Partners. CQP Holdco owns
41% of CQP's common units.
The principal methodology used in these ratings was Midstream
Energy published in February 2022.
CREDIT ACCEPTANCE: S&P Rates $500MM Senior Unsecured Notes 'BB'
---------------------------------------------------------------
S&P Global Ratings assigned its 'BB' issue rating to Credit
Acceptance Corp.'s proposed issuance of $500 million senior
unsecured notes due 2028. The company will use the net proceeds to
pay-off its existing $400 million of 5.125% unsecured notes due
2024, with the rest being used for general corporate purposes.
As of Sept. 30, 2023, Credit Acceptance's leverage, measured as
debt to equity, was 2.9x. As of the same date, the company had $3.0
billion of credit reserves (31% of gross receivables). S&P said,
"Adjusting for these reserves, we expect leverage to remain within
our expected range of 1.5x-2.75x. Pro forma, we expect leverage
will modestly rise but remain within our expected range. We expect
Credit Acceptance's balance sheet to be highly encumbered
considering that about 80%-85% of its funding is secured."
S&P said, "Pro forma for the company's two recent asset backed
securities transactions totaling $494 million and proposed debt
issuance, we expect the company's unencumbered assets to unsecured
debt ratio to be 1.0x-1.1x, albeit at the lower end, and that its
cushion of unencumbered assets to unsecured debt of above 1.0x has
declined. If the ratio declines below 1.0x, we could lower our
unsecured debt rating by at least one notch to 'BB-'.
"While there is no definitive resolution on the lawsuit filed by
the Consumer Financial Protection Bureau (CFPB) and New York State
Office of Attorney General against CACC, we will continue to
monitor the case as it could add to the legal and regulatory risks
the company already faces.
"The stable outlook over the next 12 months is based on Credit
Acceptance's consistent financial performance and relatively low
expected leverage of 1.50x-2.75x.
"We could lower the rating in the next 12 months if the company's
leverage rises above 2.75x and earnings deteriorate. We could also
lower the rating if the company faces regulatory action that erodes
its equity or materially limits operations."s
An upgrade is unlikely over the 12 months owing to legal and
regulatory risks.
CWT GROUP: Fitch Assigns 'CCC+' LongTerm IDR
--------------------------------------------
Fitch Ratings has assigned a Long-Term Issuer Default Rating (IDR)
of 'CCC+' to CWT Group LLC (successor to CWT Travel Group, Inc.).
The IDR of 'RD' for CWT Travel Group, Inc. has been removed. In
addition, Fitch has also upgraded the IDR of co-borrowers CWT US,
LLC; CWT UK Group Ltd; and CWT Beheermaatschappij BV (collectively,
CWT) to 'CCC+' from 'RD'. Concurrently Fitch has upgraded the first
lien revolver and term loan to 'B+'/'RR1' from 'CCC'/'RR1' and has
assigned a 'B'/RR2 rating to the newly issued second lien secured
term loan.
The ratings reflect the recent restructuring that materially
reduced outstanding debt and operating costs to provide for
intermediate term relief. The rating also reflects the slow
recovery in the corporate travel business, particularly in North
America, which could affect liquidity if operating costs are not
reduced fast enough to support lower revenue levels. Fitch believes
any positive rating actions are dependent upon the company to
right-size operating costs on a sustainable basis in light of
expected lower near-term revenue levels.
The IDR of 'RD' for CWT Travel Group, Inc. has been withdrawn as
the entity was dissolved during the recapitalization.
KEY RATING DRIVERS
Recapitalization: CWT announced a recapitalization of its balance
sheet on Nov. 9, 2023. The recapitalization involved the
equitization of the company's existing $625 million senior notes
and provision of incremental liquidity. The equitization of the
senior secured notes is deemed a distressed debt exchange by Fitch,
as holders of these notes were deemed to receive a material
reduction in terms and the transaction was deemed to avoid an
eventual probable default.
Fitch expects the recapitalization will materially improve EBITDA
leverage and fixed-charge coverage, while enhancing liquidity. The
improved capital structure, combined with a materially reduced cost
structure, should put CWT on stronger footing over the near term.
The transaction reduces debt by over $450 million and extends debt
maturities.
Growth but Secular Headwinds: CWT realized a very strong recovery
in 2022 and in early-2023, although growth has slowed since
mid-2023 as a result of weaker-than-expected travel in North
America, slow recovery of international travel to North America,
and the higher mix of hotel transactions relative to air traffic
transactions, which reduces yield. Fitch expects revenue to
continue to grow through 2024 but at a lower rate than 2023.
The Global Business Travel Association released its Business Travel
Index Outlook in August 2023 and expects global business travel to
recover to its pre-pandemic total of $1.4 trillion in 2024 and grow
to almost $1.8 trillion by the end of 2027. While macro headwinds
are less of a concern, the high cost to travel, the adoption of
meeting technologies, the increase in remote working,
sustainability initiatives (ESG), and other travel uncertainties
(Ukraine/Middle East) could all contribute to a drag on overall
business travel. Traditionally, the industry has shown a moderate
degree of cyclicality due to demand volatility stemming from
economic cycles or external shocks, although some of these issues
listed previously could be considered evidence of secular changes.
Improved Liquidity: Fitch estimates CWT to have approximately $120
million in total liquidity (cash plus revolver availability) pro
forma for the recapitalization. Cash-burn is expected to improve
and FCF should turn positive in 2024 from a combination of
operating cost cuts and lower interest expense. FCF improvement
should allow the company to reduce revolver borrowings and begin to
invest in growth initiatives.
Potential for Margin Improvement: CWT is taking steps to right-size
the cost structure to reflect a lower level of revenues than
realized pre-pandemic. Inflation and the initial ramp-up cost,
especially in areas of labor, have weighted on CWT's margins as
revenues recovered. Fitch expects CWT's margins to improve
meaningfully as revenues continue to normalize and its
restructuring efforts become more visible. Improving and sustained
margin improvement will be the primary rating driver given that CWT
now has a lower level of absolute debt to service.
Company Diversification: CWT is diversified from a geographic,
customer and contract type perspective, helping to moderate an
impact from cyclical travel pressures (excluding idiosyncratic
shocks like the pandemic). A majority of revenue is generated in
the Americas and EMEA, with a growing presence in Asia. No single
customer comprises a meaningful portion of total revenue, and CWT's
business clients are also diversified across industries.
DERIVATION SUMMARY
CWT is a global operator in business travel management services
with historically moderate leverage. Its closest comparable is Amex
GBT (NPR), which operates in the same travel vertical. The closest
Fitch-rated public comparison is Expedia Inc. (BBB-/Positive), an
online travel agency (OTA), which provides business-to-consumer
travel services primarily to individuals and is more exposed to
leisure travel. Sabre GLBL, which operates in the global
distribution system (GDS) business, although Fitch believes over
the long-term the disintermediation risk of GDS companies from the
travel funnel is greater than business travel management companies,
with the latter offering high value-add services to corporate
clients.
Leisure travel saw a strong rebound during 2022 with major OTAs
recording record-level gross bookings. This contrasts with
corporate travel, which Fitch expects will have an elongated path
back to pre-pandemic level of transactions. Expedia has
significantly larger scale, which had excess of $95 billion gross
travel bookings and approximately $2.7 billion in annual FCF during
2022, while it also has a long-established track record of adhering
to a below 2.0x gross debt/EBITDA target.
KEY ASSUMPTIONS
- Transactions flatten in 2024 following double-digit increase in
2023, then rise in the mid-single digits in 2025. Fitch forecasts
CWT revenues levels to be at approximately 56% of 2019 levels in
2023, 58% in 2024, and 62% in 2025;
- Adjusted EBITDA to turn positive in 2H23. Given the structural
savings in CWT's cost base, Fitch forecasts EBITDA margins reach
the mid-teens once travel demand begins to normalize. Annual
restructuring charges, which are added back to EBITDA, dissipate in
2023;
- CWT should turn FCF positive in 2024 given lower operating and
interest costs. Working capital could be a drag as business
improves;
- Capex will remain at lower levels but is expected to increase as
management looks to re-invest into the system.
RECOVERY ANALYSIS
KEY RECOVERY RATING ASSUMPTIONS
The recovery analysis assumes that CWT would be reorganized as a
going-concern in bankruptcy rather than liquidated. Fitch has
assumed a 10% administrative claim, and has assumed the $110
million revolver to be fully drawn at the time of recovery. The
current recovery ratings contemplate roughly $200 million of first
lien secured debt claims and $100 million of second lien claims.
Fitch estimates going-concern EBITDA in a scenario in which default
may be caused by deep cyclical pressures, resulting in prolonged
cash burn. Under this scenario, Fitch estimates a going-concern
EBITDA of roughly $100 million, which is below previous going
concern estimates but reflects the slower corporate business travel
recovery that may have some secular impacts.
Fitch assumes a going-concern recovery multiple of 5.0x for CWT.
This is below the previous 6.0x recovery multiple assumed by Fitch
given the potential impact of secular declines in the sector. There
are limited public transaction multiples in the travel services
industry; however, Expedia currently trades at a 9.9x EV/EBITDA
multiple.
The revolver, term loan and second lien notes are all projected to
fully recover, although the second lien is capped at a recovery
rating of 'RR2' given its subordination to the first lien and
secured debt.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- An ability to generate positive and sustained FCF with proceeds
used to reduce revolver borrowings and reinvest in growth
initiatives;
- EBITDA margins above 10% that are considered sustainable over
time;
- EBITDA leverage below 5.5x combined with further enhancements in
liquidity.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- A reduction in liquidity due to lower than expected EBITDA growth
or negative FCF;
- Inability to access external liquidity sources;
- Loss of market share and/or long-term continued weakness in
corporate travel;
- EBITDA leverage above 6.5x.
LIQUIDITY AND DEBT STRUCTURE
Liquidity Enhanced but Challenging: Fitch estimates CWT will have
pro forma approximately $120 million in total liquidity (cash plus
revolver availability) at YE 2023. Liquidity is expected to be
enhanced to materially lower operating costs and reduction in cash
interest. CWT is coming off four years of material FCF deficits and
liquidity is not sufficient to survive deficits to that magnitude.
There are no debt maturities until 2026. Fitch expects further
enhancement of liquidity, particularly revolver availability, to be
a driver of a positive rating action.
ISSUER PROFILE
CWT Group LLC (CWT, and successor of CWT Travel Group, Inc,),
through its parent CWT Holdings, LLC (successor of CWT Travel
Holdings, Inc.) is a Minnetonka, Minn.-based business-to-business
employee travel platform company that serves clients in about 145
countries through its wholly owned operations, several joint
ventures and network of international contracted partners.
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
----------- ------ -------- -----
CWT US, LLC LT IDR CCC+ Upgrade RD
senior secured LT B+ Upgrade RR1 CCC
Senior Secured
2nd Lien LT B New Rating RR2
CWT Beheermaatschappij
B.V. LT IDR CCC+ Upgrade RD
senior secured LT B+ Upgrade RR1 CCC
Senior Secured
2nd Lien LT B New Rating RR2
CWT Group, LLC LT IDR CCC+ New Rating
Senior Secured
2nd Lien LT B New Rating RR2
senior secured LT B+ Upgrade RR1 CCC
CWT Travel Group Inc. LT IDR WD Withdrawn RD
CWT UK Group Ltd. LT IDR CCC+ Upgrade RD
senior secured LT B+ Upgrade RR1 CCC
Senior Secured
2nd Lien LT B New Rating RR2
DOMTAR CORP: Moody's Cuts CFR to 'Ba3', Outlook Stable
------------------------------------------------------
Moody's Investors Service downgraded Domtar Corporation's corporate
family rating to Ba3 from Ba2 and the probability of default rating
to Ba3-PD from Ba2-PD. Moody's also downgraded the rating on the
senior secured bank credit facility to Ba3 from Ba2, the rating on
the senior secured notes to Ba3 from Ba2 and the rating on the
senior unsecured notes to B2 from Ba3. The ratings outlook is
stable.
Governance considerations was one of the key drivers for a
downgrade reflecting ongoing acquisitions of assets by Domtar from
the same owner that owns Domtar. The acquisitions could result in
higher debt and other liabilities. As a result, Moody's changed two
governance component scores. Moody's changed Management Credibility
and Track Record score to 3 from 2 and the Organization Structure
to 3 from 2, given the company's underperformance relative to
original expectations at the time of Resolute acquisition and
ongoing transactions with a related entity.
RATINGS RATIONALE
The Ba3 corporate family rating reflects worse-than-expected credit
metrics amid weak volumes and pricing and unplanned downtime in the
company's primary markets: paper, pulp and wood products. Moody's
adjust debt/EBITDA pro forma for Resolute was approximately 4.6x in
the twelve months ended September 2023. Moody's expect leverage to
peak at 5.7x in 2023 before declining to 4.3x in 2024. The rating
also reflects an aggressive financial policy with 3 acquisitions
following the initial purchase of Domtar by Paper Excellence and
expectations of further acquisitions. This could result in higher
debt and additional integration risk. This is a change from the
initially communicated strategy that Paper Excellence will run its
operations separately. The change reflects Paper Excellence's
expectations that folding its Canadian mills into Domtar will allow
Domtar to use net operating losses (NOLS) and other tax benefits.
The rating profile also reflects declining quality in financial
transparency, as the company adds new assets, restates financials
and integrates reporting segments. Continued secular decline and
weaker prices for paper and newsprint will continue to weigh on the
operating performance, while the wood products business and pulp
remain near historic lows. Exposure to products in secular decline
and volatile pulp and wood products further constrains the credit
profile.
The credit profile is supported by the company's scale ($6.7
billion pro forma for acquisition of Resolute in March 2023), a
diverse product offering, including graphic papers, pulp, wood
products, containerboard and tissue. The operations benefit from
good vertical integration and strong market positions in key
segments: paper and pulp. The company has additional assets that
could be converted to containerboard to offset secular decline in
the paper segment or divested (tissue). The company started it up
its converted containerboard machine in 2023, which should support
paper segment earnings in 2024.
The stable outlook reflects Moody's expectation that credit metrics
will improve in 2024 from trough levels in 2023.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade the ratings if the company sustains Moody's
adjusted debt/EBITDA below 4x and improves (RCF-capex)/Debt above
10%. Moody's can also upgrade the rating if Paper Excellence
demonstrates commitment to deleveraging and maintains conservative
financial policies.
Moody's could downgrade the rating if the operating environment and
earnings deteriorate, such that debt/EBITDA rises above 5.0x on a
sustained basis and (RCF-capex)/Debt falls below 5% on a sustained
basis. The rating could also be downgraded if the company generates
negative free cash flow even when it is not pursuing a large mill
conversion project or if mill additions will result in higher
absolute debt levels, high contingent considerations or other
liabilities.
Headquartered in Fort Mill, South Carolina, Domtar is a producer of
graphic papers, pulp, wood products, container board and tissue
following the acquisition of Montreal-based Resolute Forest
Products in March 2023. The combined company had pro forma sales of
$6.7 billion in the twelve months ended September 30, 2023.
The principal methodology used in these ratings was Paper and
Forest Products published in December 2021.
EAGLE PURCHASER: Midcap Financial Marks $4.3MM Loan at 22% Off
--------------------------------------------------------------
MidCap Financial Investment Corporation has marked its $4,325,000
loan extended to Eagle Purchaser, Inc to market at $3,371,000 or
78% of the outstanding amount, as of September 30, 2023, according
to Midcap Financial's Form 10-Q for the Quarterly period ended
September 30, 2023, filed with the Securities and Exchange
Commission.
Midcap Financial is a participant in a First Lien Secured Debt Loan
to Eagle Purchaser, Inc. The loan accrues interest at a rate of 1%
(SOFR+675) per annum. The loan matures on March 22, 2030.
Midcap Financial Investment Corporation is a Maryland corporation
incorporated on February 2, 2004. It is a closed-end, externally
managed, non-diversified management investment company that has
elected to be treated as a business development company under the
Investment Company Act of 1940. Apollo Investment Management, L.P.
is the investment adviser and an affiliate of Apollo Global
Management, Inc. and its consolidated subsidiaries (AGM). Apollo
Investment Administration, LLC, an affiliate of AGM, provides,
among other things, administrative services and facilities for
Midcap.
EAGLE PURCHASER: Midcap Financial Marks $658,000 Loan at 50% Off
----------------------------------------------------------------
MidCap Financial Investment Corporation has marked its $658,000
loan extended to Eagle Purchaser, Inc to market at $331,000 or 50%
of the outstanding amount, as of September 30, 2023, according to
Midcap Financial's Form 10-Q Report for the Quarterly period ended
September 30, 2023, filed with the Securities and Exchange
Commission.
Midcap Financial is a participant in a First Lien Secured
Debt-Revolver Loan to Eagle Purchaser, Inc. The loan accrues
interest at a rate of 1% (SOFR+675) per annum. The loan matures on
March 22, 2029.
Midcap Financial Investment Corporation is a Maryland corporation
incorporated on February 2, 2004. It is a closed-end, externally
managed, non-diversified management investment company that has
elected to be treated as a business development company under the
Investment Company Act of 1940. Apollo Investment Management, L.P.
is the investment adviser and an affiliate of Apollo Global
Management, Inc. and its consolidated subsidiaries (AGM). Apollo
Investment Administration, LLC, an affiliate of AGM, provides,
among other things, administrative services and facilities for
Midcap.
EDISON INTERNATIONAL: Fitch Assigns 'BB+' Rating on Jr. Sub. Notes
------------------------------------------------------------------
Fitch Ratings has assigned a 'BB+' instrument rating to Edison
International's (EIX) fixed-to-fixed rate junior subordinated notes
(JSN) due 2054. The notes are EIX's unsecured obligations and will
rank junior and subordinate in right of payment to the prior
payment in full of EIX's existing and future senior indebtedness.
Proceeds from the debt offering will be used to pay tender
consideration, plus any additional amounts representing accrued
dividends, for tender offer securities in connection with the
tender offers and for general corporate purposes. The JSNs qualify
under Fitch criteria for 50% equity credit.
Edison International's (EIX) ratings primarily reflect the
meaningful decline in major wildfires, and associated liabilities,
linked to wholly-owned subsidiary Southern California Edison
Company's (SCE; BBB/Stable) equipment post-2018, despite elevated
wildfire activity in California in 2020 and 2021. The ratings and
Stable Outlook also consider ongoing efforts to enhance system
resilience while mitigating reliance on and frequency of public
safety power shut-offs. SCE accounts for virtually all of EIX's
consolidated earnings and cash flow.
KEY RATING DRIVERS
Ignitions Involving SCE Equipment Down: Cumulative structures
destroyed by wildfires ignitions involving SCE equipment declined
more than 90% during 2019-2022 compared with those destroyed in
2017-2018, despite high wildfire risk conditions and a record 4.3
million acres burned statewide in 2020 and more than 2.5 million
acres in 2021.
After four wildfire seasons, the state's wildfire insurance fund
has not seen any claims filed through 3Q 2023, a constructive
development from a credit perspective, in Fitch's opinion, as
premature depletion of the fund is a key credit concern. SCE peer
Pacific Gas and Electric Company (BB+/Stable) is likely to be the
first utility to draw from the AB 1054 Wildfire Fund to defray
Dixie Fire costs.
Significantly Lower Wildfire Liabilities: Post-2018, SCE-linked
wildfires have been significantly smaller and third-party liability
exposures much more manageable from a credit perspective compared
with liabilities from the 2017 Thomas and Koenigstein fires, the
2018 Montecito mudslides (collectively TKM) and the 2018 Woolsey
Fire, whereas losses associated with post-2018 wildfire liabilities
are not expected to be material after insurance and regulatory
recoveries.
With most 2017-2018 wildfire liabilities resolved, Fitch expects
EIX's 2023-2026 credit metrics to improve significantly, averaging
4.5x, compared with 9.2x in 2022. Fitch projections for EIX assume
no 2017-2018 wildfire liability cost recovery at SCE. In this
scenario, further upward momentum to EIX 's ratings in the
intermediate to longer term is unlikely given the upward drift in
leverage through 2026. Fitch estimates EIX FFO leverage will
approximate 4.8x in 2026, leaving little headroom relative to
Fitch's 5.0x downgrade sensitivity.
Wildfire Cost Recovery Filing: In August 2023, SCE filed an
application with the CPUC requesting rate recovery of $2.4 billion
of prudently incurred losses related to the Thomas Fire, the
Koenigstein Fire and the Montecito Mudslides, consisting of $2.0
billion of uninsured claims and $0.4 billion of associated costs,
including legal fees and financing costs. SCE is also seeking
capital recovery of approximately $65 million in restoration costs.
In addition, SCE intends to file for rate recovery of costs
associated with the 2018 Woolsey Fire.
In its filing, SCE requested that the CPUC issue a proposed
decision on its application in February 2025 and a final decision
in March 2025. Recovery of these wildfire liabilities, which is not
included in its projections, would be a credit supportive
development for EIX.
Wildfire Resilience Update: Fitch believes wildfire risk at SCE
remains a key challenge to EIX's and the SCE's creditworthiness.
SCE has made meaningful progress strengthening the grid's fire
resilience in light of materially reduced wildfire activity over
the past four years despite challenging wildfire conditions. Fitch
notes the significant decline in acres burned post-2018 due to
fires linked to SCE equipment, despite heightened wildfire activity
across California during 2020 and 2021.
Based on California Department of Forestry and Fire Protection (CAL
FIRE) and company data, Fitch calculates average annual acres
burned and structures destroyed by SCE-linked wildfires declined
80% and 96%, respectively, during 2019-2022 compared to 2017-2018.
Less Destructive Post-2018 Wildfires: The significant reduction in
the number of structures destroyed by SCE-linked wildfires during
2019-2022 compared with 2017-2018 is the primary catalyst of the
April 2023 rating upgrade. SCE's ongoing efforts to enhance
wildfire resilience along with state and local efforts, credit
supportive elements of wildfire legislation enacted in California,
including the state wildfire fund, and improving projected credit
metrics are additional, important factors supporting SCE's
ratings.
While Fitch believes efforts to minimize wildfire destruction may
be taking root, sustained recurrence of similarly destructive
firestorm activity as 2017-2018 cannot be ruled out and would
result in adverse credit rating actions.
California Regulatory Compact: In Fitch's opinion, regulatory
practices in California are generally balanced and credit
supportive. However, SCE and other California investor-owned
utilities are subject to an active legislature and prone to a
relatively high degree of political risk dating back to the energy
crisis of 2001-2002. In Fitch's view, legislative actions and rate
regulation in recent years have generally been credit supportive.
The durability of a balanced regulatory compact in California is a
key credit determinant, especially in light of SCE's large
projected capex program.
Regulatory support for timely recovery of SCE investment to further
wildfire resilience and safety and California's ambitious clean
energy policy goals and other costs will be a critical determinant
of future credit quality for SCE and its corporate parent, along
with recovery of 2017-2018 wildfire liabilities.
Relatively Competitive Customer Rates: SCE's rates are competitive
with the two other large investor-owned utilities (IOU) in
California, Pacific Gas and Electric Company (PG&E; BB+/Stable) and
San Diego Gas & Electric Company (SDG&E; BBB+/Stable). Based on
2022 system average rates per kilowatt hour (kwh) for the three
large IOUs, PG&E's rate is approximately 18% higher than SCE's
$0.265 per kwh rate and SDG&E's system rate is more than 45%
higher.
Focus on Resilience and Clean Energy: Capex at SCE is driven by
wildfire mitigation and support for state greenhouse gas reduction
targets, and is expected by management to approximate $38
billion-$43 billion 2023-2028, 26%-45% higher than the $30 billion
invested by SCE during 2017-2022. More than 85% of SCE's 2023-2028
capex budget of $38 billion-$43 billion targets investment in its
distribution grid and the remainder transmission and generation
investment. SCE expects to spend roughly 18% of its total 2023-2028
capex budget on wildfire mitigation and nearly 30% targets
distribution infrastructure replacement.
Wildfire Hardening Efforts Continue: SCE has made significant
progress hardening its system to mitigate wildfire risk, with
approximately 44% of bare conductor in high fire risk areas (HFRA)
covered at YE 2022 and plans to harden a total of 8,500 miles or
87% in HFRA by YE 2028. SCE expects to add 1,200 miles of covered
conductor in 2023, bringing the total hardening tally to 76% of
total distribution lines in HFRA. Covered conductor is highly
effective against wildfire risks impacting SCE's service territory
and is less costly and installed more quickly compared with
undergrounding.
Approximately 7,000 circuit miles in HFRA are already underground
and SCE plans to underground an additional 600 distribution circuit
miles in 2025-2028. These efforts are augmented by installation of
state-of-the-art equipment to enhance situational awareness in
HFRA, including meteorological equipment and surveillance cameras.
Operational changes include risk-informed inspections, increased
line clearing and hazardous tree management, as well as ongoing
efforts to reduce and improve public safety power shutoff
performance.
Credit-Supportive Legislation Enacted: California Assembly Bill
(AB) 1054, Senate Bill (SB) 901 and a number of other laws were
enacted in California to protect the public against deadly
wildfires. AB 1054 creates a $21 billion wildfire insurance fund
for the three large electric IOUs in California, including SCE, to
defray prudently incurred wildfire-related liabilities under
inverse condemnation (IC) in excess of $1 billion.
The legislation also modified California's burden-of-proof standard
with regard to wildfire costs although the new standard is yet to
be implemented and is subject to interpretation and implementation
risk, in Fitch's opinion. The legislation also caps liabilities
limiting exposure to 20% of T&D equity rate base.
Wildfire Insurance Fund: California applies IC to IOUs when their
equipment is deemed to have ignited a wildfire, holding them
strictly liable even if they complied with all rules and
regulations. Under IC, payments to wildfire victims are made
relatively quickly and may not be recovered by IOUs until long
after payments have been made, if at all.
The AB 1054 insurance fund is designed to address this mismatch in
cash recovery and liability payments, providing a robust source of
funds to buffer SCE and the other large IOUs from liquidity and
funding challenges associated with large firestorm-related
liabilities. Premature exhaustion of the AB 1054 fund due to
elevated wildfire activity and related claims is a concern. Through
3Q 2023 no withdrawal requests, to Fitch's knowledge, have been
submitted to the fund, underscoring the durability of the fund
since its inception, a credit positive.
Securitization of Wildfire Costs: Both SB 901 and AB 1054 include
provisions authorizing use of securitization of wildfire costs in
certain circumstances to minimize their impact on customer rates.
SCE issued $871 million of securitization bonds in 2021 and 2022
and $775 million earlier this year to repay certain
wildfire-related expenditures as authorized under California law.
Fitch adjusts its financial ratios removing securitization related
revenue, amortization, interest expense and debt from SCE's and
EIX's financials reflecting protections and commitments granted by
state law creating a transferable, nonbypassable special tariff to
a ring-fenced SPE with no recourse to the utility.
Parent-Subsidiary Rating Linkage: Fitch has determined a
parent-subsidiary relationship exists between EIX and SCE and,
based on the companies' standalone credit profiles (SCPs), their
issuer default ratings are the same. EIX subsidiary SCE accounts
for virtually all of EIX's consolidated earnings and cash flows.
In the event that SCE's and EIX's SCPs diverge, Fitch would apply a
stronger subsidiary, weaker parent approach to rating SCE and EIX
under Fitch's parent subsidiary linkage criteria, reflecting EIX's
dependence on cash flows from SCE to meet its obligations. In that
scenario, both legal ring fencing and access and control would be
deemed by Fitch to be porous, resulting in a maximum two notch
differential in SCE's and EIX's IDRs.
EIX Debt: Fitch believes EIX's consolidated balance-sheet debt is
manageable, totaling $37 billion as of Sept. 30, 2023, including
holding company and utility preferred and preference securities of
approximately $3.9 billion. EIX parent-only debt and preferred
securities totaled $6.4 billion or 17% of total EIX consolidated
debt and preferred securities. EIX parent-only debt has increased
sharply from approximately $400 million at YE 2013. Higher EIX debt
is due to funding requirements primarily at SCE for capex and
catastrophic wildfire costs and, to a lesser extent, payments to
creditors of former subsidiary Edison Mission Energy under its
bankruptcy court-approved reorganization plan.
In the intermediate to longer term, further upward momentum to
EIX's ratings is limited by Fitch's expectations of growing
parent-only leverage in the absence of future recovery of
2017‒2018 wildfire and liabilities by SCE.
DERIVATION SUMMARY
EIX compares favorably with peer utility holding company PG&E Corp.
(PCG; BB+/Stable) and is similarly positioned to Cleco Corporate
Holdings (Cleco; BBB-/Stable) and Puget Energy Inc. (PE;
BBB-/Stable). Both EIX's and PCG's business risk profiles are
seriously challenged by outsized wildfire-related liabilities with
significantly greater adverse effect historically for PCG.
Post-2018, wildfires in SCE's service territory have been smaller
and more manageable than the 2017-2018 wildfires and the 2021 Dixie
Fire which occurred in PG&E's service territory.
EIX, PCG, Cleco and PE are single utility-holding companies
operating in parts of California (PCG and EIX), Washington (PE) and
Louisiana (Cleco). EIX and PCG are significantly greater in size
and scale than PE or Cleco and parent-only debt is significantly
lower - with both EIX and PCG below 20% compared to 30% for PE and
50% for Cleco. Virtually all of EIX's, PCG's and PE's consolidated
EBITDA is provided by regulated operations and approximately 75%
for Cleco. Fitch estimates FFO leverage will average 4.5x in
2023-2026 for EIX, better than Fitch's estimate of 5.0x-6.0x for PE
and Cleco. EIX FFO leverage of 4.4x is better than estimated PCG
leverage of approximately 5.0x in 2024.
Uncertainty regarding the magnitude, frequency and destructive
force of California wildfires and associated third-party
liabilities heighten regulatory and operating risks for EIX and
PCG, in Fitch's view, in comparison to its peers.
KEY ASSUMPTIONS
- No rate recovery of 2017-2018 wildfire liabilities;
- SCE pays approximately $9.3 billion of total wildfire-related
third-party liabilities;
- No equity return on the first $1.6 billion of wildfire mitigation
plan capex;
- Capex spend during 2023-2025 averages around $6 billion per
year;
- Credit supportive federal and state economic regulation;
- Timely recovery of memo account balances;
- Balanced funding of SCE's capex program.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Utility-sparked wildfire activity in EIX subsidiary SCE's service
territory consistent with historic 2019-2022 experience in the
intermediate to long term along with supportive California rate
regulation, especially with regard to 2017-2018 wildfire
liabilities.
- An upgrade is unlikely without recovery of 2017-2018 wildfire
liabilities in rates.
- FFO leverage of 4.5x or better on a sustained basis.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Significantly greater than expected debt issuance;
- A downgrade of SCE due to an acceleration in wildfire activity
similar to that experienced in 2017-2018, deteriorating rate
regulation or other factors would likely result in a downgrade of
EIX;
- FFO leverage of greater than 5.0x on a sustained basis.
LIQUIDITY AND DEBT STRUCTURE
Fitch believes EIX has ample consolidated liquidity. EIX negotiated
$4.9 billion of consolidated revolving credit facilities (RCFs)
composed of a $1.5 billion revolver at the corporate parent and a
$3.4 billion revolver at SCE. On a consolidated basis, EIX had
total available 3Q 2023 borrowing capacity of $3.6 billion and cash
and cash equivalents of $446 million. As of Sept. 30, 2023, EIX had
borrowings outstanding totaling $400 million on its $1.5 billion
RCF. SCE at the end of 3Q 2023 had $2.5 billion available to be
borrowed under its RCF and $317 million of cash on hand. Cash at
the parent-only level was $129 million at the end of 3Q 2023.
Like most utilities, SCE is expected to be FCF negative based on
Fitch's assumptions and its large capex program. Negative FCF is a
function of high capex to mitigate catastrophic wildfire activity
and meet California's greenhouse gas reduction goals. Fitch expects
cash shortfalls to be funded with a balanced mix of debt and
equity. EIX and SCE have access to debt capital markets and Fitch
believes debt maturities are manageable.
ISSUER PROFILE
Holding company EIX's core utility, SCE, is one of the largest
investor-owned electric utilities in the U.S. SCE provides
electricity services to 15 million people through five million
customer accounts across a 50,000 square-mile service territory in
Central, Southern and Coastal California.
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch adjusts EIX's financials to remove securitization-related
revenue, interest and amortization expense and debt. Fitch also
provides 50% equity credit for certain hybrid securities issued by
EIX in accordance with Fitch criteria and consistent with the
equity-like features of the relevant hybrid instruments.
ESG CONSIDERATIONS
EIX has an ESG Relevance Score (RS) of '4' for exposure to
environmental impacts due to the threat of catastrophic wildfire
activity offset by the constructive impact of AB 1054, including
creation of the wildfire fund, and ongoing efforts by EIX and the
State of California to improve system resilience against firestorm
activity. This has a negative impact on the companies' credit
profiles and is relevant to the ratings in combination with other
factors.
EIX has an ESG Relevance Score (RS) of '4' for exposure to social
impacts which are also related to wildfire activity and its adverse
impact on the utility's relationship with customers. This has a
negative impact on EIX's credit profiles and is relevant to the
ratings in combination 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
----------- ------
Edison International
junior subordinated LT BB+ New Rating
ELITE INVESTORS: Seeks Court Nod to Sell NJ Property for $1.25MM
----------------------------------------------------------------
Elite Investors, Inc. asked the U.S. Bankruptcy Court for the
District of New Jersey for authority to sell in a private deal its
real property located at 2103 River Road, Point Pleasant, N.J.
The company is selling the property to Paul Branning, a resident of
New Jersey, or to an entity to be formed which the buyer owns a
controlling interest in.
The property is being sold for $1.25 million "free and clear" of
liens, claims, encumbrances and interests.
The hearing on the proposed sale is set for Jan. 2, 2024.
About Elite Investors
Elite Investors, Inc. is a single asset real estate debtor (as
defined in 11 U.S.C. Section 101(51B)). The company is the fee
simple owner of a property located at 2103 River Road, Point
Pleasant, N.J., valued at $1.58 million.
Elite Investors filed Chapter 11 petition (Bankr. D.N.J. Case No.
22-13766) on May 9, 2022, with $1 million to $10 million in assets
and $500,001 to $1 million in liabilities. Thomas Ippolito,
president, signed the petition.
Judge Christine M. Gravelle oversees the case.
Eugene D. Roth, Esq., at the Law Office of Eugene D. Roth, is the
Debtor's bankruptcy counsel.
ENVIVA INC: Inclusive Capital, Jeffrey Ubben Report 7.2% Stake
--------------------------------------------------------------
Inclusive Capital Partners, L.P. and Jeffrey W. Ubben disclosed in
a Schedule 13D/A filed with the Securities and Exchange Commission
that as of Nov. 28, 2023, they beneficially owned 5,369,862 shares
of common stock of Enviva, Inc., representing 7.2 percent of the
Shares outstanding.
The Amount includes 21,152 shares of Common Stock held by Mr. Ubben
for the benefit of In-Cap and the In-Cap Funds. On Nov. 28, 2023,
Mr. Ubben resigned as a member of the board of directors of the
Issuer. Ms. Zlotnicka continues to be a member of the board of
directors of the Issuer but is no longer a managing partner at
In-Cap.
"The Reporting Persons intend to review their investments in the
Issuer on a continuing basis. Depending on various factors,
including, without limitation, the Issuer's financial position and
strategic direction, the outcome of the discussions and actions
referenced above, actions taken by the Issuer's board of directors,
price levels of the shares of Common Stock, liquidity requirements
and other investment opportunities available to the Reporting
Persons, conditions in the securities market and general economic
and industry conditions, the Reporting Persons may in the future
take actions with respect to their investment position in the
Issuer as they deem appropriate, including, without limitation,
purchasing additional shares of Common Stock or other instruments
that are based upon or relate to the value of the shares of Common
Stock or the Issuer in the open market or otherwise, selling some
or all of the securities reported herein, and/or engaging in
hedging or similar transactions with respect to the shares of
Common Stock," the Reporting Persons said.
A full-text copy of the regulatory filing is available for free
at:
https://www.sec.gov/Archives/edgar/data/1592057/000090266423005750/p23-2903sc13da.htm
About Enviva
Enviva Inc. (NYSE: EVA) is a producer of industrial wood pellets, a
renewable and sustainable energy source produced by aggregating a
natural resource, wood fiber, and processing it into a
transportable form, wood pellets. Enviva owns and operates ten
plants with an expected annual production of approximately 5.0
million metric tons in Virginia, North Carolina, South Carolina,
Georgia, Florida, and Mississippi, and is constructing its 11th
plant in Epes, Alabama. Additionally, Enviva is planning
construction of its 12th plant, near Bond, Mississippi. Enviva
sells most of its wood pellets through long-term, take-or-pay
off-take contracts with customers located primarily in the United
Kingdom, the European Union, and Japan, helping to accelerate the
energy transition and to defossilize hard-to-abate sectors like
steel, cement, lime, chemicals, and aviation.
Enviva reported a net loss of $168.37 million in 2022, a net loss
of $145.27 million in 2021, and a net loss of $106.32 million in
2020.
Enviva said in its Quarterly Report for the period ended Sept. 30,
2023, that "The Company has incurred net losses of $257.8 million
and $168.4 million for the nine months ended September 30, 2023 and
the year ended December 31, 2022, respectively, and negative cash
flow from operating activities of $25.6 million and $88.8 million,
respectively for the same periods. As of September 30, 2023, the
Company had $315.2 million in cash and cash equivalents, $125.5
million of restricted cash, and no availability under our revolving
credit facility, resulting in total liquidity of $440.7 million.
Our future profitability and liquidity are expected to be
negatively impacted by the following matters which have resulted in
substantial doubt about the Company's ability to continue as a
going concern."
ENVIVA INC: Jeffrey Ubben Quits as Director
-------------------------------------------
Enviva Inc. disclosed in a Form 8-K filed with the Securities and
Exchange Commission that on Nov. 28, 2023, Jeffrey W. Ubben
resigned from his position as a director on the board of directors
of the Company, effective immediately.
Enviva said Mr. Ubben's resignation did not result from any
disagreement with the Company on any matter relating to the Board
or the Company's management, operations, policies, or practices.
About Enviva
Enviva Inc. (NYSE: EVA) is a producer of industrial wood pellets, a
renewable and sustainable energy source produced by aggregating a
natural resource, wood fiber, and processing it into a
transportable form, wood pellets. Enviva owns and operates ten
plants with an expected annual production of approximately 5.0
million metric tons in Virginia, North Carolina, South Carolina,
Georgia, Florida, and Mississippi, and is constructing its 11th
plant in Epes, Alabama. Additionally, Enviva is planning
construction of its 12th plant, near Bond, Mississippi. Enviva
sells most of its wood pellets through long-term, take-or-pay
off-take contracts with customers located primarily in the United
Kingdom, the European Union, and Japan, helping to accelerate the
energy transition and to defossilize hard-to-abate sectors like
steel, cement, lime, chemicals, and aviation.
Enviva reported a net loss of $168.37 million in 2022, a net loss
of $145.27 million in 2021, and a net loss of $106.32 million in
2020.
Enviva said in its Quarterly Report for the period ended Sept. 30,
2023, that "The Company has incurred net losses of $257.8 million
and $168.4 million for the nine months ended September 30, 2023 and
the year ended December 31, 2022, respectively, and negative cash
flow from operating activities of $25.6 million and $88.8 million,
respectively for the same periods. As of September 30, 2023, the
Company had $315.2 million in cash and cash equivalents, $125.5
million of restricted cash, and no availability under our revolving
credit facility, resulting in total liquidity of $440.7 million.
Our future profitability and liquidity are expected to be
negatively impacted by the following matters which have resulted in
substantial doubt about the Company's ability to continue as a
going concern."
ESTUARY OYSTERS: Seeks Continued Cash Collateral Access
-------------------------------------------------------
Estuary Oysters, LLC asks the U.S. Bankruptcy Court for the
Northern District of Florida, Tallahassee Division, for authority
to continue using cash collateral and provide adequate protection.
The U.S. Small Business Administration holds a lien on the Debtor's
tangible and intangible personal property, including accounts and
cash, to secure the repayment of a EIDL loan.
