/raid1/www/Hosts/bankrupt/TCR_Public/240517.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, May 17, 2024, Vol. 28, No. 137
Headlines
AIP MC: S&P Downgrades ICR to 'B-' on Elevated Credit Metrics
AKOUSTIS TECHNOLOGIES: Financial Woes Raise Going Concern Doubt
ALTICE USA: S&P Downgrades ICR to 'CCC+', Outlook Negative
ANTERO MIDSTREAM: S&P Raises ICR to 'BB+', Outlook Stable
APPLIED ENERGETICS: Incurs $2.6 Million Net Loss in First Quarter
APPLIED ENERGETICS: Raises $4.2 Million From Private Placement
APPLIED PEDIATRICS: Tamara Miles Ogier Named Subchapter V Trustee
ARC FALCON I: Moody's Affirms 'B2' CFR, Outlook Stable
ARCADIA BIOSCIENCES: Posts $2.4 Million Net Loss in First Quarter
ARCH THERAPEUTICS: Amends Registration Rights Agreements
ARCH THERAPEUTICS: Incurs $1.47 Million Net Loss in Second Quarter
ARTISAN CONSUMER: Incurs $7,577 Net Loss in Third Quarter
ARTISAN MASONRY: Unsecureds to Get $1K per Month over 5 Years
AYRO INC: Incurs $3.6 Million Net Loss in First Quarter
BENEVOLENT HOME: Stephen Metz Named Subchapter V Trustee
BERRY CORP: S&P Alters Outlook to Negative, Affirms 'B-' ICR
BETANXT INC: Moody's Cuts CFR & Secured First Lien Term Loan to B3
BLACKBERRY LTD: Smaldone-Alsup to Step Down as Director
BROWNIE'S MARINE: Incurs $1.25 Million Net Loss in 2023
CALIFORNIA QSR: Walter Dahl of Dahl Law Named Subchapter V Trustee
CAMBER ENERGY: Incurs $26.4 Million Net Loss in First Quarter
CAN B CORP: Dismisses BF Borgers as Auditor
CAPITAL POWER:S&P Rates C$450MM Fixed-To-Fixed Rate Sub Notes 'BB'
CAPSITY INC: Court Directs Appointment of Examiner
CAPSTONE INVESTMENTS: Unsecureds to be Paid in Full in Plan
CAZOO GROUP: Delays Filing of 2023 Annual Report
CELESTICA INC: Moody's Hikes CFR to Ba1 & Alters Outlook to Stable
CELESTICA INC: S&P Rates New US$500MM Term Loan B 'BB'
CHECKOUT HOLDING: Invesco VVR Marks $201,000 Loan at 47% Off
CHICKEN SOUP: Reaches Deal to Raise $175 Million of Working Capital
CITY BREWING: S&P Upgrades ICR to 'B-' Following Restructuring
CLEAN HARBORS: Moody's Alters Outlook on 'Ba2' CFR to Positive
COGENT COMMUNICATIONS: S&P Rates Senior Unsecured Debt to 'B+'
COTY INC: Fitch Hikes LongTerm IDR to 'BB+', Outlook Stable
CYTOSORBENTS CORP: 2nd Amended and Restated Bylaws OK'd
D&D TRANS: Voluntary Chapter 11 Case Summary
DATASEA INC: Incurs $4.1 Million Net Loss in Third Quarter
DIVERSIFIED HEALTHCARE: Reports $86.3MM Net Loss in 2024 Q1
EIGER BIOPHARMA: SSG Served Investment Banker in Asset Sale
EMCORE CORP: Incurs $8.49 Million Net Loss in Second Quarter
ENCORE CAPITAL: Fitch Assigns BB+(EXP) Rating on Sr. Secured Notes
ENERGY FOCUS: Incurs $418K Net Loss in First Quarter
EUROASIA PRODUCTS: L. Todd Budgen Named Subchapter V Trustee
EYECARE PARTNERS: S&P Upgrades ICR to 'CCC+', Outlook Stable
FATINA CUISINE: Unsecureds Will Get 10% of Claims over 36 Months
FINANCE OF AMERICA: Reports First Quarter 2024 Results
FIRST CHOICE: Bush & Associates Raises Going Concern Doubt
FLORIDA FOOD: Invesco VVR Marks $1.1MM Loan at 28% Off
FLUX POWER: Financial Struggles Raise Going Concern Doubt
GENIE INVESTMENTS: Court OKs Appointment of Maria Yip as Examiner
GHX ULTIMATE:S&P Affirms 'B-' Issuer Credit Rating, Outlook Stable
GLOBAL ACQUISITIONS: Incurs $13K Net Loss in First Quarter
GLOBAL ONE: Unsecured Creditors Out of Money in Plan
GOODLIFE PHYSICAL: No Change in Patient Care, 7th PCO Report Says
GOTO GROUP: Invesco VVR Marks $3.2MM Loan at 30% Off
HARBOR HOLDINGS: Fitch Affirms 'B' LongTerm IDR, Outlook Positive
HARVARD APPARATUS: Incurs $2 Million Net Loss in First Quarter
HEALTHIER CHOICES: Incurs $2.86 Million Net Loss in First Quarter
HEYWOOD HEALTHCARE: PCO Reports No Staffing Changes
HOLLYWOOD LOFTS: Court OKs Cash Collateral Access on Final Basis
HOT CRETE: Seeks Cash Collateral Access
ICP GROUP: Invesco VVR Marks $917,000 Loan at 17% Off
INFINITE ELECTRONICS: Invesco VVR Marks $441,000 Loan at 15% Off
INNOVATE CORP: S&P Downgrades ICR to 'CCC' on Weakening Liquidity
INSIGHT ENTERPRISES: S&P Assigns 'BB+' ICR on First-Time Issuance
J CABELAS: Joseph Kershaw Spong Named Subchapter V Trustee
J FRANKLIN: Joseph Kershaw Spong Named Subchapter V Trustee
JACON LLC: Seeks to Use Cash Collateral Thru July 31
KIDKRAFT INC: Files for Chapter 11 to Facilitate Sale
LUMEN TECHNOLOGIES: Names Chad Ho EVP & Chief Legal Officer
MARINUS PHARMACEUTICALS: Reports $38.7M Net Loss in First Quarter
MARIZYME INC: WithumSmith+Brown Raises Going Concern Doubt
MATCHBOX BUSINESS: Files Emergency Bid to Use Cash Collateral
MAVENIR SYSTEMS: Invesco VVR Marks $2.9MM Loan at 31% Off
MAWSON INFRASTRUCTURE: Posts $19.9-Mil. Net Loss in First Quarter
MEDASSETS SOFTWARE: Invesco VVR Marks $774,000 Loan at 37% Off
MEDPLUS URGENT: Robert Byrd Named Subchapter V Trustee
MEXCALITO TACO-BAR: Wins Cash Collateral Access Thru June 6
MICROVISION INC: Incurs $26.3 Million Net Loss in First Quarter
MJW MARKETING: Court OKs Interim Cash Collateral Access
MOLD-RITE PLASTIC: Invesco VVR Marks $3.2MM Loan at 18% Off
NASHVILLE SENIOR: PCO Report Raises Concern Over Workforce Issues
NEP GROUP: Fitch Affirms 'B-' LongTerm IDR, Outlook Stable
NEUEHEALTH INC: Incurs $4.18 Million Net Loss in First Quarter
NEVER SLIP: $30MM DIP Loan from Antares Has Final OK
NFH LEASING: Voluntary Chapter 11 Case Summary
NISOURCE INC: Fitch Assigns 'BB+' Rating on Jr. Subordinated Notes
NITRO FLUIDS: Voluntary Chapter 11 Case Summary
NORTHWEST BIOTHERAPEUTICS: Posts $18.3M Net Loss in First Quarter
NOVABAY PHARMACEUTICALS: Posts $3.21-Mil. Net Loss in First Quarter
NUO THERAPEUTICS: Incurs $709K Net Loss in First Quarter
PEACOCK JEWELERS: Unsecureds to Split $315K in Subchapter V Plan
PINNACLE FOODS: Walter Dahl of Dahl Law Named Subchapter V Trustee
PLANTATION JEWELERS: Files Emergency Bid to Use Cash Collateral
PRA GROUP: S&P Rates New $400MM Senior Unsecured Notes 'BB'
QHSLAB INC: Recurring Losses Raise Going Concern Doubt
QUEST SOFTWARE: Invesco VVR Marks $4.7MM Loan at 20% Off
RECEPTION MEZZANINE: Fitch Lowers LongTerm IDR to B-, Outlook Neg.
REPIDA INC: Voluntary Chapter 11 Case Summary
RHP HOTEL: Moody's Hikes Rating on Senior Unsecured Notes to Ba3
RICEBRAN TECHNOLOGIES: Incurs $1.8-Mil. Net Loss in First Quarter
ROCHESTER HOLDING: Court OKs Interim Cash Collateral Access
RODA LLC: UST Seeks to Appoint Kenneth Eiler as Chapter 11 Trustee
SAM & MIKO: Files for Bankruptcy, Online Auction Ends May 23
SANDVINE CORP: Invesco VVR Marks $289,000 Loan at 52% Off
SERVICE PROPERTIES: Moody's Cuts Gtd. Unsecured Notes Rating to B2
SERVICE PROPERTIES: S&P Rates Guaranteed Unsecured Notes 'BB'
SINTX TECHNOLOGIES: Incurs $886K Net Loss in First Quarter
SORENSON COMMUNICATIONS: S&P Withdraws 'B-' Issuer Credit Rating
SPHERE 3D: Incurs $4.48 Million Net Loss in First Quarter
SPIRIT AIRLINES: Fitch Lowers Rating on 2017-1 Cl. B Certs to 'B+'
SPIRIT AIRLINES: Reports $142.6MM Net Loss in 2024 First Quarter
STRAITLINE PUMPS: Voluntary Chapter 11 Case Summary
TALEN ENERGY: Moody's Alters Outlook on 'B1' CFR to Positive
TERRASCEND CORP: Incurs $14.8 Million Net Loss in First Quarter
TIPPETT STUDIO: Court OKs Interim Cash Collateral Access
TONIX PHARMACEUTICALS: Recurring Losses Raise Going Concern Doubt
TRANS-LUX CORP: Incurs $1.3 Million Net Loss in First Quarter
TRUGREEN LP: Invesco VVR Marks $1.4MM Loan at 21% Off
TTM TECHNOLOGIES: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
TURNONGREEN INC: Marcum LLP Raises Going Concern Doubt
TYCO GROUP: Walter Dahl of Dahl Law Named Subchapter V Trustee
UNITEDLEX CORP: Invesco VVR Marks $867,000 Loan at 17% Off
VAPOTHERM INC: Incurs $14.8 Million Net Loss in First Quarter
VERRICA PHARMACEUTICALS: Says Losses Raise Going Concern Doubt
VFX FOAM: Seeks Cash Collateral Access
VINTAGE WINE: Lenders Extend Forbearance Agreement Until June 4
VOLITIONRX LTD: Financial Strain Raises Going Concern Doubt
WC CONCRETE: Unsecureds to Split $15K in Subchapter V Plan
WELCOME GROUP: Seeks Continued Cash Collateral Access
WOMEN'S CARE: Invesco VVR Marks $402,000 Loan at 22% Off
[*] More U.S. Businesses Struggling with Cash Flow, Study Shows
[] BOOK REVIEW: Taking Charge
*********
AIP MC: S&P Downgrades ICR to 'B-' on Elevated Credit Metrics
-------------------------------------------------------------
S&P Global Ratings lowered its rating on grinding media producer
AIP MC Holdings LLC (Molycop) to 'B-' from 'B' and lowered its
issue-level rating on the company's first-lien term loan to 'B-'.
The '3' recovery rating remains unchanged.
The stable outlook reflects S&P's expectation that Molycop's debt
to EBITDA will trend to 7x over the next 12 months as the impact to
earnings from the recent restructuring efforts lessens and market
conditions and commodity prices support a healthy demand and
customer production base.
S&P said, "We expect Molycop's leverage to remain above 7x during
fiscal 2024. The company's credit metric cushion is tight, and we
expect leverage to remain above 7x for at least the next 12 months.
Restructuring efforts are weighing on Molycop's earnings. During
the first quarter of fiscal 2024, Molycop put its Waratah steel
mill facility in Australia on care and maintenance. These actions
are consistent with the company's efforts in recent years to
simplify its footprint, take out cost, and make its cost structure
more flexible. However, this will impact the company's S&P Global
Ratings-adjusted EBITDA by $40 million to $50 million in fiscal
2024 (June year-end). With that said, we view these steps as
positive in the longer term and assume the site closure will result
in about $10 million of cost savings annually."
Despite supportive market conditions and relatively stable
earnings, Molycop's credit cushion is greatly diminished as a
result of the incremental debt put in place in fiscal 2022. The
company's S&P Global Ratings-adjusted debt was $1.3 billion as of
the quarter ended December 2023, compared with $834 million in June
2021. However, during this time, its S&P Global Ratings-adjusted
EBITDA has been relatively stable, averaging about $160 million
annually, supported by its alloy and metal cost passthrough
mechanisms and its pricing power from its leading market position.
While this highlights the company's earnings stability amid an
inflationary cost environment, its EBITDA has not grown
sufficiently to sustain S&P Global Ratings-adjusted leverage
expectation of 5x-6x.
S&P said, "We expect its debt to EBITDA to remain above 7x over the
next 12 months. With this diminished cushion, a small impact to
earnings from modest supply constraints or disruptions in the
mining industry, such as the Cobre Panama shutdown, could result in
leverage sustained significantly above 7x. This diminished cushion
coincides with weaker S&P Global Ratings-adjusted EBITDA from these
restructuring actions, thus leading to the company sustaining
leverage above 7x for longer than anticipated.
"We believe supportive commodity prices will drive positive demand
over the next 12-24 months. Under the current backdrop of strong
copper and gold prices, Molycop's mining customers will seek to
maximize production and yields, which is where the company's
product and technology offerings differentiate itself from lower
cost grinding media producers. We believe the company's leading
market share, global footprint, and entrance into the high chrome
grinding media production position Molycop well for future demand
and as production supply constraints ease."
In January 2024, the company entered into an agreement for the
purchase of a grinding media plant and equipment for high chrome
production capacity, which will help certain customers maximize
yields amid declining grades of multiple commodities and offer a
full suite of grinding media products.
S&P said, "Despite lower expected EBITDA this year, we still
anticipate Molycop will generate modest positive free operating
cash flow (FOCF) even with higher capital expenditures (capex)
projected this year. A large portion of the company's restructuring
charges were noncash, so the impact to cash flows is lower, but we
anticipate the company's interest burden of $115 million will
constrain its FOCF generation. We expect capex to decline with the
completion of its Indonesian NG SAG line and placement of its
Australian steel mill on care and maintenance earlier this year.
"However, with our expectations of improved earnings, cost
structure efficiencies, and reduced capex, we expect FOCF to
gradually increase to $20 million-$35 million over the next 24
months. Additionally, with the availability of long-dated maturity
profiles of credit facilities and modest cash equivalents, we
expect the company to maintain a supportive liquidity position over
the next few years.
"The stable outlook reflects our expectation that Molycop's debt to
EBITDA will trend back toward 7x over the next 12 months as the
impact to earnings from the recent restructuring efforts roll off
and market conditions and commodity prices support a healthy demand
and customer production base."
S&P could lower its rating if Molycop experiences a sustained
decline in earnings resulting in a deteriorating liquidity position
and S&P views its capital structure to be unsustainable. This could
result from the following:
-- Negative FOCF indicating a deterioration in profitability and
possible loss of market share; or
-- Increase in debt-funded discretionary spending such as
acquisitions or shareholder distributions.
S&P could raise its rating on Molycop if its leverage trends below
6x. This could result from stronger profitability that improving
EBITDA margins and FOCF, indicating Molycop's business is
strengthening as it completes its restructuring and footprint
simplification strategies and continues to incrementally grow its
market share as new gold and copper production comes online.
AKOUSTIS TECHNOLOGIES: Financial Woes Raise Going Concern Doubt
---------------------------------------------------------------
Akoustis Technologies, Inc. disclosed in a Form 10-Q Report filed
with the U.S. Securities and Exchange Commission for the quarterly
period ended March 31, 2024, that substantial doubt exists about
its ability to continue as a going concern within the next 12
months.
According to the Company, as of March 31, 2024, it had cash and
cash equivalents of $15.2 million and working capital of $10.3
million. In the absence of additional liquidity, the Company
anticipates that its existing cash resources, with a continued
focus on cash conservation, is sufficient to fund its operations
into the third quarter of fiscal 2025. There is no assurance that
the Company's projections and estimates are accurate. Furthermore,
an adverse judgment against the Company in the trial with respect
to Qorvo Inc. vs. Akoustis Technologies, Inc. DE Case
1:21-cv-01417-JPM, would reduce the amount of time that the Company
could continue operating with its current cash resources, and
create an urgent need for additional liquidity or result in the
Company's curtailing or ceasing operations and seeking protection
by filing a voluntary petition for relief under the Bankruptcy
Code.
The Company's short-term and long-term liquidity requirements
primarily arise from funding:
-- research and development expenses,
-- G&A expenses including salaries, bonuses, and commissions,
-- working capital requirements,
-- business acquisitions and investments it may make from time
to time, and
-- interest and principal payments related to its $44 million
aggregate principal amount of outstanding convertible notes and $4
million promissory note. Additionally, the Delaware Trial is
currently in process. To the extent that the outcome of the trial
includes judgments against the Company for significant damages or
other relief, the Company's liquidity will be additionally and
severely constrained.
Additionally, the Company has incurred losses and negative cash
flow from operations since inception and is experiencing financial
and operating challenges.
The Company recorded a net loss of $23.3 million for the three
months ended March 31, 2024, compared to a net loss of $15.5
million for the three months ended March 31, 2023.
Its operations thus far have been funded primarily with sales of
equity and debt securities, as well as contract research and
government grants, revenue with customers, foundry services and
engineering services. In November 2023, the Company announced that
it had undertaken significant expense reductions and cost-saving
measures to reduce its operating cash flow burn. As a result of
these cost-savings initiatives, the operating expenditures
supporting the future growth of its manufacturing capabilities and
expansion of our product offerings have decreased, along with
decreases in research and development and headcount costs.
Additionally, the Company estimates that approximately $0.7 million
of additional cash is needed to complete construction in progress
assets that are currently not in service, which construction has
been paused as part of these cost-savings initiatives. The Company
is actively managing and controlling its cash outflows to mitigate
liquidity risks.
Until the Company is able to generate sufficient cash flow from
operations to achieve and maintain profitability and meet
obligations as they come due, the Company will need to raise
significant additional capital to sustain its business through,
among other means, public or private equity offerings (including
sales of its common stock under its at-the-market equity offering
program), debt financings, real estate- or equipment-based
financing arrangements, corporate collaborations or licensing
arrangements.
In January 2024, the Company completed a public offering of its
common stock raising $10.4 million in net proceeds. Additionally,
the Company is re-activating its at-the-market equity offering
program pursuant to that certain ATM Sales Agreement, dated May 2,
2022, with Oppenheimer & Co. Inc., Craig-Hallum Group LLC and Roth
Capital Partners, LLC.
Except for the $48 million of common stock remaining available to
be sold under its ATM Sales Agreement with Oppenheimer & Co. Inc.,
Craig-Hallum Capital Group LLC, and Roth Capital Partners, LLC, the
Company has no commitments or arrangements to obtain any additional
funds, and there can be no assurance such funds will be available
on acceptable terms or at all.
If the Company is unable to obtain additional financing in a timely
fashion and on acceptable terms, its financial condition and
results of operations may be materially adversely affected, and it
may not be able to continue operations or execute its stated
commercialization plan.
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/yuncc43n
About Akoustis Technologies
Akoustis Technologies, Inc., headquartered in Huntersville, North
Carolina, is focused on developing, designing, and manufacturing
innovative radio frequency filter products for the wireless
industry, including for products such as smartphones and tablets,
cellular infrastructure equipment, Wi-Fi Customer Premise Equipment
automotive and defense applications.
As of March 31, 2024, the Company has $102.6 million in total
assets, $60.7 million in total liabilities, and $41.9 million in
total stockholders' equity.
ALTICE USA: S&P Downgrades ICR to 'CCC+', Outlook Negative
----------------------------------------------------------
S&P Global Ratings lowered all its ratings on Altice USA Inc. one
notch, including the issuer credit rating to 'CCC+', and removed
them from Credit Watch, where it placed them with negative
implications on May 2, 2024.
The negative outlook reflects that S&P could lower its ratings if
the company opts to pursue a debt restructuring over the next
year.
S&P said, "We believe Altice USA's capital structure is
unsustainable. We believe the company is vulnerable to nonpayment
long term and depends on favorable business, financial, and
economic conditions to meet its financial obligations as they come
due in 2027 and beyond. We believe it is more likely than not that
Altice USA will enter into a distressed debt restructuring that we
consider tantamount to default, or it could face bankruptcy long
term.
"We have a more cautious view of the cable industry. We believe it
will be increasingly challenging for Altice to improve its earnings
trajectory given the competitive operating environment. We believe
incremental fiber-based competition will persist and continue to
cover more of Altice's footprint. Separately, we have increased our
forecast for fixed wireless access (FWA) subscriber growth. Verizon
is expanding the depth and breadth of its FWA offering with C-Band
spectrum deployment across more rural markets (which could include
Altice's western footprint), while AT&T recently began offering the
service. As a result, we lowered our longer-term earnings forecasts
for Altice USA amid a more competitive backdrop than we previously
anticipated."
Altice's access to capital, at rates it can afford, is limited. It
is unclear whether the company can repay its debt at par when it
comes due starting in 2027, particularly with a more competitive
operating environment, elevated interest rates, and uncertainty
around earnings growth.
S&P said, "We believe the company can pull back on capital
expenditure (capex) to improve cash flow, if necessary. Currently,
management is balancing a desire to invest in the network, expand
its fiber to the home (FTTH) coverage, and improve fiber
penetration with the discipline necessary to generate slightly
positive free operating cash flow (FOCF). Management has guided to
capex of $1.6 billion-$1.7 billion in 2024." Still, S&P estimates
that the company could pull back to about $1.2 billion if it were
to stop investing in FTTH, based on:
-- Average capex for the four years prior to the FTTH initiative
was in this area.
-- The company recently scaled back capex to 13% of sales in the
fourth quarter of 2023, which would translate roughly to $1.2
billion annualized.
S&P said, "Management has indicated that capex to revenue was 11%
in the first quarter excluding FTTH, which would translate to
roughly $1 billion per year. We think this may be low considering
that without FTTH investments, it would require coaxial upgrades.
Based on the rough assumption of about $1.2 billion in capex, along
with our EBITDA forecast, we estimate that Altice USA can generate
roughly $500 million per year in FOCF before it faces higher
interest rates in 2027 and must refinance.
"However, we no longer believe it is likely that Altice will be
able to repay its debt at par long-term in the current business and
interest rate environment. Given a debt load of about $25 billion,
we estimate that Altice USA could absorb a roughly 200 basis points
increase in the average cost of debt and still generate enough cash
flow to service its debt. This would equate to an average 9%
interest rate (compared with the current blended rate of about 7%),
increasing interest expense about $500 million, roughly equal to
our estimated FOCF under minimum capex assumptions.
"In contrast, the yields on its debt are much higher and range
about 12%-16% on its roughly $10.5 billion of guaranteed notes and
23%-27% on its roughly $6 billion of unsecured notes. Therefore, we
believe the company depends on favorable business conditions to
bring in spreads to more affordable and sustainable rates. We
believe this will be more difficult to achieve in the current
operating environment.
"Management's recent comments indicate increased potential for a
debt restructuring. Altice USA has indicated it is exploring all
options to maintain a capital structure that supports its long-term
strategic objectives. We believe it could be challenging to reprice
its customer base and expand its fiber coverage and penetration
with the limited financial flexibility afforded by the balance
sheet. We believe it could be increasingly important to accelerate
these initiatives amid a more competitive backdrop or it could risk
ongoing customer losses. Therefore, we believe Altice may consider
a liability management exercise that includes exchanging or
repurchasing debt at a discount to par, which we would deem
tantamount to default."
The negative outlook on Altice USA reflects the increasingly
intense competitive broadband environment, continued earnings
declines, high interest rates, and capital spending requirements
that could result in a debt restructuring.
S&P said, "We could lower our rating if Altice USA announced a
sub-par debt exchange offer over the next year, which we believe
could be driven by an inability for management to execute on its
strategic initiatives with the current debt load. Although less
likely over the next year, we could lower the rating if weakened
liquidity caused us to believe a default is likely in the next 12
months.
"We could raise our rating if the company increases EBITDA, reduces
leverage, and improves its access to capital such that we have
greater confidence in its ability to repay debt at par when it
comes due. This would likely require high-speed data (HSD) revenue
growth driven by a combination of market share stabilization and
higher average revenue per user (ARPU)."
ANTERO MIDSTREAM: S&P Raises ICR to 'BB+', Outlook Stable
---------------------------------------------------------
S&P Global Ratings raised its issuer credit and issue-level ratings
on Denver-based Antero Midstream Partners L.P. (AM) to 'BB+' from
'BB'. The outlook is stable.
S&P said, "The stable outlook on AM parallels that of parent AR
given we would raise or lower our rating on AM if we upgraded or
downgraded AR. The stable outlook on AR reflects our expectation
that AR will maintain conservative financial policies, including
allocating approximately half of free cash flow to debt repayment
(after AR has reduced borrowings on its credit facility and
paid-off its bonds maturing in 2026), that will support financial
measures including FFO to debt above 60% over the next two years
while generating free cash flow.
"AR's financial measures have improved due to debt reduction, and
we expect continued debt reduction before the company restarts
share repurchases. As a result, we now forecast FFO to debt above
60% in 2024, increasing in 2025 due to strong commodity prices and
reduced debt levels. We also do not expect AR's financial policies
to change such that it adds debt to support shareholder returns. AR
has stated that after completing debt reduction, including
addressing its near-term maturity and paying down the revolver, it
will allocate 50% of free cash flow to additional debt reduction
and 50% to share repurchases. We view this capital allocation
policy as supportive of credit measures over the long term."
The upgrade also reflects AR's position as one of the largest
natural gas and NGL producers in the U.S. S&P Global Ratings
expects AR's production to be about 3.3 billion cubic feet
equivalent per day (bcfe/d) to 3.4 bcfe/d in 2024 and remain
relatively flat in 2025. In addition, the company increased its
reserves to 18.1 trillion cfe at year-end 2023 from 17.8 trillion
(t) tcfe at year-end 2022, with approximately 76% of reserves
classified as proved developed. AR was able to increase its
reserves organically and with land acquisitions while not
increasing debt levels. AR estimates it has more than 1,500 premium
core undeveloped locations and more than 20 years of premium core
drilling inventory with approximately 60 wells drilled per year.
S&P said, "We are unlikely to raise or lower our rating on AM
without a change to our 'BBB-' rating on AR. This reflects our
assessment that on a stand-alone basis AM's credit quality is
consistent with a 'BB' rating. The company then receives ratings
uplift due to the relationship with its parent AR, which reflects
our view that AR would support AM in most circumstances. As a
result, if we upgraded AR to 'BBB', we would raise AM one notch to
'BBB-'. Similarly, if we downgraded AR to 'BB+', we would lower our
rating on AR one notch to 'BB'. Given the influence from the group
we do not expect the stand-alone credit quality of AM to drive a
ratings action.
"AM's dependence on AR is an important consideration for the
rating. While AM benefits from a strong contract structure and
stable growth prospects due to the relationship with its parent, a
lack of counterparty diversity is a key risk that has led to
significant ratings volatility for AM despite relatively stable
credit metrics. Virtually all of AM's cash flows come from AR,
which we consolidate into AR's financial statements to reflect our
view that it effectively controls AM.
"We view AR and AM to be in the same group because nearly 100% of
AM's revenues come from AR. We view AM as strategically important
to AR and while there is no longer a general partner after AM's
consolidation in 2019, we continue to consolidate AM onto AR's
balance sheet for purposes of our credit analysis. We consider the
following factors supportive of this treatment."
-- AR owns 29% of the common shares of AM;
-- AM builds out infrastructure for AR so therefore AR effectively
controls AM's strategy, capital spending, and cash flows; and
-- AM and AR have common management teams.
S&P said, "The stable outlook on AR reflects our expectation that
near-term financial measures will improve, including FFO to debt
above 60% and debt to EBITDA of about 1.0x-1.5x over the next two
years even at our midcycle price assumptions, benefiting from flat
to modest production growth, continued debt reduction, and reduced
costs. AR benefits from its high exposure to liquids in its
production stream compared to other producers in the Appalachian
Basin. Additionally, we expect AR to repay borrowings under its
credit facility and its existing 8.375% bonds maturing in 2026
before re-starting its share repurchase program."
S&P could lower its ratings on AR if it expects:
-- Leverage to increase beyond our current expectations, such that
our three-year, weighted-average FFO to debt approached 30%; or
-- FFO to debt approached 30% under our midcycle pricing
assumptions of $50 per barrel (bbl) West Texas Intermediate (WTI)
and $2.75/mmBtu.
This would most likely occur if commodity prices weakened beyond
our current expectations and the company did not curtail capital
spending or shareholder returns, or it increased debt levels to
support shareholder returns.
Although unlikely within the next two years, we could raise our
ratings on Antero Resources if the company:
-- Increases the scale and geographic diversification of its
operations such that it more closely aligns with those of its
higher-rated peers; and
-- Maintains a prudent financial policy and strong financial
measures, including FFO to debt of above 60% including under our
midcycle price deck assumptions.
S&P said, "Environmental factors are a negative consideration in
our credit rating analysis of AM, reflecting the above-average
transition risk for the midstream industry given its interconnected
status with upstream and core business of transporting natural gas
and natural gas liquids. AM also has indirect environmental
exposure of its former parent and major counterparty, Antero
Resources Corp., which accounts for most of its revenues."