The SBA's lien is perfected by the filing of Uniform Commercial
Code Financing Statements Nos. 202105795666 and 20210579547X.
As of the date of the filing of the Petition, the Debtor possessed
$1,063 in cash in its account at Primer Meridian ending 8167.
The Debtor believes its assets, specifically its oyster processing
facility and five separate operating aquaculture leases, are worth
far more sold as a going concern that at liquidation.
The Debtor utilizes the pledged cash collateral in order to meet
post-petition contractual and tax obligations related to payroll,
inventory, and equipment owned by the Debtor and ongoing business
operations.
The Debtor is willing to enter into an agreement with the SBA to
provide post-petition replacement liens of a continuing nature on
all post-petition accruing cash collateral.
A copy of the motion is available at https://urlcurt.com/u?l=qNvUXB
from PacerMonitor.com.
About Estuary Oysters, LLC
Estuary Oysters, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Fla. Case No. 23-40469-KKS) on
December 1, 2023. In the petition signed by Kay and Rob Olin,
owners, the Debtors disclosed up to $500,000 in both assets and
liabilities.
Michael Moody, Esq., at Michael H. Moody Law, P.A., represents the
Debtor as legal counsel.
EVENT PROMOTION: Ongoing Operations to Fund Plan Payments
---------------------------------------------------------
Event Promotion Supply, Inc., d/b/a eps-DOUBLET, filed with the
U.S. Bankruptcy Court for the District of Colorado a Plan of
Reorganization dated November 28, 2023.
The Debtor is a large format printing and marketing company
headquartered in Denver, Colorado. The Debtor started out as a
screen printer and supplier to the ski racing industry, producing
racer bibs and sponsor tents.
Under this Plan, the Debtor anticipates paying the Liquidation
Value to the holders of Allowed Secured, Priority, and General
Unsecured Claims, this is more than the amount that Allowed Claim
holders would receive if the Debtor was to hypothetically liquidate
under a Chapter 7 because it is paying Allowed Administrative
Claims in addition to these amounts, within three to five years
immediately following the Effective Date.
The Debtor shall pay all of its Disposable Income to Secured Claims
and Administrative Expense Claims and then to the other Allowed
Claim holders on a Quarterly basis until the Liquidation Value is
met; however, notwithstanding the foregoing, such Quarterly
payments shall not exceed five years from the Effective Date. 2 The
Plan Distributions will be made by the Distribution Agent, which is
anticipated to be the Reorganized Debtor.
Allowed Claims that are not Secured will be paid in the order of
priority established by the Bankruptcy Code. The Debtor has two
primary secured creditor, the SBA and Adams County. Under the Plan,
the Debtor is assuming the SBA Loan Agreement and the SBA will be
paid in the manner consistent with the terms of the Loan Agreement
and all cure amounts will be paid on or before the Effective Date.
The Debtor will pay Adams County and all other holders of Secured
Claims, at the option of the Debtor: (i) the lesser of (a) the full
amount of their claim as of the Petition Date, or (b) the
Liquidation Value that holders of Allowed Class 4 Claims would have
received under a Chapter 7 liquidation proceeding; or (ii) the
collateral securing each Allowed Secured Claim. Under the Plan,
holders of Allowed Secured Claims will be paid in full.
With respect to Allowed Claims that are not Secured, Administrative
Expenses will be paid first in full, including the fees and
expenses of the Subchapter V Trustee and of the Debtor's
Professionals that have not been paid by the Parent in accordance
with the procedure approved by the Court. Priority Claims will be
paid next, up to the Liquidation Value that said Priority Claims
would have received under a Chapter 7 liquidation. Then General
Unsecured Claims will be paid the Liquidation Value of their
Claims. The Subordinated Claims, which include the Parent's Claim
of approximately $2.35 mm will be subordinated to all other Allowed
General Unsecured Claims, written off or converted to capital in
the Reorganized Debtor, as may be agreed on between the Debtor and
the Parent. In any event, the Parent will receive no distribution
under the Plan unless all General Unsecured Claims are paid in
full.
Class 2 shall consist of all Allowed General Unsecured Claims
against the Debtor. The holders of the Allowed Class 2 Claims shall
be paid the lesser of (i) the full amount of their claim as of the
Petition Date, or (ii) the Liquidation Value that holders of
Allowed Class 2 Claims would have received under a Chapter 7
liquidation proceeding. Class 2 is impaired under the Plan.
Subject to the limitations and priorities, the holders of Allowed
Class 2 Claims shall be paid, pro rata, (i) from time to time, but
in any event at least on the Initial Distribution Date and the
subsequent Interim Distribution Dates, to the extent that the
Debtor has Disposable Income available on such dates, and (ii) on
the Final Distribution Date. The funds in the Distribution Account
will be paid, first, to the holders of Allowed Claims having
greater priority in distribution. Specifically, the holders of
Allowed Class 2 Claims will not receive distributions until the
holders of claims with higher priority listed under section 6.6 of
the Plan have been paid or reserved in full.
The allowed unsecured claims total $3,943,369.81.
Class 6 consists of Equity Interests in the Debtor. Each record
holder of an Equity Interest in the Debtor shall retain its
interest in the Debtor. Subject to the limitations and priorities,
it is anticipated that the holders of Allowed Class 6 Interests
shall receive no pro rata distributions on or before the Final
Distribution Date.
From and after the Effective Date of the Plan, the Reorganized
Debtor is authorized to continue its normal business operations and
enter into such transactions as it deems advisable, free of any
restriction or limitation imposed under any provision of the
Bankruptcy Code, except to the extent otherwise provided in the
Plan. JeanBernard Doublet will continue to serve as the CEO of the
Debtor.
The projections anticipate that the Debtor will be able to fund its
projected Disposable Income through its ongoing business operations
and pay Administrative Expenses in full and pay holders of Allowed
Secured, Priority, and General Unsecured Claims the Liquidation
Value, which is more than such claims holders would receive in a
Chapter 7 liquidation proceeding. The Debtor submits that the Plan
is not likely to be followed by the liquidation or need for future
reorganization of the Debtor.
A full-text copy of the Plan of Reorganization dated November 28,
2023 is available at https://urlcurt.com/u?l=Ysy8yD from
PacerMonitor.com at no charge.
Attorneys for the Debtor:
Annette W. Jarvis, Esq.
Carson Heninger, Esq.
GREENBERG TRAURIG, LLP
222 South Main Street, Suite 1730
Salt Lake City, UT 84101
Tel: (801) 478-6900
Email: jarvisa@gtlaw.com
carson.heninger@gtlaw.com
About Event Promotion Supply
Event Promotion Supply, Inc., is a large format printing company.
EPS-Doublet can create a custom trade show booth design, fabricate,
install, and even manage a show.
The Debtor sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. D. Colo. Case No. 23-13911) on Aug. 30, 2023. In the
petition signed by Jon Leasia, secretary, the Debtor disclosed up
to $10 million in both assets and liabilities. Annette Jarvis,
Esq., at Greenberg Traurig LLP, represents the Debtor as legal
counsel.
FANJOY CO: Proposes Immaterial Modifications to Plan
----------------------------------------------------
Fanjoy Co. filed with the U.S. Bankruptcy Court for the Northern
District of Georgia a First Modification to Plan of Reorganization
dated November 28, 2023.
The changes are to address and reflect CircleUp's 1111(b) Election
and do not otherwise materially or adversely affect the rights of
any parties in interest which have not had notice and an
opportunity to be heard with regard thereto.
The Plan is hereby amended to replace Section 4.4 of the Plan with
the following:
Class 4 Secured Claim of CircleUp
Class 4 consists of the Secured Claim of CircleUp. On October 16,
2023, CircleUp filed proof of claim number 21 in the asserted
amount of $2,507,034.81 (such amount, or such lesser amount as
allowed by the Court, the "Total Class 4 Claim") which consists of
the following asserted amounts: (i) Principal Balance of
$2,275,699.58; (ii) Unpaid Accrued Interest of $143,811.20, and
(iii) fees and costs of $87,529.03. On November 13, 2023, CircleUp
filed a Notice of CircleUp Credit Advisors LLC of Election Pursuant
to Section 1111(b) of the Bankruptcy Code. In light of the 1111(b)
Election, Debtor's total stream of payments to CircleUp on the
Class 4 Claim must equal the present value of the assets secured by
CircleUp's Class 4 Claim (i.e., the Class 4 Interest Bearing
Portion, $639,864.64, plus interest), but in addition, the sum of
Debtor's Class 4 payments to CircleUp must be in an amount equal to
at least CircleUp's Total Class 4 Claim (i.e. $2,507,034.81, or
such amount as allowed by the Court) See Gen. Elec. Credit
Equities, Inc. v. Brice Rd. Devs., L.L.C. (In re Brice Rd. Devs.,
L.L.C.), 392 B.R. 274, 285 (B.A.P. 6th Cir. 2008).
CircleUp asserts the Class 4 Claim is secured by a lien on Debtor's
assets as more particularly described in the UCC Initial Filing
Number 2022 7548811 filed on September 8, 2022, with the Delaware
Department of State and as described in the Credit and Security
Agreement dated March 15, 2022 (the "CircleUp Loan Agreement").
The Class 4 Interest Bearing Portion of the Total Class 4 Claim
shall be $639,864.64, which is based upon the value of the
following assets which are subject to the security interest held by
CircleUp: $395,664.64 in cash as of the petition date, $19,200.00
in unfinished inventory as of the petition date, $175,000.00 in an
Employee Retention Credit, and $50,000.00 in Debtor's trademarks
(the "Class 4 Interest Bearing Portion").
The Debtor shall pay the Class 4 Interest Bearing Portion as
follows: (i) the Class 4 Interest Bearing Portion shall be reduced
by payments received by CircleUp after the Filing Date and before
the Effective Date including any adequate protection payments, and,
then (ii) Debtor shall pay the balance of the Class 4 Interest
Bearing Portion in equal monthly payments after application of said
payments (the "Interest Bearing Monthly Payment") commencing on the
Effective Date and continuing monthly by the 1st day of each
subsequent month for a total 60 months (the "Class 4 Maturity
Date") with interest accruing on the Class 4 Interest Bearing
Portion commencing on the Effective Date at the annual rate of
10.5%. For purpose of illustration, if CircleUp has received
$90,000 in adequate protection payments as of the Effective Date,
the Interest Bearing Monthly Payment will be $11,818.74 (i.e.
$639,864.64 - $90,000 = $549,864.64, amortized over 60 months with
10.5% annual interest).
After the final Interest Bearing Monthly Payment, Debtor shall
continue to make payments on the 1st day of each month in the same
monthly amount as the Interest Bearing Payment until the Class 4
1111(b) Portion is paid in full. The "Class 4 1111(b) Portion"
shall mean the balance of the Total Class 4 Claim after application
of the (i) the adequate protection payments and (ii) total Interest
Bearing Monthly Payments. For purposes of illustration, if CircleUp
has received $90,000 in adequate protection payments on the
Effective Date, the Class 4 1111(b) Portion would be $1,707,910.41
(i.e., $2,507,034.81 - $90,000 - $709,124.40 ($11,818.74 per month
for 60 months)).
Any payments received by CircleUp after the Filing Date but before
the Effective Date, including any adequate protection payments,
shall be applied to the principal balance of the Class 4 Interest
Bearing Portion. Any payments received by CircleUp after the
Effective Date shall be applied first to the interest accruing on
the Class 4 Interest Bearing Portion, then to the Principal Balance
of the Interest Bearing Portion and then to the Class 4 1111(b)
Portion.
The lien of CircleUp shall continue and attach to the same validity
and priority as existed on the Filing Date and to the extent of the
Total Class 4 Claim. Upon receipt of payment in full of the Total
Class 4 Claim, CircleUp shall release its liens and file a
cancellation of all UCC financing statement and take such other
acts as reasonably necessary to evidence the release of its liens
and security interests as to its collateral. There shall be no
pre-payment penalty. Within 5 days of request by Debtor, CircleUp
shall provide a then current payoff of the Total Class 4 Claim
together with an accounting of all debits and credits to the Total
Class 4 Claim since the Filing Date.
CircleUp's Total Class 4 Claim is Impaired under the Plan.
A full-text copy of the First Modified Plan dated November 28, 2023
is available at https://urlcurt.com/u?l=SkoorH from
PacerMonitor.com at no charge.
Attorneys for Debtor:
Leslie M. Pineyro, Esq.
Mark Gensburg, Esq.
Jones & Walden LLC
699 Piedmont Ave. NE
Atlanta, GA 30308
Phone: (404) 564-9300
Email: lpineyro@joneswalden.com
About Fanjoy Co.
Fanjoy Co. has been operating since 2014 and was incorporated in
Delaware in 2014 to provide platform and merchandise marketplace
services to social media content creators. The Debtor operates the
fanjoy.co website, which provides end-to-end design, production,
fulfillment, customer support, e-mail marketing, photoshoots,
product shots, and paid advertisement services for its Content
Creators. The business is operated by the Debtor's principal,
Christopher Vaccarino, out of his residence in Brookhaven,
Georgia.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Ga. Case No. 23-57565) on August 8,
2023, with up to $500,000 in assets and up to $10 million in
liabilities. Christopher Vaccarino, president, signed the
petition.
Judge Paul W. Bonapfel oversees the case.
Leslie Pineyro, Esq., at Jones and Walden, LLC, represents the
Debtor as legal counsel.
FINTHRIVE SOFTWARE: Moody's Lowers CFR to Caa2, Outlook Negative
----------------------------------------------------------------
Moody's Investors Service downgraded FINThrive Software
Intermediate Holdings, Inc.'s, a US-based healthcare revenue cycle
management provider, Corporate Family Rating to Caa2 from Caa1.
Moody's also downgraded the Probability of Default Rating to
Caa2-PD and appended the PDR with a limited default (/LD)
designation, changing it to Caa2-PD/LD from Caa1-PD. Moody's also
downgraded the first-lien senior secured instrument ratings to Caa1
from B3 and the second-lien senior secured instrument rating to Ca
from Caa3. The outlook remains negative.
The /LD designation reflects Moody's view that the cumulative
effect of FinThrive's second-lien term loan repurchases constitutes
a limited default within the company's capital structure. Moody's
regards the repurchases as a distressed exchange because they imply
substantial economic losses to lenders and help the company
alleviate a potentially untenable capital structure. The
designation also captures Moody's view that the company could
pursue incremental debt repurchases at discounted prices to reduce
its financial leverage at the expense of creditors. The repurchases
do not constitute an event of default under the terms of the credit
agreement. Moody's will remove the /LD designation from the PDR in
three business days.
The rating action also reflects FinThrive's weaker operating
results compared to Moody's expectations and other industry peers.
FinThrive has reported organic revenue declines over five
consecutive quarters (as of September 30, 2023), which exacerbates
the challenge to reduce financial leverage and generate positive
free cash flow, increasing the risk that the current capital
structure may be unsustainable. Ongoing free cash flow deficits and
the company's opportunistic repurchases of second-lien debt at
steep discounts have reduced available liquidity. The company now
relies mostly on its $150 million revolving credit facility
(undrawn as of September 30, 2023) to finance its free cash flow
deficits, absent new liquidity contributions from the financial
sponsor. FinThrive operates in a competitive revenue cycle
management (RCM) market and will need to boost its revenue growth
and improve profitability to offset a very high interest expense
burden. FinThrive's aggressive financial strategies and
underperformance versus its underwriting plan are key governance
considerations of the rating action.
RATINGS RATIONALE
FinThrive's ratings are constrained by its sizeable debt burden,
with debt/EBITDA leverage over 12x for the last 12-month period
ended September 30, 2023 (Moody's-adjusted, excluding preferred
equity, net of capitalized software expenses and after giving
partial credit to one-time items that the company considers
non-recurring). Weaker than anticipated operating performance,
including organic revenue declines, and negative free cash flow
weigh on the ratings and increase the risk of default or
incremental distressed exchanges. The company remains small
relative to other healthcare software providers in a competitive
market. The quick rise in interest rate benchmarks over the last
two years has caused a substantial increase in interest expense
that exacerbates the lack of revenue growth and has resulted in
free cash flow deficits and weakening liquidity. Ongoing
integration risks following transformative M&A also weigh on the
credit profile. A short operating history and high cost add-backs
limit visibility into the long-term growth, profitability and cash
flow profile of the going concern, which challenges the
sustainability of the current capital structure.
FinThrive benefits from a recurring revenue profile, supported by
long term subscription contracts with volume floors, which reduces
exposure to swings in elective procedure volumes. High
profitability rates and an established market position also support
the credit profile. RCM technology solutions are sticky and costly
to replace, benefitting incumbent providers, as evidenced by good
retention rates over 90% (per the company). Favorable long-term
trends in the healthcare industry also support the rating:
increasing regulatory complexity, shift to higher collections from
patients, pressure to cut costs, and vendor consolidation will
drive demand for RCM solutions. However, Moody's expects that
FinThrive's core client base, mainly large hospital systems, will
continue to face cost and resource constraints over the next 12
months in an uncertain macroeconomic environment, which will limit
FinThrive's growth opportunities.
The negative outlook reflects Moody's expectation that FinThrive
will continue to report free cash flow deficits over the next 12
months. Moody's expects revenue growth will be mostly flat as
hospital budgets remain pressured by macroeconomic uncertainty,
limiting new implementations. High interest rates will sustain
negative FCF/debt metrics around -3% (Moody's-adjusted, excluding
preferred equity PIK interest expense). Slow growth will keep
debt/EBITDA leverage very high, above 12x (Moody's-adjusted,
excluding preferred equity, net of capitalized software expenses).
Leverage reduction will rely mostly on cost savings. The company's
ability to generate long-term positive free cash flow remains
uncertain and will depend on the trajectory of interest rate
benchmarks, as well as FinThrive's ability to sustain revenue
growth while improving profitability above levels that Moody's
considers already high. The outlook could return to stable if
Moody's expects FinThrive will be able to improve its free cash
flow generation profile towards breakeven levels.
Moody's views FinThrive's liquidity as weak given the minimal cash
balance of $8 million as of September 30, 2023 and the expectation
for negative free cash flow, which will require usage of the
company's $150 million revolver (undrawn as of the same reporting
date). Moody's expects available liquidity will be sufficient to
finance the free cash flow deficit over the next 12 months,
including capex and the 1% annual first-lien term loan amortization
rate, but higher than anticipated free cash flow deficits or
additional debt buybacks could further pressure FinThrive's
liquidity position, absent a liquidity injection from the sponsor,
and lead to further downgrades. Moody's expects the company will
remain in compliance with the 9.55x consolidated first-lien net
leverage covenant given the generous add-backs in the Credit
Agreement definition. The covenant is only applicable when the
revolver is 35% or more drawn. There are no maintenance financial
covenants associated with the term loans.
The ratings for FinThrive's debt instruments reflect both the
overall probability of default rating and the loss given default
assessment of the individual debt instruments. The Caa1 ratings on
the $1,440 million (at issuance) first-lien term loan maturing 2028
and the $150 million first-lien revolver due 2026, one notch above
FinThrive's Caa2 CFR, reflect the facilities' priority position in
the capital structure, ahead of the $460 million second-lien term
loan due 2029, which is rated Ca. Recent debt buybacks have reduced
the size of the second-lien facility to $414 million. The
first-lien debt has priority of payments, relative to the
second-lien loan, from the proceeds of any default- or
bankruptcy-related liquidation. The revolver and term loan are
secured by a first-lien pledge of substantially all the assets of
FINThrive Software Intermediate Holding, Inc. and its domestic
subsidiaries.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The negative outlook indicates that rating upgrades are unlikely
over the next 12-18 months. However, the ratings could be upgraded
if Moody's-adjusted debt-to-EBITDA approaches 7.5x with free cash
flow generation, measured as percentage of debt, sustained above
1.0%.
The ratings could be downgraded if 1) FinThrive's profitability is
weaker than anticipated, or interest rates remain at levels such
that Moody's expects free cash flow will remain negative beyond the
next 12-18 months; 2) liquidity deteriorates further; 3) Moody's
does not expect the company will be able to reduce debt-to-EBITDA;
4) organic revenue growth remains negative, reflecting a weaker
competitive position; or 5) the company undertakes more aggressive
financial policies, such as further debt-funded acquisitions or
other leveraging actions.
Headquartered in Plano, Texas, FinThrive Software Intermediate
Holdings, Inc. provides healthcare revenue cycle management
software-as-a-service (Saas) solutions. The company's RCM offerings
include patient access, patient registration and eligibility,
insurance discovery, payment estimates, patient clearance, charge
integrity, claims management, contract management, analytics,
education, and other functions. The company generated $415 million
in revenue as of the twelve months ending September 30, 2023. The
company was acquired by private equity firm Clearlake Capital
Group, L.P. in January 2021.
The principal methodology used in these ratings was Software
published in June 2022.
FREE SPEECH: Jones Can Get $650K Salary While in Chapter 11
-----------------------------------------------------------
Vince Sullivan of Law360 reports that a Texas bankruptcy judge
approved a cash collateral order Monday, November 27, 2023, in the
Chapter 11 case of bankrupt InfoWars purveyor Free Speech Systems
that includes a bump in pay for right-wing conspiracy theorist Alex
Jones, saying he didn't have enough evidence to grant the company's
$1.5 million salary request as the company and its main moneymaker
pursue Chapter 11 plans.
About Free Speech Systems
Free Speech Systems LLC is a broadcast media production and
distribution company that provides broadcasting aural programs by
radio to the public. Free Speech Systems is a family-run business
founded by Alex Jones.
FSS is presently engaged in the business of producing and
syndicating Jones' radio and video talk shows and selling products
targeted to Jones' loyal fan base via the Internet. Today, FSS
produces Alex Jones' syndicated news/talk show (The Alex Jones
Show) from Austin, Texas, which airs via the Genesis Communications
Network on over 100 radio stations across the United States and via
the internet through websites including Infowars.com.
Due to the content of Alex Jones' shows, Jones and FSS have faced
an all-out ban of Infowars from mainstream online spaces. Shunning
from financial institutions and banning Jones and FSS from major
tech companies began in 2018.
Conspiracy theorist Alex Jones has been sued by victims' family
members over Jones' lies that the 2012 Sandy Hook Elementary School
shooting was a hoax.
Jones' InfoW LLC and affiliates, IWHealth, LLC and Prison Planet
TV, LLC, filed petitions under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 22-60020) on April
18, 2022.
The Debtors agreed to the dismissal of the Chapter 11 cases in June
2022 after the Sandy Hook victim families dismissed the three
bankrupt companies from their lawsuits.
Free Speech Systems filed a voluntary petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex.
Case No. 22-60043) on July 29, 2022. In the petition filed by W.
Marc Schwartz, as chief restructuring officer, the Debtor reported
assets and liabilities between $50 million and $100 million.
Melissa A Haselden has been appointed as Subchapter V trustee.
Alexander E. Jones filed for personal bankruptcy under Chapter 11
of the Bankruptcy Code (Bankr. S.D. Tex. Case No. 4:22-bk-60043) on
Dec. 2, 2022, listing $1 million to $10 million in assets against
liabilities of $1 billion to $10 billion in liabilities.
Raymond William Battaglia, of Law Offices of Ray Battaglia, PLLC,
is FSS's counsel. Raymond W. Battaglia and Crowe & Dunlevy, P.C.,
led by Vickie L. Driver, Christina W. Stephenson, Shelby A. Jordan,
and Antonio Ortiz are representing Alex Jones.
GABRIEL PARTNERS: Midcap Financial Marks $124,000 Loan at 82% Off
-----------------------------------------------------------------
MidCap Financial Investment Corporation has marked its $124,000
loan extended to Gabriel Partners, LLC to market at $188,000 or 18%
of the outstanding amount, as of September 30, 2023, according to
Midcap Financial's Form 10-Q Report for the Quarterly period ended
September 30, 2023, filed with the Securities and Exchange
Commission.
Midcap Financial is a participant in a First Lien Secured
Debt-Revolver Loan to Gabriel Partners, LLC. The loan accrues
interest at a rate of 1% (SOFR+590) per annum. The loan matures
September 21, 2026.
Midcap Financial Investment Corporation is a Maryland corporation
incorporated on February 2, 2004. It is a closed-end, externally
managed, non-diversified management investment company that has
elected to be treated as a business development company under the
Investment Company Act of 1940. Apollo Investment Management, L.P.
is the investment adviser and an affiliate of Apollo Global
Management, Inc. and its consolidated subsidiaries (AGM). Apollo
Investment Administration, LLC, an affiliate of AGM, provides,
among other things, administrative services and facilities for
Midcap.
Gabriel Partners, LLC is a Management Consulting, Finance, and
Financial Services Company located in Cleveland, Ohio.
GALLERIA 2425: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Galleria 2425 Owner, LLC
1001 West Loop South
Houston, TX 77027
Business Description: The Debtor is primarily engaged in renting
and leasing real estate properties.
Chapter 11 Petition Date: December 5, 2023
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 23-34815
Judge: Hon. Jeffrey P. Norman
Debtor's Counsel: James Q. Pope, Esq.
THE POPE LAW FIRM
6161 Savoy Drive 1125
Houston TX 77036
Tel: (713) 449-4481
Email: jamesp@thepopelawfirm.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $50 million to $100 million
The petition was signed by Dward Darjean as manager.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/ZQO3TCI/Galleria_2425_Owner_LLC__txsbke-23-34815__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
1. 2425 WL, LLC $7,592,415
13498 Pond Springs Rd.
Austin, TX 78729
2. Ali Choudhry $960,000
1001 West Loop South 700
Houston, TX 77027
3. Ash Automated Control HVAC Repair $1,548
Systems, LLC
PO Box 1113
Fulshear, TX 77441
4. Caz Creek Lending Tax Lien $800,238
118 Vintage Park Blvd No. W
Houston, TX 77070
5. Cirro Electric $27,000
PO Box 60004
Dallas, TX 75266
6. City of Houston $7,500
PO Box 1560
Houston, TX 77251
7. CNA Insurance Co $63,216
PO Box 74007619
Chicago, IL 60674
8. Datawatch Systems $18,626
4520 East West Highway 200
Bethesda, MD 20814
9. Firetron $30,040
PO Box 1604
Stafford, TX 77497
10. First Insurance Funding $5,507
450 Skokie Blvd
Northbrook, IL 60062
11. Gulfstream Legal Group $57,799
1300 Texas St
Houston, TX 77002
12. Harris County Tax Assessor $957,825
PO Box 4622
Houston, TX 77210
13. HNB Construction, LLC $58,207
521 Woodhaven
Ingleside, TX 78362
14. Lexitas $2,813
PO Box Box 734298 Dept 2012
Dallas, TX 75373
15. MacGeorge Law Firm $34,445
2921 E 17th St Blgd D Suite 6
Austin, TX 78702
16. National Bank of Kuwait $26,000,000
299 Park Ave. 17th Floor
New York, NY 10171
17. Nationwide Security $32,549
2425 W Loop S 300
Houston, TX 77027
18. Nichamoff Law Firm $46,984
2444 Times Blvd 270
Houston, TX 77005
19. TKE $57,881
3100 Interstate North Cir SE 500
Atlanta, GA 30339
20. Zindler Cleaning Service Co $2,110
2450 Fondren 113
Houston, TX 77063
GALLUS DETOX: Joli Lofstedt Named Subchapter V Trustee
------------------------------------------------------
The U.S. Trustee for Region 11 appointed Joli Lofstedt, Esq., as
Subchapter V trustee for Gallus Detox Services, Inc.
Ms. Lofstedt, a practicing attorney in Louisville, Colo., will be
paid an hourly fee of $350 for her services as Subchapter V trustee
and will be reimbursed for work-related expenses incurred.
Ms. Lofstedt declared that she is a disinterested person according
to Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Joli A. Lofstedt, Esq.
P.O. Box 270561
Louisville, CO 80027
Phone: (303) 476-6915
Fax: (303) 604-2964
Email: joli@jaltrustee.com
About Gallus Detox Services
Gallus Detox Services, Inc. offers treatment for individuals
struggling with substance abuse and substance use disorders. It is
based in Denver, Colo.
Gallus and its affiliates filed Chapter 11 petitions (Bankr. D.
Colo. Lead Case No. 23-15280) on Nov. 14, 2023. In the petition
signed by its chief executive officer, Warren Olsen, reported up to
$500,000 in assets and up to $10 million in liabilities.
Judge Joseph G. Rosania Jr. oversees the cases.
Keri L. Riley, Esq., at Kutner Brinen Dickey Riley, P.C. represents
the Debtor as legal counsel.
GAUCHO GROUP: Investor Converts Note Into Common Shares
-------------------------------------------------------
Gaucho Group Holdings, Inc. disclosed in a Form 8-K filed with the
Securities and Exchange Commission that on Nov. 20, 2023, pursuant
to a senior secured convertible note, as amended, an institutional
investor elected to convert a total of $181,707 of principal and
$27,256 of premium into 371,081 shares of common stock of the
Company at a conversion price of $0.5631 per share.
On Nov. 27, 2023, pursuant to the Note, the investor elected to
convert a total of $57,659 of principal, $2,743 of interest, and
$9,060 of premium into 135,500 shares of common stock of the
Company at a conversion price of $0.5126 per share.
Gaucho Group the Investor entered into that certain Securities
Purchase Agreement, dated as of Feb. 21, 2023 and the Company
issued to the Holder a senior secured convertible note, as amended,
and warrant to purchase 337,710 shares of common stock of the
Company.
About Gaucho Group
Headquartered in New York, NY, Gaucho Group Holdings, Inc.'s
(gauchoholdings.com) mission has been to source and develop
opportunities in Argentina's undervalued luxury real estate and
consumer marketplace. The Company has positioned itself to take
advantage of the continued and fast growth of global e-commerce
across multiple market sectors, with the goal of becoming a leader
in diversified luxury goods and experiences in sought after
lifestyle industries and retail landscapes.
Gaucho Group reported a net loss of $21.83 million for the year
ended Dec. 31, 2022, compared to a net loss of $2.39 million for
the year ended Dec. 31, 2021. As of March 31, 2023, the Company had
$21.01 million in total assets, $8.60 million in total liabilities,
and $12.40 million in total stockholders' equity.
New York, NY-based Marcum LLP, the Company's auditor since 2013,
issued a "going concern" qualification in its report dated April
17, 2023, citing that the Company has a significant working capital
deficiency, has incurred significant losses and needs to raise
additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
GENESISCARE: Lender Opposes DIP Refinancing Motion
--------------------------------------------------
Tiger Alternative Investors, one of the exit lenders to GenesisCare
objected on Monday, December 4, 2023, to the company's emergency
motion to obtain $261 million of loans that would refinance its
original DIP financing.
The request by GenesisCare -- a KKR-backed healthcare company whose
Chapter 11 plan was confirmed last month -- to access financing
"materially alters" the outcome of a group of creditors who voted
on the Plan.
Tiger objects to the refinancing motion provides significant
post-confirmation modifications to the now-confirmed Plan of
Reorganization without adequate time or opportunity for all
interested parties to negotiate the terms of the Debtors' exit
financing.
Tiger is one of the SFA Lenders as defined in the confirmed Plan.
Tiger has SFA and Swap Claims in an amount exceeding $80,000,000.
Along with the overwhelming number of SFA Lenders entitled to vote
on the Plan, Tiger voted for the Debtors' Plan based on the
representations made to it in the Plan and Disclosure Statement.
Following the vote on Nov. 15, 2023, the Debtors presented Tiger
with a new term sheet presenting significant changes to the
structure of exit financing from what had been presented through
the confirmation process.
On Nov. 20, 2023, the day prior to the confirmation hearing on the
Plan, the Debtors filed a motion to refinance the existing
debtor-in-possession financing which shall, upon satisfaction of
certain conditions precedent, convert into exit financing and enter
into the DIP Documents, including an amended DIP Credit Agreement.
The Debtors also sought approval to enter into a backstop
commitment letter with the lenders who have agreed to backstop the
financing. The Debtors seek authorization to enter into the
DIP-to-Exit Financing consisting of a senior secured multiple draw
term loan facility of $261 million, $241 million of which shall be
used to pay down the new-money tranche of the Original DIP Facility
in the chapter 11 cases and $20 million of which shall be new money
utilized to fund and emerge from these chapter 11 cases.
The Court approved the Debtors' First Amended Joint Plan on Nov.
21, 2023.
According to Tiger, the key changes to the new term sheet pertain
to the treatment of ROW Equity. Specifically, ROW Equity may now
be offered Allowed DIP New Money Claims. Lenders who choose not to
participate in this arrangement will face a loss due to the
dilution of the DIP Equity Pool resulting from the ROW Equity
offerings to the Allowed DIP New Money Claims. Furthermore, the
new term sheet formalizes the allocation of ROW Equity offerings.
These offerings will be based on the pro-rata share of DIP New
Money. Notably, this structure confers significant benefits upon
the Backstop Parties whose pro-rata share of the DIP loan exceeds
that of the non-backstop SFA lenders.
The proposed post-petition financing inadvertently diminishes the
ROW Equity allocation for the non-backstop secured lenders. While
the Backstop Parties acted swiftly to provide emergency liquidity
to the Debtors through the Backstop Party DIP Facility, the
Backstop Parties received several advantages over other creditors.
The Backstop Parties will receive the Backstop Parties Commitment
Premium, a higher pro-rata share in the DIP New Money compared to
their prior share, and an increased DIP Roll-Up Amount. In
addition, the Backstop Parties' participation in the Delayed Draw
Term Loan provided them with substantial advantages.
The effect of these changes is that the ROW Equity allocation for
the other SFA lenders will be diminished. These lenders may
experience financial losses due to the diluted DIP Equity Pool
resulting from ROW Equity offerings to the allowed DIP New Money
claims. Going forward, this backstop-centric structure appears to
disproportionately favor the Backstop Parties during the
anticipated sale of the Debtors' US assets. The distribution of
gains from the sale is likely to be heavily skewed in favor of the
Backstop Parties, potentially at the expense of the other SFA
lenders.
Moreover, according to Tiger, these disparities will exacerbate the
adverse financial loss for the other SFA lenders who will not
participate in the post-petition financing commitment. That is,
the Existing DIP Money Term Sheet outlines the allocation and
repayment possibilities for the Roll-up equitization portion.
However, the Post-Petition Financing indicates that, after
prioritizing the New Money Claim, only a disproportionately minimal
amount of ROW Equity will be allocated to the Existing Roll-up
Loan. This is expected to result in a significant disparity in
loss rates for lenders with Existing Roll-up Loans.
Because the terms of the proposed financing disproportionately
benefit the Backstop Parties, Tiger objects to the Motion.
Counsel to Tiger Alternative Investors:
ASK LLP
Kara E. Casteel, Esq.
Richard J. Reding, MN
2600 Eagan Woods Drive, Suite 400
St. Paul, MN 55121
Tel: (651) 289-3850
Fax: (651) 406-9676
E-mail: rreding@askllp.com
- and -
Edward E. Neiger, Esq.
60 East 42nd Street, 46th Fl.
New York, NY 10165
Telephone: (212) 267-7342
Email: eneiger@askllp.com
About GenesisCare
One of the world's largest integrated oncology networks,
GenesisCare -- http://www.genesiscare.com-- includes 300+
locations in the U.S., the UK, Australia, and Spain. With
investments in advanced technology and expanded access to clinical
trials, more than 5,500 highly trained GenesisCare physicians and
support staff offer comprehensive, coordinated care in radiation
oncology, medical oncology, hematology, urology, diagnostics, and
surgical oncology.
Genesis Care Pty Ltd. and its affiliated debtors sought protection
under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Texas
Lead Case No. 23-90614) on June 1, 2023. In the petition signed by
Richard Briggs, as authorized signatory, Genesis Care disclosed up
to $10 billion in both assets and liabilities.
Judge David R. Jones oversees the case.
The Debtors tapped Kirkland and Ellis, LLP, Kirkland and Ellis
International, LLP and Jackson Walker, LLP as general bankruptcy
counsel; PJT Partners, LP as investment banker; Alvarez and Marsal
North America, LLC as restructuring advisor; Herbert Smith
Freehills, LLP as foreign legal counsel; Teneo as communications
advisor; and Clayton Utz as special investigation counsel. Kroll
Restructuring Administration, LLC is the notice and claims agent.
On June 15, 2023, the U.S. Trustee for the Southern District of
Texas appointed an official committee of unsecured creditors. The
trustee tapped Kramer Levin as its counsel, Locke Lord LLP as local
counsel, and Berkeley Research Group, LLC as financial advisor.
Susan N. Goodman is the patient care ombudsman appointed in the
Debtors' Chapter 11 cases.
GET GREEN: Court OKs Interim Cash Collateral Access
---------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Illinois,
Eastern Division, authorized Get Green Recycling, Inc. to use cash
collateral on an interim basis in accordance with the budget.
The Debtors require the use of the Pre-Petition Collateral,
including cash and cash equivalents generated from using the
Pre-Petition Collateral, for the maintenance and preservation of
the Property through the payment of ordinary and necessary expenses
of the operation of the Property.
Unique Funding Solutions, LLC purports to hold a first priority
security interest Get Green Recycling, Inc.'s cash receipts through
a lien on accounts and accounts receivables granted by Get Green
Recycling, Inc. under an July 25, 2020 Security Agreement perfected
by UCC filings with the Illinois Secretary of State on July 7,
2020.
Big Shoulders Capital VI, LLC purports to hold a second priority
security interest in each Debtors' cash receipts through a lien on
accounts and accounts receivables granted by each of the Debtors
under an July 25, 2022 Security Agreement perfected by UCC filings
with the Illinois Secretary of State on August 12, 2020.
Safran Metal, Inc. purports to hold a third security interest in
Get Green Recycling, Inc.'s cash receipts through a lien on
accounts and accounts receivables granted by Get Green Recycling,
Inc. under a September 26, 2014 Loan and Supply agreement perfected
by UCC filings with the Illinois Secretary of State on December 1,
2022.
As adequate protection, Unique, Big Shoulders, and Safran will be
granted a replacement lien on the rents, accounts and accounts
receivables secured by its lien.
The Post-Petition Liens granted will be valid and perfected as of
the date of the Order, without the need for the execution or filing
of any further document or instrument otherwise required to be
executed or filed under applicable non-bankruptcy law.
As further adequate protection for Unique, Big Shoulders, and
Safran's interests in the Pre-Petition Collateral, and consistent
with section 552 of the Bankruptcy Code, Get Green Recycling, Inc.
will grant Unique, Big Shoulders, and Safran, and Dimco GGR, LLC
will grant to Big Shoulders to the extent not heretofore granted, a
replacement lien on accounts and accounts receivables derived from
operations, which are of the same type or nature as the
Pre-Petition Collateral, coming into existence or acquired by the
effected Debtor respecting its operations on or after the Petition
Date will be deemed to be Pre-Petition Collateral, subject to
Unique, Big Shoulders, and Safran's liens, as applicable.
The authority of the effected Debtor to use cash collateral will
terminate on the earlier of (a) the date of entry by the Court of
an order modifying or otherwise altering the effectiveness of the
Order, (b) an Event of Default, or (c) the expiration of the Budget
Period.
Each of the following events will constitute an Event of Default:
a. Entry of an order converting that Debtor's Chapter 11 case to a
case under Chapter 7 of the Bankruptcy Code, which order is not
stayed within 10 days of the entry of such order;
b. The entry of an order dismissing that the Debtor's Chapter 11
case, which is not stayed within 10 days of the entry of such
order; and
c. That Debtor's failure to comply with any provision of the
Order.
A continued hearing on the matter is set for December 12 at 10
a.m.
A copy of the order is available at https://urlcurt.com/u?l=nEn2o2
from PacerMonitor.com.
About Get Green Recycling Inc.
Get Green Recycling Inc. is a recycling center in Aurora,
Illinois.
Get Green Recycling Inc. filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ill. Case No.
23-13092) on Sept. 30, 2023. The petition was signed by James
Meyers as president. At the time of filing, the Debtor estimated $1
million to $10 million in both assets and liabilities.
Judge Donald R. Cassling presides over the case.
Gregory J Jordan, Esq. at Jordan & Zito LLC represents the Debtor
as counsel.