APPLIED ENERGETICS: Incurs $2.6 Million Net Loss in First Quarter
-----------------------------------------------------------------
Applied Energetics, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $2.61 million on $134,235 of revenue for the three months ended
March 31, 2024, compared to a net loss of $1.94 million on $486,678
of revenue for the three months ended March 31, 2023.
As of March 31, 2024, the Company had $3.07 million in total
assets, $3.10 million in total liabilities, and a total
stockholders' deficit of $26,522.
Applied Energetics said, "Based on the company's current business
plan, it believes its cash balance as of the date of this filing,
together with anticipated revenues from government contracts, will
be sufficient to meet its anticipated cash requirements for the
near term. However, there can be no assurance that the current
business plan will be achievable. Such conditions raise
substantial doubts about the company's ability to continue as a
going concern for one year from the date the financial statements
are issued.
"The company's existence depends upon management's ability to
develop profitable operations. Management is devoting
substantially all of its efforts to developing its business and
raising capital and there can be no assurance that management's
efforts will result in profitable operations or enable it to
overcome future liquidity concerns. The accompanying consolidated
financial statements do not include any adjustments relating to the
recoverability of assets, the amount or classification of
liabilities or otherwise that might be necessary should the company
be unable to continue as a going concern."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/879911/000121390024042336/ea0204743-10q_applied.htm
About Applied Energetics
Headquartered in Tucson, Arizona, Applied Energetics, Inc. --
www.appliedenergetics.com -- specializes in the development and
manufacture of advanced high-performance lasers and optical
systems, and integrated guided energy systems, for prospective
defense, national security, industrial, biomedical, and scientific
customers worldwide.
Las Vegas, NV-based RBSM LLP, the Company's auditor since 2016,
issued a "going concern" qualification in its report dated March
26, 2024, citing that the Company has suffered recurring losses
from operations and will require additional capital to fund its
current operating plan, that raises substantial doubt about the
Company's ability to continue as a going concern.
APPLIED ENERGETICS: Raises $4.2 Million From Private Placement
--------------------------------------------------------------
Applied Energetics, Inc. disclosed in a Form 8-K filed with the
Securities and Exchange Commission that on May 10, 2024, it
completed the placement of 1,896,182 shares of its common stock,
par value, $0.001 per share, in a private sale to individual
purchasers at a price of $2.20 per share, for aggregate proceeds in
the amount of $4,171,600. All of the purchasers are accredited,
sophisticated investors, and the issuance of the shares was not in
connection with any public offering in accordance with Section
4(a)(2) of the Securities Act of 1933.
About Applied Energetics
Headquartered in Tucson, Arizona, Applied Energetics, Inc. --
www.appliedenergetics.com -- specializes in the development and
manufacture of advanced high-performance lasers and optical
systems, and integrated guided energy systems, for prospective
defense, national security, industrial, biomedical, and scientific
customers worldwide.
Las Vegas, NV-based RBSM LLP, the Company's auditor since 2016,
issued a "going concern" qualification in its report dated March
26, 2024, citing that the Company has suffered recurring losses
from operations and will require additional capital to fund its
current operating plan, that raises substantial doubt about the
Company's ability to continue as a going concern.
APPLIED PEDIATRICS: Tamara Miles Ogier Named Subchapter V Trustee
-----------------------------------------------------------------
The U.S. Trustee for Region 21 appointed Tamara Miles Ogier, Esq.,
at Ogier, Rothschild & Rosenfeld, PC as Subchapter V trustee for
Applied Pediatrics Inc.
Ms. Ogier will be paid an hourly fee of $450 for her services as
Subchapter V trustee and will be reimbursed for work-related
expenses incurred.
Ms. Ogier declared that she is a disinterested person according to
Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Tamara Miles Ogier, Esq.
Ogier, Rothschild & Rosenfeld, PC
P.O. Box 1547
Decatur, GA 30031
Phone: (404) 525-4000
About Applied Pediatrics Inc.
Applied Pediatrics Inc. sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. N.D. Ga. Case No. 24-54094-jwc) on
April 23, 2024. In the petition signed by George S. Rosero, chief
executive officer, the Debtor disclosed up to $50,000 in assets and
up to $500,000 in liabilities.
Cameron M. McCord, Esq., at Jones & Walden, LLC, represents the
Debtor as legal counsel.
ARC FALCON I: Moody's Affirms 'B2' CFR, Outlook Stable
------------------------------------------------------
Moody's Ratings affirmed ARC Falcon I, Inc.'s (dba Arclin, Inc. or
Arclin) B2 Corporate Family Rating, B2-PD Probability of Default
Rating, B2 rating on the company's first lien senior secured bank
credit facilities, and Caa1 rating on the company's senior secured
second lien term loan. Arclin also issued a proposed $290 million
fungible add-on to the first lien senior secured term loan. Net
proceeds from the proposed incremental first lien term loan will be
used to fund an add-on acquisition. The outlook is stable.
RATINGS RATIONALE
Arclin's credit profile is supported by the company's leading
market position in surface overlay and resin used in building
products in North America, with limited competition due to its
geographically-advantaged proximity to its customer base.
Furthermore, the company benefits from its long-term relationships
with its major customers and the raw material costs pass-through
mechanism in significant portion of its contracts which supports
margin stability.
Arclin's credit profile is constrained by its leveraged capital
structure, aggressive financial policy with a track record of
making acquisitions, and high exposure to the cyclical US housing,
non-residential construction and repair and remodeling end markets.
Arclin's credit profile is also limited by lack of scale given its
relatively small asset base and high customer concentration.
Moody's also consider the risks related to its private equity
ownership as limiting factors to the rating.
Arclin maintained stable business and financial performance in
2023. Despite decreased sales volume and lower revenue YOY amid a
challenging housing market, Arclin increased its margins and EBITDA
driven by procurement savings and efficiency gains during the year.
The company completed two acquisitions with total spending of $133
million in 2023, the majority of which was debt funded. The
company's leverage, as measured by Moody's adjusted debt/EBITDA,
increased to 6.7x in 2023 from 6.4x in 2022. Pro forma the add-on
acquisition and the incremental debt, Moody's estimate Arclin's
leverage would increase modestly but remain at approximately 7.0x
based on 2023 financials. Moody's expects leverage to improve to
mid-6.0x in 2024 and below 6.0x in 2025 with continued solid
performance of Arclin and some synergy benefits.
Pro forma the add-on acquisition, Moody's expect Arclin to maintain
good liquidity. The company has total available liquidity of $176
million as of March 2024 including cash on balance sheet and
available revolving credit facility. The revolver has a springing
first lien net leverage ratio covenant of 8.75x which is tested if
the facility has the greater of $70 million and 40% drawn at the
end of the quarter. The covenant is not expected to be tested over
the next 12 to 18 months.
The B2 ratings on the first lien credit facilities are in line with
the B2 CFR reflecting the pari passu ranking of the collateral. The
Caa1 rating on the second lien term loan is two notches below the
CFR because of the preponderance of secured debt with a priority
claim.
RATING OUTLOOK
The stable outlook reflects expectations that the company will
benefit from a continued long-term favorable outlook for the US
housing market and repair and remodel activity, that Arclin will
reach and sustain its adjusted leverage between 5.5x to 6.0x in the
next 12-18 months while maintaining good liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's would consider an upgrade if financial leverage, including
Moody's adjustments, is sustained below 4.5x, consistent positive
free cash flow generation, and a sponsor commitment to a more
conservative financial policy.
Moody's would consider a downgrade if there is significant
deterioration in liquidity and operational performance, financial
leverage, including Moody's adjustments, remains above 6.5x and
free cash flow is negative for a sustained period, or if there is a
substantial debt-financed dividend or acquisition.
ESG CONSIDERATIONS
Environmental, social and governance factors are also factored in
Arclin's rating but not drivers of the action. Arclin's CIS-4
mainly reflects its waste and pollution exposure in its specialty
chemical production. It also reflects the company's aggressive
financial strategy including high leverage and track record of
acquisitions and its ownership by a private equity.
Arclin is a materials science company. It is a leading manufacturer
and formulator of proprietary surface overlays and specialty
polymers primarily for the residential construction and repair and
remodel markets, as well as industrial, pharmaceutical,
agriculture, nutrition, water treatment, electronics, mining and
building product finishing services. Headquartered in Alpharetta,
GA, the Company operates out of 15 manufacturing facilities
throughout the U.S., Canada and in the U.K. and has over 1000
employees. Arclin is owned by an affiliate of TJC L.P. Arclin
reported sales of about $825 million for the 12 months ended
December 31, 2023.
The principal methodology used in these ratings was Chemicals
published in October 2023.
ARCADIA BIOSCIENCES: Posts $2.4 Million Net Loss in First Quarter
-----------------------------------------------------------------
Arcadia Biosciences, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
attributable to common stockholders of $2.42 million on $1.26
million of total revenues for the three months ended March 31,
2024, compared to a net loss attributable to common stockholders of
$9.38 million on $1.23 million of total revenues for the three
months ended March 31, 2023.
As of March 31, 2024, the Company had $16.05 million in total
assets, $5.56 million in total liabilities, and $10.48 million in
total stockholders' equity.
Arcadia Biosciences stated, "With cash and cash equivalents of $3.3
million and short-term investments of $5.2 million as of March 31,
2024, the Company believes that its existing cash, cash equivalents
and short-term investments will not be sufficient to meet its
anticipated cash requirements for at least the next 12-18 months
from the issuance date of these financial statements, and thus
raises substantial doubt about the Company's ability to continue as
a going concern. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
"The Company may seek to raise additional funds through debt or
equity financings. The Company may also consider entering into
additional partner arrangements. The sale of additional equity
would result in dilution to the Company's stockholders. The
incurrence of debt would result in debt service obligations, and
the instruments governing such debt could provide for additional
operating and financing covenants that would restrict operations.
If the Company requires additional funds and is unable to secure
adequate additional funding at terms agreeable to the Company, the
Company may be forced to reduce spending, extend payment terms with
suppliers, liquidate assets, or suspend or curtail planned product
launches. Any of these actions could materially harm the business,
results of operations and financial condition."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1469443/000095017024058563/rkda-20240331.htm
About Arcadia
Headquartered in Dallas, TX, Arcadia Biosciences, Inc. is a
producer and marketer of innovative, plant-based food and beverage
products. The Company has used non-genetically modified ("non-GMO")
advanced breeding techniques to develop these proprietary
innovations which it is now commercializing through the sales of
seed and grain, food ingredients and products, trait licensing and
royalty agreements. The acquisition of the assets of Live Zola, LLC
added coconut water to its portfolio of products.
Tempe, Arizona-based Deloitte & Touche LLP, the Company's auditor
since 2007, issued a "going concern" qualification in its report
dated March 28, 2024, citing that the Company has an accumulated
deficit, recurring net losses and net cash used in operations, and
resources that will not be sufficient to meet its anticipated cash
requirements, which raises substantial doubt about its ability to
continue as a going concern.
ARCH THERAPEUTICS: Amends Registration Rights Agreements
--------------------------------------------------------
Arch Therapeutics, Inc. disclosed in a Form 8-K Report filed with
the U.S. Securities and Exchange Commission that on April 30, 2024,
the Company entered into an amendment to the Third Amended and
Restated Registration Rights Agreement, dated as of March 12, 2024,
by and among the Company and certain institutional and accredited
individual investors, as amended. The A&R Registration Rights
Agreement was amended to redefine "Uplist Transaction" as the
listing of the Company's common stock, par value $0.001, on any
securities exchange registered with the U.S. Securities and
Exchange Commission as a "national securities exchange" under
Section 6 of the Securities Exchange Act of 1934, as amended.
Additionally, on April 30, 2024, the Company entered into:
* Amendment No. 16 to the First Notes with the holders of the
Company's outstanding Senior Secured Convertible Promissory Notes,
as separately amended on February 14, 2023, through March 15, 2024,
issued in connection with a private placement financing the Company
completed on July 6, 2022.
* Amendment No. 16 to the Second Notes with the holders of the
Company's outstanding Unsecured Convertible Promissory Notes, as
separately amended on February 14, 2023, through March 15, 2024,
issued in connection with a private placement financing the Company
completed on January 18, 2023.
* Amendment No. 11 to the Third Notes with the holders of the
Company's outstanding Unsecured Convertible Promissory Notes, as
separately amended on June 15, 2023, through March 15, 2024, issued
in connection with a private placement financing the Company
completed on May 15, 2023.
* Amendment No. 2 to the Fourth Notes with the holders of the
Company's outstanding Unsecured Convertible Promissory Notes, as
separately amended on March 15, 2024, issued in connection with a
private placement financing the Company completed on March 12,
2024.
Under the Amendments to the Notes, the Notes were amended to extend
the date of the completion of an "Uplist Transaction" and to extend
the respective maturity date of each of the Notes from April 30,
2024, to June 30, 2024. The Notes were also amended to redefine
"Uplist Transaction" as the listing of the Company's Common Stock
on any securities exchange registered with the SEC as a "national
securities exchange" under Section 6 of the Exchange Act.
Furthermore, on May 1, 2024, the Company entered into Amendment No.
4 to the Bridge Registration Rights Agreement dated as of July 7,
2023, as amended, by and among the Company and certain
institutional and accredited individual investors in connection
with a private placement offering of pre-funded warrants to
purchase shares of Common Stock, common warrants to purchase shares
of Common Stock, and shares of Common Stock. The Bridge
Registration Rights Agreement was amended to redefine "Uplist" as
the public offering of the Company's Common Stock pursuant to a
registration statement on Form S-1 that results in the listing of
the Company's Common Stock on any securities exchange registered
with the SEC as a "national securities exchange" under Section 6 of
the Exchange Act.
About Arch Therapeutics Inc.
Framingham, Mass.-based Arch Therapeutics, Inc. is a biotechnology
company developing and marketing a products based on its innovative
AC5 self-assembling technology platform.
As of December 31, 2023, the Company had $1,821,947 in total
assets, $11,397,463 in total current liabilities, and $9,575,516 in
total stockholders' deficit.
Los Angeles, Calif.-based Weinberg & Company, P.A., the Company's
auditor since 2024, issued a "going concern" qualification in its
report dated February 14, 2024, citing that during the year ended
September 30, 2023, the Company incurred a net loss and utilized
cash flows in operations, and has had recurring losses since
inception. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
ARCH THERAPEUTICS: Incurs $1.47 Million Net Loss in Second Quarter
------------------------------------------------------------------
Arch Therapeutics, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $1.47 million on $31,866 of revenue for the three months ended
March 31, 2024, compared to a net loss of $902,477 on $16,654 of
revenue for the three months ended March 31, 2023.
For the six months ended March 31, 2024, the Company reported a net
loss of $4.15 million on $77,733 of revenue, compared to a net loss
of $2.70 million on $22,914 of revenue for the six months ended
March 31, 2023.
As of March 31, 2024, the Company had $1.54 million in total
assets, $12.42 million in total current liabilities, and a total
stockholders' deficit of $10.88 million.
Arch Therapeutics said, "The Company has not yet generated
sufficient revenues to fund operations and relies on issuance of
debt and equity instruments to generate working capital. As
reflected in the accompanying financial statements, for the six
months ended March 31, 2024, the Company recorded a net loss of
$4,150,791 and used cash in operations of $1,562,764. These
factors raise substantial doubt about the Company's ability to
continue as a going concern within one year of the date that the
financial statements are issued. In addition, the Company's
independent registered public accounting firm, in its report on the
Company's September 30, 2023, financial statements, raised
substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any
adjustments that might be necessary if the Company is unable to
continue as a going concern.
"The Company expects to incur substantial expenses for the
foreseeable future relating to research, development and
commercialization of its current and its potential future products.
The Company has not yet generated sufficient revenues to fund
operations and relies on issuance of debt and equity instruments to
generate working capital. In evaluating the going concern position
of the Company, management has considered potential funding
providers and believes that financing to fund future operations
could be provided by equity and/or debt financing. Even if the
Company is able to obtain additional financing, it may contain
undue restrictions on our operations, in the case of debt
financing, or cause substantial dilution for our stockholders, in
the case of equity financing."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1537561/000143774924015699/arch20240331_10q.htm
About Arch Therapeutics
Framingham, MA-based Arch Therapeutics, Inc. (together with its
subsidiary) is a biotechnology company developing and marketing
products based on its innovative AC5 self-assembling technology
platform. Arch arose from the June 26, 2013 merger of three
entities previously known as Arch Biosurgery, Inc., Almah, Inc.,
and Arch Acquisition Corporation, respectively.
ARTISAN CONSUMER: Incurs $7,577 Net Loss in Third Quarter
---------------------------------------------------------
Artisan Consumer Goods, Inc., filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q reporting a
net loss of $7,577 on $0 of revenue for the three months ended
March 31, 2024, compared to a net loss of $12,039 on $11 of revenue
for the three months ended March 31, 2023.
For the nine months ended March 31, 2024, the Company reported a
net loss of $27,975 on $0 of revenue, compared to a net loss of
$38,381 on $7,445 of revenue for the nine months ended March 31,
2023.
As of March 31, 2024, the Company had $1,954 in total assets,
$289,027 in total current liabilities, and a total stockholders'
deficiency of $287,073.
Artisan Consumer said, "To date the Company has little operations
or revenues and consequently has incurred recurring losses from
operations. The Company has incurred a loss since inception
resulting in an accumulated deficit of $19,286,226 at March 31,
2024 and further losses are anticipated in the development of its
business raising substantial doubt about the Company's ability to
continue as a going concern. The ability to continue as a going
concern is dependent upon the Company generating profitable
operations in the future and/or obtaining the necessary financing
to meet its obligations and repay its liabilities arising from
normal business operations when they come due. Management intends
to finance operating costs over the next twelve months with
existing cash on hand, loans from directors and/or private
placement of common stock."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1530425/000147793224002796/arrt_10q.htm
About Artisan Consumer
Artisan Consumer Goods, Inc. is a Nevada corporation, originally
formed on Sept. 19, 2009. The Company is attempting to restart the
Within / Without Granola brand acquired on July 15, 2021.
Lakewood, CO-based BF Borgers CPA PC, the Company's auditor since
2021, issued a "going concern" qualification in its report dated
Oct. 11, 2023, citing that Company has suffered recurring losses
from operations and has a significant accumulated deficit. In
addition, the Company continues to experience negative cash flows
from operations. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
ARTISAN MASONRY: Unsecureds to Get $1K per Month over 5 Years
-------------------------------------------------------------
Artisan Masonry, Inc., filed with the U.S. Bankruptcy Court for the
Eastern District of Texas a Plan of Reorganization dated April 30,
2024.
The Debtor operates a commercial window cleaning business. The
filing of this bankruptcy case was precipitated by certain
accounting errors relative to the payment its sales tax
obligations.
The Plan provides for a reorganization and restructuring of the
Debtor's financial obligations.
The Plan provides for a distribution to Creditors in accordance
with the terms of the Plan from the Debtor over the course of 5
years from the Debtor's continued business operations.
Class 3 consists of Allowed Claims against Debtor (including Claims
arising from the rejection of executory contracts and/or unexpired
leases) other than: (i) Administrative Claims; (ii) Priority Tax
Claims; or (iii) Claims included within any other Class designated
in this Plan. Class 3 shall be deemed to include those Creditor(s)
holding an alleged Secured Claim against Debtor, for which: (y) no
collateral exists to secure the alleged Secured Claim; and/or (z)
liens, security interests, or other encumbrances that are senior in
priority to the alleged Secured Claim exceed the fair to the
alleged Secured Claim exceed the fair.
Each holder of an Allowed Unsecured Claim in Class 3 shall be paid
by Reorganized Debtor from an unsecured creditor pool, which pool
shall be funded at the rate of $1,000 per month. Payments from the
unsecured creditor pool shall be paid quarterly, for a period not
to exceed 5 years (18 quarterly payments) and the first quarterly
payment will be due on the 20th day of the seventh full calendar
month after the Effective Date.
The Plan provides for a $60,000 dividend to all unsecured creditors
over a period of 5 years. Debtor contends the Plan provides for a
greater dividend to all creditors than would a liquidation of
assets under chapter 7.
Class 4 consists of the holders of Allowed Interests in the Debtor.
The holder of an Allowed Class 4 Interest shall retain their
interests in the Reorganized Debtor.
A full-text copy of the Plan of Reorganization dated April 30, 2024
is available at https://urlcurt.com/u?l=LnUA6i from
PacerMonitor.com at no charge.
Attorneys for the Debtor:
Robert T. DeMarco, Esq.
Michael S. Mitchell, Esq.
DeMarco Mitchell, PLLC
1255 W. 15th Street, 805
Plano, TX 75075
Telephone: (972) 578-1400
Facsimile: (972) 346-6791
Email: robert@demarcomitchell.com
mike@demarcomitchell.com
About Artisan Masonry
Artisan Masonry, Inc., operates a commercial window cleaning
business.
The Debtor filed its voluntary petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. E.D. Tex. Case No. 23-42275) on Nov.
30, 2023. The petition was signed by Robert Gladu as president. At
the time of filing, the Debtor estimated up to $50,000 in assets
and up to $10 million in liabilities.
Judge Brenda T. Rhoades oversees the case.
DeMarco Mitchell, PLLC serves as the Debtor's counsel.
AYRO INC: Incurs $3.6 Million Net Loss in First Quarter
-------------------------------------------------------
Ayro, Inc. filed with the Securities and Exchange Commission its
Quarterly Report on Form 10-Q reporting a net loss of $3.64 million
on $58,351 of revenue for the three months ended March 31, 2024,
compared to a net loss of $5.47 million on $113,084 of revenue for
the three months ended March 31, 2023.
As of March 31, 2024, the Company had $47.87 million in total
assets, $26.12 million in total liabilities, $14.74 million in
mezzanine equity, and $7.01 million in total stockholders' equity.
As of March 31, 2024, the Company had $5.46 million in cash and
cash equivalents, $10 million in restricted cash, $23.64 million in
marketable securities and working capital of $40.30 million. As of
Dec. 31, 2023, the Company had $33.44 million in cash and cash
equivalents and working capital of $44.67 million, including $10
million in restricted cash. The decrease in cash and cash
equivalents and working capital was primarily a result of the
Company's operating loss and the Company's internal restructuring.
The Company's sources of cash since inception have been
predominately from the sale of equity and debt.
Ayro said, "Our business is capital-intensive, and future capital
requirements will depend on many factors, including our growth
rate, the timing and extent of spending to support development
efforts, the results of our strategic review, the expansion of our
sales and marketing teams, the timing of new product introductions
and the continuing market acceptance of our products and services.
We are working to control expenses and deploy our capital in the
most efficient manner.
"We are evaluating other options for the strategic deployment of
capital beyond our ongoing strategic initiatives, including
potentially entering other segments of the electric vehicle market.
We anticipate being opportunistic with our capital, and we intend
to explore potential partnerships and acquisitions that could be
synergistic with our competitive stance in the market.
"We are subject to a number of risks similar to those of earlier
stage commercial companies, including dependence on key individuals
and products, the difficulties inherent in the development of a
commercial market, the potential need to obtain additional capital,
and competition from larger companies, other technology companies
and other technologies. Based on the foregoing, management
believes that the existing cash and cash equivalents and marketable
securities at March 31, 2024, will be sufficient to fund operations
for at least the next twelve months following the date of this
report."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1086745/000149315224019973/form10-q.htm
About AYRO
Texas-based AYRO, Inc., formerly known as DropCar, Inc. --
http://www.ayro.com-- designs and manufactures compact,
sustainable electric vehicles for closed campus mobility, low speed
urban and community transport, local on-demand and last mile
delivery and government use. The Company's four-wheeled
purpose-built electric vehicles are geared toward commercial
customers, including universities, business and medical campuses,
last mile delivery services and food service providers. The
Company has commenced sales and delivery of its current model, the
AYRO Vanish in support of the aforementioned markets.
Ayro, Inc. reproted net loss of $34.16 million in 2023, a net loss
of $22.94 million in 2022, a net loss of $33.08 million in 2021, a
net loss of $10.76 million in 2020, a net loss of $8.66 million in
2019, and a net loss of $18.75 million in 2018.
BENEVOLENT HOME: Stephen Metz Named Subchapter V Trustee
--------------------------------------------------------
The Acting U.S. Trustee for Region 4 appointed Stephen Metz as
Subchapter V trustee for Benevolent Home Health Care Inc.
Mr. Metz will be paid an hourly fee of $545 for his services as
Subchapter V trustee and will be reimbursed for work-related
expenses incurred.
Mr. Metz 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 Metz
7501 Wisconsin Avenue, Suite 1000W
Bethesda, Maryland 20814
Phone: (240) 507-1723
Email: smetz@offitkurman.com
About Benevolent Home Health Care Inc.
Benevolent Home Health Care is a family-owned home care agency.
Benevolent Home Health Care Inc. filed its voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Md. Case
No. 24-13410) on April 23, 2024, listing up to $50,000 in assets
and $1 million to $10 million in liabilities. The petition was
signed by Seth Jones as president.
Daniel Staeven, Esq. at FROST LAW represents the Debtor as counsel.
BERRY CORP: S&P Alters Outlook to Negative, Affirms 'B-' ICR
------------------------------------------------------------
S&P Global Ratings revised the outlook to negative from stable and
affirmed the 'B-' issuer credit rating on Berry Corp., a
Dallas-based oil and gas exploration and production (E&P) company
with operations in California and Utah. S&P expects about $35
million of discretionary cash flow (DCF) in 2024 (including its
assumptions for bolt-on acquisitions) and about $25 million of DCF
in 2025.
S&P said, "At the same time, we affirmed our 'B' issue-level rating
on the company's senior unsecured notes. The recovery rating on
this debt remains '2', reflecting our expectation of meaningful
(70%-90%; rounded estimate: 80%) recovery in the event of payment
default.
"The negative outlook reflects our view that we could lower our
rating within the next 12 months if we believe the company is
unable to refinance its upcoming maturities in a timely manner.
"We revised the outlook to negative from stable because of the
refinancing risk on upcoming debt maturities in late 2025 and early
2026.
"Berry's main liquidity source, the $200 million reserve-based
lending facility (RBL) has $51 million outstanding as of March 31,
2024, and matures in August 2025 while the $400 million senior
unsecured notes are due in February 2026. Our expectation for
positive free cash flow in 2024 supports the 'B-' issuer credit
rating. However, in addition to the upcoming maturities, the
operating environment remains challenged following the recent
appellate court decision upholding the temporary suspension of the
Environmental Impact Report (EIR), which continues the effective
pause on new well drilling in Kern County, Calif. (81% of
production) over the short term. The company expects a court
resolution in the next 18-24 months at which point new well permits
will likely be available. We expect the company to largely offset
production declines through workovers/sidetrack drilling activity
in California as it has done historically. While the new well
permitting delay elevates refinance risk in our view, and our base
case currently assumes the company will address the upcoming
maturities in a favorable and timely manner, the negative outlook
reflects the possibility that we could lower our rating if we
believe the company will encounter difficulty in refinancing these
maturities or its liquidity becomes constrained.
"Nonetheless, we view the company's cash flow and credit metrics as
supportive of the current rating.
"We expect DCF (after dividends and acquisition spending) of $35
million in 2024 and $25 million in 2025. The fixed dividend is $37
million annually, and the company pays a variable dividend of 20%
of quarterly free cash flow. For the next two years, we forecast
funds from operations (FFO) to debt of 40% and debt to EBITDA of
2.25x."
Cash flow is bolstered by robust hedging programs. On the
production side, 80% of production is hedged at a Brent price of
about $78 per barrel (bbl) in 2024 and 60% in 2025 at about
$76/bbl. S&P forecasts Berry Corp will produce on average 24.6
thousand barrels of oil equivalent per day (mboe/d) in 2024 with
flat to slightly down production in 2025 on capital spending of
about $120 million annually and potential bolt-on acquisitions of
$20 million. Given the pending regulatory decision, S&P expects
capital spending this year will primarily support ongoing sidetrack
wells and workovers program in California (which don't require new
well permits) and increased percentage of spending out-of-basin in
Utah (20% of capital expenditures in 2024, up from 10% in 2023).
On the cost side, Berry purchases about 53 million cubic feet
equivalent per day (mmcfe/d) of natural gas to fuel its
cogeneration plant for its steamflood enhanced oil recovery. It
purchases 90% of these volumes from the Rockies and are effectively
hedged through a combination of swaps (72% at $3.96/mcfe) and a
natural hedge from its Utah natural gas production (18%). The
remaining 10% of volumes are unhedged and purchased in-basin at
Socal Citygate, which averaged $4.21/mcfe in the first quarter
2024. S&P's forecast does not assume a material spike in Socal
Citygate natural gas prices.
The negative outlook reflects heightened refinancing risk related
to its upcoming maturities in late 2025 and early 2026 amid the
recent California EIR court decision, which effectively delayed new
well permitting in Kern County to 2025 at the earliest. S&P said,
"However, we expect Berry will largely offset production declines
as it has done historically given that the 2024 capital program is
not reliant on new well drilling and we anticipate some portion of
capital will shift to its Utah acreage. We expect discretionary
cash flow (post-dividends and bolt-on acquisitions) of $35 million
in 2024 and about $25 million in 2025. We forecast FFO to debt of
40% and debt to EBITDA of 2.25x over the next two years."
S&P said, "We could lower our rating on Berry if the company is
unable to successfully refinance upcoming maturities in a timely
manner or liquidity materially deteriorates. This would most likely
occur if Kern County drilling permits are delayed further, or
commodity prices and resulting cash flows weaken and the company
does not reduce spending.
"We could revise the outlook to stable if the company refinances
its RBL and unsecured notes while maintaining adequate liquidity."