GETTY IMAGES: Moody's Hikes CFR to B1 & Alters Outlook to Stable
----------------------------------------------------------------
Moody's Investors Service upgraded Getty Images, Inc.'s Corporate
Family Rating to B1 from B2 and Probability of Default Rating to
B1-PD from B2-PD. Concurrently, Moody's upgraded Getty's senior
secured first-lien debt obligations to Ba3 from B1 (comprising the
$150 million revolving credit facility (RCF), $639.6 million
outstanding term loan B and EUR419 million outstanding euro term
loan B) and senior unsecured notes to B3 from Caa1 ($300 million
outstanding). Moody's also assigned a Speculative Grade Liquidity
(SGL) rating of SGL-1. The outlook was changed to stable from
positive.
RATINGS RATIONALE
The ratings upgrade reflects Moody's expectation for continued
deleveraging following Getty's 2022 de-SPAC transaction driven by
an expected return to top-line growth in 2024 and improvement in
operating performance, debt protection measures and liquidity.
Though macroeconomic headwinds and muted advertising spend slowed
the pace of deleveraging this year, Moody's projects decreasing
leverage and solid free cash flow (FCF) generation over the rating
horizon.
Notwithstanding recent revenue pressures (i.e., reported revenue
was down 0.6% year-to-date (YTD) through September 30) from the
challenged macroeconomic environment, adverse foreign exchange
movements, subdued advertising spend across ad agency clients, and
the dual Hollywood strikes that impacted demand in both the
Creative and Editorial units, Getty managed to maintain EBITDA
margins (Moody's adjusted) in the 30% range, generate positive FCF
and make voluntary debt repayments ($40 million YTD through 30
September). This reflects the company's variable cost structure,
effective expense controls as well as favorable product mix. It
also captures the continued growth in annual subscription revenue
(roughly 53% of total YTD revenue) as the company continued to
focus on driving customers to its e-commerce solutions, which
helped to improve revenue stability. At LTM September 30, 2023,
financial leverage, as measured by total debt to EBITDA, was
roughly 5x (Moody's adjusted, including Moody's standard operating
lease adjustment and excluding non-cash gains on foreign currency
and fair value adjustments for swaps and foreign exchange
contracts), while FCF/debt was 5.4% (Moody's adjusted).
The stable outlook reflects Moody's expectation that Getty will
gradually de-lever to the 4.7x area (Moody's adjusted) once revenue
and EBITDA resume growth following the recent period of sluggish
demand for the company's visual, digital and video content. While
Moody's expects the residual effect of the protracted strikes to
negatively impact revenue growth at least through H1 2024, as movie
and episodic TV productions take time to resume their normal
cadence, the Editorial business will experience solid growth from
media spend associated with the US presidential election, Summer
Olympic Games and UEFA European Football Championship occurring
next year. These cyclical events combined with recommencement of
film and TV production volumes to pre-strike levels in H2 2024
should lead to organic revenue growth in the low-single digit
percentage range next year. EBITDA margins are expected to remain
near current levels as Getty continues to invest in maintaining
staffing levels and incur legal costs associated with ongoing
litigation.
Getty's B1 CFR reflects the company's differentiation relative to
competitors, which includes its: (i) global position as the leading
source of visual content with over 1 million customers annually
across more than 200 countries; (ii) sizable collection of
pictorial content, believed to be one of the largest and broadest
in the world under the Unsplash.com and iStock.com logos
(budget-conscious) as well as Getty's (premium) brands; compared to
peers, Getty has the deepest offering of exclusive and premium
content with a strong localized presence; (iii) variable cost
operating model with imagery and video content sourced from
independent and staff photographers, videographers, owned archives,
content partners and individual contributors; (iv) reduced revenue
volatility as subscription revenue is now a larger proportion of
revenue; (v) long-term relationships across a broad customer base
comprising news, entertainment and sports publishing organizations;
and (vi) good geographic diversification.
The B1 CFR is constrained by: (i) Getty's moderately high leverage,
albeit expected to decline; (ii) exposure to SMBs and consumer
discretionary businesses that are typically more cyclical and
likely to experience greater pullback in spend compared to larger
firms during economic slowdowns and downturns; and (iii) continued
market demand for lower-priced stock imagery products (a very
competitive space), offset by continued growth in client demand for
Getty's exclusive content.
Over the next 12-18 months, Moody's expects Getty will maintain
very good liquidity supported by annual positive FCF generation in
the range of $80-$100 million, unrestricted cash balances of at
least $100 million (unrestricted cash totaled approximately $114
million at 30 September 2023) and access to the $150 million RCF
(currently undrawn) maturing in 2028. Getty expects to make
principal payments of at least $10.4 million over the next 12
months, which Moody's projects the company will fund from internal
sources.
ESG CONSIDERATIONS
Getty's CIS-4 indicates that the rating is lower than it would have
been if ESG risk exposures did not exist. This is chiefly driven by
governance risks as denoted by the G-4 governance score resulting
from Getty's moderately high financial leverage and concentrated
ownership structure, as well as human capital risks as indicated by
the S-3 social score.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A ratings upgrade could occur if Getty: (i) demonstrates at least
mid-single-digit percentage organic revenue growth driven by
clients' continuing demand for the company's visual imagery
products and stable-to-improving product pricing; and (ii) exhibits
a continued mix shift to higher volume enterprise subscriptions and
higher margin Royalty-Free products. Additionally, upward rating
pressure could occur if free cash flow to debt is sustained in the
mid-to-high single-digit percentage range and total debt to EBITDA
is sustained below 4x (both metrics are Moody's adjusted). Ratings
could be downgraded if operating performance tracks below Moody's
expectations or if total debt to EBITDA is sustained above 5x
(Moody's adjusted). Ratings could also experience downward pressure
if liquidity deteriorates such that free cash flow to debt is
sustained below 4.5% (Moody's adjusted).
Headquartered in Seattle, WA, Getty Images, Inc. is a wholly-owned
subsidiary of Getty Images Holdings, Inc., a leading creator and
distributor of still imagery, vector, video and multimedia
products, as well as a recognized provider of other forms of
premium digital content, including music. The company was founded
in 1995 and provides stock images, music, video and other digital
content through gettyimages.com, iStock.com and Unsplash.com.
Revenue totaled approximately $922 million for the twelve months
ended September 30, 2023.
The principal methodology used in these ratings was Media published
in June 2021.
GIRARDI & KEESE: Feds Say Tom's Profanity Proof of Competency
-------------------------------------------------------------
Emily Sawicki of Law360 reports that prosecutors have asked a
California federal judge to find disbarred attorney Tom Girardi,
84, competent to stand trial following a dementia diagnosis, citing
a moment during a September cross-examination in which the attorney
lashed out against the prosecution as proof of "his appreciation of
this case and the allegations lodged against him."
About Girardi & Keese
Girardi and Keese or Girardi & Keese was a Los Angeles-based law
firm founded in 1965 by lawyers Thomas Girardi and Robert Keese.
It served clients in California in a variety of legal areas. It
was known for representing plaintiffs against major corporations.
An involuntary Chapter 7 petition (Bankr. C.D. Cal. Case No.
20-21022) was filed in December 2020 against GIRARDI KEESE by
alleged creditors Jill O'Callahan, Robert M. Keese, John Abassian,
Erika Saldana, Virginia Antonio, and Kimberly Archie.
The petitioners' attorneys:
Andrew Goodman
Goodman Law Offices, Apc
Tel: 818-802-5044
E-mail: agoodman@andyglaw.com
Elissa D. Miller, a member of the firm SulmeyerKupetz, has been
appointed as Chapter 7 trustee for GIRARDI KEESE. The Chapter 7
trustee can be reached at:
Elissa D. Miller
333 South Grand Ave., Suite 3400
Los Angeles, California 90071-1406
Telephone: (213) 626-2311
Facsimile: (213) 629-4520
E-mail: emiller@sulmeyerlaw.com
An involuntary Chapter 7 petition was also filed against Thomas
Vincent Girardi (Case No. 20-21020) on Dec. 18, 2020. The Chapter
7 trustee can be reached at:
Jason M. Rund
Email: trustee@srlawyers.com
840 Apollo Street, Suite 351
El Segundo, CA 90245
GOL LINHAS: Taps Seabury to Review Debt Loan
--------------------------------------------
Alex Vasquez of Bloomberg News reports that Gol Linhas Aereas
Inteligentes SA hired Seabury Capital for assistance in a broad
review of its capital structure, which includes addressing
liability management, financing transactions and other measures,
the company said in a filing Friday, December 1, 2023.
Gol seeks to increase cash resources while reprofiling the
company's near and medium-term fleet and other financial
obligations
"As part of this mandate, Seabury working together with Skyworks,
will pursue ongoing negotiations with Gol's aircraft lessors, with
the objective of achieving a comprehensive consensual restructuring
of Gol's fleet obligations," The company said.
About Gol Linhas Aereas Intellgentes
Gol Linhas Aereas Intellgentes SA operates as an airline company.
The Company offers air transportation, travel insurance, car
rental, online booking, cargo, and other related services. Gol
Linhas Aereas serves customers worldwide.
GRAFFITI BUYER: Midcap Financial Marks $1.3MM Loan at 70% Off
-------------------------------------------------------------
MidCap Financial Investment Corporation has marked its $1,307,000
loan extended to Graffiti Buyer, Inc to market at $394,000 or 30%
of the outstanding amount, as of September 30, 2023, according to
Midcap Financial's Form 10-Q Report for the Quarterly period ended
September 30, 2023, filed with the Securities and Exchange
Commission.
Midcap Financial is a participant in a First Lien Secured
Debt-Revolver Loan to Graffiti Buyer, Inc. The loan accrues
interest at a rate of 1% (SOFR+560) per annum. The loan matures on
August 10, 2027.
Midcap Financial Investment Corporation is a Maryland corporation
incorporated on February 2, 2004. It is a closed-end, externally
managed, non-diversified management investment company that has
elected to be treated as a business development company under the
Investment Company Act of 1940. Apollo Investment Management, L.P.
is the investment adviser and an affiliate of Apollo Global
Management, Inc. and its consolidated subsidiaries (AGM). Apollo
Investment Administration, LLC, an affiliate of AGM, provides,
among other things, administrative services and facilities for
Midcap.
Graffiti provides brands and retailers with an app-free solution
allowing their customers to search for product information just by
panning their camera at the shelf. Customers can instantly glean
insights about products, overlaid in AR in front of them. They can
also filter products and visually see the ones that meet their
expectations.
GS SEER GROUP: Midcap Financial Marks $4.6MM Loan at 33% Off
------------------------------------------------------------
MidCap Financial Investment Corporation has marked its $4,625,000
loan extended to GS SEER Group Borrower LLC to market at $3,121,000
or 67% of the outstanding amount, as of September 30, 2023,
according to Midcap Financial's Form 10-Q Report for the Quarterly
period ended September 30, 2023, filed with the Securities and
Exchange Commission.
Midcap Financial is a participant in a First Lien Secured Debt Loan
to GS SEER Group Borrower LLC. The loan accrues interest at a rate
of 1% (SOFR+675) per annum. The loan matures on April 29, 2030.
Midcap Financial Investment Corporation is a Maryland corporation
incorporated on February 2, 2004. It is a closed-end, externally
managed, non-diversified management investment company that has
elected to be treated as a business development company under the
Investment Company Act of 1940. Apollo Investment Management, L.P.
is the investment adviser and an affiliate of Apollo Global
Management, Inc. and its consolidated subsidiaries (AGM). Apollo
Investment Administration, LLC, an affiliate of AGM, provides,
among other things, administrative services and facilities for
Midcap.
GS SEER Group Borrower LLC and GS SEER Group Holdings LLC provide
commercial and residential HVAC, electrical, and plumbing services.
HELLO BELLO: Wants to Accept $65 Million Stalking Horse Bid
-----------------------------------------------------------
Emily Lever of Law360 reports that Hello Bello, a baby product
brand started by actress Kristen Bell, has informed a Delaware
bankruptcy judge it intends to accept a nearly $65 million stalking
horse bid for its assets from private equity fund Hildred Capital
Management, after canceling its Chapter 11 auction for lack of
other bidders.
About Hello Bello
Hello Bello(TM) -- https://hellobello.com/ -- makes premium and
affordable baby products designed to eliminate the choice many
parents have to make -- deciding between what's best for their kids
and what's best for their budget. From diapers, shampoo, and
sunscreen to organic multivitamins, laundry detergent, and wipes
Hello Bello's products are carefully crafted with babies, parents,
and the planet in mind.
Hello Bello sought relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del.) on Oct. 23, 2023. In its petition, it listed
assets and liabilities of at least $100 million each.
Willkie Farr & Gallagher LLP and Young Conaway Stargatt & Taylor
LLP are serving as Hello Bello's legal counsel. Jefferies LLC is
serving as investment banker and Emerald Capital Advisors is
serving as financial advisor.
Lowenstein Sandler LLP and Alvarez & Marsal North America, LLC, are
serving as legal counsel and financial advisor, respectively, to
Hildred Capital Management.
HIVE LLC: 77% Markdown for $2.3MM Midcap Financial Loan
-------------------------------------------------------
MidCap Financial Investment Corporation has marked its $2,326,000
loan extended to Hive Intermediate, LLC to market at $536,000 or
23% of the outstanding amount, as of September 30, 2023, according
to Midcap Financial's Form 10-Q for the Quarterly period ended
September 30, 2023, filed with the Securities and Exchange
Commission.
Midcap Financial is a participant in a First Lien Secured
Debt-Revolver Loan to Hive Intermediate, LLC. The loan accrues
interest at a rate of 1% (SOFR+610 Cash plus 2% Payment In Kind)
per annum. The loan matures on September 22, 2027.
Midcap Financial Investment Corporation is a Maryland corporation
incorporated on February 2, 2004. It is a closed-end, externally
managed, non-diversified management investment company that has
elected to be treated as a business development company under the
Investment Company Act of 1940. Apollo Investment Management, L.P.
is the investment adviser and an affiliate of Apollo Global
Management, Inc. and its consolidated subsidiaries (AGM). Apollo
Investment Administration, LLC, an affiliate of AGM, provides,
among other things, administrative services and facilities for the
Company.
Hive is in the Beverage, Food & Tobacco industry.
HOWARD INTERVENTION: Case Summary & 19 Unsecured Creditors
----------------------------------------------------------
Debtor: Howard Intervention Center, Inc.
21141 Governors Highway, Suite 301
Matteson, IL 60443
Chapter 11 Petition Date: December 5, 2023
Court: United States Bankruptcy Court
Northern District of Illinois
Case No.: 23-16312
Judge: Hon. A. Benjamin Goldgar
Debtor's Counsel: Gregory K. Stern, Esq.
GREGORY K. STERN, P.C.
53 West Jackson Boulevard
Suite 1442
Chicago, IL 60604
Tel: (312) 427-1558
Fax: (312) 427-1289
Email: greg@gregstern.com
Total Assets: $369,399
Total Liabilities: $1,085,759
The petition was signed by Cara K. Wilson as president.
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 19 unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/GNNANRI/Howard_Intervention_Center_Inc__ilnbke-23-16312__0001.0.pdf?mcid=tGE4TAMA
HRO HOLDINGS: Midcap Financial Marks $26MM Loan at 33% Off
----------------------------------------------------------
MidCap Financial Investment Corporation has marked its $26,891,000
loan extended to HRO (Hero Digital) Holdings, LLC to market at
$18,091,000 or 67% of the outstanding amount, as of September 30,
2023, according to Midcap Financial's Form 10-Q Report for the
Quarterly period ended September 30, 2023, filed with the
Securities and Exchange Commission.
Midcap Financial is a participant in a First Lien Secured Debt Loan
to HRO (Hero Digital) Holdings, LLC. The loan accrues interest at a
rate of 1% (SOFR+610). The loan matures on November 28, 2028.
Midcap Financial Investment Corporation is a Maryland corporation
incorporated on February 2, 2004. It is a closed-end, externally
managed, non-diversified management investment company that has
elected to be treated as a business development company under the
Investment Company Act of 1940. Apollo Investment Management, L.P.
is the investment adviser and an affiliate of Apollo Global
Management, Inc. and its consolidated subsidiaries (AGM). Apollo
Investment Administration, LLC, an affiliate of AGM, provides,
among other things, administrative services and facilities for
Midcap.
Hero Digital Holdings LLC provides digital consulting services. The
Company offers digital marketing and content strategy, software
platform selection, rapid prototyping and user testing, visual
design, copywriting, platform engineering, and analytics and
optimization services.
HUBBARD RADIO: Moody's Lowers CFR to Caa1 & Alters Outlook to Neg.
------------------------------------------------------------------
Moody's Investors Service downgraded Hubbard Radio, LLC's Corporate
Family Rating to Caa1 from B3, the Probability of Default Rating to
Caa2-PD from Caa1-PD, and the backed senior secured first lien term
loan to Caa1 from B3. Moody's also downgraded the Speculative Grade
Liquidity Rating (SGL) to SGL-4 from SGL-3. The outlook was changed
to negative from stable.
The downgrade of the CFR to Caa1 reflects Hubbard's weak liquidity
and refinancing risks related to the senior secured term loan
maturing in March 2025. Given the company's weak operating
performance amid weak radio advertising demand and secular
pressures on the industry, Moody's views the company's ability to
refinance in a timely manner as uncertain. Governance
considerations, as reflected in the company's credit impact score
of CIS-5 and governance issuer profile score (IPS) of G-5, were a
key driver of the rating action.
RATINGS RATIONALE
The Caa1 CFR reflects Hubbard's modest scale, weak liquidity,
elevated financial leverage, potential for a breach in its
financial covenant absent an equity cure and refinancing risks
related to the March 2025 term loan with approximately $241 million
outstanding as of September 2023. Hubbard benefits from its strong
position in several of the markets it operates in.
Hubbard's debt to EBITDA (excluding Moody's standard lease
adjustments) increased to 6.7x as of the twelve months ended
September 2023 as advertisers pulled back ad spend during uncertain
macroeconomic conditions. Hubbard's operating performance has been
negatively impacted by the secular pressures and the cyclical
nature of radio advertising demand. The radio industry has been
pressured by high inflation and slow economic growth coupled with
the shift of advertising dollars to digital mobile and social media
as well as heightened competition for listeners from a number of
digital music providers. Hubbard is also relatively small in scale
with operations in eight different markets which can increase
volatility in performance. Moody's projects leverage to further
increase to 6.9x in 2023 before declining to mid-5x in 2024
supported by incremental political revenue, potential cost
reductions and continued debt repayment through excess free cash
flow.
The SGL-4 rating reflects Moody's expectation that Hubbard will
maintain weak liquidity over the next 12 months. While the
company's liquidity is supported by $3 million of cash holdings as
of September 2023 and $10-$20 million in annual free cash flow
generation, the company will not be able to repay the senior
secured term loan maturing in March 2025 with internal cash
sources. The company's basic cash needs include annual interest
expense of $20-$25 million, modest capital expenditure of $1
million and minimal working capital needs. There is no external
liquidity due to the absence of a revolver; however, the parent
company, Hubbard Broadcasting, Inc. (HBI) has provided financial
support as evidenced by the $25 million equity contribution in Q1
2021 and $4.7 million year-to-date Q3 2023 even though HBI is not a
guarantor to the credit agreement.
The senior secured term loan contains a financial maintenance
covenant that requires quarterly total leverage of 5.75x with a
step down to 5.5x effective since Q1 2023. The company received an
equity contribution from HBI in Q2 and Q3 2023 which allowed the
company to comply with the leverage requirement. An amended credit
agreement executed in September 2023 contained key changes in the
right to cure provision in which the company can exercise an equity
cure a maximum of three from two quarters in four consecutive
quarters. Moody's expects Hubbard to exercise another equity cure
in Q4 2023 due to a likely covenant violation.
The Caa1 rating on the first lien senior secured term loan due
March 2025 is the same as the Caa1 CFR as the secured debt
represents the preponderance of debt capital. It also reflects an
above average expected family recovery rate in an event of
default.
Hubbard's ESG Credit Impact Score of CIS-5 indicates the rating is
lower than it would have been if ESG risk exposures did not exist
and that the negative impact is more pronounced than for issuers
scored CIS-4. While environmental risks are limited, social and
governance risks are the main drivers. Social risks arise from
social and demographical trends as competition for listeners from
digital music services has increased and advertising dollars have
shifted to digital and social media advertising. Governance risks
are related to the significant refinancing risks and elevated
leverage levels which are partly mitigated by a track record of
directing free cash flow to debt repayment.
The negative outlook reflects the elevated risks that Hubbard faces
in refinancing its senior secured term loan maturing in March 2025,
the need for another equity cure in Q4 2023 and the negative
pressure on operating performance in the near term due to
recessionary pressures on radio advertising demand.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if upcoming debt maturities are
financed on terms that result in a sustainable capital structure,
along with positive organic revenue and EBITDA growth and improved
liquidity.
The ratings could be downgraded if the company does not refinance
debt maturities in a timely manner or if operating performance or
liquidity weakens further.
Formed in 2011, Hubbard Radio, LLC is a family controlled and
privately held media company that owns and operates radio stations
in 8 of the top 50 markets, including Chicago, Washington, D.C.,
Minneapolis-St. Paul, St. Louis, Cincinnati, Seattle, Phoenix, and
West Palm Beach. Hubbard also operates 2060 Digital, LLC, a
national digital marketing agency based in Cincinnati, Ohio.
Hubbard is a wholly owned subsidiary of Hubbard Broadcasting, Inc.
(HBI), a television and radio broadcasting company that was started
in 1923. Headquartered in St. Paul, Minnesota, Hubbard generated
revenue on a standalone basis of $209 million for the last twelve
months ending September 2023.
The principal methodology used in these ratings was Media published
in June 2021.
INSIGHT MANAGEMENT: Plan Filing Deadline Extended to Dec. 19
------------------------------------------------------------
Judge Maria de los Angeles Gonzalez has entered an order granting
the motion filed by Insight Management Group Incorporated, a/k/a
Insight Radiology Puerto Rico, requesting extension of time of 28
days to File Disclosure Statement and Plan of Reorganization. The
new deadline is Dec. 19, 2023.
About Insight Management Group
Insight Management Group Incorporated provides specialized services
in radiology in Canovanas, P.R.
Insight Management Group filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No.
23-00506) on Feb. 22, 2023, with $500,000 to $1 million in assets
and $10 million to $50 million in liabilities. Jose A. Romero
Cruz, president of Insight Management Group, signed the petition.
Judge Maria De Los Angeles Gonzalez presides over the case.
Javier Vilarino, Esq., at Vilarino & Associates, LLC, and Dage
Consulting CPA's, PSC, serve as the Debtor's legal counsel and
financial advisor, respectively.
INSTALLED BUILDING: Moody's Ups CFR & First Lien Term Loan to 'Ba1
------------------------------------------------------------------
Moody's Investors Service upgraded Installed Building Products
Inc.'s (IBP) corporate family rating to Ba1 from Ba2, probability
of default rating to Ba1-PD from Ba2-PD. Moody's also upgraded the
rating on the company's existing senior secured first lien term
loan due 2028 to Ba1 from Ba2 and senior unsecured notes due 2028
to Ba2 from B1. The company's speculative grade liquidity (SGL)
rating remains SGL-1. The outlook is maintained at stable.
The upgrade of IBP's CFR to Ba1 reflects Moody's expectations that
IBP will continue to perform well and maintain low leverage, with
adjusted debt-to-EBITDA of about 2x over the next two years. A very
good liquidity profile characterized by the company's ability to
generate cash flow further supports the rating upgrade.
"Debt leverage of around 2x exhibits IBP's commitment to
conservative financial policies, which merits the rating upgrade,"
according to Peter Doyle, a Moody's VP-Senior Analyst.
RATINGS RATIONALE
IBP's Ba1 CFR reflects good operating performance, with adjusted
EBITDA margin sustained around 18% through 2024. As the second
largest installer of insulation in the US, IBP is well positioned
to take advantage of the improving trends in new single-family home
construction, which is the company's main revenue driver.
Although the company showed good resiliency during the past year
during which single-family home construction contracted, this
sector is very cyclical. IBP is modestly sized in terms of revenue,
limiting absolute levels of earnings and dictating that IBP
maintain low leverage and fixed charges in order to contend with a
more material downturn. At the same time, IBP faces execution risk
to its operating plan amid intense competition. IBP's product mix
is reliant on commodity-like products such as insulation and shower
doors, which are easily available from other distributors. These
factors make it difficult to increase materially pricing and market
share. Capital deployment for potentially large acquisitions is the
greatest credit risk at this time.
Moody's projects IBP will have very good liquidity over the next
two years, generating healthy free cash flow in each of the next
two years and having full access to a $250 million asset based
revolving credit facility expiring 2027, which is the nearest
material debt maturity.
The stable outlook reflects Moody's expectation that IBP will
continue to perform well and maintain conservative financial
policies. Very good liquidity profile, no material near-term debt
maturities and some improving end market dynamics further support
the stable outlook.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade of IBP's ratings could ensue if end markets remain
supportive of organic growth such that adjusted debt-to-EBITDA is
below 2x. Upwards rating movement also requires significant organic
growth in revenue and earnings, preservation of very good
liquidity, a capital structure that ensures maximum financial
flexibility and maintaining conservative financial policies. A
downgrade could occur if adjusted debt-to-EBITDA remains above 3x,
liquidity deteriorates or the company pursues a more aggressive
acquisition or share repurchase strategy.
The principal methodology used in these ratings was Distribution
and Supply Chain Services published in February 2023.
IVANTI SOFTWARE: BC Partners Marks $4MM Loan at 28% Off
-------------------------------------------------------
BC Partners Lending Corporation has marked its $4,000,000 loan
extended to Ivanti Software, Incto market at $2,897,000 or 72% of
the outstanding amount, as of September 30, 2023, according to BC
Partners's Form 10-Q for the Quarterly period ended September 30,
2023, filed with the Securities and Exchange Commission.
BC Partners is a participant in a Senior Secured Loan to Ivanti
Software, Inc. The loan accrues interest at a rate of 9.65% (S +
4.25%, 1% FLOOR) per annum. The loan matures on December 1, 2028.
BC Partners Lending Corporation is a Maryland corporation formed on
December 22, 2017. The Company has elected to be regulated as a
business development company under the Investment Company Act of
1940, as amended. In addition, the Company has elected to be
treated for U.S. federal income tax purposes, and to qualify
annually, as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended. The Company is an
emerging growth company as defined in the Jumpstart Our Business
Startups Act of 2012 and the Company will take advantage of the
extended transition period for complying with certain new or
revised accounting standards provided for emerging growth companies
in Section 7(a)(2)(B) of the Securities Act of 1933, as amended.
Ivanti Software, Inc. provides information technology services. The
Company offers IT asset management, security, endpoint, and supply
chain solutions.
J.B. POINDEXTER: Moody's Rates New Senior Unsecured Notes 'B2'
--------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to the new senior
unsecured notes offered by J.B. Poindexter & Co., Inc. All other
ratings of J.B. Poindexter remain unchanged, including the B1
corporate family rating, the B1-PD probability of default rating,
and the B2 ratings of the existing senior unsecured notes due 2026.
The outlook is stable.
The new notes will be issued in connection with a tender offer for
the company's existing $550 million senior unsecured notes due
2026. Therefore the transaction is leverage neutral and will extend
the company's debt maturities.
RATINGS RATIONALE
J.B. Poindexter's ratings reflect the company's strong competitive
position in its main business lines and long-standing relationships
with key blue chip customers. The ratings also reflect the
company's exposure to cyclical end markets, large customer
concentrations and volatility around annual fleet truck orders.
J.B. Poindexter demonstrated a notable improvement in profitability
and cash flow following significant underperformance in the past
two years. The EBITA margin expanded to 6.4% in the last 12 months
ended September 30, 2023, from only 2.3% in 2022. The lack of truck
chassis availability, higher input costs such as freight and labor,
and costs associated with the restructuring of the LEER division
weighed on the company's operating performance, despite solid
demand for commercial truck bodies and step-vans.
The company expects profitability at Leer to turn positive by the
second quarter of 2024, after completing the transition of
manufacturing operations to a new plant in Mexico. Nevertheless,
Moody's expects that the lack of orders in 2024 from UPS for step
van truck bodies in the Morgan Olson division will weigh on the
EBITA margin next year.
Along with a marked increase in earnings, debt/EBITDA decreased to
3.2 times as of September 30, 2023, from as high as 6.3 times at
year-end 2022. Moody's expects debt/EBITDA to remain well below 4
times in 2024.
The stable outlook reflects Moody's expectation that J.B.
Poindexter will be able to largely sustain the recent improvement
in margin and cash flow, despite the earnings pressure ensuing from
the lack of UPS orders in 2024 in the Morgan Olson division.
J.B. Poindexter is expected to maintain good liquidity. The
company's cash balance grew to nearly $240 million as of September
30, 2023, and availability under the $100 million asset-based
revolving credit facility was $90 million after approximately $10
million of letters of credit. Moody's expects free cash flow to be
around $50 million in 2023. Lower working capital needs will help
offset the impact on cash flow from lower earnings and higher
interest expense in 2024. A very sizeable increase in working
capital in 2021 and 2022 caused free cash flow to turn negative in
2021 and 2022.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The ratings could be upgraded if J.B. Poindexter maintains
debt/EBITDA below 3x and EBITA/interest above 3 times through
cyclical periods in its end-markets. Good liquidity, including
managing debt maturities well in advance of due dates is also an
important consideration for a ratings upgrade.
The ratings could be downgraded if J.B. Poindexter is unable to
maintain debt/EBITDA below 4.5 times, or if liquidity deteriorates,
including in the event negative free cash flow erodes the cash
balance. The adoption of more aggressive financial policies, such
as sizeable owner distributions, could also cause a ratings
downgrade.
The principal methodology used in this rating was Automotive
Suppliers published in May 2021.
KC TRUCKING: Lucy Sikes Named Subchapter V Trustee
--------------------------------------------------
The Acting U.S. Trustee for Region 5 appointed Lucy Sikes as
Subchapter V trustee for KC Trucking & Equipment, LLC and
affiliates.
Ms. Sikes will be paid an hourly fee of $365 for her services as
Subchapter V trustee and will be reimbursed for work-related
expenses incurred.
Ms. Sikes declared that she is a disinterested person according to
Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Lucy G. Sikes
P.O. Box 52545
Lafayette, LA 70505-2545
Telephone: 337-366-0214
Facsimile: 337-628-1319
Email: lucygsikes1@gmail.com
About KC Trucking & Equipment
KC Trucking & Equipment, LLC, a company in Lake Charles, La., and
its affiliates filed Chapter 11 petitions (Bankr. W.D. La. Lead
Case No. 23-20507) on Nov. 14, 2023. At the time of the filing, KC
Trucking & Equipment reported $3,481,917 in assets and $2,881,888
in liabilities.
Judge John W. Kolwe oversees the cases.
Conner L. Dillon, Esq., at Gold, Weems, Bruser, Sues & Rundell
represents the Debtor as legal counsel.
KINETIK HOLDINGS: Fitch Assigns 'BB+' Rating on Sr. Unsecured Notes
-------------------------------------------------------------------
Fitch Ratings has assigned a 'BB+'/'RR4' rating to Kinetik Holdings
LP's proposed offering of senior unsecured notes. The notes will
rank equally with the existing senior unsecured notes. Proceeds
from the offering will be used to repay a portion of the company's
outstanding term loan A.
Kinetik's ratings reflect the company's size, majority fee-based
revenues and contracted revenue-assurance features supporting cash
flows. The primary offsetting factor is Kinetik's considerable
volumetric risk arising from gathering and processing (G&P)
operations. The company's geographic asset concentration in the
Permian basin is viewed as a moderate positive as similarly sized
peers have more basin diversity.
The Positive Outlook reflects Kinetik's ability to achieve and
maintain leverage below 4.0x in 2024 as the company is set to
benefit from producer activity in 2024 as well as organic growth
projects. The potential sale of Kinetik's 16% economic interest in
Gulf Coast Express (GCX) pipeline would accelerate deleveraging.
KEY RATING DRIVERS
Size and Scale of Permian Asset Base: Kinetik's scale in terms of
EBITDA is strong for the 'BB+' rating category, as the company
generates approximately $800 million of EBITDA. Kinetik has a
balanced profile given its pairing of supply and demand
territories. Approximately two-thirds of EBITDA will come from G&P
operations in the Delaware Basin. The Delaware Basin is the faster
growing of the Permian Basin's two sub-basins in recent years on a
percentage basis.
The Permian is the overall leading U.S. oil basin. Over half of all
oil-directed rigs working in the U.S. are located there. Kinetik
supplements its G&P business with a long-haul pipeline business via
joint ventures (JVs). Its three biggest JV pipelines each terminate
in robust demand center sat different points along the Texas coast.
Fitch expects both segments of Kinetik will continue to develop
operations by capitalizing on the company's geography and size.
Deleveraging Progress: Kinetik could achieve leverage sustained
below 4.0x in 2024 as producer customers continue to drill and the
company realizes benefits from new commercial agreements and
capital growth projects. In 3Q23, the company posted positive FCF,
which along with incremental EBITDA from capital growth projects
being completed in 4Q23, will drive deleveraging. Kinetik has a
management-defined leverage target of 3.5x or less, and committed
to not growing dividends until this ratio is achieved. Converting
the company's leverage definition to Fitch's definition translates
to a policy of approximately 3.8x or less. The financial policy,
when achieved with corporate actions in management's control, would
position Kinetik strongly in its rating category and could support
an upgrade.
Volumetric Risks: Fitch expects Kinetik's Midstream and Logistics
segment, primarily comprising natural gas G&P activities, to
contribute approximately 65% of 2023 EBITDA. The company has some
minimum volume commitments in this segment. The segment depends on
customers with dedicated acreage to Kinetik to drill and complete
wells. The majority of Kinetik's assets are focused in Reeves
County, TX, in the Delaware Basin, which has an average break-even
that places the basin among the best oil regions in the U.S.
However, Fitch believes global forces could eventually cause U.S.
regions, even elite ones, such as the Delaware Basin, to be the
site of volume-downside scenarios for Kinetik and peers.
Capital Spending to Decline in 2024: Capex in 2023 is expected to
be near the high end of Kinetik's $490 million - $540 million
guidance range follow the Permian Highway Pipeline (PHP) expansion
project and completed Delaware Link pipeline project. The PHP
expansion and Delaware Link account for roughly half of total capex
and will be immediately accretive. Kinetik is also adding in well
connects with several producer customers as activity continues to
grow steadily despite the yoy drop in commodity prices. Fitch
expects capex will return to more moderate in 2024 closer to $150
million.
Potential GCX Sale Increases Deleveraging Capacity: Kinetik is
still in talks to sell their stake in GCX. In May 2022, Targa
Resources Corp. (BBB-/Positive) sold its 25% stake in the pipeline,
and Kinetik could achieve a similar multiple in the 10.0x-11.0x
range. Fitch expects potential proceeds from the sale to be used to
bring the company closer to its stated 3.5x leverage target.
Kinetik would lose approximately $50 million of annual
distributions from take-or-pay contracts that provide predictable
cash flows if the GCX sale occurs. This loss would be largely
offset by the PHP expansion project expected to be in service by YE
2023.
Dividend Reinvestment Supports Leverage Target: Kinetik's board
continued the dividend reinvestment program (DRIP) in 2023 as the
core shareholders again committed to take 100% of dividends as
stock. As such, this program decreases the amount of cash dividends
the company pays to shareholders, allowing for cash flows to
support the company's robust capex program. Completion of the GCX
stake sale would likely result in Kinetik slowing the DRIP on or
before dividends are received.
Diversified Customer Base: Of Kinetik's take-or-pay counterparties,
only Apache Corporation (BBB-/Stable) is anticipated to contribute
more than 10% of gross profit in 2023. The company has strong
counterparty diversification with over 35 customers. Fitch expects
roughly two-thirds of 2023 gross profit will come from
investment-grade customers. The weighted average counterparty
credit rating is 'BBB-'. Permian Highway -- the largest JV pipeline
by dividend contribution to Kinetik -- features a large array of
customers with many rated above 'BBB-'.
DERIVATION SUMMARY
The best comparable for Kinetik is DT Midstream, Inc. (DTM;
BB+/Positive). Both companies have volumetric risk. Each company
has a large presence in regions with long-term fast-paced growth,
giving some assurance that the volumetric risk at each company is
bounded. Both companies have approximately 90% fee-based business
(i.e. taking title to hydrocarbons and selling them at market
prices is a small part of each company).
Kinetik has better counterparty risk than DTM when isolating
long-term take-or-pay payments. However, DTM's most salient
take-or-pay exposure is to a 'BB+' rated company with a Positive
Outlook, so a contract rejection in bankruptcy is relatively
unlikely. Fitch estimates DTM has a higher percentage of run-rate
operating cash flows coming from revenue-assurance-type contracts
(i.e. take-or-pay and minimum volume commitments).
Fitch calculated Kinetik's fiscal 2022 leverage to be in line with
DTM's at approximately 4.2x. Fitch expects DTM's leverage to drop
below 4.0x by 2023 and remain comfortably below 4.0x through 2025.
Fitch expects Kinetik's Fitch-defined 2023 leverage to be in the
3.9x-4.1x range, depending in part on the potential sale of GCX.
The two companies differ in terms of their focus hydrocarbons and
operating regions. Kinetik is mainly a gas gatherer, as it focuses
on the wellhead side of the business. However, the Delaware Basin
has thus far been explored in the last decade for crude oil, not
natural gas. DTM's two regions are explored for the purpose for
finding natural gas. Each hydrocarbon has a different volumetric
risk profile.
Over the last nine years, volumes for oil in the U.S. experienced
their strongest downward moves on OPEC+ actions, with the most
recent one exacerbated by the coronavirus pandemic. U.S. natural
gas volumes over the same period showed vulnerability to warm U.S.
winters (especially consecutive warm winters, which is the case for
the past three winters). As U.S. liquefied natural gas export
volumes continue to grow, winter weather in Europe and Asia may be
a factor in the future. Fitch expects these volume risk for each
hydrocarbon to generally have different cycles.
The companies are rated the same, as they are similar on most
features. Regarding areas where Kinetik is superior, such as
take-or-pay counterparty risk, the difference is not highly
significant.
KEY ASSUMPTIONS
- Fitch macro assumptions, e.g., the Fitch price deck for oil and
natural gas, and the Global Economic Outlook with respect to
Kinetik's unhedged portion of interest rates;
- EBITDA remains relatively flat in 2023 to 2022 with volumes
expected to grow in 2024 expansion projects, new contract and
increased producer activity resulting mid-single digit percentage
growth yoy;
- Capex near the upper end of management's guidance for 2023 but
declining closer to $150 million in 2024;
- Distribution growth expected in 2024 by 5% following dividend
reinvestment program in 2023;
- Modest equity repurchases in 2023.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade
- EBITDA leverage below 4.0x, together with an expectation that the
leverage can be sustained below 4.0x;
- Maintaining or improvement of existing business risk.
Factors that could, individually or collectively, lead to negative
rating action/downgrade
- Fitch may revert to a Stable Outlook if early 2024 performance
indicates a lack of achievement of leverage below 4.0x;
- EBITDA leverage expected to be sustained above 5.0x;
- A cluster of large shippers on the joint venture pipelines
experiencing business shocks or radically changing financial policy
results in the cluster's credit quality falling to 'B'.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: As of Sept. 30, 2023, Kinetik LP had available
liquidity of approximately $607.5 million, consisting of $607.4
million of availability on the $1.25 billion senior unsecured
revolving credit facility, which had $630 million of outstanding
borrowings and $12.6 million of LOCs, and approximately $68
thousand of cash and cash equivalents. Maturities are manageable,
with the nearest maturity being the $2 billion term loan A which is
being extended to June 2026 in conjunction with this refinancing.
Kinetik's credit agreements contain a financial covenant that
requires it to maintain a net leverage ratio below 5.00 to 1.00 at
the end of any fiscal quarter. Following certain acquisition
periods, this ratio is raised to 5.50 to 1.00. Kinetik LP was in
compliance for all covenants as of the quarter ended Sept. 30,
2023.
ISSUER PROFILE
Kinetik is a gathering and processing focused midstream company
handling natural gas, NGLs, and crude oil with assets primarily
focused in the Delaware Basin in the Permian.