BETANXT INC: Moody's Cuts CFR & Secured First Lien Term Loan to B3
------------------------------------------------------------------
Moody's Ratings downgraded the credit ratings of BetaNXT, Inc.,
including its Corporate Family Rating to B3 from B2, its
Probability of Default Rating to B3-PD from B2-PD, and its backed
Senior Secured First Lien Bank Credit Facilities (Term Loan and
Revolving Credit Facility) to B3 from B2. The outlook remains
stable.
The downgrade of the CFR reflects higher leverage and lower cash
flow expectations compared to previous projections, as well as
customer concentration that remains elevated and a revenue
trajectory below prior expectations.
The stable outlook reflects expectations that the company's cash
flow profile will improve as it laps non-recurring investments
related to working capital and technology assets to finalize the
separation from London Stock Exchange Group plc, and that the
company will maintain adequate cash and revolver availability
throughout 2024.
RATINGS RATIONALE
The B3 CFR reflects elevated financial leverage of about 5.8x
(Moody's-adjusted) at 2023, modest free cash flow after adding back
working capital and special capital investments, and customer
concentration with the top 5 clients accounting for about 70% of
revenue in 2023, and one client for about 30%. Customer
concentration is a risk given that consolidation among BetaNXT's
wealth management customers could lead to customer churn and/or
contract renegotiations could lead to pricing pressures.
At the same time, BetaNXT recently extended its contract with its
largest client for 7 years, and the expectation is that upcoming
2024 client renewals will lead to a substantial amount of revenue
being under contract for the next five years. Also, the company's
core integrated wealth management platform for self-clearing wealth
management firms is deeply ingrained in its customer's operations,
making it a sticky product.
Governance considerations as reflected in the G-4 issuer profile
score include concentrated ownership by a financial sponsor,
without an independent board, and aggressive financial policies,
which include elevated leverage.
Liquidity is adequate and includes $17 million of cash at December
31, 2023 and $60 million of availability under the company's $100
million revolver as of March 31, 2024. Expectations of about
$40-$45 million in negative free cash flow (in order to fund
working capital investments, growth capex, and final investments
related to the separation from London Stock Exchange Group), plus
ongoing $7.5 million in term loan amortization, in 2024 will
require BetaNXT to draw additional amounts on the revolver, but
Moody's expects cash plus revolver availability to remain above
$40-$50 million throughout the year. The revolving credit facility
and term loan contain a first lien net leverage financial covenant
set at a maximum of 7.75x, and Moody's expects the company to
maintain adequate cushion under that test over the next year.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded with consistent free cash flow
generation, such that free cash flow to debt is sustained in the
mid-single-digit range, with ongoing revenue and EBITDA growth, and
debt-to-EBITDA maintained below 6x.
The ratings could be downgraded with revenue or EBITDA declines,
debt-to-EBITDA sustained above 7x, and/or sustained negative free
cash flow and a weakening of the liquidity profile.
Headquartered in New York City, BetaNXT is a leading provider of
self-clearing and related solutions to the US wealth management
industry. BetaNXT was carved out from London Stock Exchange Group
by sponsors Clearlake and Motive in July 2022, with revenues of
approximately $326 million for the fiscal year ended December 31,
2023. The company's customer base consists of leading wirehouse and
independent wealth management brokerage firms. Customer
relationships are governed by long-term contracts, with
volume-based tiered pricing that includes applicable minimums.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
BLACKBERRY LTD: Smaldone-Alsup to Step Down as Director
-------------------------------------------------------
BlackBerry Limited disclosed in a Form 8-K Report filed with the
U.S. Securities and Exchange Commission that on May 1, 2024, Laurie
Smaldone Alsup notified the Company that she will not stand for
re-election as a director at the Company's annual and special
meeting of shareholders, to be held on June 25, 2024. Dr. Smaldone
Alsup has served on the Board of Directors of the Company since
June 2015 and will complete her current term, which expires at the
Annual Meeting. Dr. Smaldone Alsup's decision not to stand for
re-election was not the result of any disagreements with the
Company on matters related to its operations, policies or
practices.
The Company expects to nominate Lori O'Neill for election to the
Board at the Annual Meeting. Ms. O'Neill is a FCPA, FCA, corporate
director and independent financial consultant to growth companies.
She is a director of Constellation Software Inc. and Calian Group
Ltd. and served over 24 years with Deloitte LLP.
About BlackBerry
Headquartered in Waterloo, Ontario, BlackBerry Limited (NYSE: BB;
TSX: BB) provides intelligent security software and services to
enterprises and governments around the world.
As of Dec. 31, 2023, the Company had $1.4 billion in total assets,
$619 million in total liabilities, and $776 million in total
stockholders' equity.
In September 2023, Egan-Jones Ratings Company maintained its 'CCC'
foreign currency and local currency senior unsecured ratings on
debt issued by BlackBerry Limited.
BROWNIE'S MARINE: Incurs $1.25 Million Net Loss in 2023
-------------------------------------------------------
Brownie's Marine Group, Inc., filed with the Securities and
Exchange Commission its Annual Report on Form 10-K reporting a net
loss of $1.25 million on $7.58 million of total net revenues for
the year ended Dec. 31, 2023, compared to a net loss of $1.89
million on $8.58 million of total net revenues for the year ended
Dec. 31, 2022.
As of Dec. 31, 2023, the Company had $4.78 million in total assets,
$3.18 million in total liabilities, and $1.59 million in total
stockholders' equity.
Margate, Florida-based Assurance Dimensions, the Company's auditor
since 2022, issued a "going concern" qualification in its report
dated May 9, 2024, citing that the Company had a net loss of
approximately $1,248,115 and cash used in operating activities of
approximately $374,827 for the year ended December 31, 2023 as well
as an accumulated deficit of approximately $17,685,610 as of
December 31, 2023. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1166708/000149315224018527/form10-k.htm
About Brownie's Marine
Headquartered in , Pompano Beach, Florida, Brownie's Marine Group,
Inc., through its wholly owned subsidiaries, designs, tests,
manufactures and distributes tankless dive systems, rescue air
systems and yacht-based self-contained underwater breathing
apparatus ("SCUBA") air compressor and nitrox generation fill
systems and acts as the exclusive distributor in North and South
America for Lenhardt & Wagner GmbH ("L&W") compressors in the
high-pressure breathing air and industrial gas markets. The
Company is also the exclusive United States and Caribbean
distributor for Chrysalis Trading CC, a South African manufacturer
of fitness and dive equipment, which is doing business as Bright
Weights, of a dive ballast system produced in South Africa.
CALIFORNIA QSR: Walter Dahl of Dahl Law Named Subchapter V Trustee
------------------------------------------------------------------
The U.S. Trustee for Region 17 appointed Walter Dahl, Esq., a
partner at Dahl Law, as Subchapter V trustee for California QSR
Management, Inc.
Mr. Dahl will be compensated at $485 per hour for his services as
Subchapter V trustee and will be reimbursed for work-related
expenses incurred.
In court filings, Mr. Dahl declared that he is a disinterested
person according to Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Walter R. Dahl
Dahl Law
2304 "N" Street
Sacramento, CA 95816-5716
Telephone: (916) 446-8800
Telecopier: (916) 741-3346
Email: wdahl@dahllaw.net
About California QSR Management
California QSR Management, Inc. sought protection under Chapter 11
of the U.S. Bankruptcy Code (Bankr. E.D. Calif. Case No. 24-11017)
on April 22, 2024, with $168,469 in assets and $5,086,596 in
liabilities. Imran Damani, president, signed the petition.
Judge Jennifer E. Niemann presides over the case.
Michael Jay Berger, Esq. at the LAW OFFICES OF MICHAEL JAY BERGER
represents the Debtor as legal counsel.
CAMBER ENERGY: Incurs $26.4 Million Net Loss in First Quarter
-------------------------------------------------------------
Camber Energy, Inc., filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $26.35 million on $8.29 million of total revenue for the three
months ended March 31, 2024, compared to a net loss of $1.63
million on $7.24 million of total revenue for the three months
ended March 31, 2023.
As of March 31, 2024, the Company had $96.47 million in total
assets, $76.31 million in total liabilities, and $20.16 million in
total stockholders' equity.
The loss for the three months ended March 31, 2024, was comprised
of, among other things, certain non-cash items, including: (i)
change in fair value of derivative liability of $22,117,007; (ii)
amortization of debt discount of $883,277; (iii) loss on disposal
of membership interests of $755,506; and (iv) depreciation,
depletion and amortization of $228,799.
The largest components of current liabilities creating this working
capital deficiency is drawings by Simson-Maxwell against its bank
credit facility of $3,927,188, accrued interest on notes payable to
Discover of $5,431,823 and a derivative liability of $4,077,500.
"These conditions raise substantial doubt regarding the Company's
ability to continue as a going concern. The Company's ability to
continue as a going concern is dependent upon its ability to
utilize the resources in place to generate future profitable
operations, to develop additional acquisition opportunities, and to
obtain the necessary financing to meet its obligations and repay
its liabilities arising from business operations when they come
due. Management believes the Company may be able to continue to
develop new opportunities and may be able to obtain additional
funds through debt and / or equity financings to facilitate its
business strategy; however, there is no assurance of additional
funding being available. These condensed consolidated financial
statements do not include any adjustments to the recorded assets or
liabilities that might be necessary should the Company have to
curtail operations or be unable to continue in existence," Camber
Energy said in the SEC filing.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1309082/000147793224002701/cei_10q.htm
About Camber Energy
Based in Houston, Texas, Camber Energy, Inc. --
http://www.camber.energy-- is a growth-oriented diversified energy
company. Through its majority-owned subsidiaries the Company
provides custom energy and power solutions to commercial and
industrial clients in North America, and has a majority interest
in: (i) an entity with intellectual property rights to a fully
developed, patented, proprietary Medical and Bio-Hazard Waste
Treatment system using Ozone Technology; and (ii) entities with the
intellectual property rights to fully developed, patented and
patent pending, proprietary Electric Transmission and Distribution
Open Conductor Detection Systems. Also, the Company holds a
license to a patented clean energy and carbon-capture system with
exclusivity in Canada and for multiple locations in the United
States. Various of the Company's other subsidiaries own interests
in oil properties in the United States. The Company is also
exploring other renewable energy-related opportunities and/or
technologies, which are currently generating revenue, or have a
reasonable prospect of generating revenue within a reasonable
period of time.
Dallas, Texas-based Turner, Stone & Company, L.L.P., the Company's
auditor since 2016, issued a "going concern" qualification in its
report dated March 25, 2024, citing that the Company has suffered
recurring losses from operations and has a net capital deficiency
that raise substantial doubt about its ability to continue as a
going concern.
CAN B CORP: Dismisses BF Borgers as Auditor
-------------------------------------------
Can B Corp. disclosed in a Form 8-K Report filed with the U.S.
Securities and Exchange Commission that effective May 6, 2024, BF
Borgers CPA PC is dismissed as the Company's independent registered
public accounting firm. The decision to dismiss BF Borgers was made
with the recommendation and approval of the Audit Committee of the
Company.
BF Borgers' audit reports on the Company's consolidated financial
statements as of and for the fiscal years ended December 31, 2023
and December 31, 2022 contained a qualification that the Company's
significant operating losses raise substantial doubt as to the
Company's ability to continue as a going concern. The audit reports
did not otherwise contain a disclaimer of opinion and were not
qualified or modified as to audit scope or accounting principles.
During the fiscal years ended December 31, 2023 and 2022, and the
subsequent interim period through the date of this report, there
were no disagreements, as that term is defined in Item
304(a)(1)(iv) of Regulation S-K, between the Company and BF Borgers
on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to BF Borgers' satisfaction, would
have caused BF Borgers to make reference to such disagreements in
its audit reports.
During the fiscal years ended December 31, 2023 and 2022, and the
subsequent interim period through the date of this report, there
were no reportable events within the meaning of Item 304(a)(1)(v)
of Regulation S-K.
As per order by the U.S. Securities and Exchange Commission, BF
Borgers is not currently permitted to appear or practice before the
SEC for reasons described in the SEC's Order Instituting Public
Administrative and Cease-and-Desist Proceedings Pursuant to Section
8A of the Securities Act of 1933, Sections 4C and 21C of the
Securities Exchange Act of 1934 and Rule 102(e) of the Commission's
Rules of Practice, Making Findings, and Imposing Remedial Sanctions
and a Cease-and-Desist Order, dated May 3, 2024.
About Can B Corp
Headquartered in Hicksville New York, Can B Corp (f/k/a Canbiola,
Inc.) -- http://www.canbiola.com-- promotes health and wellness
through its development, manufacture and sale of products
containing cannabinoids derived from hemp biomass and the licensing
of durable medical devices. Can B's products include oils, creams,
moisturizers, isolate, gel caps, spa products, and concentrates and
lifestyle products. The Company develops its own line of
proprietary products as well seeks synergistic value through
acquisitions in the hemp industry. It aims to be the premier
provider of the highest quality hemp derived products on the market
through sourcing the best raw material and offering a variety of
products it believes will improve people's lives in a variety of
areas.
As of Dec. 31, 2023, the Company had $10.13 million in total
assets, $11.13 million in total liabilities, and a total
stockholders' deficit of $1 million.
Before it was dismissed as the Company's auditor in May 2024,
Lakewood, Colo.-based BF Borgers CPA PC, the Company's auditor
since 2021, issued a "going concern" qualification in its report
dated April 15, 2024, citing that the Company's significant
operating losses raise substantial doubt about its ability to
continue as a going concern.
CAPITAL POWER:S&P Rates C$450MM Fixed-To-Fixed Rate Sub Notes 'BB'
------------------------------------------------------------------
S&P Global Ratings assigned its 'BB' issue-level rating to Capital
Power Corp.'s (Capital Power) C$450 million series 2 fixed-to-fixed
rate subordinated notes due 2054. The company will use net proceeds
of the offering, repay certain amounts drawn on its credit
facilities, to redeem its series 11 preferred shares, and for
general corporate purposes.
S&P said, "We classify the notes as having intermediate equity
content because of their subordination, permanence, and optional
deferability features, in line with our hybrid capital criteria. As
a result, the proposed notes will receive 50% equity treatment for
the calculation of credit metrics. In line with our criteria, we
would reclassify the notes as having minimal equity content after
the first call date in 2034 because the remaining period until
maturity will be less than 20 years.
"We rate these securities two notches below our 'BBB-' long-term
issuer credit rating on Capital Power to reflect their
subordination and management's ability to defer interest payments
on the instruments."
CAPSITY INC: Court Directs Appointment of Examiner
--------------------------------------------------
Judge Christopher D. Jaime of the U.S. Bankruptcy Court for the
Eastern District of California directed the U.S. Trustee to appoint
an examiner in the Chapter 11 case of Capsity, Inc.
Judge Jaime further ordered that the Examiner shall provide the
court with a detailed accounting of cash collateral that Capsity,
Inc., used in its capacity as a debtor and debtor in possession
from November 2, 2023, through and including March 5, 2024. To the
greatest extent possible, the accounting and report of the Examiner
shall identify all income generated and all expenses paid or
offsets made during the time period.
Moreover, the Examiner shall file an initial status report with the
court by June 17, 2024. Nothing prohibits the Examiner from filing
a final report sooner if an accounting is completed prior to June
17, 2024.
About Capsity Inc.
Capsity, Inc. sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Cal. Case No. 23-23940) on November 2,
2024, with $1,000,001 to $10 million in assets and liabilities.
Judge Christopher D. Jaime presides over the case.
CAPSTONE INVESTMENTS: Unsecureds to be Paid in Full in Plan
-----------------------------------------------------------
Capstone Investments, LLC filed with the U.S. Bankruptcy Court for
the Middle District of Louisiana a Subchapter V Plan of
Reorganization dated April 30, 2024.
The Debtor is a Louisiana limited liability company organized. The
Debtor has operated since 2004. The Debtor has five members: Alex
J. Wascom, Jr., David J. Wascom, Rosalie Wascom, Denise Bourgoyne,
and Mike Kuhn. David J. Wascom is also the Debtor's manager and
authorized representative in this Chapter 11 Case.
The Debtor is a Louisiana limited liability company organized. The
Debtor has operated since 2004. The Debtor has five members: Alex
J. Wascom, Jr., David J. Wascom, Rosalie Wascom, Denise Bourgoyne,
and Mike Kuhn. David J. Wascom is also the Debtor's manager and
authorized representative in this Chapter 11 Case.
Until recently, the Debtor has successfully and profitably operated
the Apartment Complex. In 2023, the Debtor's insurance briefly
lapsed, triggering a non-monetary default under the Loan Documents.
Unfortunately, the Debtor was not able to readily obtain
replacement coverage because the cost of insurance has skyrocketed
in Louisiana after recent tropical weather events.
Prior to the commencement of this case, Fannie Mae commenced a
foreclosure action in the 19th JDC against the Apartment Complex.
The Debtor commenced this Chapter 11 Case to preserve the Apartment
Complex as a going concern and to obtain a full accounting of
Fannie Mae's mortgage from its servicer, Lument.
The Debtor has formulated a plan of reorganization. Under this
Plan, the Debtor intends to distribute the cash generated from its
operations to holders of Allowed Claims.
This Plan provides for the treatment of Claims and Interests as
follows:
* Allowed General Unsecured Claims will be paid in full;
* Allowed Secured Claims will be paid in full; and
* Equity Security Holders, i.e., the Debtor's members, will
retain their Interests in the Debtor.
The Debtor proposes to pay all Allowed Claims in full not later
than 49 months after the Effective Date of this Plan.
Class 3 consists of General Unsecured Claims. After payment in full
of Allowed Administrative Claims, holders of Allowed General
Unsecured Claims will receive a Pro Rata share of consecutive
monthly payments of $6,000.69 until paid in full. The discount rate
used to calculate present value for holders of Allowed General
Unsecured Claims is 2.75% per annum. The Debtor estimates that
payment to Class 3 Creditors will commence in November or December
2024 and continued for approximately 44 months. The allowed
unsecured claims total $243,607.59.
In the interest of full disclosure, Emile Bourgoyne is the holder
of an Allowed Class 3 General Unsecured Claim in the amount of
$77,871.01. He is an Insider because he is married to Denise
Bourgoyne, a member of the Debtor. His Claim will not be
subordinated. Emile Bourgoyne will receive distributions in
accordance with his Allowed Class 3 Claim.
First Insurance Funding is the Debtor's insurance premium financer.
As of the Petition Date, it was owed $7,274.59 under the
pre-petition insurance premium financing package. The Debtor
continued to make payment to First Insurance Funding in the
ordinary course of business after the Petition Date. Thus, First
Insurance Funding is owed $0.00 on account of its pre-petition
Claim and will not receive any distributions under this Plan on
account of any pre-petition Claim. The Debtor and First Insurance
Funding entered into a post-petition insurance premium financing
package. The Debtor will continue to pay First Insurance Funding
$5,050.52 in the ordinary course of business according to the
attached plan projections.
Equity Security Holders shall retain their membership interests in
the Debtor. Except as otherwise provided herein, they shall not
receive any distributions under this Plan until holders of Allowed
Administrative Claims and Allowed General Unsecured Claims are paid
in full.
On Confirmation of this Plan, all property of the Debtor, tangible
and intangible, including, without limitation, licenses, furniture,
fixtures, and equipment, will revert, free and clear of all Claims
and interests, except as provided in the Plan, to the Debtor.
Funds needed to make cash payments on or before the Effective Date
under this Plan shall come from cash on hand and/or the operations
of the Apartment Complex. All payments on and/or after the
Effective Date shall be made by Reorganized Debtor from cash on
hand and/or the operations of the Apartment Complex.
A full-text copy of the Subchapter V Plan dated April 30, 2024 is
available at https://urlcurt.com/u?l=Vw7vc9 from PacerMonitor.com
at no charge.
Attorneys for the Debtor:
Ryan J. Richmond, Esq.
Ashley M. Caruso, Esq.
STERNBERG NACCARI & WHITE, LLC
450 Laurel Street, Suite 1450
Baton Rouge, LA 70801
Tel. (225) 412-3667
Fax: (225) 286-3046
Email: ryan@snw.law
ashley@snw.law
About Capstone Investments, LLC
Capstone Investments, LLC is engaged in activities related to real
estate. The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. La. Case No. 24-10064) on January 31,
2024. In the petition signed by David J. Wascom, managing member,
the Debtor disclosed up to $10 million in both assets and
liabilities.
Judge Michael A. Crawford oversees the case.
Ryan J. Richmond, Esq., at Sternberg, Naccari and White, LLC,
represents the Debtor as legal counsel.
CAZOO GROUP: Delays Filing of 2023 Annual Report
------------------------------------------------
Cazoo Group Ltd disclosed in a Form 12b-25 filed with the
Securities and Exchange Commission that as a result of the
significant amount of time devoted by management of the Company to
pursuing strategic alternatives and changing its business model as
previously disclosed, which has also required a dedication of the
Company's limited personnel and financial resources that precluded
the Company from completing the preparation and review of its
financial statements and disclosures for the reporting period, and
because of the Company's liquidity concerns whereby it would not be
able to demonstrate an ability to continue as a going concern in
the medium- to long-term, the Company was unable to file its Form
20-F for the fiscal year ended Dec. 31, 2023 on or before the
prescribed filing date without unreasonable effort or expense. The
Company does not currently expect to file the 2023 Form 20-F on or
before the fifteen-day extension period granted pursuant to Rule
12b-25 under the Securities Exchange Act of 1934, as amended. At
this time, the Company cannot estimate when it will be able to file
the 2023 Form 20-F, if at all.
About Cazoo
Cazoo -- www.cazoo.co.uk -- is an online car retailer. Cazoo was
founded with a mission to transform the car buying and selling
experience across the UK by providing better selection,
transparency, and convenience. The Company's aim is to make buying
or selling a car no different to ordering any other product online,
where consumers can simply and seamlessly buy, sell and finance a
car entirely online for delivery or collection. Since the
Company's launch in the UK in December 2019, the Company has
experienced rapid growth and sold more than 100,000 cars to Retail
customers across the UK as of Dec. 31, 2022.
London, United Kingdom-based Ernst & Young LLP, the Company's
auditor since 2019, issued a "going concern" qualification in its
report dated March 30, 2023, citing that the Company has suffered
recurring losses from operations and negative cash flows from
operating activities and has stated that substantial doubt exists
about the Company's ability to continue as a going concern.
CELESTICA INC: Moody's Hikes CFR to Ba1 & Alters Outlook to Stable
------------------------------------------------------------------
Moody's Ratings upgraded Celestica Inc.'s corporate family rating
to Ba1 from Ba2, probability of default rating to Ba1-PD from
Ba2-PD, and assigned Ba1 ratings to the company's proposed senior
secured first lien bank credit facilities (term loan A, term loan B
and multi-currency revolving credit facility). The outlook was
changed to stable from positive. The company's speculative grade
liquidity rating is unchanged at SGL-1.
Celestica plans to raise new secured term loan A and term loan B.
Net proceeds will be used to repay the company's existing term
loans and drawing under its revolving credit facility, with the
remainder going to cash. The company will also put in place a new
secured revolving credit facility, which will be undrawn at close.
The Ba1 ratings on the company's existing senior secured credit
facilities (term loan A, term loan B and revolving credit facility)
remain unchanged and will be withdraw when the transaction closes.
"The upgrade reflects Moody's expectation that the company will
sustain its good operating performance and strong credit metrics
despite global macroeconomic headwinds while the refinance
transaction will improve its financial flexibility", said Peter
Adu, Moody's Vice President and Senior Credit Officer.
RATINGS RATIONALE
Celestica's Ba1 CFR benefits from: (1) a business model that
demonstrates sustainable growth and improving operating margins as
the company continues to optimize its mix towards higher margin
services; (2) its demonstrated ability to maintain strong credit
metrics and in particular a track record of deleveraging together
with Moody's expectation that Debt/EBITDA will be sustained below
2x through 2025 (was 1.4x for LTM Q1/2024), barring material
acquisitions; and (3) very good liquidity. The rating is
constrained by: (1) high customer concentration, which could
pressure operating performance should customers reduce, delay, or
cancel orders; (2) growing but still smaller scale relative to
peers in the competitive electronics manufacturing services (EMS)
sector; and (3) global macroeconomic headwinds, which could limit
growth in certain businesses.
Celestica will have one class of secured debt when its refinance
transaction closes – $750 million revolving credit facility
expiring in 2029, $250 million term loan A due 2029, and $500
million term loan B due 2031 – all three are rated Ba1. Moody's
has rated the instruments in line with the CFR because they make up
the bulk of the debt in the capital structure and are secured by a
first-lien pledge of certain assets of the company and its
subsidiaries.
Marketing terms for the new credit facilities (final terms may
differ materially) include the following: Incremental pari passu
debt capacity up to $200 million plus unlimited amounts subject to
2.75x Consolidated Secured Leverage Ratio. There is no inside
maturity sublimit. The credit agreement is expected to include
"J-Crew" protection. The credit agreement will provide some
limitations on up-tiering transactions, requiring the consent of
each lender for amendments that subordinate or have the effect of
subordinating the debt and liens.
Celestica has very good liquidity (SGL-1) through May 31, 2025 with
sources approximating $1.4 billion while the company has uses of
about $30 million in this time frame. Sources include $415 million
of cash when the refinance transaction closes, Moody's free cash
flow estimate of about $230 million over the next four quarters and
about $740 million of availability (after letters of credit) under
its new $750 million revolving credit facility that expires in
2029. Uses consist of $12 million under its $450 million accounts
receivable securitization facility and $18 million of term loan
amortization. Since the receivables facility is not committed,
Moody's has assumed the balance outstanding is due within Moody's
twelve months forward horizon. Celestica's revolving credit
facility will be subject to leverage and coverage covenants and
Moody's expects cushion to exceed 50% through the next twelve
months.
The outlook is stable because Moody's expects Celestica to manage
global macroeconomic headwinds and its capital allocation strategy
such that the company will continue to improve its operating
results and maintain credit metrics that remain in line with its
revised rating.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if the company delivers consistently
strong operating performance, demonstrates a long-term commitment
to conservative financial policies, security provisions in its
credit agreement fall away, materially reduces its customer
concentration, and increases its scale while sustaining operating
margin above 6% (5.5% at LTM Q1/2024) and Debt/EBITDA below 2x
(1.4x at LTM Q1/2024).
The ratings could be downgraded if the company incurs material
customer/program losses without offsetting with new customer
wins/programs, or if it sustains operating margin below 4% (5.5% at
LTM Q1/2024) and Debt/EBITDA above 3x (1.4x at LTM Q1/2024).
The principal methodology used in these ratings was Distribution
and Supply Chain Services published in February 2023.
Celestica Inc., headquartered in Toronto, Ontario, Canada, is an
electronics manufacturing services company with facilities in North
America, Europe and Asia.
CELESTICA INC: S&P Rates New US$500MM Term Loan B 'BB'
------------------------------------------------------
S&P Global Ratings assigned its 'BB' issue-level rating and '3'
recovery rating to Celestica Inc.'s proposed US$500 million term
loan B. The '3' recovery rating indicates its expectation of
meaningful (50-70%; rounded estimate: 50%) recovery in a simulated
default scenario. The term loan will rank pari passu in right of
payment with the company's new US$750 million revolving credit
facility and US$250 million term loan A. S&P's 'BB' issuer credit
rating and stable outlook on Celestica are unchanged.
The company will use the proceeds from this issuance to refinance
existing debt, including existing term loans A and B and amounts
outstanding under the current revolver, and for general corporate
purposes. Celestica's pro forma debt-to-EBITDA on S&P Global
Ratings-adjusted basis will remain strong at close to 1.5x.
S&P said, "We expect the company's leverage will remain at this
level through 2024 reflecting strong revenue and EBITDA growth
while expanding profitability. A greater share of high-margin
hardware platform solutions (HPS) and hyperscaler revenue should
lead to an increase in Celestica's EBITDA margin (S&P Global
Ratings' adjusted) to 6.5%-7.0% through 2024. Looking further
ahead, we expect Celestica to continue to report robust growth over
the next two years and anticipate revenues will surpass the US$9
billion mark within the next 12 months, primarily driven by
strengthening demand in networking from hyperscalers, including in
its HPS programs. We also expect that management will prioritize
organic growth opportunities and balance sheet strength over any
transformational debt-financed acquisitions.
"The stable outlook reflects S&P Global Ratings' expectation that
Celestica's improved EBITDA generation will lead to an S&P Global
Ratings' adjusted net debt to EBITDA around 1.0x-1.5x for the next
12 months. In our view, the company's balanced financial policy and
strong liquidity creates some flexibility to accommodate any demand
volatility across its various end markets."
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- The recovery analysis is based on the new capital structure. If
the company puts in place a higher secured debt, there is a
likelihood of recovery ratings being pressured.
-- S&P's simulated default incorporates the assumption that
Celestica will default in 2029, due to intense competition, pricing
pressure, customer attrition, inefficient capital spending, and an
economic slowdown.
-- S&P assumes Celestica would be reorganized or sold as a going
concern as opposed to being liquidated because the company would
likely retain greater value as an ongoing entity.
-- S&P believe if Celestica were to default, there would continue
to be a viable business model driven by Celestica's market
position, customer relationships, and expertise in the electronics
manufacturing services (EMS) market.
-- S&P's recovery analysis yields a net default enterprise value
of US$810 million.
-- S&P bases this on a 5.5x multiple of US$155 million of
emergence EBITDA estimate and 5% administrative expenses.
-- The EBITDA multiple is 0.5x lower than the industry multiple of
6.0x, in line with other similarly rated peers in the industry such
as Sanmina Corp.
-- S&P used capital expenditures of 1% of sales compared with the
2% default assumption in its recovery criteria, reflecting
Celestica's minimum capital investment requirements.
-- S&P said, "Our analysis also incorporates that the first-lien
creditors are secured by only 40% of Celestica's default enterprise
value. Most of the company's asset base is in jurisdictions that
provide no security pledge, and the other non-U.S.-restricted
subsidiaries have a 65% security pledge, as per the credit
agreement. Since the secured debt is the only tranche in the
capital structure, the secured debt has claims against the full
enterprise value."
-- The first-lien secured claims have a '3' recovery rating,
indicating S&P's expectation of meaningful (50%-70%, rounded
estimate: 50%) recovery in the event of a default, leading to an
issue-level rating of 'BB' in line with the issue credit rating.
Simulated default assumptions
-- Default year: 2029
-- Emergence EBITDA: US$155 million
-- EBITDA multiple: 5.5x
Simplified waterfall
-- Gross recovery value: US$853 million
-- Net recovery value for waterfall (after 5% administrative
expenses): US$810 million
-- Valuation split (obligor/nonobligor): 40%/60%
-- Value available for senior secured claims: US$810 million
-- Estimated senior secured claims: US$1.59 billion
--Recovery range: 50%-70% (rounded estimate: 50%)
All debt amounts include six months of prepetition interest.
CHECKOUT HOLDING: Invesco VVR Marks $201,000 Loan at 47% Off
------------------------------------------------------------
Invesco Senior Income Trust ("VVR") has marked its $201,000 loan
extended to Checkout Holding Corp. to market at $105,605 or 53% of
the outstanding amount, as of February 29, 2024, according to a
disclosure contained in VVR's Form N-CSR for the fiscal year ended
February 29, 2024, filed with the U.S. Securities and Exchange
Commission.
VVR is a participant in Term Loan to Checkout Holding. The loan
accrues interest at a rate of 14.8% per annum. The loan matures on
May 10, 2027.
VVR is a Delaware statutory trust registered under the Investment
Company Act of 1940, as amended, as a closed-end management
investment company. VVR may participate in direct lending
opportunities through its indirect investment in the Invesco Senior
Income Loan Origination LLC, a Delaware limited liability company.
VVR owns all beneficial and economic interests in the Invesco
Senior Income Loan Origination Trust, a Massachusetts Business
Trust, which in turn owns all beneficial and economic interests in
the LLC.VVR may participate in direct lending opportunities through
its indirect investment in the Invesco Senior Income Loan
Origination LLC, a Delaware limited liability company. VVR owns all
beneficial and economic interests in the Invesco Senior Income Loan
Origination Trust, a Massachusetts Business Trust, which in turn
owns all beneficial and economic interests in the LLC.
VVR is led by Glenn Brightman, Principal Executive Officer; and
Adrien Deberghes, Principal Financial Officer. The Trust can be
reached through:
Glenn Brightman
Invesco Senior Income Trust
1555 Peachtree Street, N.E., Suite 1800
Atlanta, GA 30309
Tel: (713) 626-1919
Checkout Holding Corp. operates as a holding company. The Company,
through its subsidiaries, provides market consulting services.
CHICKEN SOUP: Reaches Deal to Raise $175 Million of Working Capital
-------------------------------------------------------------------
Chicken Soup for the Soul Entertainment, Inc. disclosed in a Form
8-K filed with the Securities and Exchange Commission that on
April 29, 2024, it entered into an agreement that allows it to
raise $175 million of additional working capital prior to June 6,
2024 from two financing parties and to make a $75 million loan
prepayment under its HPS credit facility.
Redbox Automated Retail, LLC, the other guarantors, entered into an
Agreement with the Lenders to the Credit Agreement and HPS
Investment Partners, LLC, in its capacity as administrative agent
and collateral agent under the amended and restated credit
agreement, dated as of Aug. 11, 2022, among the Borrowers, the
Lenders and the Agent, as amended, restated, supplemented or
otherwise modified by that certain first amendment, dated as of
April 29, 2024.
Pursuant to the terms of the Agreement, the Company intends to
consummate certain strategic transactions for which it has signed
term sheets that have been reviewed with the Lenders, including the
sublicensing of material video content assets and one or more sales
leaseback transactions with targeted aggregate gross proceeds of at
least $175 million. If the Company is able to successfully
consummate these transactions in their entirety, it is obligated to
utilize $75 million of the net proceeds thereof prior to June 6,
2024 to pay down amounts owed under the Credit Agreement. Until at
least June 6, 2024 (the period beginning on April 29, 2024 and
ending on such date, as it may be extended, the "Initial Period")
the Agent will forbear from acting on any events of default
existing as of the commencement of the Initial Period as well as
certain prescribed defaults that may arise during the Initial
Period.
If the Company timely makes the Initial Paydown, and complies with
the Agreement and the Credit Agreement, the Initial Period will be
extended until Sept. 30, 2024. During the Extended Period, the
Company intends to engage in additional strategic transactions.
If, during the Extended Period, the Company makes an additional
paydown of the principal amount under the Credit Agreement in an
amount pre-agreed with the Agent, the remainder of the principal
and interest under the Credit Agreement, constituting a material
reduction of the principal and interest outstanding, will be fully
terminated and all claims by the Agent against the Company waived
and released. In connection with the Agreement, the Company has
released the Agent and the Lenders from all claims it may have had
against the them under the Credit Agreement, subject to certain
limited exceptions described in the Agreement.
Additionally, the Company has agreed to implement certain
amendments to its organizational documents. Under these
amendments, so long as the Credit Agreement remains in effect, the
Company's board of directors shall include two additional directors
who are not employees or equity holders of the Company, or any
affiliates or family members thereof, that are nominated by the
board of directors of the Company and approved by Lenders having
loans outstanding under the Credit Agreement that represent more
than 50% of the all loans outstanding thereunder at such time. In
connection with these provisions, the Company's board has voted to
increase the size of the board from 9 to 11 members and appointed
the two Additional Independent Directors, effective as of May 3,
2024.
The Company also is amending its certificate of incorporation and
bylaws (as well as the organizational documents of its
subsidiaries) to embody the foregoing requirements, as well as
certain other governance provisions that are not expected to impact
the control structure or operations of the Company in any way
during the Initial Period or the Extended Period. The Company has
also identified a Chief Restructuring Officer, who shall have no
duties or role in connection with the Company for so long as the
Initial Period and the Extended Period continue. Such Chief
Restructuring Officer will not assume a role with the Company if
the Company satisfies the obligations under the Credit Agreement.
The holder of the majority of the outstanding voting power of the
Company's Class A common stock and Class B common stock, voting as
a single class, and the holder of the majority of the outstanding
voting power of the Company's Class B common stock, voting as a
separate class, has approved these amendments by written consent.
The Company will file and mail an Information Statement on Schedule
14C to its stockholders and the amendment to the Certificate of
Incorporation of the Company will be effected in accordance with
the requirements of Regulation 14c-2 under the Securities Exchange
Act of 1934, as amended. The amendments to the Company's bylaws
became effective on April 29, 2024. The Company also agreed to
certain reporting modifications that will remain in effect until
the Credit Agreement is terminated.
There can be no assurance that the Company will be successful in
consummating the currently proposed and any future transactions,
will be able to satisfy the Initial Paydown, or, if such obligation
is satisfied, thereafter deliver to the Agent the additional
pre-agreed value. If the Company is not successful in achieving
all of the foregoing objectives, the Agent will have all rights and
remedies prescribed by the Credit Agreement. The Company could be
forced to seek protections under U.S. bankruptcy law.
As part of the required amendments to the Company's charter
documents as described above and the related requirement to appoint
two Independent Directors, the board of directors of the Company
has consented and voted to increase the size of the board from nine
members to eleven members and appointed each of John T. Young, Jr.,
and Robert H. Warshauer to the Company's board of directors,
effective as of May 3, 2024. Mr. Young has deep experience in
restructuring advisory matters, including serving as a chief
restructuring officer of, or restructuring advisor to, numerous
gas, oil and utility companies. Mr. Warshauer is an experienced
executive with decades of experience providing operational,
financial and investment banking expertise to public and private
companies.
About Chicken Soup
Chicken Soup for the Soul Entertainment, Inc. provides premium
content to value-conscious consumers. The Company is one of the
largest advertising-supported video-on-demand (AVOD) companies in
the US, with three flagship AVOD streaming services: Redbox,
Crackle and Chicken Soup for the Soul. In addition, the Company
operates Redbox Free Live TV, a free ad-supported streaming
television (FAST) service with nearly 170 channels as well as a
transactional video-on-demand (TVOD) service, and a network of
approximately 27,800 kiosks across the U.S. for DVD rentals. To
provide original and exclusive content to its viewers, the Company
creates, acquires, and distributes films and TV series through its
Screen Media and Chicken Soup for the Soul TV Group subsidiaries.
The Company's best-in-class ad sales organization is known to
advertisers as Crackle Connex, a sales platform of unique scale and
differentiated reach. Across Redbox, Crackle, Chicken Soup for the
Soul and Screen Media, the Company has access to over 50,000
content assets, with over 60,000 programming hours. Chicken Soup
for the Soul Entertainment is a subsidiary of Chicken Soup for the
Soul, LLC, which publishes the famous books series and produces
super-premium pet food under the Chicken Soup for the Soul brand
name.
New York, New York-based Rosenfield and Company, PLLC, the
Company's auditor since 2017, issued a "going concern"
qualification in its report dated April 19, 2024, citing that the
Company has suffered significant losses from operations and has a
net capital deficiency that raise substantial doubt about its
ability to continue as a going concern.
CITY BREWING: S&P Upgrades ICR to 'B-' Following Restructuring
--------------------------------------------------------------
S&P Global Ratings issuer credit rating on U.S.-based beverage
co-manufacturer City Brewing to 'B-' from 'SD' (selective
default).
S&P said, "We also assigned our 'B-' issue-level ratings to the
BrewCo Borrower LLC senior secured FLFO term loan and its senior
secured FLSO term loan, with respective recovery ratings of '3' and
'4'. We also raised the issue-level rating on the company's secured
term loan B to 'B-' from 'D' with a revised recovery rating of
'4'.
"The negative outlook reflects the potential for a lower rating if
operating performance is weaker than expected, and we no longer
believe EBITDA interest coverage will improve to well above 1.5x."
The rating reflects City's improved, but still elevated leverage
and weak cash generation. While the company benefited from discount
capture on the below-par debt exchange, its leverage profile did
not change materially because of the new money term loan that
partly funded fees and working capital requirements. S&P said, "We
estimate pro forma S&P Global Ratings-adjusted leverage at
transaction close exceeded 10x. We expect credit measures to
improve over the course of the year as the company ramps up volumes
with recently acquired customers, leading to increased asset
utilization and operational efficiencies that drive margin
expansion."
However, City has also experienced downtime in the first quarter
because of weather disruptions and schedule changes to annual
equipment rebuilds. This has resulted in some missed volume
opportunity and less-than-optimal capacity utilization, so
uncertainty remains over the magnitude of an earnings rebound this
year. S&P forecasts the company will still generate EBITDA growth
and deleverage to the low-8x area in 2024, but S&P expects it will
generate an FOCF deficit of about $25 million, and EBITDA interest
coverage of around 1.5x.
S&P said, "The restructuring has improved City's liquidity
position. Despite our expectation that the company will generate
negative FOCF in 2024, we believe the transaction will provide the
company with sufficient liquidity for at least the next two years.
The infusion of $115 million of new money enabled City to repay
outstanding revolver borrowings and cover past due payments to an
important supplier. In addition, the new revolver was upsized to
$120 million and extended one year to 2027. The company is also no
longer subject to the prior revolver's springing leverage covenant
that had greatly limited its borrowing capacity and ability to fund
capital expansion projects. We estimate the company had pro forma
revolver availability of about $85 million at transaction close,
providing it greater flexibility to fund capacity expansion when
needed. Moreover, the company has no debt maturities until 2028.
"The negative outlook reflects the company's track record of
underperformance and risk that poor operating execution will cause
results to be materially weaker than we expect. City has suffered
significant profit deterioration over the last several years due to
various operational hurdles, including plant staffing challenges,
supply chain disruptions, and delays in passing on high conversion
costs. The company also had high customer concentrations and was
heavily indexed to hard seltzers, which have become less popular.
Management has made progress diversifying its customer base and
reducing its exposure to hard seltzers by expanding its ability to
serve customers in the beer, functional energy, and ready to drink
(RTD) spirits categories. We anticipate these added capabilities in
attractive categories and investments in different pack-size and
multi-pack capabilities, will position the company better for
long-term growth. Still, City's continued operational issues and
recent inability to fill orders could lead to customer losses and
inefficiencies that further erode profit margins and cause the
capital structure to become unsustainable."
The negative outlook reflects the potential for a lower rating if
City's operating performance does not improve as expected, causing
its capital structure to become unsustainable.
S&P could lower the ratings if it does not believe FOCF will turn
positive and EBITDA interest coverage will improve to well above
1.5x in 2025. This could occur if:
-- Operating disruptions impact peak selling season demand;
-- The company experiences material customer losses due to its
inability to fill orders or customer decisions to insource; or
-- It experiences significant staffing disruptions at any of its
facilities.
S&P could revise the outlook to stable if the company generates
positive FOCF and EBITDA interest coverage approaches 2x. This
could occur if the company:
-- Maintains high levels of equipment reliability and asset
utilization;
-- Successfully ramps up its production with Pabst Blue Ribbon;
and
-- Continues to onboard new customers in high growth categories.
CLEAN HARBORS: Moody's Alters Outlook on 'Ba2' CFR to Positive
--------------------------------------------------------------
Moody's Ratings affirmed Clean Harbors, Inc.'s (CLH) ratings,
including the Ba2 corporate family rating, Ba2-PD probability of
default rating, Ba1 senior secured bank credit facility rating and
Ba3 senior unsecured notes rating. Moody's also changed the
outlook to positive from stable. The SGL-2 speculative grade
liquidity rating remains unchanged.
The ratings affirmation and outlook change to positive reflect
Moody's expectation for credit metrics to improve and free cash
flow to strengthen over the next 12-18 months, despite negative
effects of near term headwinds in the oil re-refining business.
This will be driven by higher pricing and volume growth in the
environmental services base business, cost discipline and recent
acquisition synergies. Moody's anticipates that demand from key
environmental end markets, including the chemical sector, will
continue to drive higher value waste streams to CLH's disposal
facilities as well as volume opportunities presented by rising
demand for PFAS remediation services. Finally, Moody's expects CLH
to maintain good liquidity and a well-balanced financial policy,
with adjusted debt-to-EBITDA remaining below 3x absent any large
acquisitions.
RATINGS RATIONALE
The ratings reflect Moody's expectation that CLH will maintain its
leading position across its specialty North American hazardous
waste markets. The business model is supported by formidable
barriers to entry anchored by a unique collection of high value
assets and contracts that generate a recurring revenue stream
within several sub segments of CLH's environmental services
business. Acquisitions will remain key to the growth strategy and
Moody's expects the company to maintain a balanced approach to
capital allocation. The recent $400 million acquisition of HEPACO,
a provider of specialty environmental and emergency response
services, will increase the company's scale and capabilities in its
field services business and provide opportunities for incremental
waste to go to CLH's disposal and recycling facilities. However,
the acquisition has also increased financial leverage with pro
forma debt-to-EBITDA approaching 3x at March 31, 2024 from about
2.4x at year-end 2023. Moody's expects the ratio to improve over
the next year, absent significant debt-funded acquisitions,
supported by higher earnings and realization of targeted
acquisition synergies with focused execution on the HEPACO
integration.
The ratings also reflect CLH's exposure to the volatility of its
oil re-refining business, which is correlated with oil price
movements and has negatively impacted the company's profitability.
CLH is also exposed to cyclical industrial end markets and cautious
customer spending during weak economic conditions. As well, field
service operations are subject to fluctuations due to variable
project timing, though often recurring under master service
agreements. However, favorable demand tailwinds driven by reshoring
trends, government support driving increased infrastructure
investment and pollution remediation related to PFAS contamination
will support continued demand for CLH's environmental and waste
services. Moody's anticipates these factors and favorable disposal
pricing will help to offset ongoing headwinds in the company's base
oil market and cost inflation, and support an EBITDA margin near
20% through 2025.
Moody's expects CLH to maintain good liquidity over the next 12 to
18 months, as reflected by the SGL-2 speculative grade liquidity
rating. This is based on expectations of healthy cash balances
($338 million at March 31, 2024) and availability on the undrawn
$400 million ABL facility, of which $268 million was available (net
of letters of credit) at March 31, 2024. Moody's also expects CLH
to generate robust cash flow from operations of over $750 million
over the next year. This will comfortably cover high capital
expenditures of over $400 million in 2024, though moderating with
the near completion of the company's Nebraska incineration plant
investment, and mandatory term loan amortization of approximately
$15 million annually. The ABL facility is subject to a fixed charge
coverage ratio of 1.0x if liquidity is less than the greater of (i)
$30 million and (ii) 10% of the commitment. Moody's expect the
company to remain in compliance with this covenant over the next
year. There are no near-term debt maturities.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded with sustained strength in key
industrial sectors (chemical, manufacturing and energy) such that
asset utilization rates increase and landfill and incineration
tonnage trend higher. Resulting EBITDA margin sustained near or
above 20%, free cash flow-to-debt sustained above 10% and
debt-to-EBITDA remaining below 3x would support an upgrade. Reduced
vulnerability to the energy sector and oil prices would also be
viewed favorably, as would the maintenance of very good liquidity
and a demonstrated track record of a well-balanced financial
policy.
The ratings could be downgraded with a decline in base business
revenue and earnings, a materially lower incinerator utilization
rate (typically in the high-80% range), or the inability to
successfully execute the integration of acquisitions. A
deterioration in liquidity and aggressive shareholder friendly
initiatives or debt financed acquisitions that weaken the metrics
or liquidity could also lead to a ratings downgrade. Deteriorating
margins, weakening EBIT-to-interest, debt-to-EBITDA expected to
remain above 4x, and/or free cash flow to debt approaching 5% could
also drive downward rating pressure.
The principal methodology used in these ratings was Environmental
Services and Waste Management published in May 2023.
Clean Harbors, Inc. mainly provides environmental and industrial
waste services throughout North America with services including the
collection, packaging, transportation, recycling, treatment and
disposal of hazardous and non-hazardous waste. The company also
provides emergency spill response, cleaning and remediation, and
oil re-refining services. Clean Harbors operates through two main
segments: Environmental Services and Safety-Kleen Sustainability
Solutions, with the latter focused on oil re-refining by producing
and selling recycled base oil and blended oil products. Revenue for
the twelve months ended March 31, 2024, was approximately $5.5
billion.
COGENT COMMUNICATIONS: S&P Rates Senior Unsecured Debt to 'B+'
--------------------------------------------------------------
S&P Global Ratings raised its issue-level rating on U.S.-based
telecommunications service provider Cogent Communications Group
LLC's senior unsecured debt to 'B+' from 'B' and revised its
recovery rating to '3' from '5'. The '3' recovery rating indicates
our expectation for meaningful (50%-70%; rounded estimate: 60%)
recovery in the event of payment default. The 'BB' issue-level
rating and '1' recovery rating on the company's secured debt is
unchanged.
S&P said, "The rating upgrade follows a reassessment of Cogent's
valuation in our hypothetical default scenario. We raised our
estimated emergence EBITDA to $185 million from $113 million, which
partially reflects that by the time the company emerges from the
assumed default scenario, it would have realized cost savings and
overall margin improvement as the result of its integration of the
Sprint assets. Our recovery analysis also considered the 12.5
million IPv4 addresses that were transferred to an unrestricted
subsidiary for the company's recent $206 million securitization
transaction and in reverse the transfer of IRU leases to Cogent.
Despite the IPv4 address asset transfer out of Cogent Group, our
updated recovery analysis estimates higher recovery expectations
for Cogent's unsecured senior notes.
"The 'B+' issuer credit rating and stable outlook are unchanged.
Our base-case forecast assumes organic on-net revenue increases
around 4% in 2024 and 2025 based on 5% connection growth and higher
average revenue per user (ARPU). At the same time, we assume
organic off-net revenues decline around 3% per year due to a modest
1% decline in connections and lower ARPU. While we expect the
Sprint assets to be dilutive to overall EBITDA in the near term,
Cogent will receive payments from T-Mobile of around $200 million
in 2024, which will partially offset the negative EBITDA
contribution. We therefore expect Cogent's S&P Global
Ratings-adjusted debt to EBITDA will increase to around 4.7x in
2024, which is supportive of the current rating, from 4.3x in 2023.
Our base-case forecast assumes that leverage remains in the high-4x
area in 2025, despite a lower $100 million payment from T-Mobile,
and more material leverage improvement in 2026 from organic growth
and synergies from the Sprint acquisition."
COTY INC: Fitch Hikes LongTerm IDR to 'BB+', Outlook Stable
-----------------------------------------------------------
Fitch Ratings has upgraded the Long-Term Issuer Default Ratings
(IDR) for Coty Inc. and Coty B.V. to 'BB+' from 'BB'. The Rating
Outlook is Stable.
Coty Inc.'s ratings reflect its leading market position as one of
the world's largest beauty companies with a recently improved mix
toward higher growth and higher margin prestige fragrance and skin
care, and signs of stabilization in its consumer beauty business.
The upgrade reflects continued progress towards improving its
EBITDA leverage, which Fitch expects will trend just under 4x in
fiscal 2024 (ending in June 2024) and mid 3x in fiscal 2025, versus
4.6x as of June 30, 2023 as the company expands EBITDA and deploys
FCF towards debt reduction.
KEY RATING DRIVERS
Improved Business Profile: Coty's operating performance and
financial profile have improved meaningfully over the last four
years. Fiscal 2023 (which ended on June 30, 2023) revenue was
USD5.6 billion and EBITDA was USD973 million, returning close to
2019 pro forma levels after adjusting for the sale of a majority
stake in the Wella brand and over USD300 million reduction in
revenue from a rationalized distributor network. The business
continues to see strong momentum, and Fitch expects like-for-like
revenue to increase by more than 10% in fiscal 2024.
Coty has seen strong growth in its prestige fragrance business and
has taken meaningful steps to fill gaps in its consumer beauty
portfolio and stem share losses in its key consumer brands,
including Covergirl, Rimmel, Max Factor and Sally Hansen. It is
investing heavily in skin care and natural products across legacy
and newer brands. Investments in innovation, new product launches
and marketing appear to have stabilized its share in the consumer
beauty business after five years of declines.
Beginning FY25, Fitch expects Coty to sustain 2%-4% revenue growth
(relative to Coty's expectation of 6%-8% medium term growth), with
prestige fragrances to be the main contributor. Consumer beauty
business revenue could be flat, given repositioning efforts across
key brands while recognizing overall challenges in the mass market
beauty space. Coty's emerging presence in categories like prestige
makeup and skin care and in markets such as China (4% of
consolidated revenue) provide medium-term growth opportunities.
Favorable Mix Shift Supports Revenue Growth: The company, under the
leadership of Sue Nabi, a L'Oreal veteran who became CEO in
September 2020, detailed its strategic initiatives in early 2021 to
drive medium-term revenue growth of 6%-8% and has taken significant
steps to invest in existing categories and new adjacencies, such as
skin care and body care. The company's portfolio has improved with
its prestige segment driving 62% of fiscal 2023 revenue versus 56%
in fiscal 2019. Within the segment, fragrances made up around 55%
of revenue in fiscal 2023, cosmetics around 3% and skin care around
4%. The prestige business carries close to 22% EBITDA margins and
drives over 75% of EBITDA.
The consumer beauty business, which includes Coty's mass segment
color cosmetics business at 25% of total revenue, body care at 7%
and mass fragrances at 6%, has an EBITDA margin below 11%. The
company has experienced some positive momentum in the consumer
beauty business following recent investments, including indications
of market share stabilization, although in a somewhat volatile
spending environment.
Improved Credit Profile: Coty ended fiscal 2023 with around USD4.4
billion in debt, down from nearly USD9.0 billion at fiscal YE 2020.
The company paid down debt using FCF and asset sale proceeds —
including USD2.5 billion received from its sale of a stake in its
Wella hair care business to Kohlberg Kravis Roberts & Co.
L.P.(KKR). Debt was also reduced by the equitization and share
exchange of most of the USD1 billion preferred stake, which Fitch
includes in Coty's debt calculation, held by KKR. Coty has stated a
goal of reducing net leverage to approximately 2.5x exiting CY24
and approximately 2.0x exiting CY25, assuming EBITDA growth and
further debt reduction from FCF.
Company-calculated net leverage was 4.1x at June 30, 2023, which
equates to Fitch-calculated gross EBITDA leverage of 4.6x. Fitch
expects EBITDA leverage to decline under 4.0x in fiscal 2024,
reflecting the $400 million in debt tenders in late 2023, and mid
3x in fiscal 2025, with continued debt reduction given Fitch's FCF
projections in the $400 million-$500 million range. Fitch has not
projected any proceeds from additional sales of Coty's 25.9% stake
in Wella. Coty has publicly stated that it expects to fully exit
its position by calendar 2025, with the stake at a fair value of
just over USD1 billion at the end of the quarter.
Exposure to Dynamic Industry and Evolving Marketing Landscape: The
fragrance and color cosmetics industries have demonstrated some
positive long-term characteristics, including mid-single-digit
annual growth and relatively high margins. The global beauty
business is expected to continue to benefit from a growing middle
class, premiumization of fragrances and skin care products and a
focus on wellness.
However, the industry, and some of its most venerable brands, have
been disrupted by new marketing and retail channels. In addition,
there could be a moderation in the strong growth rates seen in
prestige brands and fragrances given the overall pullback in
discretionary consumer spending.
DERIVATION SUMMARY
Similarly rated peers in the consumer products market include
Hasbro, Inc., Mattel, Inc., and Reynolds Consumer Products Inc.
Mattel's 'BBB-/Stable' rating reflects the impact of the company's
efforts to revitalize and re-energize its portfolio of owned brands
such as Barbie, Hot Wheels and Fisher Price over the past several
years, which has supported market share gains. The rating also
considers its low leverage, with Fitch defined EBITDA leverage
expected to remain below 3x over the medium term.
Hasbro's 'BBB-/Negative' rating reflects brand health concerns and
execution risks in returning to positive revenue growth and driving
EBITDA expansion, and elevated leverage. Hasbro is investing in
innovation and new product launches, which should support revenue
growth in 2025 and beyond.
Reynolds Consumer Products' 'BB+'/Stable rating reflects its
leading market position, supported by innovation and conservative
financial policies and good liquidity. EBITDA leverage is expected
to remain below 3x over the medium term. Reynolds' rating also
reflects its relatively smaller scale and lower degree of diversity
compared to larger consumer goods companies.
KEY ASSUMPTIONS
- Revenue grows at approximately 10% in fiscal 2024 on a fiscal
2023 revenue base of USD5.6 billion, with particular strength in
prestige fragrances and skincare. Fitch expects organic revenue to
grow in the 2%-4% range thereafter, assuming faster growth in the
fragrance business and flattish results at Coty's consumer beauty
(mass market cosmetics) brands;
- EBITDA increases to just over USD1 billion in fiscal 2024 from
USD973 million in fiscal 2023 on revenue growth, with EBITDA
margins stable around 17.6%; EBITDA generally grows in line with
revenue thereafter;
- FCF of around USD300 million in fiscal 2024, assuming some cash
usage for working capital and USD400 million to USD500 million
annually in fiscal 2025-2026, given EBITDA growth and assuming
minimal working capital swings. Fitch expects Coty to divert a
portion of this toward debt reduction, given USD1.5 billion of debt
due in April 2026. The company maintains an approximate 26% stake
in Wella and plans to fully monetize its stake by fiscal 2025,
adding to potential liquidity sources;
- EBITDA leverage is expected to decline to around 4.0x in fiscal
2024 and the mid 3x range in fiscal 2025 from 4.6x in fiscal 2023
on continued debt reduction and some EBITDA expansion. Fitch's debt
calculations include USD143 million in preferred stock;
- Coty's debt generally has fixed interest rate structures aside
from its USD2 billion revolving credit facility; as such,
borrowings under this facility could be subject to higher interest
rates in the near term. Pricing is SOFR + 150bps for the USD1.67
billion revolver and Euribor +150 bp for the EUR300 million
tranche.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- An upgrade of Coty's ratings to 'BBB-' could result from
continued strong results, with annual organic top-line growth in
the low-to-mid-single digits, stable to improving market shares,
EBITDA of over USD1 billion, with EBITDA leverage, defined as gross
debt/EBITDA, sustained under 3.5x.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
- A downgrade to 'BB' could result from a deceleration in top-line
growth and declining EBITDA margins such that EBITDA leverage
sustains above 4x;
- A downgrade could also result from a change in financial policy
or debt financed acquisitions that result in EBITDA leverage
sustained above 4.0x.
LIQUIDITY AND DEBT STRUCTURE
Coty's liquidity as of March 31, 2024 consisted of USD260 million
in cash and approximately USD1.75 billion of availability under its
revolving credit facilities after accounting for USD255 million of
outstanding borrowings. The company has two tranches of senior
secured revolving credit commitments, one in an aggregate principal
amount of USD1.670 billion available in U.S. dollars and certain
other currencies and the other in an aggregate principal amount of
EUR300 million. Both are due to mature on July 11, 2028.
As of March 31, 2024, Coty had USD255 million of borrowings under
its revolver, USD3.2 billion of senior secured notes due 2026-2030,
USD520 million in senior unsecured notes due April 2026 and USD142
million of convertible series B preferred stock. Fitch treats the
preferred stock as debt given what Fitch views as a lack of
permanence in the cap structure due to the high coupon.
Coty has significant maturities on April 15, 2026, when
approximately USD1.4 billion of U.S. dollar and euro senior secured
notes and approximately USD520 million of senior unsecured notes
come due. Fitch expects the company to address these maturities
through debt tenders/paydown and refinancing.