SUMMARY OF FINANCIAL ADJUSTMENTS
Under Fitch's typical calculation of EBITDA, distributions from
investees accounted for under the equity method of accounting are
included in EBITDA. Equity earnings or EBITDA from these entities
are excluded.
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
----------- ------ --------
Kinetik Holdings LP
senior unsecured LT BB+ New Rating RR4
KINETIK HOLDINGS: Moody's Rates New Senior Unsecured Notes 'Ba1'
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Moody's Investors Service assigned a Ba1 rating to Kinetik Holdings
LP's proposed backed senior unsecured notes. Kinetik's other
ratings, including its Ba1 Corporate Family Rating and existing
backed senior unsecured notes rating of Ba1, and stable outlook
remain unchanged.
Kinetik will use net proceeds from its proposed bond offering to
partially repay its $2 billion term loan. The company's term loan
will extend by one year to June 2026, contingent on repayment of at
least $500 million of the term loan. The term loan maturity will
extend to December 2026 if the outstanding balance is decreased
below $1 billion.
"Kinetik's partial repayment of its term loan with net proceeds
from its proposed bonds and extension of the term loan benefits the
company's credit profile by extending its debt maturity profile,"
commented Jonathan Teitel, a Moody's Senior Analyst.
RATINGS RATIONALE
Kinetik's senior unsecured notes are rated Ba1, the same as the
CFR, because all of the debt is unsecured. Other debt includes a
senior unsecured term loan (unrated) and a senior unsecured
revolver (unrated). The notes, revolver and term loan are
guaranteed by Kinetik Holdings Inc. (Kinetik's parent company).
Kinetik's Ba1 CFR benefits from the large scale of the company's
diversified and integrated midstream platform, modest leverage, and
conservative financial policies. The company is focused on the
Delaware Basin, within the broader Permian Basin, a highly economic
oil-producing region in the US. The vast majority of the company's
EBITDA is derived from natural gas midstream services relating to
producers' associated natural gas production. However, the company
also has complementary crude oil, NGL, and water midstream
services. Growth projects will drive EBITDA growth through 2024.
Capital expenditures related to these growth projects result in
elevated expenditures in 2023, but these will decline in 2024 as
projects are completed. The company derives the vast majority of
its gross profit from fixed-fee contracts, which limits Kinetik's
direct commodity price exposure. However, the company is exposed to
volume risks. For the relatively small portion of gross profit that
is directly linked to commodity prices, Kinetik hedges some of the
exposure. A significant portion of EBITDA is derived from joint
ventures which own pipelines operated by third parties. Kinetik has
a leverage target of 3.5x (based on the calculation under the terms
of its credit agreement).
Kinetik's SGL-1 rating reflects Moody's expectation for Kinetik to
maintain very good liquidity through 2024. As of September 30,
2023, Kinetik had $630 million of borrowings outstanding on its
$1.25 billion revolver due June 2027 (also, $13 million in letters
of credit were outstanding under the facility). The revolver and
term loan have financial covenants that require maximum net
leverage to be less than 5x (except for certain designated
acquisition periods where the maximum is 5.5x). Moody's expects
Kinetik to maintain compliance with the financial covenant through
2024.
The stable outlook reflects Moody's expectation for Kinetik to
maintain low leverage and good distribution coverage.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Factors that could lead to an upgrade include increased scale
supporting EBITDA sustained over $1 billion; reduced volume risk
and improvement of cash flow stability; and maintenance of
debt/EBITDA below 3.5x and good distribution coverage.
Factors that could lead to a downgrade include debt-funded
acquisitions; aggressive increases in shareholder returns;
weakening of business profile, such as increased volume or
commodity price risks; or debt/EBITDA above 4.5x.
Kinetik Holdings LP (Kinetik), headquartered in Texas, is a wholly
owned subsidiary of publicly traded Kinetik Holdings Inc. Kinetik
is a midstream energy company with infrastructure that links the
Permian Basin and Gulf Coast. It derives the vast majority of
EBITDA from natural gas gathering, processing and transportation.
The company also has complementary crude oil, NGL, and water
midstream services. Kinetik has equity ownership stakes in four
joint ventures.
The principal methodology used in this rating was Midstream Energy
published in February 2022.
KL CHARLIE: Midcap Financial Marks $1.9MM Loan at 24% Off
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MidCap Financial Investment Corporation has marked its $1,962,000
loan extended to KL Charlie Acquisition Company to market at
$1,493,000 or 76% of the outstanding amount, as of September 30,
2023, according to Midcap Financial's Form 10-Q Report for the
Quarterly period ended September 30, 2023, filed with the
Securities and Exchange Commission.
Midcap Financial is a participant in a First Lien Secured
Debt-Revolver Loan (P + 525%) to KL Charlie Acquisition Company.
The loan matures on December 30, 2026.
Midcap Financial Investment Corporation is a Maryland corporation
incorporated on February 2, 2004. It is a closed-end, externally
managed, non-diversified management investment company that has
elected to be treated as a business development company under the
Investment Company Act of 1940. Apollo Investment Management, L.P.
is the investment adviser and an affiliate of Apollo Global
Management, Inc. and its consolidated subsidiaries (AGM). Apollo
Investment Administration, LLC, an affiliate of AGM, provides,
among other things, administrative services and facilities for
Midcap.
KL Charlie Acquisition Company is a Delaware Domestic Corporation.
KL Charlie Acquisition is in the Advertising, Printing & Publishing
industry, and affiliated with Fingerpaint Marketing, which is
backed by private equity firm Knox Lane.
LAKEPORT CF: Gets OK to Sell Assets to CORE for $185,189
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Lakeport CF, LLC received approval from the U.S. Bankruptcy Court
for the District of Colorado to sell assets to CORE Electric
Cooperative in a private deal.
The company is selling permanent utility easements to CORE over
16.611 acres of real property in Elbert County, Colo.
CORE made a cash offer of $185,189 for the assets, which are being
sold "free and clear" of liens, claims, interests and
encumbrances.
CORE will pay the sale price in accordance with Lakeport's
debtor-in-possession loan agreement with G&O Capital, LLC, which
holds senior lien on the real property.
Lakeport did not solicit rival offers due to CORE's ability to
condemn the property, according to its attorney, Michael Gilbert,
Esq., at Allen Vellone Wolf Helfrich & Factor, PC.
"The sale to CORE avoids the expense and delay that would be
occasioned by condemnation proceedings and [Lakeport] believes
results in a better return to the estate," Mr. Gilbert said in
court papers.
About Lakeport CF
Lakeport CF, LLC, a company in Elbert County, Colo., filed Chapter
11 petition (Bankr. D. Colo. Case No. 22-11941) on May 31, 2022,
with $10 million to $50 million in both assets and liabilities.
Judge Michael E. Romero oversees the case.
Jeffrey A. Weinman, Esq., at Allen Vellone Wolf Helfrich & Factor,
PC and Fairfield and Woods P.C. serve as the Debtor's bankruptcy
counsel and special counsel, respectively.
LEBANON PLATINUM: Wins Continued Cash Collateral Access Thru Dec 22
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Lebanon Platinum, LLC and affiliates ask the U.S. Bankruptcy Court
for the Middle District of Tennessee to continue using cash
collateral on an interim basis in accordance with the budget,
through December 22, 2023.
The Agreed Cash Use Order dated November 2, 2023 set (a) a final
hearing on the Debtors' Expedited Motion for Entry of Order
Approving Consolidated Cash Management or, in the Alternative,
Directing Substantive Consolidation of the Debtors' Chapter 11
Bankruptcy Cases, and (b) a final hearing on the Debtors' authority
to use cash collateral after December 8, 2023—the end of the Cash
Use Period defined in the Agreed Cash Use Order.
Under the Agreed Cash Use Order, if the Debtors sought permission
to use cash collateral after the expiration of the Cash Use Period,
they were required to file any supplemental pleadings, exhibits, or
budgets in support of continued use of cash collateral on or before
December 1, 2023 in advance of the December 6, 2023 hearing
thereon.
All other terms of the Agreed Cash Use Order will remain in place
and in full force and effect, including the variance approval, the
bi-weekly reporting, the interim consolidated cash use as set forth
in the Cash Management Motion, and all other terms thereof.
The Debtors further request that the Court set a final hearing on
(a) any use of cash collateral beyond the end of the Continued Cash
Use Period and (b) the Cash Management Motion for December 20, 2023
at 11 a.m.
SummitBridge National Investments VIII LLC asserts an interest in
the Debtor's cash collateral.
A copy of the motion is available at https://urlcurt.com/u?l=z9cchm
from PacerMonitor.com.
About Lebanon Platinum
Lebanon Platinum, LLC filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. M.D. Tenn. Case No.
23-03592) on Sept. 29, 2023, with up to $50,000 in assets and up to
$10 million in liabilities. Mitch Patel, manager, signed the
petition.
Judge Charles M. Walker oversees the case.
Steven L. Lefkovitz, Esq., at Lefkovitz & Lefkovitz, PLLC serves as
the Debtor's legal counsel.
LONG TERM CARE: T Series Marks $11-Mil. Loan at 17% Off
-------------------------------------------------------
T Series Middle Market Loan Fund LLC has marked its $11,487,000
loan extended to Long Term Care Group, Inc to market at $9,541,000
or 83% of the outstanding amount, as of September 30, 2023,
according to T Series' Form 10-Q for the Quarterly period ended
September 30, 2023, filed with the Securities and Exchange
Commission.
T Series is a participant in a First Lien Debt Loan to Long Term
Care Group, Inc. The loan accrues interest at a rate of 12.58%
(S+7.00%incl. 6.00% PIK)) per annum. The loan matures on September
8, 2027.
T Series Middle Market Loan Fund LLC is a non-diversified,
externally managed specialty finance company focused on lending to
middle market companies. The Company has elected to be regulated as
a business development company under the Investment Company Act of
1940, as amended. In addition, for U.S. federal income tax
purposes, the Company has elected to be treated, and intends to
comply with the requirements to qualify annually, as a regulated
investment company under Subchapter M of the Internal Revenue Code
of 1986, as amended. The Company is not a subsidiary of or
consolidated with Morgan Stanley.
Long Term Care Group, Inc. provides business process outsourcing.
The Company offers underwriting, claims, care management,
assessments, policy issue, and consulting services. Long Term Care
Group serves insurance industries in the United States.
LPI LLC: People's Bank of Commerce Says Disclosures Inadequate
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People's Bank of Commerce objects to the Disclosure Statement
explaining LPI, LLC's Chapter 11 Plan.
With respect to historical rents and financial statements, People's
Bank says the Disclosure Statement fails to provide adequate
information to determine whether the Plan is feasible.
According to People's Bank, the Debtor should be required to
disclose at least the last five years of past gross rents received,
which should include a detailed breakdown for each of Debtor's
properties. At a minimum, Debtor should provide a detailed rent
roll from the date of filing. The Disclosure Statement only
provides a rent roll as a snapshot in time, but provides no
historical information to determine, for example, average rates of
vacancy and non-payment, renter turnover, and how long it takes to
re-rent after a unit is vacated.
The Debtor, according to the Bank, should also be required to
provide at least the last five years of profit and loss statements,
which should include a detailed breakdown for each of Debtor's
properties.
The Debtor values the 3rd Street Property at $436,000. According
to the Bank, the Debtor should be required to disclose that this
valuation is based on an appraisal subject to a new roof and not an
as-is appraisal.
Moreover, the Bank points out that the Debtor should disclose that
it has not filed tax returns since 2016.
Attorneys for People's Bank of Commerce:
Melisa A. Button, Esq.
Hornecker Cowling LLP
14 N. Central Ave., Ste. 104
Medford, OR 97501
E-mail: mab@roguelaw.com
About LPI LLC
LPI, LLC a company in Albany, Ore., filed its voluntary petition
for Chapter 11 protection (Bankr. D. Ore. Case No. 23-60789) on May
10, 2023, with $2,064,118 in assets and $974,196 in liabilities.
Mahmood Almayah, a member of LPI, LLC, signed the petition.
Judge Thomas M. Renn oversees the case.
The Debtor tapped Michael D. O'Brien & Associates, PC, as counsel
and Jane L. Giles, CPA, at Advanced Business Logistics LLC as
accountant.
LUCKY BUCKS: BC Partners Marks $3.5MM Loan at 71% Off
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BC Partners Lending Corporation has marked its $3,556,000 loan
extended Lucky Bucks to market at $1,019,000 or 29% of the
outstanding amount, as of September 30, 2023, according to BC
Partners' Form 10-Q for the Quarterly period ended September 30,
2023, filed with the Securities and Exchange Commission.
BC Partners is a participant in a Senior Secured Loan to Lucky
Bucks. The loan accrues interest at a rate of 11.16% (L + 5.50%,
0.75% FLOOR) per annum. The loan matures on July 21, 2027.
BC Partners Lending Corporation is a Maryland corporation formed on
December 22, 2017. The Company has elected to be regulated as a
business development company under the Investment Company Act of
1940, as amended. In addition, the Company has elected to be
treated for U.S. federal income tax purposes, and to qualify
annually, as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended. The Company is an
emerging growth company as defined in the Jumpstart Our Business
Startups Act of 2012 and the Company will take advantage of the
extended transition period for complying with certain new or
revised accounting standards provided for emerging growth companies
in Section 7(a)(2)(B) of the Securities Act of 1933, as amended .
About Lucky Bucks
Lucky Bucks, LLC -- https://luckybucksga.com/ -- is a digital
skill-based COAM operator based in and incorporated under the laws
of the State of Georgia in the U.S. Its team has a combined 45
years of experience in the Georgia COAM industry.
After reaching a deal for a plan to equitize substantially all of
Lucky Bucks' secured debt, Lucky Bucks and its affiliates sought
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.
Del. Case No. 23-10758) on June 9, 2023.
In the petition signed by James Boyden, executive vice president,
Lucky Bucks disclosed up to $500 million in assets and up to $1
billion in liabilities. As of the petition date, the Debtors have
outstanding funded debt obligations in the aggregate principal
amount of $610 million.
Judge Karen B. Owens oversees the case.
Dennis F. Dunne, Esq., and Tyson Lomazow, Esq., at Milbank LLP; and
Russell C. Silberglied, Esq., at Richards, Layton & Finger P.A.,
serve as the Debtors' legal counsel. Evercore Group L.L.C. is the
Debtors' investment banker while M3 Advisory Partners, L.P., is the
financial advisor. Epiq Corporate Restructuring, LLC, serves as
the Debtors' claims and noticing agent. C Street Advisory Group,
LLC served as strategy and communications advisor to Lucky Bucks.
Akin Gump Strauss Hauer & Feld LLP and Cole Schotz PC served as
legal counsel, Greenhill & Co., LLC served as financial advisor,
and OnMessage Public Strategies served as the communications
advisor to the ad hoc group of lenders holding term loan secured
debt of Lucky Bucks. Latham & Watkins LLP served as legal counsel
to certain other lenders holding secured debt of Lucky Bucks.
* * *
In October 2023, Lucky Bucks, LLC announced the completion of its
restructuring process and successful emergence from Chapter 11.
Lucky Bucks' exit from the bankruptcy process concludes a swift
restructuring that received approval of the Bankruptcy Court for
the District of Delaware through confirmation of its Chapter 11
plan on July 28, 2023, and approval of the Georgia Lottery
Corporation on September 29, 2023. The restructuring enabled Lucky
Bucks to reduce debt by over $500 million and inject substantial
new liquidity.
The Bankruptcy Court ordered that the Chapter 11 proceeding of
Lucky Bucks Holdings LLC, the parent company of Lucky Bucks LLC, be
converted to a Chapter 7 liquidation at the behest of its
noteholders.
MALIBU'S UNITED: Mark Sharf Named Subchapter V Trustee
------------------------------------------------------
The U.S. Trustee for Region 17 appointed Mark Sharf, Esq., a
practicing attorney in Los Angeles, as Subchapter V trustee for
Malibu's United, L.L.C.
Mr. Sharf will charge $660 per hour for his services as Subchapter
V trustee and will seek reimbursement for work-related expenses
incurred.
Mr. Sharf declared that he is a disinterested person according to
Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Mark Sharf, Esq.
6080 Center Drive, 6th Floor
Los Angeles, CA 90045
Telephone: (323) 612-0202
Email: mark@sharflaw.com
About Malibu's United
Malibu's United, LLC filed Chapter 11 petition (Bankr. N.D. Calif.
Case No. 23-41482) on Nov. 14, 2023, with as much as $50,000 in
assets and $100,001 to $500,000 in liabilities. The petition was
filed pro se.
Judge Charles Novack oversees the case.
MATRIX HOLDINGS: S&P Cuts ICR to 'SD' on Missed Interest Payment
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S&P Global Ratings lowered its issuer credit rating on U.S.
telecommunications analytical solutions provider Matrix Holdings
Inc. (doing business as Mobileum) to 'SD' (selective default) from
'CCC' and removed all of our ratings from CreditWatch, where S&P
placed them with negative implications on Oct. 27, 2023.
At the same time, S&P lowered its issue-level rating on the
company's second-lien term loan to 'D' from 'CCC-'.
The downgrade follows Mobileum's recent announcement that it failed
to make the interest payment on its $160 million second-lien term
loan due 2030. The company has a five-business-day grace period to
make the payment, though S&P does not expect it will do so over
this timeframe given its heavy debt burden, which it views as
unsustainable.
Mobileum is seeking waivers from its creditors until it can restate
its financial statements. This follows the ongoing special
committee investigation stemming from certain accounting issues
related to revenue recognition irregularities in 2020-2022.
MATRIX PARENT: Moody's Cuts CFR to 'Caa3', Outlook Negative
-----------------------------------------------------------
Moody's Investors Service downgraded Matrix Parent, Inc.'s (dba
Mobileum) Corporate Family Rating to Caa3 from Caa1 and Probability
of Default Rating to Caa3-PD from Caa1-PD. Concurrently, Moody's
downgraded Mobileum's senior secured first lien bank credit
facilities to Caa2 from B3 and senior secured second lien term loan
to Ca from Caa3. The outlook is maintained at negative.
The downgrade reflects Moody's expectation that Mobileum's
operating performance will continue to be pressured and the
company's liquidity position will continue to deteriorate over the
next 12 months. Moody's views Mobileum's capital structure as
unsustainable with debt/EBITDA leverage of about 20x (Moody's
adjusted after expensing software development costs and excluding
unrealized cost saving benefits) or about 14x if the proposed cost
saving benefits are included as of the LTM period ended September
30, 2023. Moody's believes that the company has limited financial
flexibility to execute a meaningful operational turnaround driven
by subpar operating performance, macroeconomic challenges, and weak
liquidity.
Mobileum announced on October 24, 2023 that it had breached certain
covenants under its first lien and second lien credit agreements
related to the failure to maintain proper books of record and
delivery of incorrect or misleading financial statements.
Mobileum's negative outlook reflects material uncertainties
regarding the company's ability to obtain a waiver from the lenders
in a timely manner to stay compliant with its credit agreements.
The outlook could be stabilized if Mobileum completes its planned
cost savings initiatives without operational missteps, demonstrates
a path towards revenue growth, achieves improved profitability, and
obtains the waiver or amendment from its lender in a timely manner.
Mobileum also communicated a notice of default on December 1, 2023
for failing to make interest payment on the second lien term loan.
The company has a 5 business day grace period under its second lien
credit agreement. Mobileum's failure to pay the interest before the
expiration of the grace period will result in a default.
RATINGS RATIONALE
The Caa3 CFR reflects Mobileum's very high debt/EBITDA leverage of
about 20x and Moody's expectation of leverage to remain elevated at
about 15x over the next 12 months due to material revenue declines
compared to 2022, margin pressures, and incremental borrowing on
the revolving credit facility. Mobileum has been negatively
impacted by the global macroeconomic weakness with customers
delaying non-core projects in the telco sector and extending sales
cycle which has resulted in YTD revenue declines of about 23%. The
company has also faced challenges with slowed product deployment in
the roaming business unit. Following the significant decline in
revenues and margins experienced by Mobileum in 2023, Moody's
anticipate a modest recovery in revenues and EBITDA margins in 2024
driven by improving bookings and realized benefits from cost saving
initiatives.
Mobileum is also exposed to significant uncertainties regarding the
ongoing investigation of potential accounting irregularities. These
accounting irregularities stem from allegations involving potential
overstatement of Mobileum's revenue and EBITDA between the periods
2020 to 2022. Mobileum's financial sponsor, H.I.G. Capital, has
filed a lawsuit against Audax Group, alleging that the seller
(Audax Group) "knowingly and fraudulently" overstated the company's
financial information prior to the sale. The outcome of the lawsuit
and the impact of accounting irregularities on the financial
reporting in 2023 are currently unknown which create material
uncertainties going forward.
Positive credit consideration is given to Mobileum's broad
geographic revenue diversification and a customer base comprising
of global telecom operators, including almost all global Tier 1
telecom operators. The critical nature of the company's embedded
software and related services contributes to customer stickiness
and serves as an effective barrier to exit. Moody's also expects
Mobileum to benefit from increased network complexities and
incidents of cyber threats which will provide favorable demand
dynamics over the longer term. Moody's also expects Mobileum to
undertake significant cost saving actions over the next 12 months
which will provide some benefits to the company's cost structure.
Moody's views Mobileum's liquidity as weak driven by the
expectation of negative free cash flow generation of approximately
$30 million over the next 12 months which will reduce the company's
current $26 million cash on the balance sheet (as of September 30,
2023). Moody's anticipates that the company will fully draw its $55
million revolving credit facility ($51 million drawn as of
September 30, 2023) to fund cash flow deficits which will not only
result in incremental interest costs but also increase financial
leverage. Moody's anticipates that Mobileum may require a cash
equity infusion from its financial sponsor to meet its cash
obligations over the next 18 months.
Mobileum has no meaningful debt maturities until the revolving
credit facility expires in March 2027. The revolving credit
facility contains a springing first lien net leverage covenant that
is triggered when drawings exceed 35% of the amount of the revolver
size. Given expected earnings pressure, Moody's anticipates that
the company may not be able to remain in compliance with the
covenant over the next 12 months. The company's capital structure
includes second lien debt that is not included in the covenant
calculation. The term loans have no financial maintenance
covenants.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Mobileum demonstrates significant
recovery in operating performance, substantially improves its
liquidity profile, and reduces its debt/EBITDA leverage
materially.
The ratings could be downgraded if Mobileum defaults, or if Moody's
debt recovery estimates deteriorate.
The principal methodology used in these ratings was Software
published in June 2022.
Headquartered in Cupertino, CA, Matrix Parent, Inc. is the leading
provider of integrated analytic solutions for roaming and network
services, security, risk management, and testing and monitoring
solutions for the telecommunications industry.
MATRIX PARENT: T Series Marks $10.7MM Loan at 39% Off
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T Series Middle Market Loan Fund LLC has marked its $10,667,000
loan extended to Matrix Parent, Inc. to market at $6,494,000 or 61%
of the outstanding amount, as of September 30, 2023, according to T
Series' Form 10-Q for the Quarterly period ended September 30,
2023, filed with the Securities and Exchange Commission.
T Series is a participant in a First Lien Debt Loan to Matrix
Parent, Inc. The loan accrues interest at a rate of 13.56% (S +8%)
per annum. The loan matures on March 1, 2030.
T Series Middle Market Loan Fund LLC is a non-diversified,
externally managed specialty finance company focused on lending to
middle market companies. The Company has elected to be regulated as
a business development company under the Investment Company Act of
1940, as amended. In addition, for U.S. federal income tax
purposes, the Company has elected to be treated, and intends to
comply with the requirements to qualify annually, as a regulated
investment company under Subchapter M of the Internal Revenue Code
of 1986, as amended. The Company is not a subsidiary of or
consolidated with Morgan Stanley.
Matrix Parent, Inc. does business as Mobileum. Matrix operates
across four main businesses ranked as following in descending order
by revenue contribution: Roaming and Network Services; Fraud,
Security and Business Assurance; Testing and Service Assurance; and
Engagement and Experience. Matrix pioneered the development of
mobile roaming steering software used broadly among telecom
operators.
MAYVILLE HOLDINGS: Gets OK to Hire Kerkman & Dunn as Legal Counsel
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Mayville Holdings, LLC, received approval from the U.S. Bankruptcy
Court for the Eastern District of Wisconsin to hire Kerkman & Dunn
as its legal counsel.
The Debtor requires legal counsel to:
a. Give advice with respect to the duties and powers of the
Debtor under the Bankruptcy Code;
b. Advise the Debtor on the conduct of its Chapter 11 case,
including the legal and administrative requirements of operating in
Chapter 11;
c. Attend meetings and negotiate with representatives of
creditors and other parties involved in the Debtor's case;
d. Prosecute actions on behalf of the Debtor, defend actions
commenced against the Debtor, and represent the Debtor's interests
in negotiations concerning litigation in which it is involved,
including objections to claims filed against its estate;
e. Prepare pleadings;
f. Advise the Debtor in connection with any potential sale of
assets;
g. Appear before the court;
h. Assist the Debtor in preparing, negotiating and
implementing a plan, and advising with respect to any rejection and
reformulation of the plan, if necessary;
i. Assist the Debtor in state court actions related to
judgments and collection actions initiated by or against the Debtor
that are necessary for an effective reorganization; and
j. perform other necessary legal services.
The hourly rates charged by the firm's attorneys and
paraprofessionals are as follows:
Jerome Kerkman $525 per hour
Evan Schmit $435 per hour
Gregory Schrieber $410 per hour
Nicholas Kerkman $295 per hour
Non-Attorney Paraprofessionals $125 per hour
In addition, the firm will seek reimbursement for work-related
expenses incurred.
As disclosed in court filings, Kerkman & Dunn is a "disinterested
person" pursuant to Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Evan P. Schmit, Esq.
Kerkman & Dunn
839 N. Jefferson St., Suite 400
Milwaukee, WI 53202-3744
Phone: 414.277.8200
Fax: 414.277.0100
Email: eschmit@kerkmandunn.com
About Mayville Holdings
Mayville Holdings, LLC, a company in Columbus, Wis., owns and
operates an assisted living facility.
The Debtor filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. E.D. Wis. Case No. 23-24460) on Sept. 30,
2023, with $1 million to $10 million in both assets and
liabilities. Iana Vladimirova of Stafford Rosenbaum, LLP serves as
the Subchapter V trustee.
Judge Beth E. Hanan oversees the case.
Evan P. Schmit, Esq., at Kerkman & Dunn, is the Debtor's legal
counsel.
MERX AVIATION: Midcap Financial Marks $106MM Loan at 24% Off
------------------------------------------------------------
MidCap Financial Investment Corporation has marked its $106,177,000
loan extended to Merx Aviation Finance, LLC to market at
$81,075,000 or 76% of the outstanding amount, as of September 30,
2023, according to Midcap Financial's Form 10-Q Report for the
Quarterly period ended September 30, 2023, filed with the
Securities and Exchange Commission.
Midcap Financial is a participant in a First Lien Secured
Debt-Revolver Loan to Merx Aviation Finance, LLC. The loan accrues
interest at a rate of 10% per annum. The loan matures on October
31, 2025.
Midcap Financial Investment Corporation is a Maryland corporation
incorporated on February 2, 2004. It is a closed-end, externally
managed, non-diversified management investment company that has
elected to be treated as a business development company under the
Investment Company Act of 1940. Apollo Investment Management, L.P.
is the investment adviser and an affiliate of Apollo Global
Management, Inc. and its consolidated subsidiaries (AGM). Apollo
Investment Administration, LLC, an affiliate of AGM, provides,
among other things, administrative services and facilities for
Midcap.
Merx Aviation Finance is a global aircraft leasing, management &
finance company headquartered in New York, NY with offices in
Dublin, Ireland.
MI OPCO: Moody's Rates First Lien Loans Due 2026 'B2'
-----------------------------------------------------
Moody's Investors Service affirmed Mi OpCo Holdings, Inc.'s
("MedImpact") existing ratings including the Corporate Family
Rating B2 rating, Probability of Default Rating B2-PD rating and
senior secured first lien term loan B2 rating. At the same time,
Moody's assigned to the MedImpact's senior secured first lien term
loan A due 2026 and senior secured first lien revolving credit
facility expiring in 2026 a B2 rating. Moody's also withdrew the B2
ratings on the previously proposed senior secured first lien
revolving credit facility expiring in 2028 and senior secured first
lien delayed draw term loan due in 2029 following the company's
decision to change the proposed refinancing of its capital
structure. The outlook is maintained stable.
The affirmation of the ratings follows the announcement of a
revised refinancing plan in conjunction with the acquisition of
Rite Aid Corporation's PBM business Elixir. As per the new capital
structure, MedImpact will have a $330 million senior secured first
lien term loan A due 2026 (currently outstanding) and $625 million
of senior secured first lien term loan B. Net proceeds from this
new facility will be used to fund the acquisition of Rite Aid
Corporation's PBM business, pay associated fees and expenses, and
for general corporate purposes.
RATINGS RATIONALE
MedImpact's B2 CFR rating reflects its position as the 5th largest
pharmacy benefit manager (PBM) in the US. The company is
distinguished by its independent model, not affiliated with a
health insurer or retailer. This appeals to many clients, which
include employers, regional health plans and government entities.
However, the PBM industry's rapid consolidation into large
companies that integrate health insurers with PBMs suggest
advantages of that model, including breadth and scale, and
contribute to increase competitive pressure. The rating also
incorporates an elevated business risk as regulatory and/or
legislative changes could materially erode MedImpact's future
earnings. The rating also reflects governance risks related to a
highly concentrated ownership structure.
These risks are tempered by a track record of moderate financial
leverage. Furthermore, a growing cash discount card business adds
revenue diversity at higher margins than the core PBM. Pro forma
for the proposed refinancing and acquisition, Moody's estimates
MedImpact's leverage to be roughly 3.8x (excluding the one-time
litigation settlement income in 1Q 2023 and based on LTM June 2023
EBITDA). However, Moody's expects leverage to decline towards 3.0x
within 12-18 months reflecting earnings growth.
The stable outlook reflects Moody's expectations that MedImpact's
will generate modest free cash flow and liquidity will be at least
adequate over the next 12-18 months.
Moody's anticipates that MedImpact will maintain adequate liquidity
reflecting modest free cash flow assuming no changes in vendor
terms, and modest back up liquidity provided by the $125 million
revolving credit facility, which is $95 million drawn as of
September 30, 2023. However, liquidity is supported by large cash
balances at close to $370 million as of November 6, 2023, boosted
by a recent $200 million cash infusion from sister companies PHG
and Lunaria. Under the new refinancing package, cash flow will be
constrained by higher interest expenses and mandatory debt
amortization. Moody's expects good cushion under financial
maintenance covenants. MedImpact is exposed to working capital
swings and liquidity risk if multiple vendors were to rapidly
change payment terms with MedImpact.
MedImpact's ESG credit impact score is CIS-4 indicating that the
rating is lower than it would have been if ESG risk exposures did
not exist. The CIS-4 score reflects social risk exposures (S-4)
mainly stemming from customer relations and demographics and
societal. There is a variety of legislative and regulatory
proposals aimed at drug pricing and transparency, which could
constrain profits for PBMs. These trends also contribute to PBM
industry consolidation, which is creating formidable competitors to
MedImpact. Governance risk (G-4) considerations include MedImpact's
90% ownership by its founder, Chair and CEO which provides unique
risk factors including those related to oversight, controls and
succession planning. There are also material related party
transactions with companies outside the credit group, including a
rebate aggregator company. And although financial leverage within
MI OpCo Holdings, Inc. is currently modest, distributions to fund
other businesses (to the extent allowable in the credit agreement)
cannot be ruled out.
The B2 ratings for the senior secured debts are the same as the
Corporate Family Rating as it is the only class of debt in the
capital structure. The senior secured first lien term loan A has
(1) a financial maintenance covenant of 3.50x for 6 fiscal quarters
following the acquisition, stepping down to 3.25x for the remaining
life, and (2) an interest coverage ratio of 2.50x for 4 fiscal
quarters following the acquisition, stepping up to 3.00x for the
remaining life. The senior secured term loan A has a mandatory
amortization of 7.5% per annum through March 31, 2025 and 10.0% per
annum thereafter.
The first lien term loan B is expected to have a financial
maintenance covenant of 3.50x for 6 fiscal quarters following the
acquisition, stepping down to 3.5x for the remaining life. The
first lien term loan B has a mandatory amortization of 5.0% per
annum. Furthermore, the first lien term loan B has a springing
maturity to March 2026 if the first lien term loan A and the first
lien revolving credit facility have not been refinanced by year-end
2025.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade include growth in free cash
flow generation and improved liquidity, a demonstrated ability to
generate steady growth in new businesses and increasing revenue
diversity from the discount card business. Quantitatively,
Debt/EBITDA sustained below 3.5x could support an upgrade.
Factors that could lead to a downgrade include further
deterioration in liquidity, an increase in customer termination
rates, contraction in profit margins due to significant pricing
concessions, or liquidity pressure arising from changes in vendor
terms. Quantitatively, debt/EBITDA sustained above 4.5x could lead
to a downgrade.
MI OpCo Holdings, Inc. is the borrowing entity for MedImpact, a
pharmacy benefit manager headquartered in San Diego, California.
The company serves a number of customers including employers,
regional managed care organizations, Medicaid health plans and
hospital systems. MedImpact is a private company, approximately
90%-owned by founder and CEO of the company. The company generated
revenue of $7.3 billion in the twelve months ended September 30,
2023.
The principal methodology used in these ratings was Distribution
and Supply Chain Services published in February 2023.
MKS INSTRUMENTS: Moody's Alters Outlook on 'Ba1' CFR to Negative
----------------------------------------------------------------
Moody's Investors Service affirmed MKS Instruments, Inc.'s Ba1
long-term Corporate Family Rating, its Ba1-PD probability of
default rating and senior secured bank credit facility rating at
Ba1, including the ratings of the senior secured revolving credit
facility due 2027 (Revolver), senior secured term loan A due 2027
(Term Loan A), senior secured Term Loan B 2029 (US Term Loan B),
and Euro-denominated Term Loan B due 2029 (Euro Term Loan B) (the
US Term Loan B and Euro Term Loan B, collectively, "the Term Loan
B"). The Speculative Grade Liquidity (SGL) rating remains
unaffected at SGL-1. Moody's changed the outlook to negative from
stable.
The revision of the outlook to negative reflects MKS's weak credit
profile amid challenging market conditions. MKS has materially
underperformed Moody's expectations over the past year and the
company's financial metrics will remain poor over the next 12 to 18
months. MKS's Semiconductor end market segment is experiencing a
difficult demand environment. MKS's customers in the semiconductor
capital equipment market are themselves facing reduced demand from
semiconductor manufacturers, particularly in the memory segment.
The company's Electronics & Packaging end market segment is
likewise encountering lower demand driven by ongoing inventory
corrections at original equipment manufacturers in the consumer
electronics end market. Although MKS's Specialty Industrial end
market is performing comparatively well among MKS's three end
market segments, Moody's expects that this end market will only
generate flat to low single digits percent annual revenue growth
over the next 12 to 18 months. Moody's expects that the global
macroeconomic environment will weaken in 2024, both delaying and
moderating the recovery in MKS's Semiconductor and Electronics &
Packaging end markets.
RATINGS RATIONALE
MKS's Ba1 CFR reflects the company's very good liquidity, include a
large cash balance ($859 million as of September 30, 2023), unused
$500 million Revolver, and consistently positive free cash flow
(FCF). The rating also considers MKS's broad portfolio of highly
profitable manufacturing technologies and low capital intensity,
which contributes to free cash flow (FCF) generation. Long customer
relationships, customer qualification requirements, and a large
intellectual property portfolio add a degree of protection to their
competitive position and revenue base. The consumable products and
services revenues, which are driven by installed base and the
volume of electronics manufacturing and general industrial
activity, further support stability of the revenues.
Still, the acquisition of Atotech (August 17, 2022) increased
financial leverage substantially. Given the resulting interest
expense burden and depressed market conditions, FCF has been
pressured over the past year. Although the repricing of the
Existing Term Loan B in October 2023 has modestly reduced interest
expense, FCF will remain challenged over the next 12 to 18 months.
Moody's expects that FCF to debt (Moody's adjusted) will only
improve to just over 3.5% over the next 12 to 18 months. This level
of leverage is high for the rating, considering the remaining
integration execution risks of the Atotech acquisition. Moreover,
although services and consumables revenues now comprise nearly 40%
of the revenue base, equipment revenues still comprise over 60% of
revenues. This equipment revenue base can be volatile since it is
driven by the pace of customer capital spending. Indeed, due to the
large reduction in wafer fab equipment (WFE) spending by memory
firms in 2023, MKS is experiencing a sharp decline in revenues from
sales of its semiconductor process control and measurement
equipment. Given the slowdown in consumer spending, MKS is also
facing reduced demand from consumer electronics manufacturers in
2023.
The negative outlook reflects Moody's expectation of an uncertain
inflection point for MKS returning to positive revenue growth.
Revenues will likely decline in the mid single digits percent in
2024, with modest revenue growth in 2025. This reflects continued
revenue decline in the first half of 2024, with steadily improving
demand in the second half and into 2025. Given the weak FCF
generation due to the high interest expense burden, deleveraging
will be slow. The weak demand is primarily due to the steep
downturn in wafer fab equipment (WFE) spending and, to a lesser
extent, to reduced demand from consumer electronics manufacturers.
Moody's expects that MKS will continue to make steady progress
toward capturing the projected cost synergies from the Atotech
acquisition, gradually improving profitability. Given recovering
revenues and profitability beginning sometime in the second half of
2024, along with debt repayment, Moody's expects that adjusted FCF
to debt will steadily improve to over 3.5% in the next 12 to 18
months.
The Ba1 rating of the Revolver, the Term Loan A, and the Term Loan
B reflects the single class debt structure. The instrument rating
also captures the collateral supporting the Revolver and the Term
Loan B, comprised of a first lien on all assets, as well as only
modest cushion of unsecured liabilities in the capital structure.
The Speculative Grade Liquidity (SGL) rating of SGL-1 reflects
MKS's very good liquidity, which is supported by consistent, though
modest, FCF and a large cash balance. Moody's expects that MKS will
generate annual adjusted FCF of at least $150 million over the next
12 to 18 months and that cash will exceed $700 million. Given the
FCF and large cash balance, Moody's anticipates that the $500
million Revolver will remain largely undrawn. The Term Loan B is
not governed by any financial maintenance covenants. The Term Loan
A and Revolver are subject to a single financial maintenance
covenant ("net leverage" as defined in the credit agreement).
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if MKS:
- Sustains organic revenue growth in the upper single digits
percent annually
- Maintains EBITDA margin (Moody's adjusted) above 30%
- Keeps leverage below 3x debt to EBITDA (Moody's adjusted)
The ratings could be downgraded if:
- MKS does not return to revenue growth over the next 12 to 18
months;
- EBITDA margin (Moody's adjusted) remains at the low 20 percent
level; or
- FCF to debt does not improve (Moody's adjusted) over the next 12
to 18 months
MKS Instruments, Inc. makes instruments, subsystems, and process
control systems that measure, monitor, analyze, power, and control
critical parameters of advanced manufacturing processes. MKS also
makes plating chemistries, equipment, and related software used in
the manufacture of printed circuit boards and a variety of consumer
and industrial products.
The principal methodology used in these ratings was Manufacturing
published in September 2021.
MONTROSE HOUSTON: Court OKs Cash Collateral Access Thru Jan 2024
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Houston Division, authorized Montrose Houston Multifamily TX II,
LLC to continue using cash collateral on an interim basis in
accordance with the budget, with a 5% variance, through
confirmation of its plan or no later than January 31, 2024.
Emilion Capital, LLC as assignee of Project Funder, LLC; JMC
Lender, LLC; and Harris County, will continue to have the same
liens, encumbrances and security interests in the cash collateral
generated or created post filing, plus all proceeds, products,
accounts, or profits thereof, as existed prior to the filing date.
The holders of any other allowed secured claims with a perfected
security interest in cash collateral will be entitled to a
replacement lien in post-petition accounts receivable, contract
rights, and deposit accounts to the same extent allowed and in the
same priority as those interests held as of the Petition Date.