Fitch expects the company to generate USD300 million in FCF in
fiscal 2024 and around USD450 million in fiscal 2025. On Dec. 7,
2023, the company completed cash tender offers and redeemed USD150
million of the company's USD 550 million 6.50% 2026 dollar notes
(USD323 million amount outstanding as of March 2024) and USD250
million of the company's USD900 million 5.00% 2026 dollar senior
secured notes (USD650 million amount outstanding as of March
2024).
Coty also could use FCF toward USD400 million in share buybacks
over fiscal 2024-2025; in June and December 2022, the company
entered into certain forward repurchase contracts to start hedging
for two potential USD200 million and USD196 million share buyback
programs, in 2024 and 2025, respectively. In February 2024, Coty
completed the first tranche of the equity swap agreement at a cash
cost of USD200 million, resulting in a share count reduction of 27
million at an effective share price of USD7.40.
Recovery Considerations: Fitch assigns Recovery Ratings (RRs) to
the various debt tranches in accordance with Fitch's criteria,
which allows for the assignment of RRs for issuers with IDRs in the
'BB' category. Given the distance to default, RRs in the 'BB'
category are not computed by bespoke analysis. Instead, they serve
as a label to reflect an estimate of the risk of these instruments
relative to other instruments in the entity's capital structure.
Fitch has upgraded Coty's debt issuances by one notch, with the
senior secured credit facilities and secured notes, which are pari
passu, upgraded to 'BBB-'/'RR2' from 'BB+/RR2', indicating
outstanding recovery prospects in the event of default. The senior
credit facilities and secured notes are senior secured obligations
of Coty and are guaranteed on a senior secured basis by each of
Coty's wholly owned domestic subsidiaries. The unsecured notes are
rated 'BB+'/'RR4', indicating average recovery prospects, and the
series B preferred stock is rated 'BB-'/'RR6', given its deeply
subordinated nature.
ISSUER PROFILE
Founded in 1904, Coty Inc. is one of the world's largest beauty
companies, manufacturing, marketing and distributing prestige and
mass market products with a top three global position in both
fragrances and mass color cosmetics, and an emerging presence in
skincare and body care categories.
SUMMARY OF FINANCIAL ADJUSTMENTS
Historical and projected EBITDA is adjusted to add back non-cash
stock-based compensation and exclude non-recurring charges.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Coty Inc. LT IDR BB+ Upgrade BB
senior unsecured LT BB+ Upgrade RR4 BB
preferred LT BB- Upgrade RR6 B+
senior secured LT BBB- Upgrade RR2 BB+
Coty B.V. LT IDR BB+ Upgrade BB
senior secured LT BBB- Upgrade RR2 BB+
CYTOSORBENTS CORP: 2nd Amended and Restated Bylaws OK'd
-------------------------------------------------------
CytoSorbents Corporation disclosed in a Form 8-K Report filed with
the U.S. Securities and Exchange Commission that the Company's
Board of Directors has approved the Second Amended and Restated
Bylaws of the Company, which became effective immediately. The
Board adopted certain clarifying amendments and other updates,
which, among other items, made the following changes:
* Article I, Section 1.5 of the Bylaws has been amended to
delete the requirement to make a stockholder list available for
examination at stockholder meetings, consistent with recent
amendments to the Delaware General Corporation Law.
* Article I, Sections 1.9(a) and 1.10(b) and Article II,
Section 2.15(b) of the Bylaws have been amended to update certain
disclosure requirements in the advance notice to be provided in
connection with stockholder submissions of proposals regarding
certain business to be conducted at annual meetings of stockholders
and stockholder nominations of directors;
* Article I, Section 1.12 of the Bylaws has been amended to
delete the requirement for stockholder action to be effected at a
duly called annual or special meeting of stockholders, consistent
with the DGCL; and
* Article VIII of the Bylaws has been amended to add a forum
selection clause which (i) requires all litigation concerning the
internal affairs of the Company to proceed in the State of Delaware
and (ii) requires all cases brought to enforce a duty or liability
created by the Securities Act of 1933, or any successor thereto, or
the Securities Exchange Act of 1934 to be litigated in federal
court.
A full-text copy of the Second Amended and Restated Bylaws of
CytoSorbents Corporation is available at
https://tinyurl.com/4y2sf9vu
About CytoSorbents
Based in Monmouth Junction, N.J., CytoSorbents Corporation is
engaged in critical care immunotherapy, specializing in blood
purification. Its flagship product, CytoSorb, is approved in the
European Union with distribution in more than 75 countries around
the world as an extracorporeal cytokine adsorber designed to reduce
the "cytokine storm" or "cytokine release syndrome" seen in common
critical illnesses that may result in massive inflammation, organ
failure and patient death.
East Brunswick, New Jersey-based WithumSmith+Brown, PC, the
Company's auditor since 2004, issued a "going concern"
qualification in its report dated March 14, 2024, citing that the
Company has suffered recurring losses from operations, has
experienced cash used from operations, and has an accumulated
deficit, which raise substantial doubt about its ability to
continue as a going concern.
D&D TRANS: Voluntary Chapter 11 Case Summary
--------------------------------------------
Debtor: D&D Trans, Inc.
5504 Bergamot Lane
Naperville, IL 60564
Business Description: The Debtor is part of the trucking industry.
Chapter 11 Petition Date: May 16, 2024
Court: United States Bankruptcy Court
Northern District of Illinois
Case No.: 24-07279
Debtor's Counsel: Saulius Modestas, Esq.
MODESTAS LAW OFFICES, P.C.
401 S. Frontage Rd.
Ste. C
Burr Ridge, IL 60527-7115
Tel: 312-251-4460
Fax: 312-277-2586
Email: smodestas@modestaslaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Denis Coledinschi as president.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/UYHWTLY/DD_Trans_Inc__ilnbke-24-07279__0001.0.pdf?mcid=tGE4TAMA
DATASEA INC: Incurs $4.1 Million Net Loss in Third Quarter
----------------------------------------------------------
Datasea Inc. filed with the Securities and Exchange Commission its
Quarterly Report on Form 10-Q reporting a net loss to the Company
of $4.14 million on $1.38 million of revenues for the three months
ended March 31, 2024, compared to a net loss to the Company of
$1.29 million on $84,555 of revenues for the three months ended
March 31, 2023.
For the nine months ended March 31, 2024, the Company reported a
net loss to the Company of $5.99 million on $19.61 million of
revenues, compared to a net loss to the Company of $3.92 million on
$216,014 of revenues for the nine months ended March 31, 2023.
As of March 31, 2024, the Company had $3.37 million in total
assets, $2.19 million in total liabilities, and $1.18 million in
total equity.
Datasea said, "The historical operating results including recurring
losses from operations raise substantial doubt about the Company's
ability to continue as a going concern.
"During the nine months ended March 31, 2024, the Company made
total prepayments of $3.78 million for marketing and promoting the
sale of acoustic intelligence series products and 5G Multimodal
communication in oversea and domestic markets. For the three and
nine months ended March 31, 2024, the Company recorded an
amortization of prepaid expense of $0.95 million and $ 1.89 million
in the selling expense.
"If deemed necessary, management could seek to raise additional
funds by way of admitting strategic investors, or private or public
offerings, or by seeking to obtain loans from banks or others, to
support the Company's research and development ("R&D"),
procurement, marketing and daily operation. While management of
the Company believes in the viability of its strategy to generate
sufficient revenues and its ability to raise additional funds on
reasonable terms and conditions, there can be no assurances to that
effect. The ability of the Company to continue as a going concern
depends upon the Company's ability to further implement its
business plan and generate sufficient revenue and its ability to
raise additional funds by way of a public or private offering.
There is no assurance that the Company will be able to obtain funds
on commercially acceptable terms, if at all. There is also no
assurance that the amount of funds the Company might raise will
enable the Company to complete its initiatives or attain profitable
operations. If the Company is unable to raise additional funding
to meet its working capital needs in the future, it may be forced
to delay, reduce or cease its operations."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1631282/000121390024042345/ea0205544-10q_datasea.htm
About Datasea
Headquartered in Beijing, People's Republic of China, Datasea Inc.
is a technology company incorporated in Nevada, USA on Sept. 26,
2014, with subsidiaries and operating entities located in Delaware,
US and China, that provides intelligent acoustics (including
ultrasound, infrasound, directional sound, and Schumann resonance),
5G messaging and other products and services to various corporate
and individual customers. The acoustic business offers a wide
range of cutting-edge products including high-quality sonic air
disinfection solutions, skin repair and beauty solutions, as well
as sleep-aid devices. Its products find extensive applications
across various industries and sectors, including sonic antivirus,
sonic beauty, sonic medical treatments, and sonic agriculture.
DIVERSIFIED HEALTHCARE: Reports $86.3MM Net Loss in 2024 Q1
-----------------------------------------------------------
Diversified Healthcare Trust filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $86.3 million on $370.8 million of total revenue for the three
months ended March 31, 2024, compared to a net loss of $52.7
million on $346 million of total revenue for the three months ended
March 31, 2023.
The Company disclosed, "on December 21, 2023, we completed a
private offering of $940.5 million in aggregate principal amount at
maturity of senior secured notes due January 2026, with a one-year
extension option. The net proceeds from the offering were
approximately $730.4 million after deducting initial purchaser
discounts and estimated offering costs. We used a portion of the
net proceeds to repay in full the $450.0 million outstanding under
our then secured credit facility and to redeem $250.0 million of
our senior notes that were scheduled to mature in May 2024. As a
result of these transactions, we have no significant debt
maturities until June 2025 when $500.0 million of our senior notes
will become due, and as of March 31, 2024, we had $207.1 million of
cash and cash equivalents. Additionally, as of March 31, 2024, our
ratio of consolidated income available for debt service to debt
service is above the 1.5x incurrence requirement under our senior
notes, on a pro forma basis. We are able to refinance existing or
maturing debt and issue new debt as long as this ratio is at or
above 1.5x on a pro forma basis at the time of such refinancing or
issuance."
"Until its repayment in full and termination on December 21, 2023,
we had a $450.0 million credit facility that was fully drawn.
"During the three months ended March 31, 2024, we sold one property
for a sales price of $3.6 million, excluding closing costs. As of
May 2, 2024, we had two properties under agreements to sell for an
aggregate sales price of approximately $10.4 million, excluding
closing costs. We may not complete the sales of any or all of the
properties we currently plan to sell. Also, we may sell some or all
of these properties at amounts that are less than currently
expected and/or less than the carrying values of such properties
and we may incur losses on any such sales as a result."
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/yc6s4pna
About Diversified Healthcare Trust
Diversified Healthcare Trust (Nasdaq: DHC) --
https://www.dhcreit.com/ -- is a real estate investment trust,
which owns senior living communities, medical office and life
science buildings and wellness centers throughout the United
States. As of Sept. 30, 2023, DHC's approximately $7.2 billion
portfolio included 376 properties in 36 states and Washington,
D.C., occupied by approximately 500 tenants, and totaling
approximately 9 million square feet of life science and medical
office properties and more than 27,000 senior living units. DHC is
managed by The RMR Group (Nasdaq: RMR), an alternative asset
management company with approximately $36 billion in assets under
management as of Sept. 30, 2023 and more than 35 years of
institutional experience in buying, selling, financing and
operating commercial real estate.
As of March 31, 2024, the Company had $5.35 billion in total
assets, $3.09 million in total liabilities, and $2.25 million in
total stockholders' equity.
The Company stated in its Quarterly Report for the period ended
Sept. 30, 2023, that there is substantial doubt about its ability
to continue as a going concern for at least one year from the date
of issuance of the financial statements. The Company's continuation
as a going concern is dependent upon many factors, including its
ability to meet its debt covenants and repay its debts and other
obligations when due. While it believes raising permissible new
capital, including proceeds from its planned asset sales, and the
possible extension of its credit facility, will alleviate the
substantial doubt about its ability to continue as a going concern,
the Company cannot provide assurance that any new capital raised,
including proceeds from its planned asset sales, will be available
to the Company or sufficient to repay its upcoming maturing debt,
or that its lenders will agree to an extension of the maturity date
of its credit facility. The Company cannot be sure that it will be
able to obtain any future debt financing, and any such debt
financing it may obtain may not be sufficient to repay its upcoming
maturing debt. If it is unable to obtain sufficient funds, the
Company may be unable to continue as a going concern.
* * *
As reported by the TCR on Jan. 5, 2024, S&P Global Ratings raised
its issuer credit rating on Diversified Healthcare Trust (DHC) to
'CCC+' from 'CCC-', its issue-level rating on its non-guaranteed
senior unsecured notes to 'CCC+' from 'CCC-', and its issue-level
rating on its guaranteed senior unsecured notes to 'B' from 'CCC+'
and removed the ratings from CreditWatch, where S&P placed them
with positive implications on Dec. 19, 2023. S&P also revised its
recovery rating on the non-guaranteed notes to '4' from '3'.
EIGER BIOPHARMA: SSG Served Investment Banker in Asset Sale
-----------------------------------------------------------
SSG Capital Advisors, LLC (SSG) served as the investment banker to
Eiger BioPharmaceuticals, Inc. (Eiger or the Company) in the sale
of substantially all of its assets related to the FDA-approved drug
Zokinvy, to Sentynl Therapeutics, Inc. The sale was effectuated
through a Chapter 11 Section 363 process in the U.S. Bankruptcy
Court for the Northern District of Texas (Dallas Division). The
transaction closed in May 2024.
Founded in 2008, Eiger is a commercial-stage biopharmaceutical
company focused on the development of innovative therapies for the
treatment of rare and ultra-rare diseases in patients with high
unmet medical needs and for which no approved therapies exist. The
Company successfully commercialized Zokinvy (lonafarnib) for the
treatment of Hutchinson-Gilford progeria syndrome, an ultra-rare,
fatal, genetic premature aging disease.
In September 2023, Eiger suspended a late-stage Phase 3 study amid
safety concerns and subsequently determined that advancing its
pipeline would not be feasible without an extensive cash infusion.
Despite the commercialization of Zokinvy and progress advancing its
other Phase 3 pipeline assets, Eiger was unable to close an
out-of-court transaction that would provide sufficient liquidity
for the Company to continue operations in the normal course. On
April 1, 2024, Eiger filed for protection under Chapter 11 of the
U.S. Bankruptcy Code to institute a sale process designed to
maximize value for all the stakeholders and ensure the continuity
of therapeutic access for progeria syndrome patients worldwide.
SSG was retained in March 2024 as Eiger's exclusive investment
banker to solicit competing offers to the proposed stalking horse
bid for the Zokinvy assets and concurrently run a marketing process
for the remaining pipeline assets of Eiger on a separate timeline.
The accelerated process for the Zokinvy assets garnered substantial
interest from multiple parties worldwide. A qualified competing bid
for the Zokinvy assets was submitted by the bid deadline and an
auction was held on April 17, 2024. After 35 rounds of bidding, the
Stalking Horse bidder produced the highest and best offer for the
Zokinvy assets, at a gross purchase price of $46.1 million in cash.
SSG's extensive Chapter 11 transaction experience, expertise
creating a competitive bid environment and knowledge of the
biopharmaceutical industry resulted in a process where value was
maximized in an expedited time frame.
Sentynl Therapeutics, Inc. is a commercial stage biopharmaceutical
company focused on bringing innovative therapies to patients living
with rare diseases.
Other professionals who worked on the transaction include:
* Thomas R. Califano, William E. Curtin, Carlton Fleming, Anne
G. Wallice, Chelsea McManus, Jake A. Landreth and Carlton Fleming
of Sidley Austin LLP, counsel to Eiger BioPharmaceuticals, Inc.;
* Paul Rundell, Doug Staut, Paul Coloma and Reilly Olson of
Alvarez & Marsal North America LLC, financial advisor to Eiger
BioPharmaceuticals, Inc.;
* Joshua D. Morse and Jason Stirling of Pillsbury Winthrop Shaw
Pittman LLP, counsel to Sentynl Therapeutics, Inc.;
* Clifford W. Carlson of Weil Gotshal & Manges LLP, counsel to
the Progeria Research Foundation; and
* Roger G. Jones and Jay Bender, of Bradley Arant Boult
Cummings LLP, counsel to the senior secured lender.
About Eiger BioPharmaceuticals
Palo Alto, California-based Eiger BioPharmaceuticals, Inc., is a
commercial-stage biopharmaceutical company focused on the
development of innovative therapies for rare metabolic diseases.
The Company's shares traded on Nasdaq under the symbol "EIGR".
Eiger Biopharmaceuticals Inc. and its subsidiaries sought relief
under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Tex. Lead
Case No. 24-80040) on April 1,2024. In its petition, Eiger listed
$38.8 million in assets and $53.1 million in liabilities as of the
bankruptcy filing.
Eiger is represented by Sidley Austin LLP as its legal counsel,
Alvarez & Marsal as its financial advisor and SSG Capital Advisors,
LLC as its restructuring investment banker. Kurtzman Carson
Consultants LLC is the claims agent.
EMCORE CORP: Incurs $8.49 Million Net Loss in Second Quarter
------------------------------------------------------------
EMCORE Corporation filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $8.49 million on $19.63 million of revenue for the three months
ended March 31, 2024, compared to a net loss of $12.23 million on
$24.25 million of revenue for the three months ended March 31,
2023.
For the six months ended March 31, 2024, the Company reported a net
loss of $14.17 million on $43.76 million of revenue, compared to a
net loss of $23.92 million on $44.23 million of revenue for the
same period in 2023.
As of March 31, 2024, the Company had $120.99 million in total
assets, $53.66 million in total liabilities, and $67.33 million in
total sharheolders' equity.
Emcore said, "We have recently experienced losses from our
operations and used a significant amount of cash, amounting to a
net loss of $8.5 million and $14.2 million for the three and six
months ended March 31, 2024, respectively, and net cash outflows
from continuing operations of $9.7 million for the six months ended
March 31, 2024. We expect to continue to incur losses and use cash
in our operations in the near term. As a result of our recent cash
outflows, we have taken actions to manage our liquidity and plan to
continue to do so. As of March 31, 2024, our cash and cash
equivalents totaled $12.0 million, including restricted cash of
$0.5 million.
"We are evaluating the sufficiency of our existing balances of cash
and cash equivalents and cash flows from operations, together with
additional actions we could take including further expense
reductions and/or potentially raising capital through additional
debt or equity issuances, or from the potential monetization of
certain assets. However, we may not be successful in executing on
our plans to manage our liquidity, including recognizing the
expected benefits from our previously announced restructuring
program, or raising additional funds if we elect to do so, and as a
result substantial doubt about our ability to continue as a going
concern exists."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/808326/000080832624000021/emkr-20240331.htm
About Emcore
EMCORE Corporation is a provider of sensors and navigation systems
for the aerospace and defense market. Over the last five years,
EMCORE has expanded its scale and portfolio of inertial sensor
products through the acquisitions of Systron Donner Inertial, Inc.
in June 2019, the Space and Navigation business of L3Harris
Technologies, Inc. in April 2022, and the FOG and Inertial
Navigation Systems business of KVH Industries, Inc. in August 2022.
The Company's multi-year transition from a broadband company to an
inertial navigation company has now been completed following the
sale of its cable TV, wireless, sensing and defense optoelectronics
business lines and the shutdown of its chips business line and
indium phosphide wafer fabrication operations.
ENCORE CAPITAL: Fitch Assigns BB+(EXP) Rating on Sr. Secured Notes
------------------------------------------------------------------
Fitch Ratings has assigned Encore Capital Group, Inc.'s
(BB+/Stable) proposed issue of USD400 million senior secured fixed
rate notes due 2030 an expected rating of 'BB+(EXP)'.
The assignment of a final rating is contingent on the receipt of
final documents conforming to information already reviewed.
KEY RATING DRIVERS
Equalised with Long-Term IDR: The senior secured notes will be
guaranteed by most Encore group subsidiaries and rank equally with
other senior secured obligations, which comprise the majority of
Encore's debt. Consequently, the senior secured debt rating is
equalised with Encore's Long-Term Issuer Default Rating (IDR), as
Fitch expects average recoveries for the notes after accounting for
the smaller element of higher-ranking super-senior debt.
Limited Leverage Impact: Fitch expects the proceeds of the notes to
principally be used in the near term to reduce drawings under the
group's revolving credit facility, ahead of the intended redemption
in October of EUR350 million senior secured notes due 2025.
Therefore, the refinancing has no material net impact on
consolidated leverage, and extends the average tenor of the group's
borrowings.
Leading Franchise; Concentrated Activities: Encore's Long-Term IDR
reflects its leading franchise in the debt-purchasing sector, its
experienced management team and its long-term profitability record.
The rating also takes into account the company's concentration of
activities within debt-purchasing and the need to accommodate
wholesale market funding costs within profitable underwriting.
Fitch expects that net leverage will remain at the upper end of
management's long-term guidance of 2x-3x in the near term while
portfolio purchasing exceeds recent years' levels.
Ongoing High US Deployment: In 1Q24 Encore invested a record USD237
million in the US non-performing loan market, continuing its recent
trend of greater deployment in the US than in Europe, in view of
more attractive return prospects. The group reported a 22%
year-on-year increase in pre-tax profit for the quarter to USD30.5
million.
For further details of the key rating drivers and sensitivities for
Encore's IDR, see 'Fitch Affirms Encore at 'BB+'; Outlook Stable',
dated 29 June 2023, on www.fitchratings.com)
DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS
DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES
The notes' expected rating is primarily sensitive to changes in
Encore's Long-Term IDR. Changes to Fitch's assessment of relative
recovery prospects for senior secured debt in a default (e.g. as a
result of a material shift in the proportion of Encore's debt which
is either unsecured or super-senior secured) could also result in
the senior secured debt rating being notched up or down from the
IDR.
Date of Relevant Committee
27 June 2023
ESG CONSIDERATIONS
Encore Capital Group, Inc. has an ESG Relevance Score of '4' for
Customer Welfare - Fair Messaging, Privacy & Data Security due to
the importance of fair collection practices and consumer
interactions and the regulatory focus on them, particularly in the
US.
Encore Capital Group, Inc. has an ESG Relevance Score of '4' for
Financial Transparency due to the significance of internal
modelling to portfolio valuations and associated metrics such as
ERC. These factors have negative influences on the rating, but
their impact is only moderate, and they are features of the debt
purchasing sector as a whole, and not specific to Encore.
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
----------- ------
Encore Capital
Group, Inc.
senior secured LT BB+(EXP) Expected Rating
ENERGY FOCUS: Incurs $418K Net Loss in First Quarter
----------------------------------------------------
Energy Focus, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $418,000 on $833,000 of net sales for the three months ended
March 31, 2024, compared to a net loss of $1.33 million on $930,000
of net sales for the three months ended March 31, 2023.
As of March 31, 2024, the Company had $7.42 million in total
assets, $4.19 million in total liabilities, and $3.22 million in
total stockholders' equity.
"Despite continuing progress on cost reduction throughout 2023 and
2024, the Company's results reflect the challenges due to long and
unpredictable sales cycles, unexpected delays in MMM and commercial
customer retrofit budgets and project starts, and supply chain
issues. There has also been continuing aggressive price
competition in the lighting industry. We continue to incur losses
and we have a substantial accumulated deficit, which continues to
raise substantial doubt about our ability to continue as a going
concern at March 31, 2024."
Management Commentary
"Throughout the first quarter of 2024, Energy Focus has intensified
its cost management strategies while maintaining high levels of
customer satisfaction and timely delivery of eco-friendly products.
Our investments in sustainable energy solutions have empowered us
to not only enhance our product quality and services but also to
streamline our offerings efficiently. As we advance, our
commitment to Environmental, Social, and Governance (ESG)
principles is integral to our strategy," stated Chiao-Chieh (Jay)
Huang, chief executive officer.
"From our eco-conscious headquarters in Cleveland, Ohio, we
capitalize on our global network, including facilities and offices
in Taipei, to integrate resources, cater to a diverse clientele,
and manage our supply chain. Our forward-looking product strategy
pivots on boosting the efficiency and capabilities of our existing
product lines through strategic partnerships, innovative
technological advancements, and selective acquisitions. We are
dedicated to pioneering products that over-perform the market
expectations, with a keen focus on sustainability. Additionally,
we are actively exploring new markets in the Gulf Cooperation
Council (GCC) and Central Asia regions to expand our business
landscape."
"In the fiscal year 2024, the Energy Focus team is united in the
ambition to deliver top-tier quality to our customers and to
establish value-driven partnerships. Our management team, as a
group, endeavor to work our brand to secure global recognition and
success, with higher management efficiency and better product
supply midst geopolitical tensions, rising inflation, complex
supply chain challenges, and increasing cybersecurity threats. We
are determined not only to persevere but to thrive. Through
comprehensive training and enhanced teamwork at all organizational
levels, we uphold our responsibility towards our customers and
shareholders. With warmest regards and a message of hope, we
anticipate a year filled with growth, innovation, and collective
achievement."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/924168/000162828024022861/efoi-20240331.htm
About Energy Focus
Solon, Ohio-based Energy Focus -- www.energyfocus.com -- is an
industry-leading innovator of sustainable light-emitting diode
("LED") lighting and lighting control technologies and solutions.
As the creator of the first flicker-free LED lamps, Energy Focus
develops high quality LED lighting products and controls that
provide extensive energy and maintenance savings, as well as
aesthetics, safety, health and sustainability benefits over
conventional lighting.
Columbus, Ohio-based GBQ Partners, LLC, the Company's auditor since
2019, issued a "going concern" qualification in its report dated
March 22, 2024, citing that the Company has experienced recurring
losses from operations and negative cash flows from operations that
raise substantial doubt about its ability to continue as a going
concern.
EUROASIA PRODUCTS: L. Todd Budgen Named Subchapter V Trustee
------------------------------------------------------------
The U.S. Trustee for Region 21 appointed L. Todd Budgen, Esq., a
practicing attorney in Longwood, Fla., as Subchapter V trustee for
Euroasia Products, Inc.
Mr. Budgen 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. Budgen declared that he is a disinterested person according to
Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
L. Todd Budgen, Esq.
P.O. Box 520546
Longwood, FL 32752
Tel: (407) 232-9118
Email: Todd@C11Trustee.com
About Euroasia Products
Euroasia Products, Inc. sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No. 24-01964) on April
22, 2024, with $0 to $50,000 in assets and $500,001 to $1 million
in liabilities.
Judge Tiffany P. Geyer presides over the case.
Jeffrey Ainsworth at Bransonlaw PLLC represents the Debtor as legal
counsel.
EYECARE PARTNERS: S&P Upgrades ICR to 'CCC+', Outlook Stable
------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on
Missouri-based eye care service provider EyeCare Partners LLC to
'CCC+' from 'SD' (selective default) and the ratings on the legacy
first- and second-lien term loans to 'CCC-' with a '6' recovery
rating. Subsequently, S&P withdrew its ratings on the legacy first-
and second-lien term loans.
S&P said, "At the same time, we assigned our 'B' issue-level and
'1' recovery ratings to its new first-out superpriority term loan,
our 'CCC+' issue-level and '4' recovery ratings to its new $1.495
billion second-out superiority term loan, and our 'CCC-'
issue-level and '6' recovery ratings to its new $26 million third-
and $57 million fourth-out superiority term loans. The revolver is
unrated.
"The stable outlook reflects our expectation for adequate liquidity
for the next 24 months."
The recent restructuring, which extends debt maturities and
improves liquidity, provides more time for EyeCare to achieve its
turnaround. The completed exchanges pushed out upcoming debt
maturities until 2028. Moreover, the restructuring increased
liquidity as the proceeds of the new money issue repaid the entire
outstanding balance on the revolving cash flow facility.
Furthermore, the new capital structure will not have any
amortization and has a mix of PIK and cash interest. S&P believes
the company's liquidity position improved after this transaction
and gives the company time to improve operations.
S&P said, "Although we expect revenue to grow and EBITDA margin to
improve, it must progress at a brisk pace since PIK interest will
turn cash pay in 2027.Physician attrition, reduced physician
productivity, and inflationary pressure have impaired EyeCare. The
company paused acquisitions and looks to reduce its de novo spend.
The company opened 11 locations in 2023 and plans to open five in
2024 and another three in 2025. This will help preserve capital.
"In addition, we expect operating and cash flow generation to
improve. We expect the reported FOCF deficit of $200 million in
2023 to improve to $180 million in 2024, partly offset by about $50
million in transaction-related fees and expenses. We expect FOCF to
improve to a deficit of about $30 million in 2025 due to the
full-year of PIK interest, mid- to high-single-digit percent
revenue growth, productivity improvements, and cost-savings
initiatives currently underway. These initiatives include workforce
reduction, vendor contract renegotiation, revenue cycle management,
and procure-to-pay (integrating purchasing and accounts payable
systems to create efficiencies). In addition, we expect the costs
to fund these initiatives will wind down.
"Although we expect further improvement in 2026, we believe FOCF
will decline once again after the PIK debt on the second- and
third-out term loans returns to cash pay in 2027 and 2028, as the
first-, second-, and third-out term loans mature. Furthermore,
although we believe mid- to high-single-digit percent growth is
possible given demand dynamics, de novo openings, better doctor
productivity, and achievable cost-reduction programs, execution
risk to improve margin is large. If the newly hired doctors take
too long to ramp up, wage pressure increases, or cost savings do
not materialize quickly, FOCF may be lower than we project.
Furthermore, while revenue has grown, expenses (including
nonrecurring) have been higher than the company budgeted for the
last two years.
"We expect EyeCare's revenue will grow about 5% in 2024 and 7%-8%
in 2025 as de novos ramp up. We expect demand for eye care services
to be stable and benefit from the aging population. Revenue growth
has support from new physician hires, which have outpaced
departures since 2022. On average, it can two years for new hires
to ramp up.
"We expect low- to mid-single-digit percent same-store sales
growth, supplemented by incremental teleoptometry offerings, the
company's merchandising initiative, and de novo openings. We expect
the company will slow down its pace of de novo openings to five new
locations in 2024 and two in 2025, down from 11 in 2023. Beginning
in 2025, we anticipate EyeCare to open one ambulatory center per
year, which generates higher margins than its base physician
offices.
"The stable outlook reflects our expectation that liquidity will
remain adequate for the next 24 months despite large cash flow
deficits over the next 12 months."
S&P could revise its outlook to negative or lower its rating on
EyeCare if:
-- S&P no longer believes its liquidity position is adequate and
the company's sources can no longer support its uses. This may
occur if the company draws down a large portion on its revolver
while cost savings take longer to materialize from initiatives than
anticipated, or if inflation hinders credit metrics more than it
expects, resulting in higher cash burn; or
-- S&P expects heightened risk of default in the next 12 months;
including a restructuring that S&P deems to be a distressed
exchange.
S&P said, "While unlikely, we could raise our rating on EyeCare if
internally generated FOCF increases and is sufficient to cover
fixed charges on a sustained basis.
"Governance factors are a moderately negative consideration in our
credit rating analysis. Our assessment of the company's financial
risk profile as highly leveraged reflects corporate decision-making
that prioritizes the interests of the controlling owners, in line
with our view of most rated entities owned by private-equity
sponsors. Our assessment also reflects the generally finite holding
periods and a focus on maximizing shareholder returns."
FATINA CUISINE: Unsecureds Will Get 10% of Claims over 36 Months
----------------------------------------------------------------
Fatina Cuisine LLC d/b/a Milano's Pizza filed with the U.S.
Bankruptcy Court for the Eastern District of Texs a Plan of
Reorganization under Subchapter V dated April 30, 2024.
The Debtor is located in Seven Point, Texas, and owns and operates
a pizza restaurant called Milano's Pizza. The Debtor was forced to
file this case as a result of litigation with one of its alleged
and disputed creditors, Carisa Roush.
This alleged creditor filed a civil action against the Debtor
related to sexual abuse allegations against a former employee.
Debtor denies any liability as it results to the action, but Debtor
was not able to maintain the ongoing legal expenses related to the
lawsuit and operate its business. Since filing the bankruptcy case
and the stay of the litigation, Debtor has been able to support its
operations and pay its post-petition obligations.
Under this Plan, Secured Creditors will receive payment of 100% of
their Allowed Secured Claims and any Unsecured Creditors will
receive 10% of their Allowed Unsecured Claims. Therefore, pursuant
to the liquidation analysis all Creditors will receive at least as
much under this Plan as they would in a Chapter 7 liquidation.
Class 3 consists of Allowed Unsecured Claims other than Class 4
Claims. Class 3 Claimants, if any, shall be paid 10% of their
Claims over 36 months from the Effective Date, without interest.
These Claims will be paid in equal monthly installments commencing
on the first day of the first month following the Effective Date
and continuing on the first day of each month thereafter. These
Claims are Impaired, and the holders of these Claims are entitled
to vote to accept or reject the Plan.
The Debtor scheduled total non-priority Unsecured Claims of
$255,398.02.
Class 4 consists of Allowed Insider Claims. Class 4 Claims, if any,
will receive nothing under the Plan and are deemed to have rejected
the Plan.
Class 5 consists of Equity Interests. Class 5 Equity Interests
shall be retained.
The Debtor intends to make all payments required under the Plan
from available cash and income from the business operations of the
Debtor.
A full-text copy of the Plan of Reorganization dated April 30, 2024
is available at https://urlcurt.com/u?l=e7vcYU from
PacerMonitor.com at no charge.
Attorneys for the Debtor:
Joyce W. Lindauer, Esq.
Kerry S. Alleyne, Esq.
Guy H. Holman, Esq.
JOYCE W. LINDAUER ATTORNEY, PLLC
1412 Main Street, Suite 500
Dallas, TX 75202
Telephone: (972) 503-4033
Facsimile: (972) 503-4034
Email: joyce@joycelindauer.com
About Fatina Cuisine LLC
Fatina Cuisine LLC is located in Seven Point, Texas, and owns and
operates a pizza restaurant called Milano's Pizza.
The Debtor sought protection for relief under Chapter 11 of the
Bankruptcy Code (Bankr. E.D. Tex. Case No. 24-60045) on Jan. 31,
2024, listing $50,001 to $100,000 in both assets and liabilities.
Joyce W. Lindauer, Esq. at Joyce Lindauer, Attorney represents the
Debtor as counsel.
FINANCE OF AMERICA: Reports First Quarter 2024 Results
------------------------------------------------------
Finance of America Companies Inc., on May 6, 2024, reported its
financial results for the quarter ended March 31, 2024.
The Company's First Quarter 2024 Highlights include:
* Net loss from continuing operations for the first quarter of
$16 million or $0.06 basic loss per share.
* For the quarter, the Company recognized an adjusted net loss
of $7 million or $0.03 per share.
* 69% improvement on a pre-tax basis in Retirement Solutions
in the first quarter driven by higher revenue margin and reduced
expenses compared to the prior quarter.
* The first quarter 2024 marks the third consecutive quarter
of improved operating performance on an adjusted net basis.
* Adjusted EBITDA for the quarter was near break-even at a
loss of $1 million.
Commenting on the Results, Graham A. Fleming, Chief Executive
Officer said, "Throughout the first quarter, Finance of America
continued to execute against its strategic priorities and remains
on track to return to sustained profitability. As the leading
provider of home equity-based financing solutions for a modern
retirement, we are well positioned to benefit from home price
appreciation and a growing senior homeowner population."
As of March 31, 2024, the Company has $27.7 billion in total
assets, $27.4 billion in total liabilities, and $255.7 million in
total equity.
A full-text copy of the Company's report filed on Form 8-K with the
Securities and Exchange Commission is available at
https://tinyurl.com/mu6xp3ta
About Finance of America
Plano, Texas-based, Finance of America Companies Inc. is a
financial services holding company which, through its operating
subsidiaries, is a modern retirement solutions platform that
provides customers with access to an innovative range of retirement
offerings centered on the home. In addition, FoA offers capital
markets and portfolio management capabilities to optimize
distribution to investors.
As of December 31, 2023, the Company has $27.11 billion in total
assets, $26.84 billion in total liabilities, and $272.41 million in
total equity.
As reported by the Troubled Company Reporter on Oct. 20, 2023,
Fitch Ratings has downgraded the Long-Term Issuer Default Ratings
(IDRs) of Finance of America Companies Inc. and its subsidiaries,
Finance of America Equity Capital LLC and Finance of America
Funding LLC, to 'CCC+' from 'B-'. Fitch has also downgraded Finance
of America Funding LLC's senior unsecured debt rating to
'CCC-'/'RR6' from 'CCC+'/'RR5'. The Rating Outlook remains
Negative. The rating actions have been taken as part of a periodic
peer review of non-bank mortgage companies, which is comprised of
six publicly rated firms.
The rating downgrade reflects the operating losses and resulting
erosion of tangible equity FOA has experienced over the last year,
which has resulted in continuing covenant breaches, which may limit
the company's ability to extend debt maturities and secure future
funding. High interest rates and borrower affordability challenges
have reduced origination volumes, which, along with widening credit
spreads, have resulted in significant negative fair value
adjustments to FOA's assets. Tangible equity has decreased to
negative $5 million at 2Q23, down from $288 million in 2Q22 and
$480 million at YE21.
The Negative Outlook reflects Fitch's expectation that FOA's
profitability will remain weak, challenging its ability to rebuild
tangible capital levels over the Outlook horizon. Additionally,
Fitch's believes execution risk remains with regard to the
integration of American Advisors Group (AAG) and the restructuring
of FOA's continuing business segments, which could impact its
long-term franchise and market position.
FIRST CHOICE: Bush & Associates Raises Going Concern Doubt
----------------------------------------------------------
First Choice Healthcare Solutions, Inc. disclosed in a Form 10-K
Report filed with the U.S. Securities and Exchange Commission for
the fiscal year ended December 31, 2023, that its auditor expressed
substantial doubt about the Company's ability to continue as a
going concern.
Henderson, Nevada-based Bush & Associates CPA LLC, the Company's
auditor since 2024, issued a "going concern" qualification in its
report dated May 12, 2024, citing that the Company has suffered
recurring losses from operations and has a net capital deficiency
that raise substantial doubt about its ability to continue as a
going concern.
The Company has a working capital deficit as of December 31, 2023,
and has generated recurring net losses since its emergence from
bankruptcy in April 2022.
During the fiscal year ended December 31, 2023, the Company
experienced operating losses of approximately $8.2 million and
corresponding cash outflows from operations of $6.8 million. For
the years ended December 31, 2023, and 2022, the Company reported a
net loss of $8.2 million and $9.9 million, respectively. This
performance reflected challenges in operating and restructuring the
company as a result of the previous issues that confronted the
Company in the healthcare market, such as growing referral bases
and negotiating favorable contract rates with third party payors
for services rendered, as well as the negative impact of the CEO
indictment in November 2018 and the bankruptcy from June 2020. As a
result of the former CEO's actions, the Company has been subject to
litigation, as well as incurring damage to its relationships with
its employees and referral sources. The Company's ability to
continue as a going concern is dependent upon the success of its
continuing efforts to acquire profitable companies, grow its
revenue base, reduce operating costs, especially as related to
provider services, and access additional sources of capital, and/or
sell assets. The Company believes that it will be successful in
repairing its relationships with employees and referral sources,
generating growth and improved profitability, resulting in improved
cash flows from operations. Additionally, headcount was reduced in
October 2021 and again in January 2023 to generate reductions in
operating costs while the Company focused on developing and
executing its future business strategy.
However, in order to execute the Company's business development
plan, which there can be no assurance we will achieve, the Company
may need to raise additional funds through public or private equity
offerings, debt financings, corporate collaborations or other means
and potentially reduce operating expenditures. If the Company is
unable to secure additional capital, it may have to curtail its
business development initiatives and take additional measures to
reduce costs in order to conserve its cash, thus raising
substantial doubt about its ability to continue as a going concern
for more than 12 months.
A full-text copy of the Company's Form 10-K is available at
https://tinyurl.com/336hja3f
About First Choice Healthcare
Melbourne, Fla.-based First Choice Healthcare Solutions, Inc.
provides rehabilitative services, such as physical therapy.
As of December 31, 2023, the Company has $3.1 million in total
assets, $31.7 million in total liabilities, and $28.5 million in
total stockholders' equity.
FLORIDA FOOD: Invesco VVR Marks $1.1MM Loan at 28% Off
------------------------------------------------------
Invesco Senior Income Trust ("VVR") has marked its $1,133,000 loan
extended to Florida Food Products LLC to market at $821,244 or 72%
of the outstanding amount, as of February 29, 2024, according to a
disclosure contained in VVR's Form N-CSR for the fiscal year ended
February 29, 2024, filed with the U.S. Securities and Exchange
Commission.
VVR is a participant in a Second Lien Term Loan to Florida Food
Products. The loan accrues interest at a rate of 13.44% (1 mo. USD
LIBOR + 8.00%) per annum. The loan matures on October 18, 2029.
VVR is a Delaware statutory trust registered under the Investment
Company Act of 1940, as amended, as a closed-end management
investment company. VVR may participate in direct lending
opportunities through its indirect investment in the Invesco Senior
Income Loan Origination LLC, a Delaware limited liability company.
VVR owns all beneficial and economic interests in the Invesco
Senior Income Loan Origination Trust, a Massachusetts Business
Trust, which in turn owns all beneficial and economic interests in
the LLC.VVR may participate in direct lending opportunities through
its indirect investment in the Invesco Senior Income Loan
Origination LLC, a Delaware limited liability company. VVR owns all
beneficial and economic interests in the Invesco Senior Income Loan
Origination Trust, a Massachusetts Business Trust, which in turn
owns all beneficial and economic interests in the LLC.
VVR is led by Glenn Brightman, Principal Executive Officer; and
Adrien Deberghes, Principal Financial Officer. The Trust can be
reached through:
Glenn Brightman
Invesco Senior Income Trust
1555 Peachtree Street, N.E., Suite 1800
Atlanta, GA 30309
Tel: (713) 626-1919
Headquartered in Eustis, Fla., Florida Food Products, LLC is a
producer of vegetable and fruit based clean label ingredients. The
company was acquired by Ardian and MidOcean Partners in 2021.
FLUX POWER: Financial Struggles Raise Going Concern Doubt
---------------------------------------------------------
Flux Power Holdings, Inc. disclosed in a Form 10-Q Report filed
with the U.S. Securities and Exchange Commission for the quarterly
period ended March 31, 2024, that substantial doubt exists about
its ability to continue as a going concern within the next 12
months.
The Company has incurred an accumulated deficit of $94.1 million
through March 31, 2024, and a net loss of $5.6 million for the nine
months ended March 31, 2024. To date, the Company's revenues and
operating cash flows have not been sufficient to sustain its
operations and the Company has relied on debt and equity financing
to fund its operations, and its operations have relied on its
ability to successfully maintain and draw on its credit facilities.
The Company notified Gibraltar Business Capital of a certain event
of default with respect to the Company's anticipated failure to
maintain the EBITDA covenant for the trailing three-month period
ended April 30, 2024. On May 8, the Company received a waiver to
the Loan and Security Agreement dated July 28, 2023, as amended
with GBC, which waived the Default, subject to satisfaction of the
following conditions:
-- receipt of a counterpart of the Waiver duly executed by the
Company;
-- receipt of the waiver fee; iii) receipt of the
representations and warranties from the Company that after giving
effect to the Waiver, the representations and warranties contained
in the Agreement, the Waiver and the other Loan Documents shall be
true and correct; and
-- after giving effect to the Waiver, no additional event of
default shall have occurred and be continuing on and as of the
effective date of the Waiver.
"Our ability to draw funds from the GBC Credit Facility is subject
to certain restrictions, covenants and borrowing base limitations.
In addition, the Company's operations have been impacted by delays
in new orders of its energy storage solutions due to corresponding
deferrals of new forklift purchases mainly caused by lower capital
spending in the market sector that we serve and interest rate
variability affecting selected large customer fleets which have
impacted its ability to meet projected revenue targets and generate
cash from operations. Further, these events have placed pressure on
the Company's cash resources and raise substantial doubt about the
Company's ability to continue as a going concern," the Company
explained.
The Company's ability to continue as a going concern is dependent
upon its ability to meet order projections, ship open sales orders,
further improve its margins, reduce operating costs and raise
additional capital, if needed, on a timely basis until such time as
revenues and related cash flows are sufficient to fund its
operations. As of May 6, 2024, the Company had a cash balance of
$1.7 million, funding available under our GBC Credit Facility under
which up to $3.2 million is currently available, subject to
borrowing base limitations, and funds available under our 2023
Subordinated LOC of up to $2 million. In light of the recent
Default under the GBC Credit Facility, the Company is working with
GBC to modify the financial covenants in the Agreement to prevent
future defaults. However, there is no guarantee that the Company
will be able to modify the terms in a manner that is favorable to
it. If the Company is unable to modify the terms or otherwise meet
the conditions provided in the Agreement, the funds may not be
available to the Company.
Management has undertaken steps to improve operations with the goal
of sustaining its operations. These steps include actual and
planned price increases for our energy storage solutions, a number
of cost saving initiatives including product cost efficiencies and
planned operating cost savings.
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/nhcpudb9
About Flux Power
Vista, Calif.-based Flux Power Holdings, Inc. designs, develops,
manufactures, and sells a portfolio of advanced lithium-ion energy
storage solutions for electrification of a range of industrial
commercial sectors which include material handling, airport ground
support equipment, and other commercial and industrial
applications. The Company focuses on providing lithium-ion products
and service to large fleets of Fortune 500 customers.
As of March 31, 2024, the Company has $36.8 million in total
assets, $31.4 million in total liabilities, and $5.4 million in
total stockholders' equity.
GENIE INVESTMENTS: Court OKs Appointment of Maria Yip as Examiner
-----------------------------------------------------------------
Judge Jason A. Burgess of the U.S. Bankruptcy Court for the Middle
District of Florida approved the appointment by Mary Ida Townson,
the U.S. Trustee for Region 21, of Maria M. Yip to serve as
examiner in the Chapter 11 case of Genie Investments NV Inc.
To the best of the United States Trustee's knowledge, the appointed
Chapter 11 Examiner has no connections with the Debtor, creditors,
other parties in interest (with the exception of taxing
authorities), their respective attorneys and accountants, the
United States Trustee, and/or persons employed by the United States
Trustee, except as set forth in her verified statement.
In court papers, Ms. Yip disclosed that she is a "disinterested
person" within the meaning of Section 101(14) of the Bankruptcy
Code.
The examiner can be reached at:
Maria M. Yip, CPA, CFE, CIRA, CFF
Yip Associates
2 S. Biscayne Blvd, Suite 2690
Miami, Florida 33131
Telephone: (305) 569-0550
Facsimile: (888) 632-2672
E-mail: myip@yipcpa.com
About Genie Investments NV, Inc.
Genie Investments NV Inc., filed a Chapter 11 bankruptcy petition
(Bankr. M.D. Fla. Case No. 24-00496) on Feb. 21, 2024, disclosing
under $1 million in both assets and liabilities. The Debtor hires
Law Offices of Mickler & Mickler, LLP as counsel.
GHX ULTIMATE:S&P Affirms 'B-' Issuer Credit Rating, Outlook Stable
------------------------------------------------------------------
S&P Global Ratings affirmed its 'B-' rating and stable outlook on
GHX Ultimate Parent Corp. and its 'B-' issue-level ratings on the
revolving credit facility and first-lien term loan.
The stable outlook reflects S&P's expectation for continued solid
revenue growth and a greater focus on expenses, resulting in flat
to positive free cash flow in 2024 and 2025.
S&P said, "The 'B-' rating and stable outlook reflects our
expectation that the company will generate neutral to slightly
positive FOCF in 2024, followed by positive FOCF of approximately
$25 million in 2025. In 2023, the company had a FOCF deficit,
partly due to higher interest rates, which added about $40 million
of interest expense compared to 2022. This more than offset S&P
Global Ratings-adjusted EBITDA growth of about $25 million.
However, cash flow would have been nearly flat when excluding
one-time expenses and an unusually large working capital outflow
from hospitals extending payments due to financial pressure.
"In 2024, we expect between a $35 million-$40 million improvement
in FOCF year over year. The increase is due to the roll-off of
about $25 million in one-time costs associated with refinancing, a
$5 million decrease in cash interest expense, break-even working
capital requirements compared to a $12.6 million outflow in 2023,
and between $20 million-$30 million of S&P Global Ratings-adjusted
EBITDA growth, slightly offset by roughly a $5 increase in cash
taxes paid.
"The stable outlook reflects our expectation that the company's
revenues will grow in the high-single-digit percent area and S&P
Global Ratings-adjusted margins will expand significantly from the
combination of cost reduction initiatives and customer migration to
cloud-services. We expect neutral to slightly positive FOCF in 2024
followed by solidly positive FOCF in 2025. Our stable outlook also
reflects some risk of a leveraging transaction (such as an
acquisition) as cash flow improves, which could keep FOCF to debt
between 0%-3% even if the company exceeds our forecast.
"We could consider lowering our rating on GHX if the company's
revenue generation is below our expectations or cost reduction
initiatives do not lead to margin expansion, leading to sustained
free operating cash flow deficits and weakening liquidity, at which
point we could consider the capital structure unsustainable."
Although not expected in the next 12 months, S&P could raise the
rating if:
-- The company maintains FOCF to debt of at least 3%; and
-- S&P expects GHX and its sponsor will maintain financial
policies that support a higher rating after incorporating
leveraging events, such as shareholder dividends or acquisitions.
S&P said, "Governance factors are a moderately negative
consideration in our credit rating analysis of GHX. Our highly
leveraged assessment of the company's financial risk profile
reflects its corporate decision-making that prioritizes the
interests of its controlling owners, which is in line with our view
of the majority of rated entities owned by private-equity sponsors.
Our assessment also reflects private-equity owners' generally
finite holding periods and focus on maximizing shareholder
returns."
GLOBAL ACQUISITIONS: Incurs $13K Net Loss in First Quarter
----------------------------------------------------------
Global Acquisitions Corporation filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q reporting
a net loss of $12,911 for the three months ended March 31, 2024,
compared to a net loss of $21,683 for the three months ended
March 31, 2023.
As of March 31, 2024, the Company had $150 in total assets,
$623,310 in total current liabilities, and a total stockholders'
deficit of $623,160.
As of March 31, 2024, the Company had an accumulated deficit of
$29,357,730.
Global Acquisitions said, "The Company's management believes that
its operations may not be sufficient to fund operating cash needs
over at least the next 12 months. The Company has no significant
assets and continues to depend on affiliates to provide funds to
pay its ongoing expenses. There can be no assurance however that
the Company will be able to raise additional capital when needed,
or at terms deemed acceptable, if at all. These factors raise
substantial doubt about the company's ability to continue as a
going concern within one year after the date that the unaudited
condensed financial statements are issued."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/930245/000147237524000037/ixform10q.htm
About Global Acquisitions
Headquartered in Las Vegas, NV, Global Acquisitions Corporation has
nominal operations and assets. The Company's business plan is to
seek, investigate, and, if warranted, acquire an interest in a
business opportunity. Such an acquisition may be made by merger,
exchange of stock, or otherwise. The Company has very limited
sources of capital, and will likely be able to take advantage of
only one business opportunity.
GLOBAL ONE: Unsecured Creditors Out of Money in Plan
----------------------------------------------------
Global One Media, Inc. filed a Plan of Reorganization for Small
Business dated May 2, 2024.
The Debtor is a media company with several radio stations in the
markets of Elko, Nevada and Clovis, New Mexico.
Those radio stations are the primary stations in each of these
markets. The debtor purchased existing media companies in each
market in early 2022.
The Plan Proponent has provided projected financial information
which indicates proposed expenditures, including plan disbursements
for the 36 month period starting with the effective date of the
plan, and based on gross monthly revenues of about $$146,000 to
$150,000 a month.
The final Plan payment is expected to be paid on or about September
1, 2027, assuming the effective date of the Plan is around October
of 2024.
Non-priority general unsecured creditors holding allowed claims
will likely receive no distributions. This Plan also provides for
the payment of administrative and priority claims.
Class 4 consists of unsecured claimants. Reasonable projections
indicate that no disposable income is available for distribution to
this class. This Class is impaired.
Class 5 consists of Equity security holders of the Debtor. No
treatment other than the continued status quo.
The Debtor shall have stable income in the form of business
revenues shown by historical data and monthly reports.
A full-text copy of the Plan of Reorganization dated May 2, 2024 is
available at https://urlcurt.com/u?l=dt0PAr from PacerMonitor.com
at no charge.
Attorney for the Debtor:
David A. Riggi, Esq.
Riggi Law Firm
5550 Painted Mirage Rd. Suite 320
Las Vegas, NV 89149
Tel: (702) 463-7777
Fax: (888) 306-7157
Email: RiggiLaw@gmail.com
About Global One Media, Inc.
Las Vegas-based Global One Media, Inc. is a media company with
several radio stations in the markets of Elko, Nevada and Clovis,
New Mexico.
The Debtor filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. D. Nev. Case No. 24-10526) on February 2,
2024, with up to $50,000 in assets and $1 million to $10 million in
liabilities. Richard Hudson, president and chief executive officer,
signed the petition.
Judge Mike K. Nakagawa oversees the case.
David Riggi, Esq., at Riggi Law Firm represents the Debtor as
bankruptcy counsel.
GOODLIFE PHYSICAL: No Change in Patient Care, 7th PCO Report Says
-----------------------------------------------------------------
Tamar Terzian, the court-appointed patient care ombudsman, filed
with the U.S. Bankruptcy Court for the Central District of
California a seventh interim report regarding the quality of
patient care provided at Goodlife Physical Medicine Corp.'s health
care facilities.
In the report which covers the period February 17 to April 17,
2024, the PCO finds that all locations have adequate staff and
providers on site to meet the standard of care for each patient.
During this period, Debtor added to staff a new director overseeing
all the clinics. The director will be responsible for the overall
quality, outcomes and performance of the clinics.
The PCO observed all medication (primarily consisting of lidocaine
and syringes) is properly stored and labeled and access is limited.
Goodlife does not have any controlled substances on site. The PCO
also noted that Goodlife has sufficient equipment to continue to
provide the quality of care for the patients. No patients or
employees have reported complaints or grievances for this
location.
The PCO also observed several leaks from the ceiling throughout the
treatment areas at the Redondo Beach facility. This was primarily
caused from the heavy rains and Debtor notified the landlord and
the landlord has not made the proper repairs. After the site visit,
PCO contacted the COO to insure this issue was resolved and
landlord did repair the roof.
A copy of the ombudsman report is available for free at
https://urlcurt.com/u?l=NaFQ9e from PacerMonitor.com.
The ombudsman may be reached at:
Tamar Terzian, Esq.
Terzian Law Group
1122 E. Green Street
Pasadena, CA 91106
Telephone: (818) 242-1100
Facsimile: (818) 242-1012
Email: tterzian@terzlaw.com
About Goodlife Physical Medicine Corp
Goodlife Physical Medicine Corp, a company in Redondo Beach,
Calif., filed a petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. C.D. Calif. Case No. 23-10340) on Jan. 23,
2023. At the time of the filing, the Debtor reported up to $50,000
in assets and $1 million to $10 million in liabilities.
Judge Sandra R. Klein oversees the case.
The Debtor is represented by Leslie A. Cohen, Esq., at Leslie Cohen
Law, PC.
Tamar Terzian, Esq., at Terzian Law Group is the patient care
ombudsman appointed in the Debtor's Chapter 11 case.
GOTO GROUP: Invesco VVR Marks $3.2MM Loan at 30% Off
----------------------------------------------------
Invesco Senior Income Trust ("VVR") has marked its $3,190,000 loan
extended to GoTo Group, Inc. to market at $2,241,067 or 70% of the
outstanding amount, as of February 29, 2024, according to a
disclosure contained in VVR's Form N-CSR for the fiscal year ended
February 29, 2024, filed with the U.S. Securities and Exchange
Commission.
VVR is a participant in a Second Lien Term Loan to GoTo Group. The
loan accrues interest at a rate of 10.17% (3 mo. Term SOFR + 8.76%)
per annum. The loan matures on August 31, 2027.
VVR is a Delaware statutory trust registered under the Investment
Company Act of 1940, as amended, as a closed-end management
investment company. VVR may participate in direct lending
opportunities through its indirect investment in the Invesco Senior
Income Loan Origination LLC, a Delaware limited liability company.
VVR owns all beneficial and economic interests in the Invesco
Senior Income Loan Origination Trust, a Massachusetts Business
Trust, which in turn owns all beneficial and economic interests in
the LLC.VVR may participate in direct lending opportunities through
its indirect investment in the Invesco Senior Income Loan
Origination LLC, a Delaware limited liability company. VVR owns all
beneficial and economic interests in the Invesco Senior Income Loan
Origination Trust, a Massachusetts Business Trust, which in turn
owns all beneficial and economic interests in the LLC.
VVR is led by Glenn Brightman, Principal Executive Officer; and
Adrien Deberghes, Principal Financial Officer. The Trust can be
reached through:
Glenn Brightman
Invesco Senior Income Trust
1555 Peachtree Street, N.E., Suite 1800
Atlanta, GA 30309
Tel: (713) 626-1919
GoTo, formerly LogMeIn Inc., is a flexible-work provider of
software as a service and cloud-based remote work tools for
collaboration and IT management.
HARBOR HOLDINGS: Fitch Affirms 'B' LongTerm IDR, Outlook Positive
-----------------------------------------------------------------
Fitch Ratings has affirmed Harbor Holdings Corp.'s and Houghton
Mifflin Harcourt Company's (HMH) Long-Term Issuer Default Ratings
(IDRs) at 'B' and first-lien credit facilities rating at
'B+'/'RR3'. The Rating Outlook has been revised to Positive from
Stable.
The Positive Outlook reflects a notable improvement in EBITDA
margins at 40.2% in FY23 compared to 20.0% in FY21. The margin
expansion is due to the notable execution of the cost savings plan
associated with the Veritas' acquisition and the realization of
about $23 million of run-rate savings related to the NWEA
acquisition. The rest is on track to be implemented by end of
2025.
Additionally, the margin expansion reflects an ongoing digital
shift, increasing digital billings to 57% from 41% in FY21, further
supporting a more effective cost structure, shifting away from
lower margin print-based products while increasing the company's
subscription-based revenue.
KEY RATING DRIVERS
High Leverage: Over the last three years, HMH has undergone two
transformative transactions financed by a combination of debt and
equity. On April 7, 2022, Veritas Capital completed the
take-private acquisition of HMH for $3.2 billion, or a 14x multiple
based on adjusted EBITDA of $229 million (Fitch's EBITDA is after
pre-publication costs). This was followed by the acquisition of
NWEA, a Portland-based not-for-profit provider of interim and
summative student assessments in May 2023.
While the NWEA acquisition was a positive, as it expanded its K-12
instructional and assessment capabilities and provided additional
cross-selling opportunities, the transactions left the company with
considerable EBITDA leverage at around 6.5x.
The company has since driven EBITDA leverage down to 4.5x as of
Dec. 31, 2023, as a result of the successful execution of cost
savings plans and its digital transformation with a more effective
cost structure. Looking forward, Fitch expects leverage to continue
on a declining trend over the short to medium term. This is mainly
due to further margin improvements and favorable momentum of the
conversion cycle in the U.S.
Ongoing Margin Improvement: For FY23, HMH's EBITDA resulted in $478
million or 40.2% margin, a notable increase from the average margin
of around 25% in the previous two years. This margin enhancement is
largely due to the execution of the take-private savings plan and
synergies from the NWEA acquisition, resulting in about $42 million
of realized run-rate savings, with approximately 50% of the
remaining projected synergies and savings yet to be realized by the
end of FY25.