The adequate protection liens in cash collateral are subject in all
respects to the carve out in an amount equal to the sum of (i) all
fees required to be paid to the Clerk of Court and to the United
States Trustee under Section 1930(a) of title 28 of the United
States Code plus interest at the statutory rate; (ii) all
reasonable fees, costs, and expenses incurred by a trustee under
Section 726(b) of the Bankruptcy Code in an amount not exceeding
$15,000; and (iii) to the extent allowed by the Court on an interim
or final basis at any time, all unpaid fees, costs, and expenses of
the professionals retained by the Debtor under Section 327 of the
Bankruptcy Code.
A continued hearing on the matter is set for January 11 at 11:30
a.m.
A copy of the order is available at https://urlcurt.com/u?l=hhRgGQ
from PacerMonitor.com.
About Montrose Houston Multifamily TX II, LLC
Montrose Houston Multifamily TX II, LLC is the owner of an
apartment complex in the Montrose area of Houston located at 1648
West Alabama, Houston, Texas.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Case No. 23-33418) on September
1, 2023. In the petition signed by Christopher Saul Bran, manager,
the Debtor disclosed up to $10 million in both assets and
liabilities.
Judge Jeffrey P Norman oversees the case.
Reese Baker, Esq., at Baker & Associates, represent the Debtor as
legal counsel.
MONTROSE HOUSTON: Unsecureds to Get 100% in 36 Months
-----------------------------------------------------
Montrose Houston Multifamily TX II, LLC, submitted a Chapter 11
Plan of Reorganization and a Disclosure Statement.
The Debtor owns the real property located at 1648 West Alabama,
Houston, Texas). The assets of the Debtor constitute "single asset
real estate" as that term is defined in Bankruptcy Code s
101(51B).
Allowed Interests of the Equity Interest Holders will be continued
and the Equity Interest Holders will contribute the amount of
$500,000 of new equity to fund the Plan. The funds to be used for
the payment of improvements to the Property.
Allowed claims or other distributions to be made under the Plan
will come from the income generated from the Property, the new
equity contribution, plus any other available funds or property
that the Reorganized Debtor may otherwise possess on or after the
Effective Date, including, without limitation, any such funds or
property which may be provided through additional capital
contributions and the proceeds of any sale, refinancing, or other
disposition of the Debtor's Assets.
Class 5: Holders of Unsecured Claims will be paid 100% of the
allowed amount without interest in approximately equal quarterly
payments during the first 36 months after the Effective Date. The
first quarterly payment will be due and payable on the fifth
Business Day of the first calendar quarter that is more than 30
days after the Effective Date and on the first Business Day of each
respective calendar quarter thereafter. Class 5 Claims are
impaired by the Plan.
Class 6: Insider General Unsecured Claims will be paid 100% of the
Allowed amount without interest in approximately equal quarterly
payments after the claims in Class 5 are paid in full and starting
approximately 36 months from the Effective Date. The first
quarterly payment will be due and payable on the 5th Business Day
of the first calendar quarter that is more than 36 months after the
Effective Date and on the first Business Day of each respective
calendar quarter thereafter; provided however, if the claims in
Class 5 have been fully paid, then the Debtor may pay the claims in
Class 6 at any time. Class 6 Claims are impaired by the Plan and
are deemed to reject the Plan.
The funds used for the repayment of Claims or other Distributions
to be made under the Plan will come from the income generated from
the Property, the new equity contribution, plus any other available
funds or property that the Reorganized Debtor may otherwise possess
on or after the Effective Date, including, without limitation, any
such funds or property which may be provided through additional
capital contributions, and the proceeds of any sale, refinancing,
or other disposition of the Debtor's Assets.
The Debtor believes that the Plan is feasible. The funds to be
used for the payment of Claims or other Distributions to be made
under the Plan will come from the Debtor's Cash on hand, the income
generated from the Property, the new equity contribution, any
additional equity contributions made by the new equity holder, and
the net proceeds of any sale, refinancing or other disposition of
the Debtor's Assets.
A copy of the Disclosure Statement dated November 29, 2023, is
available at https://tinyurl.ph/tJOKC from PacerMonitor.com.
About Montrose Houston Multifamily TX II
Montrose Houston Multifamily TX II, LLC, is the owner of an
apartment complex in the Montrose area of Houston located at 1648
West Alabama, Houston, Texas.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Case No. 23-33418) on Sept. 1,
2023. In the petition signed by Christopher Saul Bran, manager,
the Debtor disclosed up to $10 million in both assets and
liabilities.
Judge Jeffrey P Norman oversees the case.
Reese Baker, Esq., at Baker & Associates, is the Debtor's legal
counsel.
N&H SADDLEBRED: Case Summary & One Unsecured Creditor
-----------------------------------------------------
Debtor: N&H Saddlebred Holdings LLC
Hunterdon Equestrian Center
119 W. Woodschurch Rd.
Flemington NJ 08822
Business Description: Hunterdon Equestrian Center is a newly
remodeled, state of the art facility that is
home to two of New Jersey's top horse farms.
Chapter 11 Petition Date: December 6, 2023
Court: United States Bankruptcy Court
District of New Jersey
Case No.: 23-21332
Debtor's Counsel: Herbert K. Ryder, Esq.
LAW OFFICES OF HERBERT K. RYDER, LLC
531 U.S. Highway 22 East, Suite 182
Whitehouse Station NJ 08889
Tel: (908) 838-0543
Fax: (908) 838-0544
Email: hryder@hkryderlaw.com
Total Assets as of Dec. 5, 2023: $1,793,422
Total Liabilities as of Dec. 5, 2023: $1,525,528
The petition was signed by Megan Nicole Harrison as owner/managing
member.
The Debtor listed Readington Township located at 509 Route 523,
Whitehouse Station, NJ as its sole unsecured creditor.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/3ZEBDCQ/NH_Saddlebred_Holdings_LLC__njbke-23-21332__0001.0.pdf?mcid=tGE4TAMA
NEXTERA ENERGY: Fitch Affirms 'BB+' IDRs, Outlook Stable
--------------------------------------------------------
Fitch Ratings has affirmed the Issuer Default Ratings (IDR) of
NextEra Energy Partners, LP (NEP) and its subsidiary, NextEra
Energy Operating Partners, LP (NEP Opco) at 'BB+' with a Stable
Rating Outlook. Due to strong legal ties, the IDRs of the two
entities are the same. Fitch has also affirmed at 'BB+'/'RR4' the
rating for the senior unsecured notes at NEP Opco and assigned a
'BB+'/'RR4' rating to the proposed issuance of $750 million of
senior unsecured debt. The proceeds will be used for general
corporate purposes including refinancing of $750 million of senior
unsecured debt maturing in 2024. The 'RR4' denotes average
recoveries in an event of default.
Fitch views positively the recent natural gas pipelines sale
announcement as it takes care of the convertible equity portfolio
financing (CEPF) buyouts through 2025. There are three CEPF buyouts
remaining post 2026. Fitch's current ratings and Outlook assume the
management will look to resolve 2026 and beyond CEPFs buyouts in a
manner that is consistent with Fitch's 100% equity treatment of
CEPFs. Fitch does not assume any CEPF buyouts are financed by the
issuance of long-term holdco debt.
NEP's ratings also take into account relatively stable cash flows
generated by its portfolio of long-term contracted wind, solar and
natural gas pipeline assets and sponsor affiliation with NextEra
Energy, Inc. (NextEra; A-/Stable). Ratings also reflect the
financial complexity and structural subordination of Holdco debt
resulting from limited recourse project debt financings, tax equity
and CEPF structures deployed by the company across its project
subsidiaries.
KEY RATING DRIVERS
Asset Sales Resolve Near-term CEPF Financing: Announced natural gas
pipelines sales are eliminating equity issuances that would
otherwise be required to complete CEPF buyouts planned for 2023
through 2025, a credit positive. Suspensions of the IDR fees,
announced earlier this year should mostly replace the loss of cash
available for distribution (CAFD) from the pipeline asset sale.
On Nov. 8, 2023, NEP entered into a definitive agreement to sell
its Texas natural gas pipeline portfolio for $1.815 billion to
Kinder Morgan, Inc. (KMI; BBB/Stable). The sale is expected to
close in the first half of 2024. The net proceeds will be used to
buy out $1.1 billion remaining under the NEP Renewables II CEPF
beyond 2023, and repay a portion of the revolver that is being used
to finance some of 2023 CEPFs buyouts.
Fitch expects the NEP Pipelines CEPF buyout to be completed by 2025
with the proceeds from the sale of the Meade natural gas pipeline
as previously announced, resolving buyouts of all CEPFs outstanding
through 2025 (the STX Midstream, which was fully bought out in
2023, 2019 NEP Pipelines/Meade and NEP Renewables II).
Large Upcoming Refinancing: Fitch projects NEP's cash flows to come
under pressure due to large portion of the capital structure being
refinanced in the near term at materially higher interest rates vs.
average fixed interest rates on the current long-term debt of less
than 3%. There is $1.25 billion of holding company debt maturing
within next 12 month. The remaining $2.2 billion of long-term
HoldCo debt is maturing within next three years.
In October 2023, given the change in market sentiment of higher
interest rates for a longer period, NEP entered into $1.85 billion
treasury rate locks at 4.3% to 4.5% intended to hedge $1.85 billion
of HoldCo debt maturities in 2024 and 2025. Current spreads on the
NEP unsecured debt are around 260 bps, implying cost of new debt at
about 7%.
Slower Growth, A Credit Positive: Following the dividend growth cut
earlier this year, NEP is expected to continue to grow although at
a slower pace than before, a credit positive. Growth in the next
couple of years will be supported by organic growth and
acquisitions. NEP plans to repower the majority of its wind
portfolio in the coming years, which is typically cheaper than new
greenfield investments. It also expects to continue to look to
acquire wind, solar and storage assets from NextEra Energy
Resources, the renewable subsidiary of NextEra, and other third
parties.
On Sept. 27, 2023 NEP announced a unit growth rate reduction to a
range of 5%-8%, with a 6% target through at least 2026. Fitch
viewed previous growth range of 12%-15% as fairly aggressive
compared with the growth rate targeted by its peers. The reduction
in growth target was driven by tighter monetary policy and higher
interest rates affecting the financing needed to grow distributions
at an aggressive rate. At the same time, Fitch believes increasing
leverage and refinancing cost in the next couple of years could put
pressure on maintaining current 6% dividend growth target, as
payout is expected to approach 100% over the forecast period.
Leverage Headroom Reducing: Fitch expects Holdco Debt/Parent Only
FFO ratio to increase to around 4.9x through 2025-2026, in-line
with the ratings, but higher than previously expected. Most of the
capex/acquisitions are expected to be financed by holding company
and non-recourse project debt as. management has committed to not
issuing any growth equity through 2026. Fitch assigns 100% equity
credit to CEPFs as it has assumed that NEP would complete its
remaining CEPF buyouts post 2025 with a combination of equity
issuance and non-recourse debt at the asset level to fund the cash
buyout portions, with no issuance of Holdco level debt.
Based on Fitch's calculations Parent Only FFO leverage stood at
3.9x in 2022. Management has a target to manage Holdco debt/FFO in
the 4.0x-5.0x range, to which it has managed in the last several
years. Fitch defines Parent Only FFO as run rate project
distributions less Holdco G&A expenses, fee for management service
agreement, credit fees and Holdco debt service costs.
Financial Flexibility Under Pressure: The increased use of CEPFs
has added financial complexity to the organizational structure and
made NEP reliant on the stability of capital markets and strength
of its unit price to execute the buyouts in a timely and
cost-effective manner. Given recent pull back in the stock price,
the buyback of CEPFs using equity is currently uneconomical.
Following the natural gas pipeline sale and buyout of CEPFs through
2025, NEP will have a couple of years before it has to address the
remaining CEPFs, which should provide room for the stock price to
improve.
Absent material stock price improvement, Fitch would expect NEP to
find other equity like sources of funding to buyout remaining $3.7
billion outstanding under three CEPFs post 2025. While NEP has the
ability to issue non-recourse project debt to fund the investor
buyout in cash as a significant amount of assets in the CEPFs are
unencumbered, doing so will negatively affect Parent FFO and
increase leverage.
In the past several years NEP was increasingly reliant upon CEPF to
finance its growth and has, since 2018, entered into seven such
transactions with large institutional investors to raise
approximately $5.3 billion in total proceeds.
Sponsor Not Expected to Financially Support NEP: Although NEP has
benefited from its affiliation with NextEra, which is the largest
renewable developer in the U.S., Fitch does not expect NextEra will
provide any equity support to NEP for future CEPFs buyouts nor
buy-in NEP. Buy-in of NEP would result in materially addition of
debt on NextEra's balance sheet as currently Fitch deconsolidates
NEP from NextEra's balance sheet and only includes the upstream
dividend distribution from NEP in NextEra's credit analysis. The
off-credit treatment reflects Fitch's assumption that NextEra would
walk away from NEP in the event of financial deterioration. As of
Sept. 30, 2023, NextEra owns approximately 51.4% interest in NEP.
Contractual Cash Flows and Asset Diversity: Fitch views favorably
NEP's portfolio of wind, solar and natural gas pipeline assets,
which have long-term offtake arrangements with creditworthy
counterparties and minimal exposure to either volumetric or
commodity risks. The weighted average counterparty credit is 'BBB',
based upon Fitch and other rating agencies' ratings. As of Sept.
30, 2023, the renewable energy and pipeline projects had a total
weighted average remaining contract term of approximately 14 years.
The distributions that NEP receives from its project subsidiaries
are well diversified by fuel and geography.
The distributions are split as approximately 58% from wind assets,
21% from solar and 21% from natural gas pipeline assets based upon
2022 run rate project level CAFD. The high proportion of wind in
NEP's portfolio is of modest concern given intermittency of the
wind resource. However, a wide geographic footprint of its wind
portfolio mitigates NEP's exposure somewhat.
In addition, the project debt for renewable projects is typically
sized to yield a debt service coverage ratio (DSCR) greater than
1.2x and generate a low 'BBB-'/'BBB' rating. The debt typically
matures within the expiration date of the long-term contracts on
any project. Most recent DSCRs provided to Fitch by NEP indicate
that all projects with limited recourse project debt financings are
performing well in excess of their DSCR thresholds.
DERIVATION SUMMARY
Fitch views NEP's ratings to be positively positioned compared to
those of Atlantica Sustainable Infrastructure Plc (Atlantica;
BB+/Stable) due to favorable geographic exposure, long-term
contractual cash flows with minimal regulatory risk, and
association with a strong sponsor. These factors are partially
offset by NEP's relative higher leverage, aggressive distribution
growth strategy and weaker asset composition owing to a larger
concentration of wind assets.
NEP like its peer Terraform Power (TERPO; BB-/Stable) has parent
support. Although NEP has been supported by NextEra in terms of
asset dropdowns that were needed to drive aggressive growth
targets, and recent IDR suspension, Fitch does not expect NextEra
to support any funding needs or CEPF buyouts. TERPO benefits from
having Brookfield Asset Management (BAM; A-/Stable) as a sponsor.
Algonquin Power & Utilities Corp. (BBB/Stable) has 43% ownership
interest in Atlantica, but has announced its intention to move to a
pure-play regulated businesses.
Atlantica's portfolio benefits from a large proportion of solar
generation assets that exhibit less resource variability. In
comparison NEP's portfolio consists of a larger exposure to wind
MWs. TERPO's utility scale portfolio consists of 43% solar and 57%
wind. NEP's concentration in wind is mitigated to certain extent by
its diverse geographic footprint. Fitch views NEP's geographic
exposure in the U.S. (100%) favorably as compared to TERPO's (68%)
and Atlantica's (30%). NEP's long-term contracted fleet has a
remaining contracted life of 14 years, higher than Atlantica's 13
years and TERPO's 11 years.
NEP's forecasted credit metrics are stronger than TERPO's but
weaker than Atlantica's. Fitch forecasts NEP's Holdco debt to
Parent Only FFO ratio will increase to 4.9x through 2025 compared
with around 5.0x for TERPO and below 4.0x for Atlantica. Fitch
rates NEP, Atlantica and TERPO based on a deconsolidated approach
since their portfolio comprises assets financed using non-recourse
project debt or with tax equity. NEP's financing model is more
complex as it also involves CEPF.
KEY ASSUMPTIONS
- Buyout of STX Midstream, NEP Renewables II and NEP Pipelines with
proceeds from STX and Meade pipelines sales;
- Acquisition of operational and contracted assets over 2023-2025
to meet 6% distribution per unit growth;
- Acquisition CAFD toward the lower end of 8%-10% range;
- Acquisitions and repowering funded with non-recourse and Holdco
debt;
- Interest expense rate on new and refinanced Holdco debt around
7.0%;
- None of the project debt treated on-credit, which includes
Fitch's assumption of future project debt issuances;
- No CEPF nor growth equity issuance beyond 2023 over the forecast
period.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- The structural subordination of the Holdco debt to the
non-recourse project debt, tax equity and CEPFs, as well as
management's 4.0x-5.0x target Holdco leverage ratio caps the IDR at
'BB+'.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Higher than expected reliance on debt to fund the buyout of
investors in CEPFs;
- Holdco FFO leverage ratio exceeding 5.0x on a sustainable basis;
- Distribution payout ratio approaching or exceeding 100%;
- Material underperformance in the underlying assets that lends
variability or shortfall to expected cash flow for debt service;
- Growth strategy underpinned by aggressive acquisitions, addition
of assets in the portfolio that bear material volumetric, commodity
or interest rate risks.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: NEP has a $2.5 billion revolving credit
facility that matures in February 2028. The credit facility
provides for up to $400 million of LC borrowing capacity. NEP has
an accordion in its revolving facility up to a total commitment
size of $2.0 billion. The facility provides flexibility for NEP to
finance acquisitions partly through revolver borrowings. As of
Sept. 30, 2023, NEP had $545 million outstanding issuance under its
revolving credit facility.
The Holdco debt at NEP is subordinate to project debt, tax equity
and CEPF structures. As of 9/30/2023 there is about $2.6 billion of
non-recourse project finance debt at NEP's owned projects. About
$1.2 billion is at the natural gas pipeline projects that NEP is in
the process to sell.
ISSUER PROFILE
NEP is a growth-oriented limited partnership that acquires, manages
and owns contracted clean energy projects with stable long-term
cash flows.
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
----------- ------ -------- -----
Nextera Energy
Operating
Partners, LP LT IDR BB+ Affirmed BB+
senior unsecured LT BB+ New Rating RR4
senior unsecured LT BB+ Affirmed RR4 BB+
NextEra Energy
Partners, LP LT IDR BB+ Affirmed BB+
NU STYLE LANDSCAPE: U.S. Trustee Appoints Creditors' Committee
--------------------------------------------------------------
The U.S. Trustee for Region 19 appointed an official committee to
represent unsecured creditors in the Chapter 11 case of Nu Style
Landscape & Development, LLC.
The committee members are:
1. Edmonson, Inc. dba Arbor Valley Nursery
c/o Jim Browning
18539 WCR 4
Brighton, CO 80603
Tel: (303) 654-1682
Email: jimb@arborvalleynursery.com
2. Bobcat of the Rockies
c/o Nicholas Scholl
10397 Havana Street
Henderson, CO 80640
Tel: (303) 615-3162
Email: nscholl@bobcatoftherockies.com
3. The Milk Block, LLC
c/o Walid Mourtada
3801 W. 41st Ave.
Denver, CO 80211
Tel: (720) 543-0121
Email: walid@kutkuthg.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 NU Style Landscape & Development
Nu Style Landscape & Development, LLC, a company in Denver, Colo.,
filed Chapter 11 petition (Bankr. D. Colo. Case No. 23-14475) on
Oct. 2, 2023, with $1 million to $10 million in both assets and
liabilities. Michael Moilanen, managing member, signed the
petition.
Judge Thomas B. McNamara oversees the case.
Allen Vellone Wolf Helfrich & Factor, PC serves as the Debtor's
legal counsel.
OCEAN POWER: Registers for Sale $100 Million Worth of Securities
----------------------------------------------------------------
Ocean Power Technologies, Inc. filed a Form S-3 registration
statement with the Securities and Exchange Commission in connection
with the offer from time to time of debt securities, shares of its
common stock, shares of its preferred stock, depositary shares,
warrants, subscription rights, purchase contracts and units.
The aggregate initial offering price of the securities will not
exceed $100,000,000. The Company will offer the securities in
amounts, at prices and on terms to be determined at the time of the
offering.
The Company's common stock is quoted on the NYSE American under the
symbol "OPTT." The last reported sale price of the Company's
common stock on Nov. 27, 2023 was $0.30 per share.
The aggregate market value of the Company's outstanding common
stock held by non-affiliates was $17,487,005 based on 58,788,718
shares of outstanding common stock as of Nov. 27, 2023, of which
approximately 58,290,016 shares were held by non-affiliates, and
based on the last reported sale price of its common stock as noted
above. Pursuant to General Instruction I.B.6 of Form S-3, in no
event will the Company sell securities pursuant to this prospectus
with a value of more than one-third of the aggregate market value
of its common stock held by non-affiliates in any 12-month period,
so long as the aggregate market value of its common stock held by
non-affiliates is less than $75,000,000. In the event that
subsequent to the date of this prospectus, the aggregate market
value of the Company's outstanding common stock held by
non-affiliates equals or exceeds $75,000,000, then the one-third
limitation on sales shall not apply to additional sales made
pursuant to this prospectus.
The Company will provide the specific terms of the offering in
supplements to this prospectus.
A full-text copy of the Registration Statement is available for
free at:
https://www.sec.gov/Archives/edgar/data/1378140/000149315223043395/forms-3.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 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.
OCEANVIEW DEVELOPMENT: Ordered to File Plan by Feb. 29
------------------------------------------------------
Judge Robert J. Harris has entered an order that no later than Feb.
29, 2024, Oceanview Development LLC must (i) file a disclosure
statement and plan and (ii) obtain a hearing date for approval of
the disclosure statement.
Mililani, Hawaii-based Oceanview Development LLC sought Chapter 11
protection (Bankr. D. Hawaii Case No. 23-00842) on Oct. 18, 2023,
estimating $1 million to $10 million in assets and liabilities.
The Debtor is represented by:
Chuck C. Choi
Choi & Ito
808-533-1877
cchoi@hibklaw.com
- and -
Allison A. Ito
Choi & Ito
808-533-1877
aito@hibklaw.com
OFFICE PROPERTIES: S&P Lowers ICR to 'CCC+' on Pressured Liquidity
------------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Office
Properties Income Trust (OPI) to 'CCC+' from 'BB-'. At the same
time, S&P lowered its issue-level rating on its senior unsecured
notes to 'CCC+' from 'BB'. The recovery rating on this debt is
lowered to '3' from '2'. At the same time, S&P placed the ratings
on CreditWatch with negative implications.
The CreditWatch placement reflects the possibility that OPI might
not secure sufficient liquidity sources over the next few months to
cover its upcoming debt maturities.
S&P said, "OPI's operating performance has been weak, a trend we
expect to continue. For the three months and nine months ended
Sept. 30, 2023, same-property cash net operating income (NOI)
declined by 9.2% and 5.5%, respectively. The company expects a
year-over-year same-property cash NOI decline of 11%-13% in the
fourth quarter. Operating performance has been impacted by lease
expirations, high free rent levels, and higher operating costs.
Same-property leased percentage has declined by 140 basis points
(bps) to 93.3% over the past 12 months, while total portfolio
leased percentage has declined 80 bps to 89.9% over the same time
frame. OPI has substantial lease expirations in 2024 and 2025 (a
combined 23.6% of the company's annualized rental income) at a time
when cyclical and secular headwinds are pressuring office assets.
We expect OPI's operating performance and occupancy to remain under
significant stress over the next few years and for the company to
underperform relative to office REIT peers given our view of its
weaker asset quality. As such, we have revised our view of the
company's business risk profile to weak from fair."
The company's in-progress developments will eventually boost cash
flow, with two large projects totaling an estimated $389 million
nearing completion. However, these projects were only 55% and 28%
preleased as of Sept. 30, 2023. This, along with free rent periods,
means these projects will not likely collect material cash rent
until late 2024 or 2025. S&P said, "We believe leasing could pose a
challenge given the weakening economy, particularly for unleased
traditional office space (but we note that demand for life science
space has also slowed). In our view, companies will delay leasing
decisions when possible and will likely need to be incentivized to
sign longer-term leases through higher concessions, including
tenant improvements and additional months of free rent."
Asset sales have been light amid a challenging transaction
environment. Dating back to 2022, significant dispositions that
were expected (with proceeds allocated for debt repayment) have not
materialized. Year-to-date asset sales have been minimal with OPI
generating gross proceeds of $23.6 million from the sale of six
assets. Furthermore, funds have been used to fund development
projects and significant costs were incurred in connection with the
failed merger with DHC. The transaction environment remains
challenging, particularly for office assets, and the company's
ability to execute future asset sales remains in doubt. The lack of
proceeds from asset sales, together with upcoming debt maturities,
has led to the revision of S&P's view of the company's liquidity
position to weak from less than adequate because its sources to
uses reflect a material deficit over the next 12 months.
S&P expects a continued deterioration of the company's key credit
metrics over the near term. As of Sept. 30, 2023, S&P Global
Ratings-adjusted debt to EBITDA was 8.7x, an increase from 7.1x a
year prior. EBITDA has declined precipitously as lease expirations
and office headwinds have pressured operating performance, while
debt levels have also increased due to higher revolver usage and
new secured mortgage debt. These same factors have resulted in
OPI's S&P Global Ratings-adjusted fixed-charge coverage (FCC) ratio
declining to 2.6x from 3.0x over the past year.
The company has closed on roughly $177 million of mortgage loans
year to date with an average interest rate of 7.79%, significantly
higher than the average coupon rate on its unsecured notes of
3.825%. With $350 million of 4.25% senior unsecured notes due in
May 2024 and $650 million of 4.5% senior unsecured notes due in
February 2025, any type of refinancing will be done at much higher
interest rates, further pressuring FCC. S&P said, "Furthermore,
OPI's $750 million unsecured revolving credit facility matures in
January 2024, and while we expect it to be recast, the ultimate
terms for the facility could impact our view of liquidity and
recovery. We apply a negative one-notch comparable rating analysis
adjustment in large part to reflect future refinancing risk and our
view that the company's refinancing options are more limited
relative to many other REIT peers."
The CreditWatch placement reflects the possibility of a downgrade
within the next few months if OPI does not secure sufficient
liquidity sources to meet upcoming financial obligations, notably
its $350 million senior unsecured notes due May 2024 and its $650
million senior unsecured notes due February 2025. Furthermore, S&P
could lower its ratings by multiple notches if the company pursued
a debt exchange whereby debtholders received less than the original
promise.
S&P said, "Governance factors are a moderately negative
consideration in our credit rating analysis of OPI given its
external management structure and the relative inexperience of its
senior management team. OPI is externally managed by The RMR Group
Inc. From a governance perspective, we view this external
management structure unfavorably given the inherent conflicts of
interest that arise from this advisory relationship."
OUTPUT SERVICES: EverView Exits Chapter 11 Bankruptcy
-----------------------------------------------------
Output Services Group, Inc., d/b/a EverView, a leading provider of
print and digital billing and payment solutions, on Dec. 4
disclosed that it has successfully completed its reorganization
process, emerged from Chapter 11 and exited its U.K. business. All
conditions have been satisfied or otherwise waived pursuant to its
Second Amended Joint Prepackaged Plan of Reorganization (the
"Plan") as of November 30 (the "Effective Date").
"OSG was able to complete an exceptionally efficient and
uncontentious process due to the support of our stakeholders,
including our employees, vendors, customers and investors and
lenders," said Dean Cherry, Chief Executive Officer. "We would like
to thank each of our advisors for their guidance and tireless
efforts that supported our smooth reorganization. OSG continues to
be a leading innovator in providing solutions for its customers'
billing and payment needs. With the Company's dramatically reduced
debt burden and financial flexibility with the exit of the U.K.
operations, we are confident in OSG's ability to achieve its goals
as it refocuses on its core North American operations."
As part of the transaction, OSG's balance sheet has been completely
recapitalized with only modest leverage and meaningful balance
sheet cash, positioning the Company to capitalize on market growth
and investments to serve its customers. The Company will also have
access to a revolving credit facility of $50 million, provided by
MidCap Financial.
In accordance with the Plan, the Company will be controlled by
investors from several large, well-capitalized, and experienced
investment firms. The stakeholders will be represented by a newly
constituted seven-person Board of Managers for the Company that was
appointed today, consisting of Dean Cherry, Max Harris, Keith Maib,
Lonnie Mahrt, Don McKenzie, William Nolan and Tim Pohl, who bring
extensive industry, operating and growth experience.
"With the Company now on solid financial footing, we are excited to
support its growth strategy and its continued commitment to
exceptional customer service," said Adam Schimel, Managing Director
and Co-Head of H.I.G. Bayside Capital, one of OSG's lead
investors.
In connection with the reorganization, OSG was represented by
McDermott Will & Emery LLP as its legal counsel, Accordion Partners
as its financial advisor, Houlihan Lokey Capital, Inc. as its
investment bank and Sitrick And Company as its strategic
communications advisor. The ad hoc group of first lien lenders was
advised by Paul Hastings LLP as legal counsel and Perella Weinberg
Partners LP as investment banker.
About OSG Group
OSG Group is a business print and digital communications provider.
OSG and its affiliates are a digital and print communications
platform, serving corporate clients throughout North America and
the United Kingdom. The Company provides primarily transactional,
marketing, and payment solutions to various industries, including
consumer services, business-to-business markets, education, retail,
property management, financial services, healthcare, and the
government, both through the use of its traditional print and mail
businesses, as well as through its omnichannel software-as-service
(SaaS) platform. The Company also provides a comprehensive suite
of complementary services to its clients, such as online payment
portals and accounts receivable software, real-time reporting and
data analytics, and database management services.
OSG Group sought relief under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. S.D. Tex. Lead Case No. 23-90799) on Oct. 15, 2023.
In the petition filed by Keith A. Maib, as chief restructuring
officer, the Debtor reported assets and liabilities between $500
million and $1 billion each.
The Honorable Bankruptcy Judge Christopher M. Lopez handles the
case.
The Debtors tapped McDERMOTT WILL & EMERY LLP as general bankruptcy
counsel; ACCORDION PARTNERS, LLC as financial advisor; and HOULIHAN
LOKEY CAPITAL, INC., as investment banker. KURTZMAN CARSON
CONSULTANTS LLC is the claims agent.
PAX THERAPY: U.S. Trustee Appoints Tamar Terzian as PCO
-------------------------------------------------------
Peter Anderson, the U.S. Trustee for Region 16, appointed Tamar
Terzian, Esq., at Hanson Bridgett, LLP as patient care ombudsman
for Pax Therapy and Family Services, Inc.
The appointment was made pursuant to the order from the U.S.
Bankruptcy Court for the Central District of California on Nov.
17.
Section 333 of the Bankruptcy Code directs that a patient care
ombudsman be appointed if a debtor is a health care business unless
the court finds that the appointment of such ombudsman is not
necessary for the protection of patients. The ombudsman is
responsible for monitoring the quality of patient care and
representing the interest of patients of the healthcare debtor.
Ms. Terzian disclosed in a court filing that she is a
"disinterested person" pursuant to Section 101(14) of the
Bankruptcy Code.
The ombudsman may be reached at:
Tamar Terzian, Esq.
Hanson Bridgett, LLP
777 Figueroa Street
Suite 4200
Los Angeles, CA 90017
Tel: (323) 210-7747
Email: tterzian@hansonbridgett.com
About Pax Therapy and Family Services
Pax Therapy and Family Services, Inc. provides mental health
therapy services through its licensed professionals from its
offices located in Whittier, Calif.
The Debtor filed Chapter 11 petition (Bankr. C.D. Calif. Case No.
23-17284) on Nov. 2, 2023, with up to $100,000 in assets and up to
$1 million in liabilities. Kristin Martinez, president, signed the
petition.
Judge Deborah J. Saltzman oversees the case.
David B. Zolkin, Esq., at Weintraub Zolin Talerico & Selth LLP,
represents the Debtor as legal counsel.
PEAK TAHOE: SMC Says Plan Disclosures Inadequate
------------------------------------------------
SMC Construction, Co., and SMC Contracting, Inc., filed an
objection to the First Amended Disclosure Statement filed on behalf
of debtor Peak Tahoe LLC.
On July 9, 2021, SMC and Peak Tahoe, LLC executed the Prime
Contract Agreement (the "Original Agreement") outlining the
construction work to be performed by SMC at a property owned by the
Debtor called "The Peak," which is located at 323 Tramway Drive,
Stateline Nevada 89449 (the "Property"). SMC was to act as the
general contractor on the Project. The original estimated budget
for the Project was $28,995,564.
On Feb. 21, 2023, SMC filed a Complaint against the Debtor in the
Ninth Judicial District Court for the State of Nevada as Case No.
2023-cv-00035, Dept. II (the "Litigation"). SMC alleged three
claims for relief: Foreclosure of Mechanic's Lien, Breach of
Contract and Unjust Enrichment.
On Feb. 23, 2023, SMC filed a Lis Pendens against the real property
owned by the Debtor, which it subsequently recorded. Some, but not
all, of SMC's subcontractors joined the Litigation. After the
Debtor defaulted, on March 27, 2023, SMC filed a Notice of
Foreclosure in the Litigation.
In July 2023, the Debtor, SMC and certain subcontractors entered
into an agreement (the "Settlement Agreement") in which the Debtor
promised to pay -- upon closing re-financing with Balbec Capital --
a total settlement amount of$2,294,249.70 (the "Settlement Funds").
As of the date of the Settlement Agreement, SMC had already paid
some of the subcontractors and promised to use the Settlement Funds
to promptly pay all outstanding claims by the remaining
subcontractors. SMC and the subcontractors agreed to release their
mechanic's liens in exchange for the Settlement Funds; however, the
Settlement Agreement provided that if the Debtor did not make
payment of the Settlement Funds, the releases would not be executed
and recorded.
The Debtor did not transmit the Settlement Funds and the releases
were never recorded.
SMC points out that the debtor's disclosure statement does not set
forth a specific plan of Reorganization:
* The primary issue with the Debtor's Proposed Plan and
Disclosure Statement is that while it sets forth several options
for reorganization or liquidation, none are described in sufficient
detail and none of the options appears to be concrete, final or
even near completion.
* In the present case, the Debtor has revealed in the Disclosure
Statement that it is in negotiations with a "new lender" who will
"refinance the Property and secure construction financing to
complete the Property." The Debtor further submits that this new
lender will contribute "approximately $6,400,000" to a newly formed
joint venture between it and the Debtor's member, Sheba
Development, LLC. However, the Debtor does not disclose the name
of this new lender and admits that the new lender still needs to
actually secure such "construction financing to finish the
Property." ("The new lender will use reasonable efforts to arrange
a third-party construction financing for development of the
Property... ."). The Debtor additionally admits that the term
sheet between the parties is "nonbinding." Notably -- at the same
time that the Debtor filed its Amended Disclosure Statement
proposing this tentative deal with the unidentified new lender that
has not yet secured financing -- the Debtor also filed the
Employment Application, proposing to employ a broker to market and
sell the Property.
* Although the Debtor claims that it will have a "duly signed
and executed purchase sale agreement with the lender/joint venture
partner by November 30, 2023," for which it will request court
approval, it remains to be seen what that purchase sale agreement
will reveal. Thus far, the Debtor has claimed that its deal with
the new lender must remain confidential for the time being; as
such, the Debtor does not disclose the new lender's identity, the
identity of the new lender's principals, or what experience this
new lender has with construction financing. It is unclear whether
the principals of the new lender are prior business associates of
the Debtor who have already been given an opportunity to raise
financing but were unsuccessful. It is additionally unclear what
role, if any, this new lender will receive in return for its
investment. Indeed, there is no indication -- and no way to
evaluate -- how much control the new lender may or may not have
over the Debtor and what the new lender's qualifications are in
management or oversight. Similarly, the Debtor does not disclose
the terms of any proposed sale of the Property, the length of
marketing time for a sale, potential comparable sales in the local
market and/or any efforts the Debtor has made in the past to look
for buyers for the Property.
SMC further points out that the Disclosure Statement fails to
properly characterize and classify SMC's claim:
* SMC also objects to the Debtor's characterization of its
claim. On February 14, 2023, SMC recorded a mechanic's lien
pursuant to Nevada law against the Property in the total amount of
$2,002,311.75 (before interest and fees). This is the amount SMC
billed to the Debtor pre-petition, which the Debtor did not pay to
SMC. This is a fully secured claim.
* Moreover, SMC is not only entitled to 8% interest pursuant to
Section 10.9 of its Agreement with the Debtor, but it is also
contractually and statutorily entitled to attorney's fees and an
additional 4% interest.
* Inexplicably, however, the Debtor states in the Amended
Disclosure Statement, without explanation, that the "Allowed
Amount" of SMC's claim is only $553,285.26. SMC is the Debtor's
general contractor and pursuant to the Nevada Revised Statutes, SMC
has a statutory right to include in its mechanic's lien all amounts
the Debtor owes to subcontractors with whom SMC entered into
contracts.
* The Debtor has designated certain Class 3 claims as
potentially avoidable pursuant to 11 U.S.C. Sec. 547. Again,
regardless of whether certain subcontractors recorded mechanic's
liens within the preference period is irrelevant because, as noted,
SMC's mechanic's lien, which was recorded well outside of the
preference period, encompasses all of these alleged avoidable
liens.
Counsel for SMC Construction, Co. and SMC Contracting, Inc.:
Elizabeth Fletcher, Esq.
FLETCHER & LEE
About Peak Tahoe
Peak Tahoe LLC, a company in Stateline, Nev., filed its voluntary
petition for Chapter 11 protection (Bankr. D. Nev. Case No.
23-50483) on July 18, 2023, with as much as $10 million to $50
million in both assets and liabilities. Judge Hilary L. Barnes
oversees the case.
Harris Law Practice, LLC, serves as the Debtor's bankruptcy
counsel.
PEAR THERAPEUTICS: Settles WARN Act Class Lawsuit
-------------------------------------------------
Software-based medicine venture Pear Therapeutics is asking a
Delaware bankruptcy court to approve a $990,000 settlement
agreement with its ex-employee who filed a class action against the
company under the Worker Adjustment and Retraining Notification
Act.
Pear Therapeutics (US), Inc., on the one hand, and Evan Grandfield
(the "Plaintiff"), on behalf of himself and all others similarly
situated (the "Class Members") filed with the Bankruptcy Court a
motion seeking entry of a preliminary order:
(a) approving on a preliminary basis the Settlement Agreement,
(b) certifying the Class for settlement purposes only,
appointing Raisner Roupinian LLP as class counsel for settlement
purposes only, and appointing Evan Grandfield as Class
Representative for settlement purposes only;
(c) approving the form and manner of notice to Class Members of
the settlement;
(d) scheduling a fairness hearing to consider final approval of
the Settlement Agreement; and
(e) approving the Settlement Agreement through the entry of a
final order.
On about April 6, 2023, Plaintiff and other employees of Debtor
were terminated without cause effective April 7, 2023.
On April 10, 2023, Plaintiff filed a Class Action Adversary
Proceeding Complaint against Defendant for violation of the Worker
Adjustment and Retraining Notification Act ("WARN Act"), 29 U.S.C.
Sec. 2101 et seq., and the California Labor Code Sec. 1400 et. seq.
("CAL-WARN Act"). The Complaint asserts that Defendant is liable
to Plaintiff and a putative class for damages in the amount of 60
days' pay and ERISA benefits because of Defendant's violation of
the WARN Acts.
On April 19, 2023, Plaintiff was appointed to the Unsecured
Creditors Committee.
Based on the asserted claims and defenses in the Adversary
Proceeding, there exist significant, complex legal and factual
issues regarding the application of the WARN Act and CAL WARN Act
(collectively, the "WARN Acts") to the facts and circumstances at
issue and the viability of the Adversary Proceeding.
Due to the complex nature of the issues involved, the Parties
recognize that the outcome of the Adversary Proceeding is
uncertain. To avoid extensive, costly, and uncertain litigation,
the Parties elected to enter into the Settlement Agreement.
Pursuant to the Settlement, on the Effective Date, the Class shall
be awarded an allowed Section 507(a)(4) class claim in the amount
of $990,000, from which the Service Payment, and the Class Counsel
Fees and Expenses, as approved by the Bankruptcy Court, shall be
paid, with the balance distributed to the Settlement Class.
Class Counsel shall receive attorneys' fees of one-third of the
Settlement Amount, net of (a) litigation expenses not to exceed
$20,000 , and (b) the Service Payment.
About Pear Therapeutics
Pear Therapeutics, Inc., is a commercial-stage healthcare company
pioneering a new class of software-based medicines, sometimes
referred to as Prescription Digital Therapeutics, which uses
software to treat diseases directly.
Pear Therapeutics, Inc. and Pear Therapeutics (US), Inc., filed
their voluntary petitions for relief under Chapter 11 of the
Bankruptcy Code (Bankr. D. Del. Lead Case No. 23-10429) on April 7,
2023. Christopher Guiffre, chief financial officer and chief
operating officer, signed the petitions. In the petitions, the
Debtors reported $10 million to $50 million in both assets and
liabilities.
Judge Thomas M. Horan oversees the cases.
The Debtors tapped Foley Hoag, LLP as general bankruptcy counsel;
Gibbons, P.C. as Delaware counsel; Wilmer Cutler Pickering Hale and
Dorr, LLP as special counsel; and Sonoran Capital Advisors, LLC and
MTS Health Partners, L.P. as financial advisors. Stretto, Inc., is
the administrative advisor and claims and noticing agent.
PENN HILLS SD: Moody's Raises Issuer Rating to 'B1', Outlook Pos.
-----------------------------------------------------------------
Moody's Investors Service has upgraded Penn Hills School District,
PA's issuer and general obligation limited tax (GOLT) ratings to B1
from B3. Moody's maintains A1 (fiscal agent) enhanced and A2
(non-fiscal agent) enhanced ratings on all of the district's
outstanding debt, which are unaffected by this action. The district
has approximately $169.9 million in debt outstanding. The outlook
remains positive.
RATINGS RATIONALE
The upgrade of the issuer rating to B1 reflects the district's
markedly improved financial position that is poised to strengthen
further in the near term. Further, the rating incorporates the
district's now moderate leverage and fixed costs. However, the
rating continues to incorporate Penn Hills' designation as
distressed by the Pennsylvania Department of Education (PDE).
Additionally, the district faces continuing challenges from sharply
declining enrollment that is driven in part by significant
competition from local charter schools.
Governance considerations are material to the district's credit
quality. The district was formally admitted to the commonwealth's
program for distressed school districts in January 2019. In
February 2019, the district was appointed a Chief Recovery Officer.
The district's board approved a formal recovery plan in the summer
of 2019, and established a formal fund balance policy in May of
2021. While the state oversight has benefitted the district
tremendously, its improved financial trajectory has led it to begin
the process of exiting the program.
The lack of distinction between the district's issuer rating and
the B1 rating on the district's GOLT debt is based on the
district's general obligation full faith and credit pledge. The
GOLT rating also reflects Pennsylvania school districts' ability to
apply for exceptions to the cap on property tax increases for debt
service and the Commonwealth's history of granting such
exceptions.
The district's A1 and A2 enhanced ratings reflect Moody's current
assessment of the Pennsylvania School District Intercept Program,
which provides that state aid will be allocated to bondholders in
the event that the school district cannot meet its scheduled debt
service payments.
The district's A1 enhanced rating, which applies to its Series of
2021, Series of 2020, Series of 2017, Series A of 2015, and Series
of 2015 debt, reflects its direct-pay agreement with the
commonwealth, in which the district has directed the treasurer of
the commonwealth to automatically appropriate its state aid to the
fiscal agent for the benefit of bondholders without any further
notice required. For the above-mentioned issuances of debt, the
state has agreed to withhold a portion of the commonwealth
appropriations due to the district in advance of payments that are
due to bondholders.
The A2 enhanced rating, which applies to the remainder of the
district's rated parity debt, reflects the absence of language in
the bond documents that requires the paying agent to trigger the
state aid intercept prior to default.
As of audited 2022 financial statements, Penn Hill's School
District's state aid revenue provides more than sum sufficient debt
service coverage.
RATING OUTLOOK
The positive outlook reflects the expected improvement in the
district's financial trajectory, even after the conclusion of
federal coronavirus aid and an exit from the distressed school
district program.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
-- Sustained improvements in reserves and liquidity
-- Reduced enrollment losses
-- Upgrade of the commonwealth's rating and state aid intercept
program rating (enhanced)
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
-- Return to structurally imbalanced financial operations leading
to draws on reserves and liquidity
-- Additional borrowing that causes outsized growth in leverage or
fixed costs
-- Acceleration of trend of declining enrollment
-- Downgrade of the commonwealth's rating and state aid intercept
program rating (enhanced)
LEGAL SECURITY
All of the district's outstanding debt is secured by its general
obligation limited tax pledge, which is subject to the limitations
of Pennsylvania's Act 1 index.
The district's debt is further enhanced by the Pennsylvania School
Intercept Program. The intercept program is not a general
obligation guarantee of the Commonwealth, and in fact, there have
been times when the state has not distributed any aid to school
districts, as was the case during the 2016 state budget impasse.
However, with implementation of Act 85 in 2016, the state has
ensured that intercept payments, for the benefit of bond debt
service, will be made even in the absence of an appropriation
budget.
PROFILE
Penn Hills School District is located in Allegheny County (Aa3
stable) in southwestern Pennsylvania (Aa3 positive), approximately
nine miles west of downtown Pittsburgh (A1 stable). The district's
enrollment is 2,974 as of the current (2023-2024) school year.
METHODOLOGY
The principal methodology used in these ratings was US K-12 Public
School Districts Methodology published in January 2021.
PITNEY BOWES: S&P Downgrades ICR to 'B+' on Continued Losses
------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Pitney Bowes
Inc. to 'B+' from 'BB-'. S&P also lowered its issue-level ratings
on the company's senior secured term loan B to 'BB' from 'BB+' and
on both its guaranteed and legacy senior unsecured notes to 'B'
from 'B+'.
The stable outlook reflects S&P's view that decreasing
restructuring costs and the realization of cost savings will
improve the company's EBITDA margins to the mid-7% area by the end
of 2024 and thus reduce leverage to below 5x and increase FOCF to
debt to 7%-9%.
The increasing quarterly losses at Pitney Bowes' GEC segment
continue to drag down overall profitability. The GEC segment's
company-adjusted EBITDA declined to about negative $64 million for
the first nine months of 2023 from negative $16.5 million in the
previous year. While the domestic parcel business continues to
experience strong revenue growth of about 29% in the third quarter,
the overall segment remains hindered by the cross-border business
and lower revenue per piece for domestic parcels. The cross-border
business has suffered from lower volumes due to currency volatility
and contract changes with two major clients in the first quarter of
the year.
S&P said, "As a result, we expect GEC to remain a loss-making
segment at least over the next 12 months, potentially further
impacted by competitive pricing pressures due to market
overcapacity and the risk of online shopping activity being
impaired by inflation and macroeconomic uncertainties. However, we
also expect the segment's losses to reduce in 2024, helped by cost
savings from activities such as closures of older sites and network
and warehouse optimizations.
"The stable outlook reflects our view that decreasing restructuring
costs and the realization of cost savings will contribute to EBITDA
margins improving to the mid-7% area by the end of 2024 and thus
reduce leverage to below 5x. We also expect losses at the GEC
business to decrease moderately in 2024 from actions to improve
efficiencies, including consolidating older facilities, while
SendTech and Presort continue benefitting from wider cost reduction
actions. In addition to lower capital investments, we expect FOCF
to debt to improve to the mid- to high-single-digit percent area in
2024 from EBITDA growth."
S&P could downgrade Pitney Bowes if:
-- It cannot reduce leverage to below 5x on a sustained basis.
This could be due to a worse-than-expected macroeconomic outlook in
the U.S. that accelerates revenue declines in SendTech and causes
weakness in Presort;
-- Operational mishaps or poor strategic execution lead to
continued worse-than-expected operating performance in GEC and
Pitney Bowes in general; or
-- It maintains reported FOCF near break-even levels or worse on a
sustained basis.
S&P said, "We would consider an upgrade if Pitney Bowes reduces
leverage towards 4x or below on a sustained basis and improves FOCF
to debt to above 10%. We believe this would likely involve the
company improving its long-term EBITDA margins by successfully
implementing its planned cost restructuring activities without
significantly affecting its sales and business operations, as well
as stabilizing the performance of the GEC segment's cross-border
business."
PIVOT3 INC: Runway Growth Marks $17.3MM Loan at 33% Off
-------------------------------------------------------
Runway Growth Finance Corp has marked its $17,389,000 loan extended
Pivot3, Inc to market at $11,613,000 or 67% of the outstanding
amount, as of September 30, 2023, according to Runway Growth's Form
10-Q for the Quarterly period ended September 30, 2023, recently
filed with the Securities and Exchange Commission.
Runway Growth Finance Corp is a participant in a Senior Secured
Term Loan to Pivot3, Inc. The loan accrues interest at a rate of
9.43% (S +4.00%) per annum. The loan was scheduled to mature
October 15, 2023. The loan has been marked as non-income
producing.
Runway Growth Finance Corp formerly known as Runway Growth Credit
Fund Inc is a Maryland corporation that was formed on August 31,
2015. On August 18, 2021, the Company changed its name to Runway
Growth Finance Corp. from Runway Growth Credit Fund Inc. The
Company is an externally managed, non-diversified, closed-end
investment company that has elected to be regulated as a business
development company under the Investment Company Act of 1940, as
amended. In addition, the Company has elected to be treated,
currently qualifies, and intends to continue to qualify annually as
a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended.
Pivot3 Inc. develops and sells hyperconverged infrastructure and
video surveillance systems.
POLARIS OPERATING: Gets Court Nod to Sell Assets by Auction
-----------------------------------------------------------
Polaris Operating, LLC and its affiliates received approval from
the U.S. Bankruptcy Court for the Southern District of Texas to
sell substantially all of their assets by auction.
The companies are pursuing three separate but concurrent sales of
their assets, including their equity interest in a waterflood oil
and gas project located approximately 30 miles south of Oklahoma
City; and assets in the Texas Panhandle, the companies' core area
of operations, which are comprised of working interests in the Red
Cave Formation and the Granite Wash Formation.
The assets will be put up for bidding to "maximize value to the
estates," according to the companies' attorney, Christopher Adams,
Esq., at Okin Adams Bartlett Curry, LLP.
The court-approved bid procedures require interested buyers to
place their bids on the assets by Dec. 8, at 5:00 p.m. (prevailing
Central Time). Bidders will be notified no later than 5:00 p.m.
(prevailing Central Time) on Dec. 11, if they are qualified to
participate in an auction.
The companies will conduct an auction for the assets starting at
10:00 a.m. (prevailing Central Time) on Dec. 13 by telephone and
Zoom videoconference, or at such other place as designated in
advance by the companies.
Mesa Vista Operating, LLC, a debtor-in-possession lender, will
participate as a stalking horse bidder at the auction.
The lender offered $4.5 million for the Granite Wash Formation
assets, payable by credit of all funds advanced pursuant to the DIP
loan agreement, with the balance payable in cash at closing.
Pursuant to their sale agreement with Mesa Vista, the companies
have to achieve certain milestones of which a failure would likely
trigger a default under the DIP loan agreement and termination of
the companies' authority to use cash collateral. These milestones
include court approval of the sale of the Granite Wash Formation
assets on or before Dec. 20 and consummation of the sale on or
before Jan. 15, 2024.
The companies have not yet selected a stalking horse bidder for the
other assets.
Judge Christopher Lopez is set to hold a hearing on Dec. 20 to
consider the sale of assets to the winning bidders. Objections to
the sale are due by Dec. 15.
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 and affiliates filed Chapter 11 petitions (Bankr. S.D.
Texas Lead Case No. 23-32810) on July 28, 2023. In the petition
signed by its chief executive officer, Christopher Czuppon, Polaris
reported $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 legal counsel;
SP Securities, LLC as investment banker; and Stout Risius Ross, LLC
as restructuring advisor. Douglas J. Brickley of Stout Risius Ross
serves as the Debtors' chief restructuring officer. Donlin, Recano
& Company, Inc. is the notice, claims and balloting agent.
PONTOON BREWING: Leon Jones Named Subchapter V Trustee
------------------------------------------------------
The U.S. Trustee for Region 21 appointed Leon Jones, Esq., at Jones
& Walden, LLC, as Subchapter V trustee for Pontoon Brewing Company,
LLC.
Mr. Jones will be paid an hourly fee of $450 for his services as
Subchapter V trustee and will be reimbursed for work-related
expenses incurred.
Mr. Jones declared that he is a disinterested person according to
Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Leon S. Jones, Esq.
Jones & Walden, LLC
699 Piedmont Ave. NE
Atlanta, GA 30308
Phone: (404) 564-9300
Email: ljones@joneswalden.com
About Pontoon Brewing Company
Pontoon Brewing Company, LLC, an alcoholic beverage company in
Atlanta, Ga., filed Chapter 11 petition (Bankr. N.D. Ga. Case No.
23-61376) on Nov. 16, 2023. In the petition signed by Sean O'Keefe,
manager, the Debtor disclosed up to $10 million in both assets and
liabilities.
Judge Lisa Ritchey Craig oversees the case.
G. Frank Nason, IV, Esq., at Lamberth, Cifelli, Ellis & Nason, PA
represents the Debtor as legal counsel.
POTTERS BORROWER: Moody's Affirms 'B2' CFR, Outlook Stable
----------------------------------------------------------
Moody's Investors Service has affirmed Potters Borrower, LP's B2
Corporate Family Rating and B2-PD Probability of Default Rating.
Moody's also affirmed the B2 ratings on the senior secured first
lien bank credit facilities, consisting of a $75 million first lien
revolving credit facility maturing 2025 and $390 million senior
secured first lien term loan due 2027. The outlook is stable.
"The affirmation reflects Potters' strong position in both the
transportation safety and performance materials markets and
relatively stable business profile that supports credit metrics
despite the current challenging macroeconomic environment," said
Domenick R. Fumai, Moody's Vice President and lead analyst for
Potters Borrower, LP.
RATINGS RATIONALE
Potters Borrower, LP's B2 CFR is supported by a leading positions
in the global glass microsphere market in North America, Europe and
Latin America and number two in Asia-Pacific used in transportation
safety and performance materials, where it holds number one or two
positions in a variety of industry segments such as polymer
additives, conductives and metal finishing. The rating also
reflects relatively stable sales volumes, particularly in
transportation safety, where volumes have held up despite some
weakness in Europe, attractive EBITDA margins historically
averaging around 20% and fairly moderate leverage with Debt/EBITDA,
including Moody's standard adjustments, of approximately 4.4x as of
September 30, 2023. The rating further considers Potters
Industries' extensive global production network with 30 facilities
worldwide that serve a diverse customer base with long-term
customer relationships.
The B2 rating is constrained by its limited scale and product
diversity with earnings concentrated primarily in glass
microspheres. The rating is further tempered by Potters very modest
growth prospects, particularly in Transportation Safety, where
spending tends to grow between 1-2% on average. The company's
Performance Materials business has exposure to several end markets,
including general industrial, home construction and repair/remodel,
that are likely to remain negatively impacted by weaker economic
growth and is a limiting factor to the rating. Private equity
ownership is another consideration incorporated in the rating
profile.
LIQUIDITY
Moody's expects Potters Industries to have good liquidity over the
next 12 months with available cash on the balance sheet of
approximately $23 million, modest positive free cash flow
generation and substantial availability under its $75 million
revolving credit facility, which is currently undrawn as of
September 30, 2023, but used on a seasonal basis to fund working
capital.
STRUCTURAL CONSIDERATIONS
The B2 rating for the first lien credit facilities are in line with
the B2 CFR reflecting the preponderance of first lien debt in the
capital structure with no second lien debt to absorb losses. The
credit facilities have a first lien security interest on
substantially all the assets of the company and guarantors.
The first lien term loan does not contain financial maintenance
covenants while the revolving credit facility has a springing
maximum first lien net leverage ratio of 8.85x that will be tested
when the revolver is more than 40% drawn at the end of the quarter.
Moody's does not expect the covenant to be triggered over the next
12 months.
The rating outlook is stable as the sponsor has capitalized the
company on a relatively conservative basis ensuring solid credit
metrics, but the company's small size and limited product diversity
limit future upside to the rating.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's would consider an upgrade if financial leverage, including
Moody's standard adjustments, is sustained below 4.0x, the
company's size increases to over $500 million in revenue, product
or end market diversity improves materially providing the potential
for greater organic growth, free cash flow growth remain positive
and the private equity sponsor is supportive of maintaining
leverage below 4.0x on a sustained basis.
The ratings could be downgraded if leverage is above 6.0x and free
cash flow is negative for a sustained period, or if there is a
significant deterioration in liquidity, a large debt-financed
acquisition or dividend.
Potters Industries, LLC is a leading provider of glass spheres for
highway and safety markings and engineered glass materials used in
a variety of end use applications. The company operates in two
segments: Transportation Safety and Performance Materials, which
represented 63% and 37% of FY 2022 sales, respectively. Potters
generated approximately $441 million in revenue for the twelve
months ending September 30, 2023.
The principal methodology used in these ratings was Chemicals
published in October 2023.
PRECISION REFRIGERATION: 70% Markdown for $1.7MM Midcap Loan
------------------------------------------------------------
MidCap Financial Investment Corporation has marked its $1,705,000
loan extended to Precision Refrigeration & Air Conditioning LLC to
market at $517,000 or 30% of the outstanding amount, as of
September 30, 2023, according to Midcap Financial's Form 10-Q
Report for the Quarterly period ended September 30, 2023, filed
with the Securities and Exchange Commission.
Midcap Financial is a participant in a First Lien Secured
Debt-Revolver Loan to Precision Refrigeration & Air Conditioning
LLC. The loan accrues interest at a rate of 1% (SOFR+690) per
annum. The loan matures on March 8, 2028.
Midcap Financial Investment Corporation is a Maryland corporation
incorporated on February 2, 2004. It is a closed-end, externally
managed, non-diversified management investment company that has
elected to be treated as a business development company under the
Investment Company Act of 1940. Apollo Investment Management, L.P.
is the investment adviser and an affiliate of Apollo Global
Management, Inc. and its consolidated subsidiaries (AGM). Apollo
Investment Administration, LLC, an affiliate of AGM, provides,
among other things, administrative services and facilities for
Midcap.
Precision Refrigeration & Air Conditioning, Inc. provides
industrial and commercial ammonia and freon refrigeration and air
conditioning services. The Company offers design and engineering,
construction, and service and maintenance. Precision Refrigeration
& Air Conditioning serves customers in the United States.
PREDICTIVE TECHNOLOGY: Joli Lofstedt Named Subchapter V Trustee
---------------------------------------------------------------
The U.S. Trustee for Region 19 appointed Joli Lofstedt, Esq., as
Subchapter V trustee for Predictive Technology Group, Inc.
Ms. Lofstedt, a practicing attorney in Louisville, Colo., will be
paid an hourly fee of $350 for her services as Subchapter V trustee
and will be reimbursed for work-related expenses incurred.
Ms. Lofstedt declared that she is a disinterested person according
to Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Joli A. Lofstedt, Esq.
P.O. Box 270561
Louisville, CO 80027
Phone: (303) 476-6915
Fax: (303) 604-2964
Email: joli@jaltrustee.com
About Predictive Technology Group
Predictive Technology Group, Inc. develops and commercializes
discoveries and technologies involved in novel molecular
diagnostic, therapeutic, and Human Cellular and Tissue-Based
Products. The company uses this information as the cornerstone in
the development of new diagnostics that assess a person's risk of
disease and develop pharmaceutical therapeutics and HCT/Ps for use
by healthcare professionals to improve outcomes in their patients.
The company's corporate headquarters are in Salt Lake City, Utah.
Predictive Technology Group filed Chapter 11 petition (Bankr. D.
Utah Case No. 23-25147) on Nov. 9, 2023, with $1 million to $10
million in both assets and liabilities. Bradley C. Robinson, chief
executive officer and president, signed the petition.
Judge Peggy Hunt oversees the case.
Workman Nydegger serves as the Debtor's legal counsel.
PURDUE PHARMA: S.C. Questions Sacklers Shield in Opioid Pact
------------------------------------------------------------
Greg Stohr of Bloomberg News reports that the US Supreme Court
signaled a likely divide over Purdue Pharma LP's $6 billion opioid
settlement, as the justices weighed Biden administration
contentions that the accord improperly shields the Sackler family
members who own the company.
In a Monday argument that cut across the court's normal ideological
divides, some justices questioned whether the Sacklers should get
the benefit of a legal shield when they haven't filed for
bankruptcy themselves.
"Why should they get the discharge that usually goes to a bankrupt
person once they've put all their assets on the table, without
having put all their assets on the table?" Justice Elena Kagan
asked.
The case threatens a bankruptcy reorganization plan that would end
a mountain of litigation against the OxyContin maker and funnel
money toward efforts to abate the opioid crisis. As part of the
accord, family members have agreed to give up ownership of the
company and pay as much as $6 billion.
Purdue Pharma is urging the Supreme Court to let the accord go
forward, as are advocates for tens of thousands of opioid victims.
They say the funds are urgently needed to address the nation's
opioid crisis.
A ruling against the plan could upend a key tool, known as
non-consensual third-party releases, used in almost every big
settlement. Purdue Pharma's lawyer, Greg Garre, said a ruling
against the plan would take a "wrecking ball to the bankruptcy
code."
He drew support from Justice Brett Kavanaugh, who said that
"bankruptcy courts for 30 years have been approving plans like
this."
Sex-Abuse Cases
Congress authorized similar maneuvers decades ago in bankruptcies
related to asbestos lawsuits, and over time lawyers and judges have
used the approach to address an array of corporate wrongdoing.
Similar deals have ended mass litigation over dangerous products
and waves of sex abuse claims against Catholic dioceses, the Boy
Scouts of America and USA Gymnastics.
But other justices suggested they agreed with contentions by the
Justice Department and US Trustee William Harrington that federal
bankruptcy courts lack the power to insulate the Sacklers from
lawsuits.
"We don't normally say a non-consenting party can have its claim
for property eliminated in this fashion without consent or any
process of court," Justice Neil Gorsuch said. He pointed to the
Constitution's Seventh Amendment, which guarantees the right to a
jury trial in civil cases.
Justice Ketanji Brown Jackson was similarly skeptical, pointing to
the billions of dollars the Sacklers collected in dividends before
Purdue Pharma filed for bankruptcy.
"They actually took the assets from the company, which started the
set of circumstances in which the company now doesn't have enough
money to pay the creditors," Jackson said.
Another Deal?
The victims' lawyer, Pratik Shah, told the justices the settlement
will collapse unless the court upholds it. "There is no better
deal," he said.
Justice Department lawyer Curtis Gannon took at different view,
saying, "I do think that there's a very good chance that there's a
deal on the other side of this."
The Sacklers withdrew more than $10 billion from Purdue Pharma
beginning in 2008. Nearly half of those transfers went to pay taxes
and much of that remaining wealth was parked in offshore trusts
that would make collecting any potential judgments from the
Sacklers difficult, according to court documents.
Kagan was among several justices who asked probing questions of
both sides. She said there was "overwhelming" support for this
deal, "and among people who have no love for the Sacklers, among
people who think that the Sacklers are pretty much the worst people
on Earth."
In a statement after the argument, Purdue Pharma said the accord
"is the only way to deliver billions of dollars toward lifesaving
opioid abatement programs and victim compensation."
The case, which the court will resolve by the middle of next year,
is Harrington v. Purdue Pharma, 23-124.
About Purdue Pharma LP
Purdue Pharma L.P. and its subsidiaries --
http://www.purduepharma.com/-- develop and provide prescription
medicines and consumer products that meet the evolving needs of
healthcare professionals, patients, consumers and caregivers.
Purdue's subsidiaries include Adlon Therapeutics L.P., focused on
treatment for Attention-Deficit/Hyperactivity Disorder (ADHD) and
related disorders; Avrio Health L.P., a consumer health products
company that champions an improved quality of life for people in
the United States through the reimagining of innovative product
solutions; Imbrium Therapeutics L.P., established to further
advance the emerging portfolio and develop the pipeline in the
areas of CNS, non-opioid pain medicines, and select oncology
through internal research, strategic collaborations and
partnerships; and Greenfield Bioventures L.P., an investment
vehicle focused on value-inflection in early stages of clinical
development.
Opioid makers in the U.S. are facing pressure from a crackdown on
the addictive drug in the wake of the opioid crisis and as state
attorneys general file lawsuits against manufacturers. More than
2,000 states, counties, municipalities and Native American
governments have sued Purdue Pharma and other pharmaceutical
companies for their role in the opioid crisis in the U.S., which
has contributed to the more than 700,000 drug overdose deaths in
the U.S. since 1999.
OxyContin, Purdue Pharma's most prominent pain medication, has been
the target of over 2,600 civil actions pending in various state and
federal courts and other fora across the United States and its
territories.
On Sept. 15 and 16, 2019, Purdue Pharma L.P. and 23 affiliated
debtors each filed a voluntary petition for relief under Chapter 11
of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No.
19-23649), after reaching terms of a preliminary agreement for
settling the massive opioid litigation. The Debtors' consolidated
balance sheet as of Aug. 31, 2019, showed $1.972 billion in assets
and $562 million in liabilities.
U.S. Bankruptcy Judge Robert Drain oversees the cases.
The Debtors tapped Davis Polk & Wardwell, LLP and Dechert, LLP, as
legal counsels; PJT Partners as investment banker; AlixPartners as
financial advisor; and Grant Thornton, LLP as tax structuring
consultant. Prime Clerk, LLC, is the claims agent.
Akin Gump Strauss Hauer & Feld LLP and Bayard, P.A., represent the
official committee of unsecured creditors appointed in the Debtors'
bankruptcy cases.
David M. Klauder, Esq., is the fee examiner appointed in the
Debtors' cases. The fee examiner is represented by Bielli &
Klauder, LLC.
* * *
U.S. Bankruptcy Judge Robert Drain in early September 2021 approved
a plan to turn Purdue into a new company (Knoa Pharma LLC) no
longer owned by members of the Sackler family, with its profits
going to fight the opioid epidemic. The Sackler family agreed to
pay $4.3 billion over nine years to the states and private
plaintiffs and in exchange for a lifetime legal immunity. The deal
resolves some 3,000 lawsuits filed by state and local governments,
Native American tribes, unions, hospitals and others who claimed
the company's marketing of prescription opioids helped spark and
continue an overdose epidemic.
Separate appeals to approval of the Plan have already been filed by
the U.S. Bankruptcy Trustee, California, Connecticut, the District
of Columbia, Maryland, Rhode Island and Washington state, plus some
Canadian local governments and other Canadian entities.
In early March 2022, Purdue Pharma reached a nationwide settlement
over its role in the opioid crisis, with the Sackler family members
boosting their cash contribution to as much as $6 billion. The
settlement was hammered out with attorneys general from the eight
states -- California, Connecticut, Delaware, Maryland, Oregon,
Rhode Island, Vermont and Washington -- and D.C. who had opposed
the previous settlement.
RECORDED BOOKS: Phillip Street Marks $471,000 Loan at 46% Off
-------------------------------------------------------------
Phillip Street Middle Market Lending Fund LLC has marked its
$471,000 loan extended to Recorded Books Inc. to market at $256,000
or 54% of the outstanding amount, as of September 30, 2023,
according to Phillip Street's Form 10-Q for the Quarterly period
ended September 30, 2023, filed with the Securities and Exchange
Commission.
Phillip Street is a participant in a First Lien Senior Secured Debt
Loan to Recorded Books, Inc. The loan accrues interest at a rate of
11.66% (S +6.25%) per annum. The loan matures on August 31, 2028.
Phillip Street Middle Market Lending Fund LLC is a Delaware Limited
Liability Company formed on July 13, 2022. The Company has elected
to be regulated as a business development company under the
Investment Company Act of 1940, as amended. In addition, the
Company intends to elect to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as
amended, commencing with its taxable year ended December 31, 2022.
The Company commenced operations on October 6, 2022. On November 2,
2022, the Company's initial investors (other than the Initial
Member funded the initial portion of their capital commitment to
purchase units of the Company’s limited liability interest.
Recorded Books, Inc -- RBMedia -- is a digital audiobook and
related spoken word content producer and a provider of digital
content distribution through its recently acquired OverDrive
business.
REMARKABLE HEALTHCARE: U.S. Trustee Appoints Susan Goodman as PCO
-----------------------------------------------------------------
Kevin Epstein, the U.S. Trustee for Region 6, appointed Susan
Goodman of Pivot Health Law, LLC to serve as patient care ombudsman
in the Chapter 11 cases of Remarkable Healthcare of Carrollton, LP
and affiliates.
The appointment follows an order from the U.S. Bankruptcy Court for
the Eastern District of Texas directing the Justice Department's
bankruptcy watchdog to appoint a PCO who will monitor the quality
of care provided to patients by Remarkable Healthcare.
Ms. Goodma disclosed in a court filing that she does not have any
connection with Remarkable Healthcare, creditors and other parties
involved in the bankruptcy cases.
The PCO may be reached at:
Susan N. Goodman, RN JD
Pivot Health Law, LLC
P.O. Box 69734
Oro Valley, AZ 85737
Phone: (520) 744-7061
Email: sgoodman@pivothealthaz.com
About Remarkable Healthcare of Carrollton
Remarkable Healthcare of Carrollton, LP and affiliates own and
operate nursing home facilities.
The Debtors filed Chapter 11 petitions (Bankr. E.D. Texas Case No.
23-42098) on Nov. 2, 2023. In the petition signed by its chief
executive officer, Laurie Beth McPike, Remarkable Healthcare of
Carrollton disclosed up to $10 million in both assets and
liabilities.
Judge Brenda T. Rhoades oversees the cases.
Mark Castillo, Esq., at Carrington, Coleman, Sloman & Blumental,
LLP, represents the Debtors as legal counsel.
RI-TAR ENTERPRISES: Case Summary & Eight Unsecured Creditors
------------------------------------------------------------
Debtor: Ri-Tar Enterprises, Inc.
2019 Hill Country Court
Arlington, TX 76012
Chapter 11 Petition Date: December 6, 2023
Court: United States Bankruptcy Court
Northern District of Texas
Case No.: 23-43761
Debtor's Counsel: Eric A. Liepins, Esq.
ERIC A. LIEPINS, P.C.
12770 Coit Road, Ste. 850
Suite 1100
Dallas, TX 75251
Tel: (972) 991-5591
Fax: (972) 991-5788
Email: eric@ealpc.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Huay Ling Yen as president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's eight unsecured creditors is available for
free at PacerMonitor.com at:
https://www.pacermonitor.com/view/PVKCR6I/Ri-Tar_Enterprises_Inc__txnbke-23-43761__0001.0.pdf?mcid=tGE4TAMA
ROAD LION: Seeks Cash Collateral Access
---------------------------------------
Road Lion Corporation asks the U.S. Bankruptcy Court for the
Southern District of Alabama for authority to use cash collateral
and provide adequate protection.
Throughout the last 12 to 18 months, the Debtor-In-Possession has
suffered a decrease in cash flow due to various reasons including,
but not limited to, competitive freight pricing, decreased demand,
lack of qualified personnel, and truck and/or trailer repairs.
The Debtor requires the use of cash collateral for administrative,
general and necessary costs and expenses.
The entities that may assert an interest in the Debtor's cash
collateral are G Squared Funding, LLC, BMO Harris Bank, N.A.,
England Carrier Service, Motion 120 Trust, Corporation Service -
Agent, Crestmark Vendor Finance, Small Business Administration,
Signature Financial, and the Alabama Department of Revenue.
As of the Petition Date, the Debtor-In-Possession's account(s)
reflected that the sum of $1,309 was on deposit with Wells Fargo
Bank, N.A. and Regions Bank.
The Debtor proposes that adequate protection to these identified
entities includes a replacement lien on the Debtor's post-petition
receivables and projected positive cash flow.
A copy of the motion is available at https://urlcurt.com/u?l=Lif967
from PacerMonitor.com.
About Road Lion Corporation
Road Lion Corporation transports refrigerated freight throughout
the U.S. using tractors and refrigerated trailers.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Ala. Case No. 23-12841) on December 1,
2023. In the petition signed by Perry Lee Bryant,
president/shareholder, the Debtor disclosed up to $1 million in
both assets and liabilities.
Anthony Bush, Esq., at The Bush Law Firm, LLC, represents the
Debtor as legal counsel.
ROCHESTER MATH: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Rochester Math and Science Academy
415 16th Street Southwest
Rochester MN 55902
Business Description: The Debtor is a charter school in Rochester,
Minnesota.
Chapter 11 Petition Date: December 5, 2023
Court: United States Bankruptcy Court
District of Minnesota
Case No.: 23-32604
Judge: Hon. William J. Fisher
Debtor's Counsel: Paul L. Ratelle, Esq.
FABYANSKE WESTRA HART & THOMPSON
333 South Seventh Street, Suite 2600
Minneapolis, MN 55402
Tel: 612-359-7636
E-mail: pratelle@fwhtlaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by Dr. Charlene Ellingson as authorized
agent.
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/WDMVKQY/Rochester_Math__Science_Academy__mnbke-23-32604__0001.0.pdf?mcid=tGE4TAMA
ROCHESTER STEM: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Rochester STEM Academy, Inc.
415 16th Street Southwest
Rochester MN 55902
Business Description: Rochester STEM Academy is a tuition-free
public charter high school that serves
students from the Rochester Area.
Chapter 11 Petition Date: December 5, 2023
Court: United States Bankruptcy Court
District of Minnesota
Case No.: 23-32606
Judge: Hon. Katherine A Constantine
Debtor's Counsel: Paul L. Ratelle, Esq.
FANYANSKE WESTRA HART & THOMPSON
333 South Seventh Street, Suite 2600
Minneapolis MN 55402
Tel: 612-359-7636
Email: pratele@fwhtlaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $50,000 to $100,000
The petition was signed by Dr. Charlene Ellingson as authorized
agent.
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/AFLOJQA/Rochester_STEM_Academy_Inc__mnbke-23-32606__0001.0.pdf?mcid=tGE4TAMA
RSA SECURITY: BC Partners Marks $4MM Loan at 34% Off
----------------------------------------------------
BC Partners Lending Corporation has marked its $4,000,000 loan
extended to RSA Security, LLCto market at $2,635,000 or 66% of the
outstanding amount, as of September 30, 2023, according to BC
Partners's Form 10-Q for the Quarterly period ended, September 30,
2023, filed with the Securities and Exchange Commission.
BC Partners is a participant in a Senior Secured Loan to RSA
Security, LLC. The loan accrues interest at a rate of 13.41% (L +
7.75%, 0.75% FLOOR) per annum. The loan matures on April 27, 2029.
BC Partners Lending Corporation is a Maryland corporation formed on
December 22, 2017. The Company has elected to be regulated as a
business development company under the Investment Company Act of
1940, as amended. In addition, the Company has elected to be
treated for U.S. federal income tax purposes, and to qualify
annually, as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended. The Company is an
emerging growth company as defined in the Jumpstart Our Business
Startups Act of 2012 and the Company will take advantage of the
extended transition period for complying with certain new or
revised accounting standards provided for emerging growth companies
in Section 7(a)(2)(B) of the Securities Act of 1933, as amended.
RSA Security LLC is the former cyber security division of Dell
Technologies Inc. RSA Security claims to be the most widely
recognized cybersecurity and risk management vendor in the market.
RUBRIK INC: 91% Markdown for $1.2MM Phillip Street Loan
-------------------------------------------------------
Phillip Street Middle Market Lending Fund LLC has marked its
$1,226,000 loan extended to Rubrik Inc. to market at $112,000 or 9%
of the outstanding amount, as of September 30, 2023, according to
Phillip Street's Form 10-Q for the Quarterly period ended
September 30, 2023, filed with the Securities and Exchange
Commission.
Phillip Street is a participant in a First Lien Senior Secured Debt
Loan to Rubrik Inc. The loan accrues interest at a rate of 12.37%
(S +7.00%) per annum. The loan matures on August 17, 2028.
Phillip Street Middle Market Lending Fund LLC is a Delaware Limited
Liability Company formed on July 13, 2022. The Company has elected
to be regulated as a business development company under the
Investment Company Act of 1940, as amended. In addition, the
Company intends to elect to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as
amended, commencing with its taxable year ended December 31, 2022.
The Company commenced operations on October 6, 2022. On November 2,
2022, the Company's initial investors (other than the Initial
Member funded the initial portion of their capital commitment to
purchase units of the Company's limited liability interest.
Rubrik, Inc. operates as a cloud data management and data security
company. The Company offers a platform which helps enterprises
achieve data control to drive business resiliency, cloud mobility,
and regulatory compliance. Rubrik serves government, health care,
legal, and financial industries worldwide.
S&G HOSPITALITY: Seeks Cash Collateral Access Thru March 2024
-------------------------------------------------------------
S&G Hospitality, Inc. and affiliates ask the U.S. Bankruptcy Court
for the Southern District of Ohio, Eastern Division, for authority
to use cash collateral and provide adequate protection, through
March 31, 2024.
Since the Petition Date, the Debtors have operated profitably and
steadily generated additional cash collateral even after taking
into account the adequate protection payments being made to the
purported secured creditors. The Debtors need authority to continue
using cash collateral to remain open and progress towards the
filing of a chapter 11 plan in these cases. The Debtors also need
to make certain capital expenditures in terms of repairs to their
hotels or make improvements to them required by their franchisors
to maintain their good-standing status as franchisees. It is most
advantageous to conduct these repairs and make these improvements
during the first quarter of the calendar year because this will
minimize the disruptions to hotel guests as this is usually the
slowest season for the hotels.
While the proposed budget shows that even in this slow period the
Debtors will continue to generate cash from operations, once the
necessary capital expenditures are made, proposed adequate
protection payments are made, and professional fees are paid their
will be a net usage of cash collateral during the proposed budget.
The Debtors post-petition operations to date have been profitable
enough that they currently possess more than $900,000 in cash,
which is more than twice the projected net usage of cash under the
budget In addition, the Debtors are making adequate protection
payments to the purported secured parties during this period and
the secured parties will have an adequate protection claim to the
extent that previous profits and/or future profits do not cover
this net usage.
The entities with a purported interest in cash collateral are RSS
COMM 2015-PC1 BL, LLC, Small Business Administration, and Itria
Funding LLC.
The Debtors submit that the proposed adequate protection package
satisfies these standards. While the budget provides for net usage
of cash collateral, this should be amply covered by the profits
generated to date in these cases and the approximately $900,000
currently in the Debtors' bank accounts. In addition, RSS has
consented to the extension. The proposed order also provides
protection to RSS, Itria and the SBA by providing for regular cash
payments. Additional adequate protection is also provided for by
superpriority claims under 11 U.S.C. Section 507 and adequate
protection liens on the Debtors' other assets (besides avoidance
actions) to secure any adequate protection diminution claims which
might be awarded later under 11 U.S.C. Section 507.
A copy of the order is available at https://urlcurt.com/u?l=Jxxl1n
from PacerMonitor.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 Abijit Vasani, president, the
Debtor disclosed up to $10 million in assets and up to $1 million
in liabilities.
Judge Mina Nami Khorrami oversees the case.
David Beck, Esq., at Carpenter Lipps LLP, reprents the Debtor as
legal counsel.
SAMARCO MINERACAO: Davis Polk Served as Counsel to Creditors
------------------------------------------------------------
Davis Polk served as U.S. counsel to an ad hoc group of financial
creditors of Samarco Mineracao S.A. On December 1, 2023, Samarco
consummated a consensual, cross-border restructuring of
approximately $4.8 billion in funded debt. The restructuring
transactions, which resolve a contentious, eight-year-long process,
were implemented through a plan that was jointly filed by Samarco
and the ad hoc group in Samarco's Brazilian judicial reorganization
proceeding. The joint plan was approved by the Brazilian court
overseeing Samarco's judicial reorganization proceeding on
September 1, 2023, and was also granted enforcement in the United
States by the United States Bankruptcy Court for the Southern
District of New York on October 10, 2023.