Margins are expected to stabilize in the mid-thirties percentage
range in the short to medium term. This stabilization is contingent
on HMH maintaining an efficient cost structure, fully integrating
its acquisitions, and leveraging its digital platform to increase
engagement and subscription-based revenue, while capitalizing on
new cross-selling opportunities in the K-12 adoption market.
Digital Transformation and Increasing Subscription-based Revenue:
Since acquiring NWEA, HMH has increased its annual digital billings
from 41% in FY21 to 57% in FY23. Subscription-based revenue also
surged by around 180% during this period, accelerated primarily by
the integration of NWEA's digital offerings. These offerings are in
line with HMH's efforts to increase its digital exposure. Recent
acquisitions, including Classcraft and Writable, which add new
subscription services and incremental GenAI capabilities, have also
help drive subscription-based revenues.
The ongoing digital shift, catalyzed by the pandemic, is expected
to persist, allowing HMH to maintain a more efficient cost
structure and reduce dependency on print product risks and costs.
The digital push has also led to an increase in the ratio of
computing devices per student, signaling the potential for higher
recurring revenue streams due to annual renewals.
Limited Revenue Diversification in a Competitive Market: HMH
competes with various other publishers across the K-12 market for
instructional materials and services, which the company estimates
to total approximately $12 billion. The company offers a broad
portfolio of core, supplemental, intervention, services, and
assessment instructional material. HMH, together with Savvas
Learning and McGraw-Hill, are the largest core curriculum
providers.
Fitch believes all three collectively hold more than 80% of the
core market. However, HMH's lack of exposure to the higher
education, professional, and international markets leaves it more
susceptible to operational risks while navigating the K-12 market
cycle, such as not securing state approval for its publications and
content.
Resilient Sector During Economic Distress: During the pandemic,
several rounds of direct and indirect federal stimulus injections
mitigated the economic impact on state budgets. Funds could be used
for multiple purposes, including improving digital infrastructure
and platforms and, to a lesser extent, purchasing educational
learning tools. While local governments derive varying portions of
their revenues from property taxes, they could also use these funds
to pay for school safety measures, including establishing and
maintaining remote learning infrastructure.
During prior periods of economic stress, K-12 adoptions were rarely
cancelled or even delayed (and then only for one year). While Fitch
will continue to pay close attention to near-term adoption
calendars for delays, delays do not represent a near-term concern
given the significant stimulus funding.
State governments typically fund approximately 45% of local K-12
education content purchases and depend on sales and/or income tax
for revenue. While local governments were less affected by the
pandemic's economic dislocation as they derive varying portions of
their revenues from property taxes, they were responsible for
funding school safety measures, including establishing and
maintaining remote learning infrastructure.
DERIVATION SUMMARY
HMH is well positioned in the domestic K-12 core education and
supplemental learning markets and is one of the top three K-12
textbook market publishers. HMH has completed re-investment in its
core textbook educational material following a period of
operational weakness that has resulted in improved market share, as
evidenced by recent state adoptions. Fitch expects K-12 education
publishers to benefit from the adoption market in 2024-2026,
including opportunities in Florida, California and Texas, which
represent the largest adoption states and drive a significant
portion of the adoption cycle.
McGraw-Hill Education, Inc (MHE), HMH's closest Fitch-rated peer
has greater scale and marketplace positioning. Additionally, MHE
has enhanced revenue diversity, owing to MHE's focus on both the
K-12 and higher education markets compared with HMH's focus on the
K-12 market.
KEY ASSUMPTIONS
- For 2024, low-single-digit revenue growth driven primarily by a
softer than expected open territory market and weaker than expected
Extensions revenue due to lower than expected renewals coupled with
a continuing decline of Heinemann products. This reflects a lower
expansion of NWEA billings assuming cross-selling challenges of MAP
Growth.
- For 2025, a single-digit decline in core solutions and extensions
due to a consistent open territory weakness and slower than
expected state adoptions, offsetting to some extend with NWEA
performance. For 2026, a low double-digit revenue growth reflecting
an adoptions cycle recovery driven primarily by solid demand from
state including California, Texas and Florida. Thereafter, a
mid-to-high single digit revenue growth average for the rest of the
projection.
- EBITDA margins are expected to stabilize around mid-thirties
percent during the next two years, reflecting a consolidation of
recently acquired synergies and cost savings post-acquisitions.
Thereafter, a gradual and modest increase in margins reaching
around 41% by the end of the projection, attributed to an ongoing
digital transformation and development of additional cross-selling
opportunities derived from NWEA, Classcraft and Writable.
- 10.0% of net revenues in capex and pre-publication expenditures
(capital intensity) per year.
- Slight growth in changes in deferred revenues per year to reflect
a more stable digital adoption and cost structure;
- About $100 million of additional net working capital financing
(excluding deferred revenue) in FY24, thereafter $20 million per
year of additional net working capital requirements.
RECOVERY ANALYSIS
KEY RECOVERY RATING ASSUMPTIONS
The recovery analysis assumes HMH would be reorganized as a
going-concern in bankruptcy rather than liquidated. Fitch has
assumed a 10% administrative claim.
Going-Concern (GC) Approach
HMH's recovery analysis assumes significant K-12 adoption delays
followed by market share loss, driven by an inability to win enough
upcoming adoptions, pressuring margins. The post-reorganization GC
EBITDA of $250 million is based on Fitch's estimate of HMH's
average EBITDA over a normal cycle as adjusted for
post-acquisitions synergies and the ongoing digital transformation
that offers an improved margin (versus its printed business), which
have permanently reset the company's cost structure.
The enterprise value (EV) multiple of 6.0x incorporates the
following information:
- The median TMT multiple of reorganization EV/forward EBITDA was
6.0x for the 60 cases for which there was adequate information to
make an estimate. Most (62%) were in the 4.0x-7.0x range. However,
17 companies were reorganized at multiples of 7.1x or higher, and
six below 4.0x. The broadcasting and media sector median multiple
was 6.2x, compared with 5.3x and 5.2x for small samples of
Technology and Telecom cases, respectively;
- Following the global financial crisis and economic downturn in
2008, HMH filed for Chapter 11 Bankruptcy on May 21, 2012 and
eventually emerged at a 4.9x multiple. Fitch's GC multiple estimate
of 6.0x is influenced by Fitch's belief that HMH has made
significant strides in reducing cyclicality in its business model
though its transition to a more digital model and reduced
volatility in plate capex spend;
- Veritas Capital acquired HMH in 2022 for total consideration of
$3.2 billion, or 14x Fitch-calculated adjusted LTM ended March 31,
2022 EBITDA of $229 million. Fitch's EBITDA is after
pre-publication costs.
- Peer Multiples: The closest Fitch-rated peer to HMH is
McGraw-Hill, which incorporates a multiple of 7.0x into its
recovery. Fitch believes McGraw-Hill benefits from higher revenue
diversity and greater scale, warranting the higher multiple.
- Debt: Fitch assumes a full draw on HMH's $250 million
asset-backed revolving credit facility, $1.4 billion of first-lien
term loan due 2029 outstanding, $358 million of incremental
first-lien term loan due 2028 and $390 million of second-lien term
loan due 2030.
Assuming $250 million in recovery EBITDA and a 6.0x emergence
multiple leads to a recovery of 'RR3' on the first-lien debt.
Applying standard notching criteria to the 'B' Long-Term IDR
results in a 'B+' first-lien rating.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to a
Positive Rating Action/Upgrade
- Significant increase in operational scale and segmental or
geographical diversification, providing additional financial
flexibility to navigate the K-12 adoption cycle;
- Sustained margin gains as result of the successful realization of
the cost-savings plan and estimated synergies with a full
consolidation of the recently acquired assets, notable progress in
the digital shift strategy with higher subscription-based revenue,
and significant debt repayment, driving EBITDA leverage
consistently below 5.0x through the adoption cycle;
Factors that Could, Individually or Collectively, Lead to a
Negative Rating Action/Downgrade
- Persistent margin losses as result of a failed business strategy
sustainably driving EBITDA leverage above 6.0x without a commitment
to reduce leverage within 18-24 months;
- Sustained negative FCF with the expectation of negative cash flow
into cyclical industry improvement.
Outlook Stabilization: Fitch expects the Positive Outlook to
stabilize with sustained EBITDA leverage in the 5.0x-6.0x range,
while maintaining an adequate liquidity position and positive free
cash flow generation within 12 to 18 months.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: As of the end of December 2023, HMH reported a
liquidity position of $561 million composed by $323 million of cash
and cash equivalents and about $238 million of available capacity
under its existing revolver credit facility net of letters of
credit outstanding. The company's liquidity position is further
supported by Fitch's expectation that FCF generation will continue
to expand in the upcoming years, as result of further consolidation
of recent acquisitions to about $150 million in average per year.
ISSUER PROFILE
Houghton Mifflin Harcourt Company is a leading global provider of
K-12 core curriculum, supplemental and intervention solutions and
professional learning services. The company serves more than 50
million students and four million educators in 150 countries.
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
----------- ------ -------- -----
Harbor Holding Corp. LT IDR B Affirmed B
Houghton Mifflin
Harcourt Company LT IDR B Affirmed B
senior secured LT B+ Affirmed RR3 B+
HARVARD APPARATUS: Incurs $2 Million Net Loss in First Quarter
--------------------------------------------------------------
Harvard Apparatus Regenerative Technology, Inc. filed with the
Securities and Exchange Commission its Quarterly Report on Form
10-Q reporting a net loss of $2.03 million on $57,000 of product
revenue for the three months ended March 31, 2024, compared to a
net loss of $2.89 million on $0 of product revenue for the three
months ended March 31, 2023.
As of March 31, 2024, the Company had $2.41 million in total
assets, $2.24 million in total current liabilities, and $175,000 in
total stockholders' equity.
Harvard Apparatus stated, "We have incurred substantial operating
losses since our inception, and as of March 31, 2024 had an
accumulated deficit of approximately $94.0 million and will require
additional financing to fund future operations. We expect that our
operating cash on-hand as of March 31, 2024 of approximately $0.3
million and equity financing of $1.2 million in gross proceeds
received subsequent to March 31, 2024 will enable us to fund our
operating expenses and capital expenditure requirements into the
second quarter of 2024. We expect to continue to incur operating
losses and negative cash flows from operations for 2024 and in
future years. Therefore...these conditions raise substantial doubt
about our ability to continue as a going concern.
"We will need to raise additional funds to fund our operations. In
the event we do not raise additional capital from outside sources
before or during the second quarter of 2024, we may be forced to
curtail or cease our operations."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1563665/000149315224018874/form10-q.htm
About Harvard Apparatus
Headquartered in Holliston, Massachusetts, Harvard Apparatus
Regenerative Technology, Inc. is a biotechnology company with a
mission to cure patients of cancers, injuries, and birth defects of
the gastro-intestinal tract and the airways. The Company believes
its technology is likely to be used to treat esophageal cancer,
esophageal injuries, and birth defects in the esophagus. The
Company believes additional product candidates in its pipeline may
treat intestinal cancer and colon cancer. Since inception, the
Company has devoted substantially all of its efforts to business
planning, research and development, recruiting management and
technical staff, and acquiring operating assets.
Boston, MA-based Marcum LLP, the Company's auditor since 2022,
issued a "going concern" qualification in its report dated March
28, 2024, citing that the Company has suffered recurring losses
from operations, has an accumulated deficit, uses cash flows in its
operations, and will require additional financing to continue to
fund its operations. These conditions raise substantial doubt
about the Company's ability to continue as a going concern.
HEALTHIER CHOICES: Incurs $2.86 Million Net Loss in First Quarter
-----------------------------------------------------------------
Healthier Choices Management Corp. filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q reporting a
net loss of $2.86 million on $15.89 million of net total sales for
the three months ended March 31, 2024, compared to a net loss of
$1.91 million on $13.56 million of net total sales for the three
months ended March 31, 2023.
The Company had negative working capital of $1.5 million. The
Company expects to continue incurring losses for the foreseeable
future. Management has made plans to reduce certain costs and
raise needed capital, however there can be no assurance the Company
can successfully implement these plans. The Company anticipates
its current cash and cash generated from operations will not be
sufficient to meet projected operating expenses for the foreseeable
future through at least twelve months from the issuance of the
consolidated financial statements.
As of March 31, 2024, the Company had $29.13 million in total
assets, $22.99 million in total liabilities, $1.11 million in
convertible preferred stock, and $5.02 million in total
stockholders' equity.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/844856/000149315224018493/form10-q.htm
About Healthier Choices Management
Hollywood, FL-based Healthier Choices Management Corp. is a holding
company focused on providing consumers with healthier daily choices
with respect to nutrition and other lifestyle alternatives.
Through its wholly owned subsidiary HCMC Intellectual Property
Holdings, LLC, the Company manages its intellectual property
portfolio.
Saddle Brook, NJ-based Marcum LLP, the Company's auditor since
2017, issued a "going concern" qualification in its report dated
March 27, 2024, citing that the Company has a working capital
deficiency, has incurred significant losses and needs to raise
additional funds to meet its obligations to sustain its operations.
These conditions raise substantial doubt about the Company's
ability to continue as a going concern.
HEYWOOD HEALTHCARE: PCO Reports No Staffing Changes
---------------------------------------------------
Joseph Tomaino, the duly appointed patient care ombudsman, filed
with the U.S. Bankruptcy Court for the District of Massachusetts
his third report regarding the quality of patient care provided by
Heywood Healthcare, Inc.
The PCO and the organization's Senior Director, Quality and Risk,
Corporate Compliance Officer conducted weekly virtual meetings
where incidents or patient complaints, staffing or supply issues
which may have been impacted by the bankruptcy were discussed. Any
planned or unplanned service interruptions are also covered.
The PCO interviewed select staff from a variety of disciplines at
Heywood Hospital, the Athol Hospital, and one of the Heywood
Medical Group sites, where staff at both hospitals did not uncover
any changes in staffing patterns since the bankruptcy filing, and
staff who were interviewed reported staffing is adequate.
Moreover, a complaint was received by a hospital pharmacist that
procedures for the safe handling of controlled substances from the
operating room, as well as the scanning of medications being placed
in drug dispensing machines were being bypassed. The complaints
were brought to the attention of the Senior Director, Quality and
Risk, Corporate Compliance Officer and the Chief Medical Officer
who met with the Pharmacist and took action. The PCO will follow up
with complainant to see if improvements have occurred.
A copy of the ombudsman report is available for free at
https://urlcurt.com/u?l=vM79gC from PacerMonitor.com.
The ombudsman may be reached at:
Joseph J. Tomaino
Chief Executive Officer
Grassi Healthcare Advisors, LLC
750 Third Avenue
New York, NY 10017
Phone: (212) 223-5020
Email: jtomaino@grassihealthcareadvisors.com
About Heywood Healthcare
Heywood Healthcare, Inc. is a non-profit community-owned hospital
in Gardner, Mass.
Heywood Healthcare and its affiliates filed Chapter 11 petitions
(Bankr. D. Mass. Lead Case No. 23-40817) on Oct. 1, 2023. In the
petition signed by its chief executive officer, Thomas Sullivan,
Heywood Healthcare disclosed up to $500,000 in assets and up to
$50,000 in liabilities.
Judge Elizabeth D. Katz oversees the cases.
John M. Flick, Esq., at Flick Law Group, PC represents the Debtors
as legal counsel.
The U.S. Trustee for Region 1 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases. The
committee tapped Dentons Bingham Greenebaum, LLP and Dentons US,
LLP as its legal counsel.
Joseph J. Tomaino is the patient care ombudsman appointed in the
Debtors' cases.
HOLLYWOOD LOFTS: Court OKs Cash Collateral Access on Final Basis
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Washington
authorized Hollywood Lofts LLC to use cash collateral on a final
basis, in accordance with the budget, with a 5% variance.
The Debtor requires the use of cash collateral to pay the operating
expenses that will allow it to continue its ordinary course
business operations.
Wells Fargo Bank, National Association, as Trustee for the
Registered Holders of J.P. Morgan Chase Commercial Mortgage
Securities Corp., Multifamily Mortgage Passthrough Certificates,
Series 2017-K724 assert an interest in the Debtor's cash
collateral.
On September 8, 2016, the Debtor obtained a loan from KeyBank
National Association in the original principal amount of $9.8
million. The Loan is evidenced by, among other documents, a
Multifamily Loan and Security Agreement, a Multifamily Deed of
Trust, Assignment of Rents and Security Agreement, and a
Multifamily Note Fixed Rate Defeasance.
The Deed of Trust was recorded with the King County Assessor's
Office on September 8, 2016, under Recording No. 20160908001127 as
an encumbrance against the Property to secure repayment of the
Loan.
The Loan and the Loan Documents were subsequently assigned to Wells
Fargo, which presently holds the beneficial interests in the Loan
Documents.
The current balance owing on the Loan is approximately $9.5
million. An appraisal of the Property, prepared by Newmark
Valuation & Advisory, LLC, effective February 23, 2024, states "as
is" and "as stabilized" values of the Property at $14.1 million and
$14.450 million, respectively.
As adequate protection for the Debtor's use of cash collateral:
a. Wells Fargo is granted valid, binding, enforceable and perfected
replacement liens on and security interests in all Postpetition
Collateral, to the same extent and with the same validity and
priority as Wells Fargo's liens on prepetition collateral;
b. The Debtor will continue to maintain insurance on its assets as
the same existed as of the Petition Date, with Wells Fargo named as
additional insured, mortgagee insured and loss payee. For the
avoidance of doubt, the Security Interests extend to insurance
proceeds to the same extent as such Security Interest extend to
insurance proceeds prepetition.
c. In accordance with 11 U.S.C. Section 507(b), if, notwithstanding
the foregoing protections, Wells Fargo has a claim allowable under
11 U.S.C. Section 507(a)(2) arising from the stay of action against
the prepetition collateral from the use, sale, or lease of such
collateral, or from the granting of any lien on the collateral,
then Wells Fargo's claim will have priority over every other claim
and administrative expense allowable under 11 U.S.C. Section
507(a)(2), in any amount equal to the decrease, if any, in the
value of Wells Fargo's interest in the prepetition collateral as a
result of the Debtors' use of cash collateral.
The authority of the Debtor to use cash collateral will terminate
upon the earlier of:
(a) the Debtor's material breach of this Order or the Final Budget;
(b) entry of an order that stays, reverses, vacates, or modifies
this Final Order in any material respect without Wells Fargo's
prior written consent, unless such order otherwise provides;
(c) conversion of Debtor's case to a case under Chapter 7 of the
Bankruptcy Code;
(d) occurrence of the Termination Date or
(e) the appointment of a trustee in this Chapter 11 case.
Upon the occurrence of a Change Event, Wells Fargo will have the
right, but not the obligation, to note a hearing before this Court
seeking such relief as it may deem appropriate upon ten calendar
days' notice to (i) counsel for the Debtor; (ii) counsel for any
statutory committee appointed herein or, if no such committee has
been appointed, then to the twenty largest unsecured creditors;
(iii) the Office of the U.S. Trustee; and (iv) all parties that
have requested special notice therein.
A final hearing on the matter is set for May 14, 2024 at 9:30 a.m.
A copy of the order is available at https://urlcurt.com/u?l=48j73L
from PacerMonitor.com.
About Hollywood Lofts LLC
Hollywood Lofts LLC is a Single Asset Real Estate debtor (as
defined in 11 U.S.C. Section 101(51B)). The Debtor owns real
property and improvements thereon located at 127 Broadway East,
Seattle, WA 98102, commonly known as the Hollywood Lofts having an
appraised value of $14.1 million.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. W.D. Wash. Case No. 24-10916) on April 15,
2024. In the petition signed by Ron E. Amundson, manager, the
Debtor disclosed $14,278,613 in assets and $9,396,079 in
liabilities.
Judge Christopher M. Alston oversees the case.
James L. Day, Esq., at BUSH KORNFELD LLP, represents the Debtor as
legal counsel.
HOT CRETE: Seeks Cash Collateral Access
---------------------------------------
Hot Crete, LLC asks the U.S. Bankruptcy Court for the Western
District of Texas, Austin Division, for authority to use cash
collateral and provide adequate protection.
The Debtor previously served pool construction companies by
providing and spraying concrete shells for in-ground pools. Prior
to filing the bankruptcy, the Debtor ceased operations due to its
automobile insurance terminating. Since filing the petition, the
Debtor has positioned itself to liquidate its assets in this
bankruptcy proceeding with a motion to employ a broker pending. The
Debtor also anticipates filing a motion for authority to sell its
equipment in the near future.
The Debtor's assets are generally: i) the vehicles, some of which
are encumbered; ii) the cash in the pre-petition bank accounts with
Frost Bank (Checking Acct.# 3563 & Savings Acct.# 9988); iii) an
anticipated ERTC refund from the IRS; and, iv) potential legal
claims.
Given the lack of ongoing operations, the Debtor's monthly expenses
are minimal. Specifically, the Debtor is looking to pay monthly
insurance premiums, Google Suite licensing fees, and Quickbooks
licensing fees. These expenses are necessary to keep the Debtor in
a place to respond to various requests from past clients and
potential claimants and maintain adequate insurance as statutorily
required.
As adequate protection for the use of cash collateral, Frost Bank
will be granted a replacement lien pursuant to 11 U.S.C. section
361(2), solely to the extent cash collateral is used, in all cash
the Debtor acquires or generates after the Petition Date, but
solely to the same extent and priority as existed pre-petition and
subject to a determination by the Court that any such creditor
holds a fully perfected, enforceable pre-petition lien on cash.
A copy of the motion is available at https://urlcurt.com/u?l=C73kcu
from PacerMonitor.com.
About Hot Crete LLC
Hot Crete LLC filed its voluntary petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. W.D. Tex. Case No. 24-10303) on
March 22, 2024, listing $1,000,001 to $10 million in both assets
and liabilities. The petition was signed by Edgar Castro as
president.
Todd Brice Headden, Esq. at Hayward PLLC represents the Debtor as
counsel.
ICP GROUP: Invesco VVR Marks $917,000 Loan at 17% Off
-----------------------------------------------------
Invesco Senior Income Trust ("VVR") has marked its $917,000 loan
extended to ICP Group Holdings LLC to market at $763,546 or 83% of
the outstanding amount, as of February 29, 2024, according to a
disclosure contained in VVR's Form N-CSR for the fiscal year ended
February 29, 2024, filed with the U.S. Securities and Exchange
Commission.
VVR is a participant in a Term Loan to ICP Group Holdings. The loan
accrues interest at a rate of 9.36% (1 mo. Term SOFR + 3.75%) per
annum. The loan matures on December 29, 2027.
VVR is a Delaware statutory trust registered under the Investment
Company Act of 1940, as amended, as a closed-end management
investment company. VVR may participate in direct lending
opportunities through its indirect investment in the Invesco Senior
Income Loan Origination LLC, a Delaware limited liability company.
VVR owns all beneficial and economic interests in the Invesco
Senior Income Loan Origination Trust, a Massachusetts Business
Trust, which in turn owns all beneficial and economic interests in
the LLC.VVR may participate in direct lending opportunities through
its indirect investment in the Invesco Senior Income Loan
Origination LLC, a Delaware limited liability company. VVR owns all
beneficial and economic interests in the Invesco Senior Income Loan
Origination Trust, a Massachusetts Business Trust, which in turn
owns all beneficial and economic interests in the LLC.
VVR is led by Glenn Brightman, Principal Executive Officer; and
Adrien Deberghes, Principal Financial Officer. The Trust can be
reached through:
Glenn Brightman
Invesco Senior Income Trust
1555 Peachtree Street, N.E., Suite 1800
Atlanta, GA 30309
Tel: (713) 626-1919
ICP Group is a formulator and manufacturer of specialty coatings,
adhesives, and sealants serving the construction markets. ICP Group
is comprised of market leading brands known for innovation,
quality, and performance. ICP Group is headquartered in Andover,
Mass. and has manufacturing and distribution sites throughout the
globe.
INFINITE ELECTRONICS: Invesco VVR Marks $441,000 Loan at 15% Off
----------------------------------------------------------------
Invesco Senior Income Trust ("VVR") has marked its $441,000 loan
extended to Infinite Electronics to market at $373,057 or 85% of
the outstanding amount, as of February 29, 2024, according to a
disclosure contained in VVR's Form N-CSR for the fiscal year ended
February 29, 2024, filed with the U.S. Securities and Exchange
Commission.
VVR is a participant in a Second Lien Term Loan to Infinite
Electronics. The loan accrues interest at a rate of 12.57% (3 mo.
Term SOFR + 7.00%) per annum. The loan matures on March 2, 2029.
VVR is a Delaware statutory trust registered under the Investment
Company Act of 1940, as amended, as a closed-end management
investment company. VVR may participate in direct lending
opportunities through its indirect investment in the Invesco Senior
Income Loan Origination LLC, a Delaware limited liability company.
VVR owns all beneficial and economic interests in the Invesco
Senior Income Loan Origination Trust, a Massachusetts Business
Trust, which in turn owns all beneficial and economic interests in
the LLC.VVR may participate in direct lending opportunities through
its indirect investment in the Invesco Senior Income Loan
Origination LLC, a Delaware limited liability company. VVR owns all
beneficial and economic interests in the Invesco Senior Income Loan
Origination Trust, a Massachusetts Business Trust, which in turn
owns all beneficial and economic interests in the LLC.
VVR is led by Glenn Brightman, Principal Executive Officer; and
Adrien Deberghes, Principal Financial Officer. The Trust can be
reached through:
Glenn Brightman
Invesco Senior Income Trust
1555 Peachtree Street, N.E., Suite 1800
Atlanta, GA 30309
Tel: (713) 626-1919
Infinite Electronics is a global supplier of electronic components,
serving engineers' urgent needs through a family of highly
recognized and trusted brands.
INNOVATE CORP: S&P Downgrades ICR to 'CCC' on Weakening Liquidity
-----------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Innovate
Corp. to 'CCC' from 'CCC+' and its rating on the company's senior
notes due 2026 to 'CCC+' from 'B-'. The recovery rating on the
notes remains '2', indicating its expectation for meaningful (75%)
recovery in the event of a default.
The negative outlook reflects S&P's view that the company's
liquidity will be under stress in the next six to 12 months, such
that sources are unlikely to meet uses absent any unforeseen
positive developments.
The downgrade indicates S&P Global Ratings' view that Innovate's
liquidity will be strained for the next six to 12 months and that
the risk of its failure to make interest payments has increased. As
of March 31, 2024, the company had corporate-level cash and
equivalents of $9.2 million and was fully drawn on its $20 million
line of credit. While the company receives cash flows from dividend
payments and tax share agreements from its subsidiary DBM Global
Inc., S&P believes it may be strained to make the $39 million in
interest payments on its corporate-level debt over the next 12
months.
S&P said, "Innovate's portfolio contains exclusively unlisted
companies, which we view as an underlying weakness for an
investment holding company. Currently, the majority of Innovate's
portfolio value is its 91% controlling interest in DBM Global. The
management team has publicly stated that it's exploring
opportunities to monetize noncash flowing assets to address the
company's capital structure. However, we think Innovate's
concentration in unlisted assets could limit its ability to
monetize assets to repay debt or generate additional liquidity on
short notice.
"We think Innovate's capital structure is unsustainable over the
longer term. We estimate the company's loan-to-value ratio (based
on book values) exceeded 200% as of March 31, 2024. Potential paths
to lowering leverage include asset divestures and external capital
raises, for example."
Innovate has no corporate-level debt due until 2025, but all three
of its subsidiaries have near-term maturities. The life sciences
segment has $20.7 million of notes due on May 17, 2024. The
maturity date of these notes has already been extended twice in
2024, and failure to gain another extension could jeopardize
Innovate's investments in this segment. Additionally, Innovate's
Spectrum segment has $69.7 million in debt due in 2025, and DBM
Global has about $72.5 million of debt due in the next 18 months.
S&P said, "The negative outlook reflects our view that Innovate's
liquidity will be under stress for the next six to 12 months, and
absent any unforeseen positive developments, the company is
unlikely to meet its liquidity needs.
"We could lower the ratings if we believe a default event, such as
insufficient liquidity to fund interest payments, is likely in the
next six months. We could also lower the ratings if the company
executes exchange offers or a debt restructuring that we would view
as distressed.
"We could revise the outlook to stable if Innovate's liquidity
improves such that we expect the company could maintain sufficient
liquidity for its operations over the next six to 12 months."
INSIGHT ENTERPRISES: S&P Assigns 'BB+' ICR on First-Time Issuance
-----------------------------------------------------------------
S&P Global Ratings assigned its 'BB+' issuer credit rating to
U.S.-based IT solutions and digital transformation services
provider Insight Enterprises Inc. S&P also assigned its 'BB+'
issue-level and '3' recovery ratings to the proposed senior
unsecured notes.
The stable outlook reflects S&P's expectation of S&P Global
Ratings-adjusted net leverage in the 2x area in 2024, declining to
the mid-1x area in 2025, based on mid-single-digit percent revenue
growth with good liquidity despite its large intra-year working
capital swings.
Insight has a differentiated approach in the competitive,
fragmented enterprise IT spending category.
Insight operates in the fragmented and highly competitive industry
for outsourced IT products and services, where it competes against
both smaller and larger players. While the company is a scaled
player with more than $9 billion of revenue, it still represents
less than 1% of the roughly $3 trillion global IT enterprise
market. The company is exposed to the cyclicality of IT spending
and the broader economy, given that hardware sales account for
nearly half of its total revenue. Despite its focus on
profitability, the company's EBITDA margins remain low at about
5%-6%. However, these factors are partly offset by its consistently
strong revenue growth over the past five years, larger scale than
most value-add-resellers (VARs), and emphasis on expanding its
software and service revenue by cultivating strong client
relationships and maintaining a sizable technical workforce. In
addition, the company has a diversified customer base of over
10,000 clients, largely servicing Fortune 300 companies, with no
single entity accounting for more than 3% of its revenue.