The plan and restructuring followed the entry by members of the ad
hoc group, Samarco and Samarco's shareholders into a comprehensive
restructuring support agreement that also provided for the
settlement of numerous ongoing litigation proceedings.
The jointly filed plan is the first creditor-proposed Brazilian
restructuring plan approved in an internationally significant case
following a 2021 amendment to Brazil's insolvency laws that, for
the first time, made it possible for creditors to propose
restructuring plans as an alternative to the debtor's plan.
Pursuant to the plan, members of the ad hoc group and most other
financial creditors will receive approximately $3.7 billion of new
senior notes due 2031.
Headquartered in Belo Horizonte, Minas Gerais, Brazil, Samarco is a
mining company with operations in Minas Gerais and Espírito Santo.
Samarco's products include direct reduction and blast furnace
pellets and iron ore fines, which supply various industries in the
Americas, Europe, the Middle East, North Africa and Asia.
The Davis Polk restructuring team included partners Timothy
Graulich, Angela M. Libby and David Schiff and associates Jarret
Erickson, Paavani Garg, Moshe Melcer and Motty Rivkin. The capital
markets team included partner Yasin Keshvargar and associates
Michael Stromquist and Christian Knoble. Partner Antonio J.
Perez-Marques and counsel Matthew Cormack provided litigation
advice. Partners Manuel Garciadiaz and Leo Borchardt provided
general corporate advice. Partners Corey M. Goodman and Lucy W.
Farr provided tax advice. Members of the Davis Polk team are based
in the New York, London and São Paulo offices.
Davis Polk refers to Davis Polk & Wardwell LLP, a New York limited
liability partnership, and its associated entities.
About Samarco Mineracao SA
Samarco Mineracao SA is a Brazilian mining joint venture between
BHP Group and Vale SA. erves as an iron ore processing company. The
company provides blast furnace, direct reduction, sinter feed, as
well as low and normal silica content pellets.
On April 9, 2021, the Debtor filed a voluntary petition for
judicial reorganization in the 2nd Business State Court for the
Belo Horizonte District of Minas Gerais in Brazil pursuant to
Brazilian Federal Law No. 11,101 of February 9, 2005.
Samarco Mineracao filed for Chapter 15 bankruptcy recognition
(Bankr. S.D.N.Y. Case No. 21-10754) on April 19, 2021, in New York,
to seek U.S. recognition of its Brazilian proceedings.
The Debtor's U.S. counsel:
Thomas S. Kessler
Cleary Gottlieb Steen & Hamilton LLP
Tel: 212-225-2000
E-mail: tkessler@cgsh.com
SAN JORGE: Delays Disclosure Statement Hearing to Feb. 8
--------------------------------------------------------
Judge Maria de los Angeles Gonzalez approved San Jorge Children's
Hospital Inc.'s motion to reschedule the hearing for disclosure
statement and related timelines as there were no timely objections
filed.
The hearing on the Disclosure Statement will be held on Feb. 8,
2024, at 10:00 a.m., at the Jose V. Toledo Fed Bldg & Us
Courthouse, 300 Recinto Sur (the specific courtroom to be posted
the date of the hearing).
The Debtor must file a supplement or amend the disclosure statement
14 days prior to the hearing. Objections to the disclosure
statement as supplemented or amended are due Feb. 1, 2024, or 7
days prior to the hearing.
About San Jorge Children's Hospital
San Jorge Children's Hospital, Inc., operates a hospital in San
Juan, P.R., which specializes in pediatrics.
San Jorge Children's Hospital filed its voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case
No. 22-02630) on Sept. 1, 2022, with between $10 million and $50
million in both assets and liabilities. Edward P. Smith, chief
operating officer, signed the petition.
Judge Maria De Los Angeles Gonzalez presides over the case.
The Debtor tapped Wigberto Lugo Mender, Esq., at Lugo Mender Group,
LLC as bankruptcy counsel and Galindez, LLC as external auditor.
Cardona Jimenez Law Offices, P.S.C., represents the official
committee of unsecured creditors appointed in the Debtor's case
while RSM Puerto Rico serves as the committee's financial advisor.
SISSON ENGINEERING: Stephen Darr Named Subchapter V Trustee
-----------------------------------------------------------
The U.S. Trustee for Region 1 appointed Stephen Darr of Huron
Consulting Services, LLC as Subchapter V trustee for Sisson
Engineering Corp.
Mr. Darr will be paid an hourly fee of $775 for his services as
Subchapter V trustee and will be reimbursed for work-related
expenses incurred.
Mr. Darr declared that he is a disinterested person according to
Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Stephen Darr
Huron Consulting Services, LLC
Suite 402
265 Franklin Street
Boston, MA 02110
About Sisson Engineering Corp.
Sisson Engineering Corp., a company in Orange, Mass., is a global
supplier of complex machined parts.
Sisson filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. D. Mass. Case No. 23-30475) on Nov. 14,
2023, with $2,830,063 in assets and $11,211,249 in liabilities.
Judge Elizabeth D. Katz oversees the case.
David B. Madoff, Esq., at Madoff & Khoury LLP, represents the
Debtor as legal counsel.
SJA WAPITI: Creditor Bay Point Sets Dec. 11 Auction
---------------------------------------------------
Bay Point Capital Partners II LP ("secured party") will conduct a
public sale of membership interests of M. Stewart Geyer Jr.
("pledgor") in SJA Wapiti LLC, SJA Wapiti Lot LLC, Geyer Capital
Management LLC, GCM RB LLC ("RB", "Borrower"), a Delaware limited
liability, as more fully described in exhibit A to the pledge and
security agreement between pledgor and secured party dated April
28, 2020, as the same was reaffirmed pursuant to that certain
guarantor reaffirmation agreement and release agreement dated July
21, 2021, among pledgor and secured party, and constituting 100% of
the issued and outstanding membership interests of RB, as security
for the prompt payment, performance, and satisfaction of borrower's
obligations owed to the secured party ("Secured Debt").
The pledged membership interests are in certificated form and the
certificate is in the possession of the secured party. The secured
party also filed a financing statement with the Texas Secretary of
State (No. 20-0015727135) covering the pledged membership
interests.
The sale will commence on Dec. 11, 2023, at 10:30 a.m. (Prevailing
Eastern Time) at the Law offices of Thompson Hine LLP, Two Alliance
Center, 3560 Lenox road, Suite 1600, Atlanta, Georgia 30326.
Parties may also appear virtually via computer video and audio
conference. Parties wishing to participate in the sale in person
must register with Mr. Austin Alexander, Esq., of Thompson Hine LLP
at 1-404-407-3683 or Austin.Alexander@ThompsonHine.com by 9:00 a.m.
on the sale date. If you which to receive the electronic link to
appear virtually, contact Mr. Alexander at the phone number or
email address before Dec. 8. 2023.
Secured party intends to acquire the pledged membership interests
at the sale via credit bid, in an amount up to the secured debt due
and owing as of the date of the sale.
Prospective bidders are invited to submit bids in writing prior to
the sale. Prospective bidders wishing to obtain a copy of the bid
procedures, including the procedures for submitting a written bid,
prior to the sale may request the same from Mr. Alexander via the
phone number and email address before Dec. 8, 2023. All written
bids, including any applicable bid deposit, are due by 10:00 a.m.
on Dec. 11, 2023.
SMILEDIRECTCLUB INC: Align Asks Court to Reject Plan Disclosures
----------------------------------------------------------------
Invisalign maker Align Technology is asking a Texas bankruptcy
judge to reject the disclosure statement explaining rival
SmileDirectClub's Chapter 11 plan, saying the plan is unfair and
unworkable and that the mail-order dental service provider isn't
fully disclosing its legal issues.
"The premise of the Debtors' proposed "toggle" plan is that the
Debtors do not yet know what path these cases will take and whether
the Plan will be one of reorganization or liquidation. Regardless
of how these cases develop, it is crucial that stakeholders be
fully informed and given the opportunity to vote to accept or
reject the Plan. The Disclosure Statement Motion should not be
approved because the Disclosure Statement and the proposed
Solicitation and Voting Procedures fail to accomplish either
requirement," Align said.
Align notes that:
* Certain facts related to the Debtors' business practices are
either omitted or misstated in the Disclosure Statement.
The Disclosure Statement fails to provide any disclosure regarding
(i) estate claims and causes of action stemming from (among other
things) these business practices and prepetition distributions to
insiders, (ii) the status of the ongoing investigations of these
claims by the Official Committee of Unsecured Creditors and the
Special Committee of the Board of Directors of SDC, Inc., or (iii)
an assessment of the value of these claims.
* The Disclosure Statement Motion seeks approval of Solicitation
and Voting Procedures that could improperly disenfranchise
stakeholders. Among other things, any creditor whose claim is
objected to by the Debtors for voting purposes (the proposed
deadline for which is two days prior to the Voting Deadline) would
have to either get an agreement by the Debtors or file a 3018
motion (or some other motion seeking the allowance of its claim for
voting purposes) and obtain a ruling from the Court at least two
business days prior to the Voting Deadline -- a date that falls
before the last date that an objection can be filed by the
Debtors.
Moreover, Align asserts that the Debtors must fix certain
confirmation infirmities in the Plan prior to solicitation so as
not to create an unacceptable risk to the estates.
"The Plan suffers from several infirmities that render it
unconfirmable, some of which should be modified prior to
solicitation to save the estates from potentially having to
resolicit. First, in the case of a restructuring, the Plan
unfairly discriminates against Align and other general unsecured
creditors in violation of section 1123(a)(4) of the Bankruptcy Code
because HPS's similarly situated guarantee claims will be
reinstated while general unsecured creditors will receive a minimal
(if any) recovery. Second, in a wind down scenario, the Plan
improperly classifies the HPS guarantee claims separately from
other unsecured claims in order to gerrymander an impaired
accepting class in violation of section 1122 of the Bankruptcy
Code. Third, in a restructuring, the Plan is not feasible because
the Debtors' business is not viable. Finally, the Plan's
exculpation and release provisions are overbroad."
About SmileDirectClub, Inc.
SmileDirectClub, Inc. (Nasdaq: SDC) --
http://www.SmileDirectClub.com/-- is an oral care company and
creator of the first medtech platform for teeth straightening.
Through its cutting-edge telehealth technology and vertically
integrated model, SmileDirectClub is revolutionizing the oral care
industry. Its mission is to democratize access to a smile each
and
every person loves by making it affordable and convenient for
everyone. SmileDirectClub is headquartered in Nashville,
Tennessee.
SmileDirectClub and its affiliates sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. S.D. Texas Lead Case No.
23-90786) on Sept. 29, 2023. In the petition signed by its chief
financial officer, Troy Crawford, SmileDirectClub disclosed
$498,712,000 in assets and $1,051,823,000 in liabilities.
Judge Christopher M. Lopez oversees the cases.
The Debtors tapped Kirkland & Ellis LLP and Kirkland & Ellis
International, LLP as general bankruptcy counsel; Jackson Walker,
LLP as local bankruptcy counsel; Centerview Partners, LLC as
financial advisor and investment banker; FTI Consulting, Inc., as
restructuring advisor; and Kroll Restructuring Administration, LLC,
as notice and claims agent.
STEEL HUGGERS: Mark Dennis of SL Biggs Named Subchapter V Trustee
-----------------------------------------------------------------
The U.S. Trustee for Region 11 appointed Mark Dennis, a certified
public accountant at SL Biggs, as Subchapter V trustee for Steel
Huggers, LLC.
Mr. Dennis will be paid an hourly fee of $400 for his services as
Subchapter V trustee and will be reimbursed for work-related
expenses incurred.
Mr. Dennis declared that he is a disinterested person according to
Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Mark D. Dennis, CPA
SL Biggs, A Division of SingerLewak, LLP
2000 S. Colorado Blvd., Tower 2, Ste. 200
Denver, CO 80222
Phone: 303-226-5471
Email: mdennis@slbiggs.com
About Steel Huggers
Steel Huggers, LLC is a steel-fabrication company located in
unincorporated Weld County just outside Longmont.
Steel Huggers filed a petition under Chapter 11, Subchapter V of
the Bankruptcy Code (Bankr. D. Colo. Case No. 23-15295) on Nov. 15,
2023, with as much as $50,000 in assets and $1 million to $10
million in liabilities. Nic Malwitz, manager, signed the petition.
Judge Thomas B. Mcnamara oversees the case.
Keri L. Riley, Esq., at Kutner Brinen Dickey Riley, PC represents
the Debtor as legal counsel.
SUNOPTA INC: S&P Withdraws 'B' Long-Term Issuer Credit Rating
-------------------------------------------------------------
S&P Global Ratings withdrew all of its ratings on SunOpta Inc.,
including its 'B' long-term issuer credit rating, at the issuer's
request. At the time of the withdrawal, S&P's outlook on the
company was stable.
SUPERIOR ENVIRONMENT: 73% Discount for $553,000 Phillip Street Loan
-------------------------------------------------------------------
Phillip Street Middle Market Lending Fund LLC has marked its
$553,000 loan extended to Superior Environmental Solutions to
market at $152,000 or 73% of the outstanding amount, as of
September 30, 2023, according to Phillip Street's Form 10-Q for the
Quarterly period ended, September 30, 2023, filed with the
Securities and Exchange Commission.
Phillip Street is a participant in a First Lien Senior Secured Debt
Loan to Superior Environmental Solutions. The loan accrues interest
at a rate of 11.87% (S +6.50%) per annum. The loan matures on
August 1, 2029.
Phillip Street Middle Market Lending Fund LLC is a Delaware Limited
Liability Company formed on July 13, 2022. The Company has elected
to be regulated as a business development company under the
Investment Company Act of 1940, as amended. In addition, the
Company intends to elect to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as
amended, commencing with its taxable year ended December 31, 2022.
The Company commenced operations on October 6, 2022. On November 2,
2022, the Company's initial investors (other than the Initial
Member funded the initial portion of their capital commitment to
purchase units of the Company’s limited liability interest.
Superior Environmental Solutions, Inc. provides industrial cleaning
services. The Company offers vacuum truck, water and hydro
blasting, pressure washing, waste management, confined space
training, emergency response, hazardous waste disposal, and
remediation services. Superior Environmental Solutions operates in
the United States.
THLP CO LLC: Midcap Financial Marks $4.4MM Loan at 72% Discount
---------------------------------------------------------------
MidCap Financial Investment Corporation has marked its $4,494,000
loan extended to THLP CO. LLC to market at $1,268,000 or 28% of the
outstanding amount, as of September 30, 2023, according to Midcap
Financial's Form 10-Q for the Quarterly period ended September 30,
2023, filed with the Securities and Exchange Commission.
Midcap Financial is a participant in a First Lien Secured
Debt-Revolver Loan to THLP CO. LLC. The loan accrues interest at a
rate of 1% (SOFR+600 Cash plus 2% Payment In Kind) per annum. The
loan matures on May 31, 2024.
Midcap Financial Investment Corporation is a Maryland corporation
incorporated on February 2, 2004. It is a closed-end, externally
managed, non-diversified management investment company that has
elected to be treated as a business development company under the
Investment Company Act of 1940. Apollo Investment Management, L.P.
is the investment adviser and an affiliate of Apollo Global
Management, Inc. and its consolidated subsidiaries (AGM). Apollo
Investment Administration, LLC, an affiliate of AGM, provides,
among other things, administrative services and facilities for
Midcap.
THLP Co, LLC's line of business includes the retail sale of a range
of canned foods and dry goods.
TOP SHELV: Plan and Disclosures Due Feb. 16
-------------------------------------------
Judge Daniel S. Opperman has entered an order that the deadlines
and hearing dates are established for debtor Top Shelv Worldwide,
LLC:
a. For creditors who are required by law to file claims, the
deadline is Feb. 26, 2024.
b. The deadline for the debtor to file motions to value security
pursuant to L.B.R. 9014-1 b is Dec. 18, 2023.
c. The deadline for parties to request the debtor to include any
information in the disclosure statement is Jan. 17, 2024.
d. The deadline for the debtor to file a combined plan and
disclosure statement is Feb. 16, 2024.
e. The deadline to return ballots on the plan, as well as to
file objections to final approval of the disclosure statement and
objections to confirmation of the plan, will be 7 days prior to the
hearing. The completed ballot form will be returned by mail to the
debtor’s attorney: Edward Gudeman, 1026 W. Eleven Mile Road,
Royal Oak, Michigan 48067.
f. The hearing on objections to final approval of the disclosure
statement and confirmation of the plan will be held within 45 days
of filing the disclosure statement, with the date to be scheduled
by the Court.
g. The deadline for all professionals to file final fee
application is 14 days after the hearing.
h. The deadline to file objections to the Case Management Order
is Dec. 20, 2023.
i. The deadline to file a motion to extend the deadline to file
a plan is Jan. 17, 2024.
j. These dates and deadlines are subject to change upon notice
if the debtor files a plan before the deadline.
About Top Shelv Worldwide
Top Shelv Worldwide, LLC, owns the property constituting the land
and lacility known as the Tri-City Sports Complex at Williams
Township, Bay County, Michigan.
Top Shelv has sought bankruptcy protection several times. Top
Shelv filed for Chapter 11 bankruptcy (Bankr. E.D. Mich. Case No.
15-21770) on Aug. 31, 2015, a plan was confirmed May 6, 2016. Top
Shelv again sought protection (Bankr. E.D. Mich. Case No. 17-21434)
on July 14, 2017.
Top Shelv most recently sought Chapter 11 protection (Bankr. E.D.
Mich. Case No. 23-21248) on Oct. 19, 2023.
The Hon. Daniel S Oppermanbaycity is the case judge.
The Debtor's counsel:
Edward J. Gudeman
Gudeman & Associates, P.C.
248-546-2800
ecf@gudemanlaw.com
TRAVELPORT WORLDWIDE: Receives $570-Mil. Equity Injection
---------------------------------------------------------
Giulia Morpurgo of Bloomberg Law reports that travel retail
platform Travelport Worldwide Limited has received a $570 million
equity injection from a group of shareholders and creditors as part
of a restructuring.
An infusion of cash is key for the company, whose liquidity had
been described as "weak" by S&P Global Ratings in a downgrade last
week.
As part of the deal, the UK-headquartered company will slash its
debt pile by swapping into equity $2.4 billion of liabilities, said
people familiar with the matter, who asked not to be identified
because the details are private.
About Travelport Worldwide
Travelport Worldwide Limited, together with its subsidiaries,
provides travel commerce platform that offers distribution,
technology, payment, and other solutions for the travel and tourism
industry in the United States, the United Kingdom, and
internationally. The Company serves travel providers, buyers,
agencies, and management companies; corporations; and other travel
data users. Travelport Worldwide Limited was incorporated in 2006
and is headquartered in Langley, the United Kingdom.
TRENCH PLATE: 69% Markdown for $1.8MM Midcap Financial Loan
-----------------------------------------------------------
MidCap Financial Investment Corporation has marked its $1,818,000
loan extended to Trench Plate Rental Co to market at $564,000 or
31% of the outstanding amount, as of September 30, 2023, according
to Midcap Financial's Form 10-Q Report for the Quarterly period
ended September 30, 2023, filed with the Securities and Exchange
Commission.
Midcap Financial is a participant in a First Lien Secured
Debt-Revolver Loan to Trench Plate Rental Co. The loan accrues
interest at a rate of 1% (SOFR+560) per annum. The loan matures on
December 3, 2026.
Midcap Financial Investment Corporation is a Maryland corporation
incorporated on February 2, 2004. It is a closed-end, externally
managed, non-diversified management investment company that has
elected to be treated as a business development company under the
Investment Company Act of 1940. Apollo Investment Management, L.P.
is the investment adviser and an affiliate of Apollo Global
Management, Inc. and its consolidated subsidiaries (AGM). Apollo
Investment Administration, LLC, an affiliate of AGM, provides,
among other things, administrative services and facilities for
Midcap.
Trench Plate Rental Co. is one of the suppliers of trench safety
equipment rental services. The company also provides traffic
control equipment rental services through its separate TPR-Traffic
Solutions division and manufactures a broad spectrum of trench
safety equipment through its wholly-owned Quik-Shor Manufacturing
subsidiary.
TW AUTOMATION: Court OKs Cash Collateral Access on Final Basis
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Kansas, Kansas City
Division, authorized TW Automation, LC to use cash collateral on a
final basis in accordance with the terms and conditions set forth
in the Debtor's Motion and as modified by the Interim Order dated
October 23, 2023.
As of the Petition Date, the Debtor was indebted to the Small
Business Administration in the approximate amount of $500,000. SBA
asserts a security interest in the Debtor's assets, which include
chattel paper, accounts and general intangibles.
Under the October 23 order, the Debtor was directed to make an
adequate protection payment to SBA of $2,450 on or before November
15, 2023 and by the 15th day of each month thereafter until
modified by agreement, a court order or a confirmed Plan.
The court said whatever pre-petition liens SBA has in the Debtor's
pre-petition property will be retained. SBA will be granted a
replacement lien in the Cash Collateral and inventory and such lien
will be in the same priority as SBA's lien in the Debtor's
pre-petition bank accounts, accounts receivable and inventory.
A copy of the order is available at https://urlcurt.com/u?l=qabPdJ
from PacerMonitor.com.
About TW Automation
TW Automation, LC., is an automation company in Lenexa, Kansas.
The Debtor filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. D. Kan. Case No. 23-21184) on October 5,
2023, with $320,183 in assets and $1,473,191 in liabilities. Jason
Luzar, member, signed the petition.
Judge Robert D. Berger oversees the case.
Erlene W. Krigel, Esq., at Krigel & Krigel, PC represents the
Debtor as legal counsel.
TWO RIVERS FARMS: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Two Rivers Farms F-2, Inc.
999 18th Street, Suite 3000-S
Denver, CO 80202
Business Description: Two Rivers Farms F-2, Inc.
Chapter 11 Petition Date: December 6, 2023
Court: United States Bankruptcy Court
District of Colorado
Case No.: 23-15627
Debtor's Counsel: K. Jamie Buechler, Esq.
BUECHLER LAW OFFICE, L.L.C.
999 18th Street, Suite 1230 S
Denver, CO 80202
Tel: 720-381-0045
Email: Jamie@kjblawoffice.com
Total Assets: $615,000
Total Liabilities: $16,099,861
The petition was signed by Greg Harrington as authorized
representative of the Debtor.
A copy of the Debtor's list of 20 largest unsecured creditors is
now available for download at PacerMonitor.com.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/FFRQGZI/Two_Rivers_Farms_F-2_Inc__cobke-23-15627__0001.0.pdf?mcid=tGE4TAMA
VARDIMAN BLACK: T Series Marks $5.6MM Loan at 16% Off
-----------------------------------------------------
T Series Middle Market Loan Fund LLC has marked its $5,643,000 loan
extended Vardiman Black Holdings, LLC to market at $4,767,000 or
84% of the outstanding amount, as of September 30, 2023, according
to T Series' Form 10-Q for the Quarterly period ended September 30,
2023, filed with the Securities and Exchange Commission.
T Series is a participant in a First Lien Debt Loan to Vardiman
Black Holdings, LLC. The loan accrues interest at a rate of 12.40%
(S +7%) per annum. The loan matures on March 18, 2027. The loan
was on non-accrual status as of September 30, 2023.
T Series Middle Market Loan Fund LLC is a non-diversified,
externally managed specialty finance company focused on lending to
middle market companies. The Company has elected to be regulated as
a business development company under the Investment Company Act of
1940, as amended. In addition, for U.S. federal income tax
purposes, the Company has elected to be treated, and intends to
comply with the requirements to qualify annually, as a regulated
investment company under Subchapter M of the Internal Revenue Code
of 1986, as amended. The Company is not a subsidiary of or
consolidated with Morgan Stanley.
Vardiman Black Holdings, LLC is an operator of a Dental Support
Organization (DSO) in Nashville, Tennessee. The company specializes
in offering business management services for pediatric and
endodontist, helping the clinics to focus on patient care while
they handle the administration part of the business.
VARDIMAN BLACK: T Series Marks $6.7MM Loan at 16% Off
-----------------------------------------------------
T Series Middle Market Loan Fund LLC has marked its $6,699,000 loan
extended to Vardiman Black Holdings, LLC to market at $5,659,000 or
84% of the outstanding amount, as of September 30, 2023, according
to T Series' Form 10-Q for the Quarterly period ended, September
30, 2023, filed with the Securities and Exchange Commission.
T Series is a participant in a First Lien Debt Loan to Vardiman
Black Holdings, LLC. The loan accrues interest at a rate of 12.40%
(S +7%) per annum. The loan matures on March 18, 2027. The loan
was on non-accrual status as of September 30, 2023.
T Series Middle Market Loan Fund LLC is a non-diversified,
externally managed specialty finance company focused on lending to
middle market companies. The Company has elected to be regulated as
a business development company under the Investment Company Act of
1940, as amended. In addition, for U.S. federal income tax
purposes, the Company has elected to be treated, and intends to
comply with the requirements to qualify annually, as a regulated
investment company under Subchapter M of the Internal Revenue Code
of 1986, as amended. The Company is not a subsidiary of or
consolidated with Morgan Stanley.
Vardiman Black Holdings, LLC is an operator of a Dental Support
Organization (DSO) in Nashville, Tennessee. The company specializes
in offering business management services for pediatric and
endodontist, helping the clinics to focus on patient care while
they handle the administration part of the business.
VARI-FORM INC: 95% Markdown for $2.1MM Midcap Financial Loan
------------------------------------------------------------
MidCap Financial Investment Corporation has marked its $2,110,000
loan extended to Vari-Form Inc to market at $95,000 or 5% of the
outstanding amount, as of September 30, 2023, according to Midcap
Financial's Form 10-Q Report for the Quarterly period ended
September 30, 2023, filed with the Securities and Exchange
Commission.
Midcap Financial is a participant in a First Lien Secured Debt Loan
to Vari-Form Inc. The loan accrues interest at a rate of 11% (7%
Cash plus 4% Payment In Kind) per annum. The loan matured last
February 2, 2023.
Midcap Financial has classified the loan as non-accrual.
Midcap Financial Investment Corporation is a Maryland corporation
incorporated on February 2, 2004. It is a closed-end, externally
managed, non-diversified management investment company that has
elected to be treated as a business development company under the
Investment Company Act of 1940. Apollo Investment Management, L.P.
is the investment adviser and an affiliate of Apollo Global
Management, Inc. and its consolidated subsidiaries (AGM). Apollo
Investment Administration, LLC, an affiliate of AGM, provides,
among other things, administrative services and facilities for
Midcap.
Founded in 2007, Vari-Form Inc makes automotive stamping products.
VARI-FORM INC: 95% Markdown for $5.8MM Midcap Financial Loan
------------------------------------------------------------
MidCap Financial Investment Corporation has marked its $5,860,000
loan extended to Vari-Form Group, LLC to market at $264,000 or 5%
of the outstanding amount, as of September 30, 2023, according to
Midcap Financial's Form 10-Q Report for the Quarterly period ended
September 30, 2023, filed with the Securities and Exchange
Commission.
Midcap Financial is a participant in a First Lien Secured Debt Loan
Vari-Form Group, LLC. The loan accrues interest at a rate of 11%
(7% Cash plus 4% Payment In Kind) per annum. The loan matured last
February 2, 2023.
Midcap Financial has classified the loan as non-accrual.
Midcap Financial Investment Corporation is a Maryland corporation
incorporated on February 2, 2004. It is a closed-end, externally
managed, non-diversified management investment company that has
elected to be treated as a business development company under the
Investment Company Act of 1940. Apollo Investment Management, L.P.
is the investment adviser and an affiliate of Apollo Global
Management, Inc. and its consolidated subsidiaries (AGM). Apollo
Investment Administration, LLC, an affiliate of AGM, provides,
among other things, administrative services and facilities for
MidCap.
Founded in 2007, Vari-Form Inc makes automotive stamping products.
VERTIV GROUP: Moody's Upgrades CFR & Senior Secured Debt to Ba3
---------------------------------------------------------------
Moody's Investors Service upgraded Vertiv Group Corporation's
ratings, including the corporate family rating to Ba3 from B1,
probability of default rating to Ba3-PD from B1-PD, and senior
secured debt ratings to Ba3 from B1. The outlook is maintained at
stable. Moody's also upgraded the company's speculative grade
liquidity rating to SGL-1 from SGL-2.
The upgrade of Vertiv's ratings reflects the company's improved
operating performance highlighted by solid organic revenue growth,
strengthening EBITDA margin, and significant free cash flow. Supply
chain challenges have been largely alleviated and lead times in
acquiring parts and materials have come down over the last year.
Vertiv in turn has been able to improve product delivery times,
which can reduce the significant backlog. The backlog is at very
high levels resulting from both strong order volumes and a capacity
limitations and will result in continued strong operating
performance.
The stable outlook reflects Moody's expectation that Vertiv's
revenue will grow from both increasing volumes and pricing while
profit margin will continue to improve. Debt-to-EBITDA is also
expected to decline and approach 2.7 times by the end of 2024.
RATINGS RATIONALE
Vertiv is well diversified geographically and is increasing its
scale in the rapidly growing data center thermal management market
that is being driven by increasing digitization and Artificial
Intelligence (AI). Demand for Vertiv's cloud and co-location
products will remain solid. Pricing initiatives and operational
leverage together with productivity improvements will continue to
drive margin expansion. However, Moody's expects the magnitude of
price increases will slow relative to the last few years. Also,
there has been weak demand from North American telecom customers
and in the APAC region.
Moody's expect the company to maintain balanced financial policies.
Vertiv publicly announced a reduction of its net leverage target to
1-2 times from 2-3 times. However, Moody's believes Vertiv will
increasingly focus on shareholder initiatives including higher
dividend payouts and share buybacks.
Vertiv's debt-to-LTM EBITDA has improved significantly over the
last few quarters and Moody's expect it to decline further and
approach 2.7 times by the end of 2024. The company's free cash flow
has also strengthened and Moody's expect it will be greater than
$500 million in 2024.
Vertiv's liquidity will remain very good over the next year as
reflected by its SGL-1 speculative grade liquidity rating.
Liquidity is supported by Moody's expectation for positive free
cash flow of more than $500 million over the next 12-18 months.
Vertiv also had $500 million of cash and $545.9 million of
availability on its $570 million asset-based lending (ABL) facility
at September 30, 2023 (net of about $17 million for outstanding
letters of credit and borrowing base limitations).
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Vertiv continues to experience
healthy organic revenue growth, debt-to-EBITDA is maintained around
3.0 times, and EBITA-to-interest expense is sustained above 6.0
times. In addition, Vertiv would be expected to maintain very good
liquidity and a measured approach to shareholder returns for a
rating upgrade.
The ratings could be downgraded if debt-to-EBITDA is sustained
above 4.0 times or EBITA-to-interest expense is sustained below 4.0
times. In addition, the rating could be downgraded if the company
makes a large debt financed acquisition, financial policy becomes
increasingly aggressive, or liquidity weakens.
The principal methodology used in these ratings was Manufacturing
published in September 2021.
Vertiv Group Corporation ("Vertiv" or NYSE: VRT), headquartered in
Columbus, Ohio, provides various infrastructure technologies and
equipment for power and thermal management and infrastructure
monitoring services used in data centers, communication networks,
and commercial and industrial environments.
VILLAGE AT GERMANTOWN: Fitch Lowers IDR to 'BB-'
-------------------------------------------------
Fitch Ratings has downgraded The Village at Germantown, TN's (The
Village) Issuer Default Rating (IDR) to 'BB-' from 'BB+'. Fitch has
also downgraded the following bonds issued by The Health,
Educational and Housing Facility Board of the County of Shelby, TN
on behalf of The Village to 'BB-' from 'BB+':
- $19,999,000 residential care facility mortgage revenue bonds
series 2014.
In addition, Fitch has maintained all of The Village's ratings on
Rating Watch Negative.
Entity/Debt Rating Prior
----------- ------ -----
The Village at
Germantown (TN) LT IDR BB- Downgrade BB+
The Village
at Germantown
(TN) /General
Revenues/1 LT LT BB- Downgrade BB+
The downgrade to 'BB-' reflects The Village's current operating,
occupancy and liquidity challenges that led to very slim MADS
coverage of 0.1x in through the first nine months of fiscal 2023
(year-ended Dec. 31).
Over the last six months, The Village has experienced a further
slowdown in sales and a reduction in independent living unit (ILU)
occupancy to a concerningly low 77%. These decreases were driven by
a lack of demand for its smaller independent living units (ILUs)
and increased competition from a new entrant in the market that has
begun reducing entrance fees and monthly rates in order to fill.
This has led to strained operating metrics and increased entrance
fee refunds for The Village. After ILU sales remained flat,
management expanded the role of a consultant to include the sales
directorship position to help the community address its occupancy
challenges.
Fitch has maintained the Rating Watch Negative on The Village due
to a more onerous rate covenant imposed by majority bondholder
following The Village's rate covenant violation for fiscal 2022.
The violation constituted an Event of Default under its Master
Trust Indenture (MTI). In September 2023, the majority bondholder
waived its right to accelerate the bonds but imposed additional
stipulations to The Village's rate covenant requiring it to
maintain debt service at or above 1.2x (calculated quarterly) for
the fourth quarter (ending Dec. 31) and the first quarter of 2024
(ending March 31).
Failure to achieve this stipulated coverage level in either quarter
will constitute an Event of Default under the MTI. While management
believes they will come in above the 1.2x threshold, Fitch views
this result as uncertain, given the operating, occupancy and
liquidity pressures The Village is currently experiencing.
SECURITY
The bonds are secured by a gross revenue pledge and a first
mortgage lien. A debt service reserve fund provides additional
security.
KEY RATING DRIVERS
Revenue Defensibility - 'bb'
Weakened Demand, Increased Competition
As of Sept. 30, 2023 The Village's ILU occupancy averaged 77%. This
is considerably weaker than its previous five-year average of 88%,
and Fitch believes it supports a weaker revenue defensibility
assessment. The Village has struggled in recent years to re-sell
its smaller units and has experienced increased competition in its
primary market area due to significant price discounting at its
closest competitor, which opened in 2021 and is located
approximately seven miles away. Management expects seven move-ins
before the end of the year. However, additional turnover in ILU
could further pressure occupancy figures.
Operating Risk - 'bb'
Average Operating Metrics; Elevated Leverage
Through the first three quarters of FY23, the community's operating
ratio, net operating margin (NOM) and NOM- adjusted were 104%,
3.3%, and -0.5%. This is an improvement over the previous year
(FY22) figures of 111%, -2.4% and 17.2% but still weak and
significantly weaker than the previous four-year averages of 94.7%,
14.9%, and 24.2%, respectively. While the five-year averages for
The Village's operating metrics still fall in the midrange
category, Fitch believes operating metrics will continue to
struggle if occupancy weakness persists over the Outlook period.
The Village has made sizable capital improvements to its campus in
recent years, as evidenced by its average age of plant of 11.5
years, consistent with Fitch's midrange assessment of its capex
requirements. Capex-to-depreciation has averaged around 50% over
the last five years and particularly ramped up in 2016 and 2017,
averaging roughly 220%. Future capex remains unclear as combining
smaller units is no longer financially accretive for the
organization due to increased construction costs associated with
the location of vacant units.
Financial Profile - 'bb'
Weakened Financial Profile
On Sept. 30, The Village disclosed that its MADS coverage was 0.1x
through the first nine months of the fiscal year. Language recently
added to the MTI stipulates that The Village will be required to
maintain MADS coverage at or above 1.20x in Q4 2023 and Q1 2024 or
risk another Event of Default. Management believes that with the
additional move-ins scheduled before the end of the year they will
generate about $825,000 in entrance fees net of refunds and be
slightly above the required MADS coverage ratio in Q4 2023. The
Village reported days cash on hand (DCOH) of 259 as of Sept. 30,
2023, compared to 304 DCOH in its audited fiscal 2022 financial
statements while cash to debt fell from 34.6% to 29.4% over the
same period. While this level of liquidity is neutral to Fitch's
assessment of The Village's financial profile, this weakening is a
credit concern given its considerable operating challenges and
struggles to fill vacated units in light of its significant
entrance fee refund liability.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Further deterioration in ILU occupancy below current levels;
- Core operations to continue to deteriorate, resulting in
sustained net operating margin (NOM) and operating ratio
pressures;
- Failure to meet required MADS coverage in either Q4 2023 or Q1
2024 would lead to an Event of Default and would pressure the
rating.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- An Outlook revision back to Stable will require stabilized ILU
occupancy of above 88%, coupled with growth in unrestricted
liquidity such that cash to adjusted debt return to at least 50% in
Fitch's forward look.
PROFILE
The Village is a Tennessee not-for-profit corporation organized in
2000 that owns and operates a single site LPC located in
Germantown, TN. It was organized with the assistance of Methodist
LeBonheur Healthcare and has been affiliated with Methodist
LeBonheur Healthcare since its inception. The Village is the only
member of the obligated group, and Methodist LeBonheur Healthcare
has no obligation with regard to The Village's outstanding bonds.
The Village and Methodist LeBonheur Healthcare are parties to an
affiliation agreement through which Methodist LeBonheur Healthcare
receives an annual affiliation fee of $75,000 and provides
assistance and support in the development and operation of The
Village. Fitch views the affiliation favorably as it provides The
Village with unique access to Methodist LeBonheur Healthcare's
broad knowledge base and expertise in healthcare, regulatory and
operational matters. The Village has 230 ILUs (202 independent
living apartments, 28 independent living cottages), 32 ALUs, 16
memory care units and 50 SNF beds. Total operating revenues in 2022
audited were $23.1 million.
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.
WATSONVILLE COMMUNITY HOSPITAL: Ex-Execs Siphoned $4 Million
------------------------------------------------------------
Ben Zigterman of Law360 reports that the liquidation trustee for a
California hospital accused former executives of fraudulently
transferring nearly $4 million from the hospital's coffers to
themselves, their families and friends in the years preceding
Watsonville Community Hospital's Chapter 11 bankruptcy.
About Watsonville Community Hospital
Watsonville Community Hospital --
https://watsonvillehospital.com/-- is your community healthcare
provider that offers a comprehensive portfolio of medical and
surgical services to the culturally diverse tri-county area along
California's Central Coast.
Watsonville Community Hospital sought Chapter 11 protection
(Bankr.
N.D. Cal. Case No. 21-51477) on Dec. 5, 2021. The case is handled
by Honorable Judge Elaine Hammond.
The Debtor's attorneys are Debra Grassgreen, Maxim Litvak and
Steven Golden of Pachulski Stang Ziehl & Jones LLP. Force 10
Partners is the Debtor's financial advisor.
WELLNESS PET: Moody's Cuts CFR to Caa2 & Alters Outlook to Negative
-------------------------------------------------------------------
Moody's Investors Service downgraded Woof Holdings, Inc.'s
("Wellness Pet") Corporate Family Rating to Caa2 from B3 and its
Probability of Default Rating to Caa2-PD from B3-PD. Concurrently,
Moody's downgraded Wellness Pet's existing senior secured first
lien and incremental first lien term loan ratings to Caa2 from B3
and the senior secured second lien term loan rating to Ca from
Caa2. The outlook was changed to negative from stable.
The downgrades reflect Moody's expectation that Wellness Pet will
maintain very high financial leverage and breakeven to slightly
negative free cash flow over the next 12 months, indicating a
rising likelihood of a restructuring or a distressed exchange.
Moody's view reflects that soft growth in consumer demand for
Wellness Pet's products, retailer inventory destocking and higher
operating costs will create challenges to quickly improve the
company's EBITDA performance in 2024. Without a material
improvement in earnings, Moody's believes the high interest burden
will make it increasingly challenging for the company to generate
positive free cash flow to pay down debt and reduce leverage. As a
result, Wellness Pet would need to rely on its ABL revolver to fund
operations and debt service. Moody's views the company's capital
structure as increasingly unsustainable.
Governance risk considerations are material to the rating action.
The company's aggressive financial policy and very high leverage
and cash interest burden constrains the company's cash flow and
elevates risk of a distressed exchange or other debt restructuring.
As a result, Moody's changed the financial strategy & risk
management issuer profile score (IPS) to 5 from 4, the governance
IPS score to G-5 from G-4 and the credit impact score to CIS-5 from
CIS-4.
RATINGS RATIONALE
The Caa2 CFR reflects Wellness Pet's very high leverage and track
record of negative free cash flow over the past seven quarters. The
company's operating performance continues to deteriorate, which
Moody's believes is a combination of weakening consumer demand and
retailer inventory destocking, further exacerbated by inflationary
cost pressures and consumers looking to economize spending. Moody's
expects that debt-to-EBITDA leverage will remain very high at about
10x (on a Moody's adjusted basis) over the next 12 months as
Wellness Pet will be challenged to execute a material earnings
turnaround. While large outlays related to various business
disruptions and cost savings initiatives have moderated, the
company's EBITDA remains heavily adjusted, raising concerns about
earnings quality.
The ratings are supported by Wellness Pet's strong brand
recognition in the relatively stable pet products industry,
expanding product portfolio, diversified channel mix and valuable
asset portfolio. Consumption of pet food and treats is expected to
continue to grow in the low to mid-single digit percentage range
over the next 12 months, supported by a large pet population in the
United States. Pet owners are seeking healthy additions to their
pet's diets which Wellness Pet is well positioned to address,
through continuous introductions of new flavors and packaging
options. However, consumer spending on super premium and premium
options moderated in recent quarters because inflationary pressures
are prompting consumers to be more selective. Slow economic growth
in 2024 and the company's increasing investment in marketing to
drive growth and improve household penetration will create
challenges for Wellness Pet to quickly and meaningfully reverse
recent earnings weakness.
The company's liquidity remains adequate and bolstered by the
incremental term loan executed in July 2023 that facilitated full
repayment of the ABL revolver, which remains undrawn as of
September 2023. Investments to support growth and higher interest
expense will continue to contribute to weak free cash flow that
will lead to some reliance on the revolver. Liquidity reflects full
availability on the $150 million ABL facility that expires in
December 2025, subject to borrowing base limitations, and $19
million of cash as of September 2023. Moody's expects that Wellness
Pet will generate breakeven to slightly negative free cash flow in
2024 that would be a meaningful improvement from -$58 million in
the 12 months ended September 2023. The improvement is driven by a
slight earnings improvement, moderating working capital and lower
capital investments since the dental treats manufacturing expansion
was completed during the second half of 2023. The liquidity sources
provide adequate coverage for the roughly $8.9 million of
requirement annual term loan amortization.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The negative outlook reflects execution risk that Wellness Pet
faces to materially reduce its leverage and generate positive free
cash flow. Moody's expectation remains for debt-to-EBITDA leverage
to remain elevated above 10x in 2024, which along with weak free
cash flow could further increase the risk of a distressed
exchange.
The ratings could be upgraded if the company demonstrates
significant improvement in earnings and earnings quality, with a
track record of positive free cash flow generation and limited
reliance on the ABL revolver to fund operations. The company would
also need to materially reduce leverage and improve and sustain
EBITA-to-interest coverage to a level above 1x.
The ratings could be downgraded if operating performance does not
improve, free cash flow remains negative, liquidity deteriorates,
the likelihood of a distressed exchange or a default increases
further, or recovery estimates decline.
Woof Holdings, Inc. (founded in 1926 and headquartered in
Burlington, Massachusetts; "Wellness Pet") is a global manufacturer
of premium pet food and treats, mainly in North America. The
company owns a portfolio of brands specializing in natural, premium
nutrition focused on health outcomes for both dogs and cats.
Notable brands include Wellness, its flagship brand of premium
natural dry and wet pet food and treats products for dogs and cats,
Whimzees treats focused on dental hygiene, Old Mother Hubbard, Good
Dog, and Good Kitty. The Wellness brand has been established as the
endorser brand over Whimzees and Old Mother Hubbard, Good Dog and
Good Kitty brands. Wellness Pet is positioned within the premium
natural category and is the largest independent pet food
manufacturing company in North America. The company was formed as
part of a leveraged buyout of The Wellness Pet Food Company, Inc.
("WellPet") by Clearlake Capital Group, L.P. in December 2020.
Wellness Pet generated approximately $550 million in net revenue
through the last twelve months (LTM) ending September 30, 2023.
The principal methodology used in these ratings was Consumer
Packaged Goods published in June 2022.
WESTERN GLOBAL AIRLINES: Exits Chapter 11 Bankruptcy
----------------------------------------------------
Western Global Airlines, a US FAA 121 certified long-haul wide-body
cargo airline with worldwide coverage, announced Dec. 4, 2023, that
the Company has successfully completed its comprehensive financial
restructuring. The Company's Plan of Reorganization (the "Plan")
was confirmed by the U.S. Bankruptcy Court for the District of
Delaware after receiving overwhelming support by all voting classes
of creditors and the unanimous support of the Official Committee of
Unsecured Creditors. Under the Plan, WGA has materially reduced its
debt by more than $460 million and infused significant new capital
into the Company, while preserving its seasoned workforce and
long-term relationships with customers and suppliers.
The Company is positioned for a strong and promising future as it
leverages its unique and scalable platform. WGA will benefit from a
greatly enhanced balance sheet, building on its extensive ten-year
experience of safely and reliably operating large wide-body
freighters to more than 400 airports in 135 countries on six
continents. The Company has emerged with its entire pre-petition
fleet of four 747-400 and fifteen MD-11 operational freighters
intact, as well as two MD-11F's that have not yet been conformed,
eleven part-out aircraft, and a large inventory of parts,
materials, and tooling. Further, during the Chapter 11 process, the
Company completed the overhaul of seven spare CF6-80C2 engines.
With the exception of one leased airplane, all aircraft, engines,
and spare parts are 100% owned by the reorganized WGA.
Over the course of just 100 days, the Company restructured its debt
through an in-court process. WGA continued to operate without
disruption and implemented a cash award retention program for
nearly its entire workforce during the process by drawing on $77.5
million of Debtor in Possession (DIP) financing provided by its
owners, Jim and Sunny Neff, who also funded the equity and exit
financing, and waived nearly $100 million of secured and unsecured
prepetition debt held by them in order to provide recovery to all
creditors. This cash consideration is a testament to the Company's
effort to build consensus around its restructuring Plan, which it
is proud to have achieved, and to establish a strong foundation
going forward.
"As the Founder and CEO of Western Global Airlines, my top priority
has always been to preserve the long-term viability of our Company
and protect our people. I am pleased our restructuring process has
achieved that," said Jim Neff. "It continues to be a privilege to
lead our team, especially as WGA has emerged stronger and ready to
thrive again as it has historically done. As always, I am
immensely grateful to our employees, customers, and partners for
their enduring support as we navigated this process. I look
forward to sharing the Company's successes with our loyal employees
and for Western Global to continue to serve as a critical partner
for our customers. We will continue our mission to connect people
worldwide to the urgent necessities that are important to
them—with steadfast and renewed focus and financial resources."
At the Company's confirmation hearing, Weil, Gotshal & Manges LLP
Partner Candace Arthur, counsel for WGA, stated, "The debtors thank
Jim and Sunny Neff for stepping up prepetition when extensive
efforts failed to identify anyone else that would invest in the
company to keep it out of liquidation. The debtors thank them for
financing these Chapter 11 cases through a plan process despite it
not being the easiest and most economic decision for them. The
plan before the Court today is a gifting plan with multiple
stakeholders receiving a recovery that they would, otherwise, not
have. After today the debtors will also thank the owners for
reinvesting with an equity check for the benefit of the reorganized
company."
The presiding judge, the Honorable Karen B. Owens, further
commended the parties "for working together very productively to
make these cases as smooth as one could imagine," later continuing,
"I very much appreciate everyone's hard work to reach consensus."
Her comments followed an affirmation from the Official Committee of
Unsecured Creditors, whose legal representative called the Plan
"highly favorable...[with] overwhelming support of all creditor
classes."
Ms. Arthur concluded the hearing by noting, "Western Global is
better than it was...It is emerging stronger with significantly
less debt, without... operational distractions... And it's poised
to strive even in the face of an industry that continues to have
significant headwinds."
About Western Global Airlines
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.
Western Global Airlines 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.
The U.S. Trustee for Region 3 appointed an official committee to
represent unsecured creditors in the Chapter 11 cases of Western
Global Airlines Inc. The committee retained Willkie Farr &
Gallagher LLP as its lead counsel, Potter Anderson & Corroon LLP as
Delaware and conflicts counsel, and AlixPartners, LLP as financial
advisor.
WESTLAKE SURGICAL: No Decline in Patient Care, PCO Report Says
--------------------------------------------------------------
Dr. Thomas Mackey, the court-appointed patient care ombudsman,
filed with the U.S. Bankruptcy Court for the Western District of
Texas a report regarding the quality and safety of patient care
provided at The Hospital at Westlake Medical Center, a boutique
hospital in Westlake Hills operated by Westlake Surgical, L.P.
The report contains the PCO's findings from his visit on Nov. 24.
According to the report, Westlake has adequate clinical staff for
the number of patients being seen. An appropriate number of
physicians, staff nurses, pharmacists, and other critical staff are
employed to care for the number of active patients.
The PCO observed that while there has been some turnover of staff,
there has been no significant reduction in staffing because of
Chapter 11 and patient care has not deteriorated. Personnel
interviewed displayed a positive attitude of change toward
providing quality and safe care to patients.
The PCO believes issues discovered during the previous visit have
adequately been addressed by Westlake. Westlake has put in place
the processes and structures to build solid infection control and
quality improvement programs.
The following are the points of the PCO visit on November 24:
* Quality and safety of patient care has not decreased since
Westlake filed Chapter 11 nor since the last PCO visit.
* Westlake satisfactorily addressed each concern related to
quality and safety in the first report to the court (infection
control, quality improvement processes, involvement of the
certified dietitian, policy and procedure clarifications or
delineations, replacement of carpet). Westlake now has the
processes and structures to further build solid infection control
and quality improvement programs.
* Three vendors who previously terminated services have
returned to doing business with Westlake.
* Westlake's various licenses (hospital, laboratory,
radiology, pharmacy) are still current and in good standing.
* Personnel interviewed displayed a positive attitude of
change toward providing quality and safe care to patients.
A copy of the ombudsman report is available for free at
https://urlcurt.com/u?l=C9uQO9 from PacerMonitor.com.
About The Hospital at Westlake
Medical Center
The Hospital at Westlake Medical Center is a physician-owned
boutique hospital in Westlake Hills, Texas, a suburb of Austin.
Guided by an unwavering commitment to delivering quality healthcare
services in a comfortable setting, its core service areas include
surgical procedures, outpatient radiology, and a 24/7 emergency
room.
Westlake Surgical, L.P., doing business as The Hospital at Westlake
Medical Center, sought Chapter 11 protection (Bankr. W.D. Texas
Case No. 23-10747) on Sept. 8, 2023. The Honorable Shad Robinson is
the case judge.
The Debtor tapped Hayward, PLLC as bankruptcy counsel and Donlin,
Recano & Company, Inc. as claims agent. eCapital Healthcare Corp.,
the DIP lender, is represented by Foley & Lardner, LLP.
On Sept. 29, 2023, the U.S. Trustee for Region 7 appointed an
official committee to represent unsecured creditors in the Debtor's
Chapter 11 case. The committee is represented by White & Case,
LLP.
Dr. Thomas Mackey is the patient care ombudsman appointed in the
Debtor's case.
WRENCH GROUP: Moody's Affirms 'B3' CFR, Outlook Remains Stable
--------------------------------------------------------------
Moody's Investors Service affirmed Wrench Group LLC's B3 corporate
family rating and B3-PD probability of default rating. At the same
time, Moody's affirmed Wrench Group's B2 ratings on the senior
secured first lien term loan and senior secured first lien
revolving credit facility. The outlook is maintained at stable.
"The ratings affirmation and stable outlook reflect Moody's
expectation for EBITDA and free cash flow to improve in the back
half of 2023 and 2024," says Justin Remsen, Moody's Assistant Vice
President.
"Mild weather, with heating and cooling days far below long term
averages, was the key driver for weaker than anticipated results in
the first half of 2023. Stronger operating performance and
incremental profitability from acquisitions in early 2024 will
result in improved margins with leverage declining to low 6x by the
end of 2024," added Remsen.
RATINGS RATIONALE
Wrench Group's B3 CFR reflects the company's high leverage,
presence in a fragmented market with intense competition, and
industry seasonality with susceptibility to weather conditions.
The rating also considers Wrench's track record of debt funded
acquisitions, where the company has increased leverage above 7x.
Nevertheless, the company has a track record of acquiring and
integrating businesses effectively.
The B3 rating also reflects the non-discretionary nature of Wrench
Group's home repair services (primarily heating, ventilation & air
conditioning (HVAC)) providing steady demand and a track record of
growth throughout the economic cycle. Ratings also reflect the
company's ability to de-lever through earnings growth, and its
position as a larger player in the home services space with
stronger geographical and customer diversification relative to
smaller, local competitors. Moody's believe Wrench will continue to
gain market share through its differentiated service and benefit
from legislation including the Inflation Reduction Act and changes
to refrigerant standards.
Wrench has good liquidity, which Moody's expects to be maintained
over the next 12 to 18 months. The company's liquidity is supported
by about $140 million in cash as of June 30, 2023 and full
availability under the company's $75 million revolving credit
facility expiring April 2025. Cash balances will decline in 2024
given Moody's expectation for acquisition spend, but likely remain
above historical levels. Moody's forecast assumes limited reliance
on the revolver in fiscal year 2024, below the company's springing
covenant test of less than 65% revolver availability. Moody's
projects about $5 million and $20 million of free cash flow in
fiscal 2023 and 2024.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating could be upgraded if debt to EBITDA is sustained below
6.0x, EBITA to interest is sustained above 2.0x, good liquidity is
maintained, and the company adopts a more conservative financial
policy.
The rating could be downgraded if operating performance
deteriorates, debt to EBITDA is sustained above 7.0x, EBITA to
interest is sustained below 1.0x, or liquidity deteriorates.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
Headquartered in Marietta, Georgia, Wrench Group LLC through its
subsidiaries, operates as a provider of home repair services for
heating, ventilation and air conditioning, plumbing, water quality,
and electrical equipment in the US. The company is majority-owned
by Leonard Green & Partners.
XPO INC: Moody's Rates New Incremental $400MM 1st Lien Loan 'Ba1'
-----------------------------------------------------------------
Moody's Investors Service affirmed the ratings of XPO, Inc.,
including the Ba2 corporate family rating and Ba2-PD probability of
default rating. Moody's also affirmed XPO's Ba1 senior secured
credit facilities and senior secured notes along with the Ba3
rating on the company's senior unsecured notes. Concurrently,
Moody's assigned a Ba1 rating to XPO's proposed incremental $400
million first lien term loan due 2031 and a Ba3 rating to its new
$585 million senior notes due 2032. The outlook was changed to
stable from positive. The SGL-2 Speculative Grade Liquidity Rating
is also unchanged.
The proceeds of the new debt offerings will be used to finance the
acquisition of 26 properties and two leased sites from the auction
of Yellow Corporation's real estate portfolio and to refinance
XPO's 6.25% senior notes due in 2025.
The affirmation of the CFR and change in the outlook to stable
reflects the increase in leverage resulting from the debt funded
asset purchase. Moody's estimates pro forma debt-to-LTM EBITDA at
approximately 4.5x, up from 3.6x at September 30, 2023. Leverage
will improve to 3.6x in fiscal 2024. Moody's also predicts a modest
drag on earnings in the near term as the majority of Yellow's
freight volume associated with the terminals has been absorbed by
competitors and XPO will be challenged to regain the freight
business in the near term. From a governance perspective, Moody's
believes the asset purchase delays the reduction in leverage
incorporated in previous expectations and displays a modest
increase in the company's tolerance toward financial risk.
However, Moody's acknowledges that the acquisition of 26 properties
and the assumption of two operating leases will boost XPO's door
count, and curtail previously planned higher capital expenditures
that would have been necessary to replicate the purchase. Further,
the transaction will expedite revenue growth in previously
underserved areas and improve the company's network efficiency.
RATINGS RATIONALE
The ratings reflect XPO's dominant position in the North American
market as a key player among less-than-truckload (LTL)
transportation operators. However, the company concurrently faces
exposure to the cyclical, competitive freight trucking industry,
which is experiencing an economic downturn and rate pressures.
Moody's predicts that freight market conditions will continue to be
challenging due to higher costs and excess capacity in transport
shipping, potentially affecting freight volumes into 2024. In the
short term, Moody's anticipates that XPO will sustain its organic
revenue growth by securing business from smaller carriers who can't
meet capital requirements for fleet maintenance, and through a more
disciplined pricing environment among larger LTL carriers.
Furthermore, Moody's expects that XPO will reap benefits from
ongoing operational initiatives aimed at enhancing network
efficiency within its LTL operations and the expansion to be
realized with the addition of 28 more terminals.
The stable outlook reflects Moody's expectations of revenue growth
stemming from a rebound in freight volumes in 2024 and a
stabilizing pricing environment that should improve operating
performance. Additionally, while leverage will increase from the
current transaction, the company retains its commitment to a
conservative financial policy, including attaining net leverage
below 2.0x.
XPO's liquidity is good, as reflected in the SGL-2 speculative
grade liquidity rating. The company's liquidity benefits from a
$600 million Asset Based-Lending Revolver that is fully available,
a sizeable cash balance of about $355 million at September 30, 2023
and a $200 million letters of credit revolving credit facility with
$61 million available. However, Moody's expects free cash flow to
be negative in 2023 due to elevated capital expenditures associated
with upgrading and adding to its truck fleet, although, cash flow
from operations is expected to be over $600 million.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if XPO continues to practice
conservative financial policies, including debt repayment from
proceeds generated by the sale of its European business. Improving
operating margin, sustained debt-to-EBITDA of less than 3.0x, and
free cash flow to debt of greater than 6% could also result in an
upgrade of the ratings.
The ratings could be downgraded if the company experiences end
market weakness resulting in revenue and operating margin declines
or adopts a more aggressive financial policy, including large debt
financed acquisitions or shareholder distributions. More
specifically, the ratings could be downgraded if adjusted
debt-to-EBITDA is sustained above 4.0x, free cash flow to debt
approaches 3% or EBITDA margin is less than 7%.
The principal methodology used in these ratings was Surface
Transportation and Logistics published in December 2021.
XPO, Inc., headquartered in Greenwich, CT, is a leading
less-than-truckload carrier to a broad set of customers across
multiple industries including industrial/manufacturing, retail &
e-commerce, consumer goods and food & beverage. Revenue for the
twelve months ended September 30, 2023 was approximately $7.6
billion.
YELLOW CORP: To Sell Its Trucking Terminals to Estes for $1.9 Bil.
------------------------------------------------------------------
Steven Church of Bloomberg News reports that former cargo hauler
Yellow Corp. will sell its trucking terminals to more than 20
companies for $1.9 billion, the company said in a court filing on
Monday, December 4, 2023.
The company will sell 128 properties it owns, while another 46
remain for sale, court papers show. The winning bidders include XPO
Inc. which agreed to buy 26 owned locations and two leased
terminals for $870 million.
Rival trucker Estes Express Lines will purchase another 24
locations for about $249 million, and Saia Inc. agreed to buy 17
properties for $236 million.
About Yellow Corporation
Yellow Corporation -- http://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.
The Debtors tapped Kirkland & Ellis LLP as restructuring counsel;
Pachulski Stang Ziehl & Jones LLP as Delaware local counsel;
Kasowitz, Benson and Torres LLP as special litigation counsel;
Goodmans LLP as special Canadian counsel; Ducera Partners LLC as
investment banker; and Alvarez and Marsal as 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 Scholer LLP serves as counsel to the United
States Department of the Treasury.
On Aug. 16, 2023, the United States Trustee for Region 3 appointed
an official committee of unsecured creditors in the Chapter 11
cases. The committee tapped Akin Gump Strauss Hauer & Feld LLP and
Benesch, Friedlander, Coplan & Aronoff LLP as counsel; Miller
Buckfire as investment banker; and Huron Consulting Services LLC as
financial advisor.
YEP COMMERCE: Wins Cash Collateral Access on Final Basis
--------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware authorized
Yep Commerce, Inc. to use cash collateral on a final basis in
accordance with the budget, with a 10% variance.
The court said funds not used by the Debtor in a given month will
be sequestered in a Debtor-in-Possession bank account.
As adequate protection for the use of cash collateral, Bridge Bank,
a subsidiary of Western Alliance Bank, is granted replacement liens
against the Debtor's post-petition cash collateral and the proceeds
thereof, to the same extent, validity, and priority as any
prepetition lien held by Bridge Bank.
As further adequate protection for the use of cash collateral, the
Debtor will continue to make monthly payments consistent with
Bridge Bank's loan documents each month on or before the 10th day
of the month while Debtor is authorized to use cash collateral.
These amounts may be debited from amounts held at Bridge Bank
accounts.
As adequate protection for the use and diminution in value of cash
collateral, Umpqua Bank is granted replacement liens against the
Debtor's postpetition collateral and the proceeds thereof, to the
same extent, validity, and priority as any prepetition lien held by
Umpqua Bank.
A copy of the order is available at https://urlcurt.com/u?l=4TEijM
from PacerMonitor.com.
About Yep Commerce, Inc.
Yep Commerce, Inc. is a general freight trucking company. Its
logistics solutions are designed to serve the needs of individual
shippers, small and mid-sized businesses, as well as enterprise
customers.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D.Del Case No. 23-11820) on November 6,
2023. In the petition signed by Airende Ojeomogha, chief executive
officer, the Debtor disclosed up to $10 million in both assets and
liabilities.
Judge Laurie Selber Silverstein oversees the case.
Jason S. Levin, Esq., at Morris James LLP, represents the Debtor as
legal counsel.
[] Creditsafe Releases Retail Financial & Bankruptcy Outlook
------------------------------------------------------------
Amid rising inflation, a cost-of-living crisis and a steep decline
in consumer spending, many retailers are calling for flat to
declining sales this year. So, retail bankruptcies have become more
common in recent years with the likes of Serta Simmons Bedding,
Neiman Marcus Group and JCPenney filing for Chapter 11. On December
4, 2023, Creditsafe released its Financial & Bankruptcy Outlook:
Retail report, which examines how financial planning, cash flow
management and Accounts Payable management have affected the
financial health of U.S. retailers.
The report provides an in-depth analysis of the financial health
and payment behaviors of 10 major U.S. retailers, including Serta
Simmons Bedding, Macy's, Inc., JCPenney, Lowe's Companies Inc.,
Neiman Marcus Group Ltd. LLC, Nordstrom, Inc., Stein Mart, Inc.,
Target Corporation, The Kroger Co. and Belk Inc. The data included
in the report was gathered from multiple sources, including
financial earnings reports released by the retailers, filings with
the U.S. Securities and Exchange Commission and the Creditsafe
credit risk and intelligence platform.
Highlights from the report include:
-- The Kroger Co. is in strong financial shape with increased sales
and profitability and a track record of paying its bills on time.
The company pays 88% to 92% of its bills on time, which means very
few of its bills are paid late. Plus, the value of its late
payments dropped significantly in October 2023. It's also worth
noting that Kroger's Days Beyond Terms score (the number of days
past payment terms it takes to pay bills) has ranged between 2 and
6 for the last 12 months and was over 5 times lower than the
industry average (11.44) in October. -- With increasing net income
and consistently low Days Beyond Terms (DBT), Target is on the
right track. The retailer has one of the lowest Days Beyond Terms
(DBT) scores out of the retailers examined in the report. To put
this into context, Target's DBT has ranged between 4 and 6 for the
last 12 months -- meaning it typically pays its bills within a week
of the agreed payment terms. Meanwhile, the industry average DBT
was between 13 and 15. -- Macy's and JCPenney may be in the same
category of department stores, but their financial health differs
vastly. Macy's has improved its cash flow through disciplined sales
and inventory forecasting. This has helped keep its DBT low for the
last 12 months and drastically reduce the number of delinquent
bills (91+ days). On the other hand, JCPenney, which filed for
bankruptcy in May 2020, is struggling to pay its bills with an
increasing number of delinquent payments (91+ days) in recent
months. -- Neiman Marcus is struggling with declining revenue and
late payments, while Nordstrom's annual revenue has grown and DBT
has consistently been below the industry average. Three years since
filing for bankruptcy, Neiman Marcus' quarterly revenue and store
sales have dropped. Although its track record of paying bills on
time has been erratic over the last six months, the number of late
payments (61-90 days) and delinquent payments (91+ days) dropped
considerably in the last two months. Meanwhile, Nordstrom is faring
better with a DBT that has been consistently below the industry
average DBT. Plus, has its finances in good working order. Its DBT
has consistently been below the industry average and its ability to
pay bills on time has markedly improved in recent months.
Matthew Debbage, CEO of the Americas and Asia for Creditsafe, said,
"If our analysis has proven anything, it's that Accounts Payable
management can improve cash flow and lower the risk of failure. But
more than that, it shines a light on an important risk metric that
many businesses aren't aware of -- Days Beyond Terms (DBT) -- which
indicates the likelihood that a company will become seriously
delinquent (91+ days) on bills or that a company will go bankrupt
within 12 months. As our report uncovers, retailers with higher DBT
scores tend to struggle with making payments and are often plagued
by declining sales, mounting debt and liquidity issues. Meanwhile,
retailers with consistently low DBT scores tend to have their
finances under better control. Understanding what factors influence
a company's financial health is critical as retailers face hard
times ahead and consumer spending continues to decline."
About Creditsafe
Creditsafe, the global expert in credit monitoring and risk
management, is the world's most used provider of business reports.
Today, over 115,000 customers globally depend on Creditsafe to make
critical business decisions. Using real-time data from over 9,000
sources across over 200 countries and territories, Creditsafe's
mission is to help businesses mitigate financial, legal and
compliance risks, while also empowering them to make more informed
decisions.
[^] Recent Small-Dollar & Individual Chapter 11 Filings
-------------------------------------------------------
In re Bellareed Construction & Remodeling, LLC
Bankr. N.D. Ga. Case No. 23-61726
Chapter 11 Petition filed November 28, 2023
See
https://www.pacermonitor.com/view/TA5GU6Y/Bellareed_Construction__Remodeling__ganbke-23-61726__0001.0.pdf?mcid=tGE4TAMA
represented by: Douglas Jacobson, Esq.
LAW OFFICES OF DOUGLAS JACOBSON, LLC
E-mail: douglas@douglasjacobsonlaw.com
In re Zina Annette Roberts
Bankr. N.D. Ga. Case No. 23-61702
Chapter 11 Petition filed November 28, 2023
In re Frank C. Nelsen
Bankr. N.D. Ill. Case No. 23-81464
Chapter 11 Petition filed November 28, 2023
represented by: Darron Burke, Esq.
BARRICK, SWITZER, LONG, BALSLEY &
VAN EVERA, LLP
In re Sis Trucking, LLC
Bankr. D. Neb. Case No. 23-41123
Chapter 11 Petition filed November 28, 2023
See
https://www.pacermonitor.com/view/7RTEXZA/Sis_Trucking_LLC__nebke-23-41123__0001.0.pdf?mcid=tGE4TAMA
represented by: John A. Lentz, Esq.
LENTZ LAW, PC, LLO
E-mail: john@johnlentz.com
In re SAI SB Center, LLC
Bankr. D.N.J. Case No. 23-21025
Chapter 11 Petition filed November 28, 2023
See
https://www.pacermonitor.com/view/RUMECKI/SAI_SB_Center_LLC__njbke-23-21025__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re VL Restaurant Group Inc.
Bankr. E.D.N.Y. Case No. 23-74448
Chapter 11 Petition filed November 28, 2023
See
https://www.pacermonitor.com/view/XIML6WQ/VL_Restaurant_Group_Inc__nyebke-23-74448__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re Gregory Terrance Curtis
Bankr. C.D. Cal. Case No. 23-17908
Chapter 11 Petition filed November 29, 2023
represented by: Stephen Burton, Esq.
In re Hernan Chalco
Bankr. C.D. Cal. Case No. 23-11682
Chapter 11 Petition filed November 29, 2023
represented by: Stephen Burton, Esq.
In re Xiaoyong Lai
Bankr. N.D. Cal. Case No. 23-51382
Chapter 11 Petition filed November 29, 2023
represented by: Arasto Farsad, Esq.
In re Lee Tile and Stone
Bankr. S.D. Cal. Case No. 23-03742
Chapter 11 Petition filed November 29, 2023
See
https://www.pacermonitor.com/view/SBJC7RI/Lee_Tile_and_Stone__casbke-23-03742__0001.0.pdf?mcid=tGE4TAMA
represented by: Vik Chaudhry, Esq.
VC LAW GROUP LLP
E-mail: vik@thevclawgroup.com
In re Mini Mansion, LLC
Bankr. E.D. Mich. Case No. 23-50440
Chapter 11 Petition filed November 29, 2023
See
https://www.pacermonitor.com/view/EW6QBHQ/Mini_Mansion_LLC__miebke-23-50440__0001.0.pdf?mcid=tGE4TAMA
represented by: Guy T. Conti, Esq.
CONTILEGAL
E-mail: gconti@contilegal.com
In re 2815 Atlantic Avenue, LLC
Bankr. E.D.N.Y. Case No. 23-74465
Chapter 11 Petition filed November 29, 2023
See
https://www.pacermonitor.com/view/BB2VLJY/2815_Atlantic_Avenue_LLC__nyebke-23-74465__0001.0.pdf?mcid=tGE4TAMA
represented by: Anne Penachio, Esq.
PENACHIO MALARA, LLP
E-mail: frank@pmlawllp.com
In re Alla Borisov
Bankr. E.D.N.Y. Case No. 23-44363
Chapter 11 Petition filed November 29, 2023
represented by: Alla Kachan, Esq.
In re Park & Main Restaurant, Inc
Bankr. E.D.N.Y. Case No. 23-74476
Chapter 11 Petition filed November 29, 2023
See
https://www.pacermonitor.com/view/GW2MYPY/Park__Main_Restaurant_Inc__nyebke-23-74476__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re Prospect 631 Venture Corporation
Bankr. E.D.N.Y. Case No. 23-44348
Chapter 11 Petition filed November 29, 2023
See
https://www.pacermonitor.com/view/Z4VHULQ/Prospect_631_Venture_Corporation__nyebke-23-44348__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re R&P Land Company LLC
Bankr. N.D. Ala. Case No. 23-03236
Chapter 11 Petition filed November 30, 2023
See
https://www.pacermonitor.com/view/BRMY4QQ/RP_Land_Company_LLC__alnbke-23-03236__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re Aloa-ETS LLC
Bankr. D. Ariz. Case No. 23-08632
Chapter 11 Petition filed November 30, 2023
See
https://www.pacermonitor.com/view/RB2FTOY/ALOA-ETS_LLC__azbke-23-08632__0001.0.pdf?mcid=tGE4TAMA
represented by: Nathan E. Carr, Esq.
CARR LAW, PLLC
E-mail: natecarrlaw@yahoo.com
In re Arcittera Group, LLC
Bankr. D. Ariz. Case No. 23-08640
Chapter 11 Petition filed November 30, 2023
See
https://www.pacermonitor.com/view/EAWRJJI/ARCITERRA_GROUP_LLC__azbke-23-08640__0001.0.pdf?mcid=tGE4TAMA
represented by: Gerald Shelley, Esq.
FENNEMORE CRAIG, P.C.
E-mail: gshelley@fennemorelaw.com
In re Tom Delaney
Bankr. N.D. Cal. Case No. 23-41574
Chapter 11 Petition filed November 30, 2023
represented by: Lars Fuller, Esq.
THE FULLER LAW FIRM PC
E-mail: admin@fullerlawfirm.net
In re Jerome David Mitchell
Bankr. M.D. Fla. Case No. 23-05027
Chapter 11 Petition filed November 30, 2023
In re Short Fork Farms, LLC
Bankr. N.D. Miss. Case No. 23-13661
Chapter 11 Petition filed November 30, 2023
See
https://www.pacermonitor.com/view/2YIZEVI/Short_Fork_Farms_LLC__msnbke-23-13661__0001.0.pdf?mcid=tGE4TAMA
represented by: Craig M. Geno, Esq.
LAW OFFICES OF CRAIG M. GENO, PLLC
In re AMBA Management Corp
Bankr. E.D.N.Y. Case No. 23-44414
Chapter 11 Petition filed November 30, 2023
See
https://www.pacermonitor.com/view/A3AB4TI/AMBA_Management_Corp__nyebke-23-44414__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re Fraleg Quincy Corp
Bankr. E.D.N.Y. Case No. 23-44383
Chapter 11 Petition filed November 30, 2023
See
https://www.pacermonitor.com/view/SN3TLFI/Fraleg_Quincy_Corp__nyebke-23-44383__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re Road Lion Corporation
Bankr. S.D. Ala. Case No. 23-12841
Chapter 11 Petition filed December 1, 2023
See
https://www.pacermonitor.com/view/RLKHIRQ/Road_Lion_Corporation__alsbke-23-12841__0001.0.pdf?mcid=tGE4TAMA
represented by: Anthony Bush, Esq.
THE BUSH LAW FIRM, LLC
E-mail: abush@bushlegalfirm.com
In re Maria E Sanchez
Bankr. C.D. Cal. Case No. 23-12551
Chapter 11 Petition filed December 1, 2023
represented by: John Bauer, Esq.
In re Smoke Showin' Catering, LLC
Bankr. M.D. Fla. Case No. 23-05461
Chapter 11 Petition filed December 1, 2023
See
https://www.pacermonitor.com/view/LNPCMIA/Smoke_Showin_Catering_LLC__flmbke-23-05461__0001.0.pdf?mcid=tGE4TAMA
represented by: Matthew B. Hale, Esq.
STICHTER, RIEDEL, BLAIN & POSTLER, P.A.
E-mail: mhale@srbp.com
In re Estuary Oysters, LLC
Bankr. N.D. Fla. Case No. 23-40469
Chapter 11 Petition filed December 1, 2023
See
https://www.pacermonitor.com/view/DPKSE3Q/Estuary_Oysters_LLC__flnbke-23-40469__0001.0.pdf?mcid=tGE4TAMA
represented by: Michael Moody, Esq.
MICHAEL H. MOODY LAW, P.A.
E-mail:
michael.moody@michaelhmoodylaw.com
In re Kerf, Inc.
Bankr. E.D.N.C. Case No. 23-03508
Chapter 11 Petition filed December 1, 2023
See
https://www.pacermonitor.com/view/IV65FJY/Kerf_Inc__ncebke-23-03508__0001.0.pdf?mcid=tGE4TAMA
represented by: Danny Bradford, Esq.
PAUL D. BRADFORD, PLLC
E-mail: dbradford@bradford-law.com
In re La Belle Famille LLC
Bankr. S.D. Fla. Case No. 23-20014
Chapter 11 Petition filed December 3, 2023
See
https://www.pacermonitor.com/view/UHYPULQ/La_Belle_Famille_LLC__flsbke-23-20014__0001.0.pdf?mcid=tGE4TAMA
represented by: Mark S. Roher, Esq.
LAW OFFICE OF MARK S. ROHER, P.A.
E-mail: mroher@markroherlaw.com
In re Servo Corp LLC
Bankr. E.D. Cal. Case No. 23-24333
Chapter 11 Petition filed December 4, 2023
See
https://www.pacermonitor.com/view/HTKALXI/Servo_Corp_LLC__caebke-23-24333__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re Metro Brokers Florida, LLC
Bankr. M.D. Fla. Case No. 23-05088
Chapter 11 Petition filed December 4, 2023
See
https://www.pacermonitor.com/view/DW342UI/Metro_Brokers_Florida_LLC__flmbke-23-05088__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re Raphael Khorran
Bankr. M.D. Fla. Case No. 23-05477
Chapter 11 Petition filed December 4, 2023
represented by: Buddy Ford, Esq.
BUDDY D. FORD, P.A.
In re Brandy Herndon
Bankr. S.D. Fla. Case No. 23-20038
Chapter 11 Petition filed December 4, 2023
represented by: Susan Lasky, Esq.
In re Hillridge Holding Company, LLC
Bankr. M.D. Ga. Case No. 23-51704
Chapter 11 Petition filed December 4, 2023
See
https://www.pacermonitor.com/view/UJQVD2Y/Hillridge_Holding_Company_LLC__gambke-23-51704__0001.0.pdf?mcid=tGE4TAMA
represented by: Daniel L. Wilder, Esq.
EMMETT L GOODMAN JR LLC
E-mail: bkydept@goodmanlaw.org
In re Gains Capital LLC
Bankr. N.D. Ga. Case No. 23-21361
Chapter 11 Petition filed December 4, 2023
See
https://www.pacermonitor.com/view/WIXFKPI/Gains_Capital_LLC__ganbke-23-21361__0001.0.pdf?mcid=tGE4TAMA
represented by: Charles N. Kelley, Jr., Esq.
KELLEY & CLEMENTS LLP
E-mail: ckelley@kelleyclements.com
In re Georgia's Perfect Solutions LLC
Bankr. N.D. Ga. Case No. 23-61994
Chapter 11 Petition filed December 4, 2023
See
https://www.pacermonitor.com/view/37XYFZA/Georgias_Perfect_Solutions_LLC__ganbke-23-61994__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re The Guru LLC
Bankr. N.D. Ga. Case No. 23-61969
Chapter 11 Petition filed December 4, 2023
See
https://www.pacermonitor.com/view/LP7JNIQ/The_Guru_LLC__ganbke-23-61969__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re 465 Boston Street, LLC
Bankr. D. Mass. Case No. 23-12035
Chapter 11 Petition filed December 4, 2023
See
https://www.pacermonitor.com/view/FUZC5ZY/465_Boston_Street_LLC__mabke-23-12035__0001.0.pdf?mcid=tGE4TAMA
represented by: George J Nader, Esq.
RILEY & DEVER
E-mail: nader@rileydever.com
In re Borohub Gardens LLC
Bankr. E.D.N.Y. Case No. 23-44469
Chapter 11 Petition filed December 4, 2023
See
https://www.pacermonitor.com/view/LHCKQQI/Borohub_Gardens_LLC__nyebke-23-44469__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re Matthews Timber Transport, LLC
Bankr. E.D.N.C. Case No. 23-03521
Chapter 11 Petition filed December 4, 2023
See
https://www.pacermonitor.com/view/LASUVIQ/Matthews_Timber_Transport_LLC__ncebke-23-03521__0001.0.pdf?mcid=tGE4TAMA
represented by: Laurie B. Biggs, Esq.
BIGGS LAW FIRM PLLC
E-mail: lbiggs@biggslawnc.com
In re John Wei
Bankr. E.D. Pa. Case No. 23-13678
Chapter 11 Petition filed December 4, 2023
represented by: Albert Ciardi, Esq.
In re M & T Elevations LLC
Bankr. N.D. Tex. Case No. 23-32858
Chapter 11 Petition filed December 4, 2023
See
https://www.pacermonitor.com/view/T5UNPRQ/M__T_Elevations_LLC__txnbke-23-32858__0001.0.pdf?mcid=tGE4TAMA
represented by: John Paul Stanford, Esq.
QUILLING, SELANDER, LOWNDS, WINSLETT
& MOSER, P.C.
E-mail: jstanford@qslwm.com
In re Jewels Rio
Bankr. W.D. Tex. Case No. 23-51686
Chapter 11 Petition filed December 4, 2023
represented by: Rosa Gonzalez, Esq.
In re Fenex Fitness Facilities, LLC
Bankr. W.D. Wash. Case No. 23-12351
Chapter 11 Petition filed December 4, 2023
See
https://www.pacermonitor.com/view/7Z43DUI/Fenex_Fitness_Facilities_LLC__wawbke-23-12351__0001.0.pdf?mcid=tGE4TAMA
represented by: Thomas D. Neeleman, Esq.
NEELEMAN LAW GROUP, P.C.
E-mail: courtmail@expresslaw.com
In re The Daniels Partners LLC
Bankr. N.D. Ga. Case No. 23-62074
Chapter 11 Petition filed December 5, 2023
Filed Pro Se
In re 7502 Harrisburg LLC
Bankr. S.D. Tex. Case No. 23-34813
Chapter 11 Petition filed December 5, 2023
Filed Pro Se
*********
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
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liabilities delivered to nation's bankruptcy courts. The list
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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.
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