Insight has carved out its own niche in the hyper-competitive
industry, coining the term "solutions integrator" as the
traditional lines between IT solutions providers continue to blur.
The company views the depth and breadth of its technical talent as
key to its solutions-oriented sales strategy. Having offshore
capabilities to conduct proof of concept work in an efficient
manner (a strength for Insight, compared with some VAR peers), will
allow it to win, and keep business through the entire lifecycle of
a project rather than losing that to traditional systems
integrators, including larger and well-capitalized players such as
CapGemini SE (BBB+/Stable), Infosys Ltd. (A/Stable), and Accenture
PLC (AA-/Stable).
Acquisitions are a key part of Insight's growth strategy.
Insight's increase in scale has been a product of both organic
growth and acquisitions. It completed six acquisitions over the
past five years. The fragmented characteristics of this industry
are conducive to consolidation and acquiring smaller regional
players can instantly add scale and increase market share. This is
an important aspect of the company's dual-pronged approach. The
other avenue is generally around building capabilities (i.e.
technical talent) within key growth areas. The size and valuation
of the latter type of acquisition can vary significantly. Its
recent acquisitions in 2023 of Amdaris--a service provider with
core expertise in providing software application and development
services that expands Insight's data practices and strengthens its
solution capabilities in Europe--and SADA--a Google cloud service
provider that expands its capabilities to offer multi-cloud
solutions, fits its playbook well. In May 2024, it acquired
Infocenter--a pure-play ServiceNow partner with consulting and
implementation expertise. ServiceNow is an end-to-end workflow
platform with embedded AI and machine learning (ML) capabilities.
S&P believes Infocenter, which was awarded ServiceNow's 2024
Partner of the Year, sits well inside Insight's automation
solutions portfolio and should have traction in an environment
where AI is front and center for every chief technology officer.
The growing trend of multi-cloud adoption (SADA), the need for
faster digital transformations (Amdaris), and demand around
enterprise workflow automation (Infocenter) are addressed via its
recent acquisitions, in line with its strategy. While these
acquisitions can command high acquisition-multiples with contingent
earnouts, Insight has managed to keep leverage below 2.5x over the
past five years, with the exception of 2019, when leverage spiked
to 3.9x (not pro forma adjusted) because it purchased PCM--a
provider of IT products and services to increase its scale. S&P
believes it remains committed to discipline within its financial
policy and expect leverage to be sustained below 3x.
S&P believes that the needs of enterprise IT customers are becoming
increasingly more complex and will continue to require service
providers to offer greater sophistication as part of their
solution. Smaller, regional players may not be able to offer the
same depth and breadth of solutions but have niche expertise that
make them attractive acquisition targets to round out an
established players' holistic offering.
Insight is making good progress toward its 2027 EBITDA margin goals
of 6.5%-7%.
Over the past few years, the company has re-aligned its focus to
emphasize profitability, alongside revenue growth. Its plan to
capitalize on fast-growing market segments such as hybrid cloud,
cyber, data and AI, among others, is augmented by offering both
software and services to drive customer retention and increase
revenue predictability. The company's ambition to expand EBITDA
margins to the 6.5%-7% area by 2027 is centered on successful
execution of this strategy. S&P expects the company's organic
growth and savings from its recent cost-saving-initiatives executed
in 2023, to result in modest EBITDA margin expansion by year-end
2024.
S&P said, "We believe Insight has made a deliberate choice to focus
on profitable growth and is willing to walk away from opportunities
if it does not meet its criteria. Its value-based pricing
philosophy compared with a more traditional cost-plus approach is
indicative of this shift. We believe that prioritizing margins can
provide an organization with operational flexibility to adapt in a
variety of environments and build new capabilities as technology
requirements evolve.
"We expect good operating performance over the next 12-24 months,
largely from Insight's Software & Services segment, resulting in
2024 leverage in the low-2x area."
Insight has consistently increased its revenue by the
high-single-digit to low-double-digit percent area annually over
the past five years (with the exception of 2023 as a result of an
industry-wide decline in hardware sales) while improving its
margins on accelerating revenue expansion in its more-profitable
services and cloud solutions business. S&P said, "We expect
Insight's growth will primarily come from its software and services
segment (rather than hardware). The growth in software is driven by
increased demand for digital transformation and software remains a
critical enabler. The growth in its services segment (which
includes cloud sales and services) is driven by the continued
transition toward the public cloud, as well as contributions from
its recent acquisitions. While Insight posted better-than-expected
performance for the quarter ended March 31, 2024, as a result of
about 25% growth in its Software & Services segment, its hardware
segment declined nearly 15% year over year despite
high-single-digit percent growth in device refreshes. We believe
that the overall demand environment for hardware sales will remain
muted due to macroeconomic factors such that the segment will be
flat for 2024, which will weigh on earnings. We anticipate steady
gross margin improvement over time due to a positive mix shift from
faster software and cloud sales. Software and cloud revenue is
recognized net of costs, and therefore has higher gross margins. As
such, we forecast S&P Global Ratings-adjusted leverage to be in 2x
area by year-end 2024, declining to the mid-1x area in 2025."
Insight's cash flow volatility is tied to growth in its Hardware
segment.
Insight's hardware sales can inject substantial cash flow
volatility. The COVID-19 pandemic accelerated enterprises
transitioning to notebooks from desktop computers. As a result,
Insight's hardware sales grew meaningfully because device growth in
the second half of 2021 and 2022 was in the high-20% to low-30%
area. This led to working capital outflows of nearly $150
million-$300 million in both years. On the contrary, as hardware
sales declined in 2023, Insight's cash flow improved, resulting in
working capital inflows. In addition, Insight's free operating cash
flow (FOCF) has been volatile over the past five years due to the
timing of large payments and one-time capital projects.
S&P said, "While we don't expect any material one-time events to
affect cash flow over our forecast period, an increase in demand
will cause higher working capital needs and lower free cash flow.
Given our expectations for flat hardware growth in 2024, working
capital volatility should remain reasonable such that it results in
FOCF to debt in the 20%-30% range.
"The stable outlook reflects our expectation of S&P Global
Ratings-adjusted net leverage in the 2x area in 2024, declining to
the mid-1x area in 2025, based on mid-single-digit revenue growth
with good liquidity despite its large intra-year working capital
swings."
Although unlikely, S&P could lower its rating on Insight if its
leverage were sustained above 3x, which includes intra-period
borrowings on its ABL facility. This could occur if:
-- It relied on its ABL revolver more than we currently assume to
fund its increasing working capital;
-- There were a downturn in global IT spending, rapid
technological shifts, large customer losses, operational or
service-related issues, or increased competition that lead to
sustained EBITDA declines; or
-- The company adopted a more aggressive financial policy by
pursuing significant debt-funded acquisitions or shareholder
returns.
Although not expected over the next 12 months, S&P could raise the
rating if the company revised its financial policy such that it
came to believe it were committed to maintaining an
investment-grade rating. This could occur if:
S&P believed the company had strengthened its competitive position
relative to peers and vendors, which would likely require the
company to establish a track record of above- industry-average
growth, sustained market share gains, and demonstrated material
margin improvement; or
-- S&P believed it could absorb an operating decline and pursue
its acquisition and shareholder return objectives while maintaining
leverage below 1.5x.
J CABELAS: Joseph Kershaw Spong Named Subchapter V Trustee
----------------------------------------------------------
The Acting U.S. Trustee for Region 4 appointed Joseph Kershaw Spong
as Subchapter V trustee for J Cabelas, LLC.
Mr. Spong will be paid an hourly fee of $350 for his services as
Subchapter V trustee and will be reimbursed for work-related
expenses incurred. Melissa White, paralegal, and Rebecca
Faulkenberry, legal assistant, charge $150 per hour and $125 per
hour, respectively.
Mr. Spong declared that he is a disinterested person according to
Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Joseph Kershaw Spong
P.O. Box 11449
Columbia, SC 29211
Phone: (803) 929-1400
Email: kspong@robinsongray.com
About J Cabelas LLC
J Cabelas, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. S.C. Case No. 24-01458) on April 24,
2024, with $100,001 to $500,000 in assets and $500,001 to $1
million in liabilities.
Judge Helen E. Burris presides over the case.
Kevin Campbell, Esq., at Campbell Law Firm, PA, represents the
Debtor as legal counsel.
J FRANKLIN: Joseph Kershaw Spong Named Subchapter V Trustee
-----------------------------------------------------------
The Acting U.S. Trustee for Region 4 appointed Joseph Kershaw Spong
as Subchapter V trustee for J Franklin, LLC.
Mr. Spong will be paid an hourly fee of $350 for his services as
Subchapter V trustee and will be reimbursed for work-related
expenses incurred. Melissa White, paralegal, and Rebecca
Faulkenberry, legal assistant, charge $150 per hour and $125 per
hour, respectively.
Mr. Spong declared that he is a disinterested person according to
Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Joseph Kershaw Spong
P.O. Box 11449
Columbia, SC 29211
Phone: (803) 929-1400
Email: kspong@robinsongray.com
About J Franklin, LLC
J Franklin, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. S.C. Case No. 24-01457-hb) on April 24,
2024. In the petition signed by Ronald B. Jennings, Jr., managing
member, the Debtor disclosed up to $500,000 in assets and Ronald B.
Jennings, Jr. to $1 million in liabilities.
Kevin Campbell, Esq., at Campbell Law Firm, PA, represents the
Debtor as legal counsel.
JACON LLC: Seeks to Use Cash Collateral Thru July 31
----------------------------------------------------
Jacon, LLC asks the U.S. Bankruptcy Court for the District of
Minnesota for authority to use cash collateral and provide adequate
protection, through July 31, 2024.
The following secured lienholders have an interest in the cash
collateral:
a. Platinum Bank -- UCC Financing Statement filed on May 18, 2016,
June 14, 2021, September 24, 2021, and April 29, 2022, Filing
Numbers: 888850700027, 1239693100023, 1258171100020 and
1311732400020, with the Minnesota Secretary of State securing a
lien on all assets of the Debtor, including cash and receivables.
The Debtor owes approximately $5.219 million per the filed proof of
claim number 23.
b. United States Small Business Administration -- UCC Financing
Statement filed on May 23, 2020, Filing Number: 1160408103162, with
the Minnesota Secretary of State securing a lien on all assets of
the Debtor, including cash and receivables. The Debtor owes
approximately $303,129 per the filed proof of claim number 11.
c. There are other secured creditors, but these UCC financing
statements relate to specific items of collateral and not cash
collateral.
As and for adequate protection of the secured creditors' interest
in the cash collateral:
a. The Debtor will use cash to pay ordinary and necessary business
expenses and administrative expenses for the items and in such use
will not vary materially from the budget, except for variations
attributable to expenditures specifically authorized by Court
order.
b. The Debtor will grant the secured creditors replacement liens,
to the extent of the Debtor's use of cash collateral, in
post-petition inventory, cash, accounts, equipment, and general
intangibles, with such liens being of the same priority, dignity,
and effect as their respective prepetition liens.
c. The Debtor will carry insurance on its assets.
d. The Debtor will provide the secured creditors such reports and
documents as they may reasonably request.
e. The Debtor will afford the secured creditors the right to
inspect the Debtor's books and records and the right to inspect and
appraise the collateral at any time during normal operating hours
and upon reasonable notice to the Debtor and its attorneys.
A hearing on the matter is set for May 28, 2024 at 1:30 p.m.
A copy of the motion is available at https://urlcurt.com/u?l=Ri1P4d
from Pacer Monitor.com.
About Jacon LLC
Jacon LLC is a demolition, excavating, and utilities contractor in
the St. Paul/Minneapolis area. The Debtor sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Minn. Case No.
23-31873) on September 12, 2023. In the petition signed by Jason
Jacobsen, president, the Debtor disclosed up to $10 million in both
assets and liabilities.
William J. Fisher oversees the case.
John D. Lamey III, Esq., at Lamey Law Firm, P.A., represents the
Debtor as legal counsel.
KIDKRAFT INC: Files for Chapter 11 to Facilitate Sale
-----------------------------------------------------
KidKraft, Inc. and its U.S. and Canadian affiliates, an industry
leader in the design and development of branded, wood-based active
and imaginative play products including swing sets, doll houses,
role play, playhouses, and more, on May 10 disclosed that it has
filed voluntary petitions for Chapter 11 relief in the United
States Bankruptcy Court for the Northern District of Texas to
effectuate a value-maximizing sale transaction to Backyard
Products, LLC that will allow for the continued operation of the
business, with the resources to invest in growth across key markets
globally.
The Company enters this process with the strong support of its
first lien secured lender, its majority shareholder, and Backyard,
all of whom executed a restructuring support agreement prior to the
filing. The RSA sets forth the principal terms of the restructuring
transaction to be effectuated by the prepackaged chapter 11 plan,
including the sale of substantially all of the U.S. and Canadian
assets to Backyard pursuant to an asset purchase agreement. The APA
sets forth the terms of the sale, which will enable the continued
operation of the business as a going concern under new ownership.
The Company is targeting closing the sale in approximately two
months, subject to approval by the Court and other conditions in
the APA, the chapter 11 plan, and related transaction documents.
"The announcement marks an important step forward for KidKraft that
will position us to continue investing in our industry-leading
products and delivering for our valued customers well into the
future," said Geoffrey Walker, President and Chief Executive
Officer, KidKraft, Inc. "We are confident that with the strong
support of new ownership, KidKraft will be on track to continue
inspiring imaginative play experiences through our impressive range
of high quality products."
As a continuation of its support through the sale process and
successful restructuring, the Company has also received a
commitment from 1903 Partners, LLC, an affiliate of Gordon
Brothers, to provide up to $10.5 million of new money
debtor-in-possession financing, subject to Court approval. This
financing, combined with cash flow from operations, is expected to
enable the Company to continue operations in the ordinary course
during the Chapter 11 process and to provide sufficient liquidity
to ensure continuity of manufacturing and distribution.
KidKraft has also filed customary motions in the Chapter 11 cases,
seeking court approval to continue supporting its operations during
this process. These motions, upon approval, will ensure the
continued payment of employee wages and benefits, maintenance of
customer programs, and other relief measures customary in these
circumstances.
The Company's entities incorporated or organized in Canada will
also file CCAA recognition proceedings under supervision of the
Canadian Bankruptcy Court. Its international operations in Europe,
the Pacific, and Asia are not a part of this reorganization
process.
Additional information is available through the Company's claims
agent, Stretto, Inc., at www.stretto.com/kidkraft. Stakeholders
with questions can call 855-469-1713 (Toll Free) or 714-886-6210
(International).
Company Advisors
Vinson & Elkins, LLP, is serving as counsel, Sierra Constellation
Partners, LLC is serving as financial advisor, and Baird is serving
as investment banker to the Company.
About KidKraft
KidKraft, Inc. manufactures and sells wooden toys and furniture.
The Company offers easels, puzzles, dollhouses, tables, chairs, and
toddler beds.
LUMEN TECHNOLOGIES: Names Chad Ho EVP & Chief Legal Officer
-----------------------------------------------------------
Lumen Technologies, Inc. disclosed in Form 8-K Report filed with
the U.S. Securities and Exchange Commission that Mr. Stacey Goff,
the general counsel and secretary of the Company and its principal
subsidiaries, will be leaving the Company.
In connection with Mr. Goff's separation from the Company and its
subsidiaries, the Human Resources and Compensation Committee of the
Company's board of directors approved:
(i) the accelerated vesting of Mr. Goff's time-based
restricted stock awards granted in 2022 and 2023; and
(ii) Mr. Goff's continued right to hold a prorated portion of
his performance-based restricted stock awards granted in 2022 and
2023 subject to their original performance conditions and vesting
dates, in each case effective as of his last day of employment. Mr.
Goff will forfeit all other equity grants. Mr. Goff will also
receive certain cash severance and bonus payments under previously
existing compensation arrangements, which arrangements are
described in the Company's definitive proxy statement for its 2024
annual meeting of shareholders, as filed with the U.S. Securities
and Exchange Commission on April 5, 2024.
Mr. Chad Ho will succeed Mr. Goff as chief legal officer. Mr. Ho
will join the Company in June 2024. Commencing with Mr. Ho's start
date, Mr. Goff will cease serving in his current executive role,
although he is expected to remain an employee of the Company for a
few weeks to assist with the transition.
"We anticipate that Mr. Goff will remain with the company for a few
weeks after Mr. Ho's appointment to ensure a smooth transition,"
the Company said.
Ho is an experienced chief legal officer with a unique track record
of success. He has extensive expertise advising market-leading
publicly traded companies as well as emerging high-growth
organizations. Ho served as the long-time general counsel of Hulu
where, as part of the original management team, he helped grow the
company from pre-revenue to a multibillion-dollar business. After
Hulu's sale and integration into Disney, he oversaw Legal for the
global business operations across Disney's TV networks and
streaming services. Most recently, Ho was chief legal officer for
Sabre, a travel technology company with the largest global
distribution system in the U.S. He holds a J.D. from Harvard Law
School and a B.A. from Stanford University.
"Chad's innovative and proven experience with large public
companies and his ability to fuel growth in the technology sector
makes him the perfect person to guide Lumen through its ongoing
transformation," said Kate Johnson, president and CEO of Lumen. "I
am confident in Chad's ability to bring unique insights and drive
results. In addition, his ability to motivate is a great cultural
fit for this company."
"I'm excited to be joining Lumen at such a pivotal time," said Ho.
"With its world-class team and unique technology capabilities, the
opportunity is enormous."
"I want to thank Stacey for his contributions, leadership and
commitment through many important moments in Lumen's history.
Stacey built a significant legacy, having led with care and empathy
during challenging times. He leaves Lumen with a stronger
foundation," said Johnson.
"It has been a privilege to serve at Lumen," said Goff. "Through
the years, I have seen this company transform from a small
telecommunications firm into a powerful technology company. I have
loved the many great people I have worked with here, am proud of
all that we have achieved together and of the transformational
journey that began so many years ago. I know Lumen has the right
strategy in place to deliver revenue growth. I look forward to
watching the company's success."
About Lumen Technologies
Headquartered in Monroe, Louisiana, Lumen Technologies, Inc. is an
international facilities-based technology and communications
company focused on providing its business and mass markets
customers with a broad array of integrated products and services
necessary to fully participate in its ever-evolving digital world.
The Company's platform empowers its customers to swiftly adjust
digital programs to meet immediate demands, create efficiencies,
accelerate market access and reduce costs -- allowing customers to
rapidly evolve their IT programs to address dynamic changes.
As of March 31, 2024, the Company had $33.2 billion in total
assets, $32.7 billion in total liabilities, and $504 million in
total stockholders' equity.
* * *
As reported by the TCR on April 4, 2024, Fitch Ratings has
downgraded the Long-Term Issuer Default Ratings (IDR) of Lumen
Technologies and subsidiaries, Level 3 Parent, LLC and Level 3
Financing, Inc., to 'RD' from 'CCC-'. Fitch has also downgraded the
issue-level ratings assigned to Lumen and Level 3 Financing, Inc.,
as well as issue-level ratings at Qwest Capital Funding, Inc. In
addition, Fitch has removed the Rating Watch Negative on all
ratings, and has affirmed the Long-Term IDRs for Qwest Corporation,
Qwest Communications International Inc., and Qwest Services Corp.
at 'CCC+'.
Fitch has subsequently upgraded the ratings of Lumen Technologies,
Inc. and its key borrower subsidiaries to reflect the new capital
structure post its transaction support agreement (TSA) transaction
closed on March 22, 2024. Fitch has rated Lumen and various
subsidiaries 'CCC+'. The rating actions reflect Fitch's view that
the completed TSA involving a comprehensive debt restructuring
resulted in a distressed debt exchange (DDE) for the Lumen and
Level 3 entities. The transaction completed pursuant to the TSA was
one of the largest private debt restructurings completed in the
U.S. to date and encompassed participation from more than $15
billion of outstanding debt. The new 'CCC+' IDR ratings reflect an
improved debt maturity profile, offset by execution risks related
to the company's ability to strengthen its operating profile. Fitch
believes the combination of the large debt balance with weak
operating results calls into question the long-term sustainability
of the company's capital structure, even with extended maturities.
Moreover, as reported by the TCR on April 11, 2024, S&P Global
Ratings raised its issuer credit rating on Lumen Technologies to
'CCC+' from 'SD' (selective default). The TSA included $1.325
billion of new senior secured debt issued at wholly owned
subsidiary Level 3 Financing Inc. S&P assigned a 'B' issue-level
rating and '1' recovery rating to this debt and the new
super-priority debt at Lumen. S&P said, "We assigned a 'B-' rating
and '2' recovery rating to the new senior secured second-lien debt
at Level 3 (corrected from 'CCC+' and '3'). The '2' recovery rating
indicates our expectation for substantial (70%-90%; rounded
estimate: 70%) recovery. S&P said, "We also lowered the rating on
the senior unsecured debt at wholly owned subsidiary Qwest Corp. to
'B-' from 'B' and the rating on the debt at Qwest Capital Funding
Inc. to 'CCC-' from 'B-'. We removed all the Qwest issue-level
ratings from CreditWatch, where we placed them with negative
implications on Jan. 30, 2024." "The stable outlook reflects our
view that, over the next 12 months, Lumen will maintain sufficient
liquidity from cash and revolver availability due to the maturity
extensions despite lingering uncertainty over the long-term
sustainability of the capital structure."
The 'CCC+' rating reflects ongoing secular industry pressures in
Lumen's business and mass market segments. Lumen has made some
progress improving top-line trends by selling new products from its
digital platform, including network-as-a-service (Naas) and
ExaSwitch. It is also building some momentum in the public sector.
Nonetheless, the company derives about 79% of its revenue from
business customers, a segment in secular decline given the ongoing
migration to less expensive, newer technologies from higher-margin
legacy services. In addition, amid intense competition, it will
likely take several years to expand these newer products and
services at scale, in S&P's view. Moreover, Lumen still has
substantial exposure to legacy products and services, which will
take time to bottom out.
MARINUS PHARMACEUTICALS: Reports $38.7M Net Loss in First Quarter
-----------------------------------------------------------------
Marinus Pharmaceuticals, Inc., filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q reporting a
net loss applicable to common stockholders of $38.67 million on
$7.68 million of total revenue for the three months ended March 31,
2024, compared to a net loss applicable to common shareholders of
$34.73 million on $10.38 million of total revenue for the three
months ended March 31, 2022.
As of March 31, 2024, the Company had $137.35 million in total
assets, $153.78 million in total liabilities, and a total
stockholders' deficit of $16.43 million.
Marinus said, "We had Cash and cash equivalents and Short-term
investments of $113.3 million as of March 31, 2024. We believe
that such amount is not sufficient to fund our operations for the
one-year period after the date these financial statements are
issued. As a result, there is substantial doubt about our ability
to continue as a going concern through the one-year period from the
date these financial statements are issued. Cost reduction
activities are being implemented, with expected impact beginning in
the second quarter of 2024. Management's plans that are intended
to further mitigate this risk include securing additional funding
in the future from one or more equity or debt financings,
government funding, collaborations, licensing transactions, other
commercial or strategic transactions or other sources. However,
there can be no assurance that we will be successful in raising
additional capital or that such capital, if available, will be on
terms acceptable to us. We have and will continue to evaluate
alternatives to extend our operations beyond the one-year period
after the date the financial statements are issued."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001267813/000155837024007187/mrns-20240331x10q.htm
About Marinus Pharmaceuticals
Marinus -- www.marinuspharma.com -- is a commercial-stage
pharmaceutical company dedicated to the development of innovative
therapeutics for seizure disorders. The Company first introduced
FDA-approved prescription medication ZTALMY (ganaxolone) oral
suspension CV in the U.S. in 2022 and continues to invest in the
potential of ganaxolone in IV and oral formulations to maximize
therapeutic reach for adult and pediatric patients in acute and
chronic care settings.
Philadelphia, Pennsylvania-based Ernst & Young LLP, the Company's
auditor since 2020, issued a "going concern" qualification in its
report dated March 5, 2024, citing that the Company has suffered
recurring losses from operations and has stated that substantial
doubt exists about the Company's ability to continue as a going
concern.
MARIZYME INC: WithumSmith+Brown Raises Going Concern Doubt
----------------------------------------------------------
Marizyme, Inc. disclosed in a Form 10-K Report filed with the U.S.
Securities and Exchange Commission for the fiscal year ended
December 31, 2023, that its auditor expressed substantial doubt
about the Company's ability to continue as a going concern.
East Brunswick, New Jersey-based WithumSmith+Brown PC, the
Company's auditor since 2020, issued a "going concern"
qualification in its report dated May 13, 2024, citing that the
Company has suffered recurring losses from operations, has
experienced cash used from operations in excess of its current cash
position, and has an accumulated deficit, that raise substantial
doubt about its ability to continue as a going concern.
The Company had a net loss of approximately $65.3 million, negative
working capital of approximately $19.6 million, and had cash used
in operations of approximately $4.7 million for the year ended
December 31, 2023.
The Company's ability to continue its operations is dependent on
the execution of management's plans, which include the raising of
capital through the debt and/or equity markets, until such time
that funds provided by operations are sufficient to fund working
capital requirements.
The Company said there can be no assurances it will be successful
in generating additional cash from the equity or debt markets or
other sources to be used for operations. Based on the Company's
current resources, the Company will not be able to continue to
operate without additional immediate funding. Should the Company
not be successful in obtaining the necessary financing to fund its
operations, the Company would need to curtail certain or all
operational activities or contemplate the sale of its assets, if
necessary.
A full-text copy of the Company's Form 10-K is available at
https://tinyurl.com/yhsmjn57
About Marizyme
Jupiter, Fla.-based Marizyme, Inc. is a medical technology company
changing the landscape of cardiac care by delivering innovative
solutions for coronary artery bypass graft surgery.
As of December 31, 2023, the Company has $22 million in total
assets, $26.7 million in total liabilities, and $4.7 million in
total stockholders' deficit.
MATCHBOX BUSINESS: Files Emergency Bid to Use Cash Collateral
-------------------------------------------------------------
Matchbox Business, LLC asks the U.S. Bankruptcy Court for the
Western District of Michigan for authority to use cash collateral
and provide adequate protection.
The Debtor requires the use of cash collateral to meet payroll
obligations, sustain its operations, and preserve its assets for
the benefit of its creditors.
The value of Debtor's "cash collateral" is approximately $ 50,865,
which includes Debtor's Cash, Bank Accounts, Accounts Receivable,
pre-paid taxes, and inventory.
The Lenders that are likely to assert an interest in one or more of
the Debtor's assets are:
a. Grand River Bank
i. First Priority - filed March 28,2016 (Continuation
December 4, 2020)
ii. Balance Owed: $55,552.
b. Small Business Administration
i. Second Priority-filed May 5, 2020
ii. Balance Owed: $1,254,652
iii. Lien on: All assets
c. AKF. Incd/b/a Fundkite:
i. Third Priority- filed December 29, 2023
ii. Balance Owed: $232,474.38
iii. Lien on: Receipts
d. Cloudfund, LLC:
i. Fourth Priority - filed December 29,2023
ii. Balance Owed: Unknown
iii. Lien on: accounts, equipment, and general
intangibles
As adequate protection, the Debtor will pay Grand River Bank its
full contractual monthly payment of $3,037.
Secured Creditors will be granted continuing and replacement
security interests in liens on all of the Debtor's post-petition
property, excluding the Debtor's rights under 11 U.S.C. section 544
et seq.; however, nothing in this paragraph shall be deemed to
provide any creditor with an improvement of position from the
values of said creditor's respective collateral, as of the date of
the Petition nor grant any interests in any property which said
creditor does not have a properly perfected lien.
The Debtor's use of cash collateral pursuant to the order will
cease, after notice and hearing, upon the occurrence of one of the
following:
(i) Debtor fails to comply with its promises of adequate
assurance in any fashion;
(ii) the appointment of a Chapter 11 trustee, other than the
Subchapter V Trustee;
(iii) conversion of this Chapter 11 proceeding to a Chapter 7;
(iv) this Chapter 11 proceeding is dismissed without the consent
of the Secured Creditors; or
(v) a material diminution in the amount of the Debtor's cash
collateral.
A copy of the motion is available at https://urlcurt.com/u?l=Z0vrzP
from PacerMonitor.com.
About Matchbox Business, LLC
Matchbox Business, LLC sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. W.D. Mich. Case No. 24-01263-swd) on
May 9, 2024.
In the petition signed by Nathan Orange, member, the Debtor
disclosed up to $500,000 in assets and up to $10 million in
liabilities.
Steven M. Bylenga, Esq., at CBH Attorneys & Counselors, PLLC,
represents the Debtor as legal counsel.
MAVENIR SYSTEMS: Invesco VVR Marks $2.9MM Loan at 31% Off
---------------------------------------------------------
Invesco Senior Income Trust ("VVR") has marked its $2,982,000 loan
extended to Mavenir Systems, Inc. to market at $2,045,227 or 69% of
the outstanding amount, as of February 29, 2024, according to a
disclosure contained in VVR's Form N-CSR for the fiscal year ended
February 29, 2024, filed with the U.S. Securities and Exchange
Commission.
VVR is a participant in a Term Loan B to Mavenir Systems, Inc. The
loan accrues interest at a rate of 10.34% (3 mo. Term SOFR + 4.75%)
per annum. The loan matures on August 13, 2028.
VVR is a Delaware statutory trust registered under the Investment
Company Act of 1940, as amended, as a closed-end management
investment company. VVR may participate in direct lending
opportunities through its indirect investment in the Invesco Senior
Income Loan Origination LLC, a Delaware limited liability company.
VVR owns all beneficial and economic interests in the Invesco
Senior Income Loan Origination Trust, a Massachusetts Business
Trust, which in turn owns all beneficial and economic interests in
the LLC.VVR may participate in direct lending opportunities through
its indirect investment in the Invesco Senior Income Loan
Origination LLC, a Delaware limited liability company. VVR owns all
beneficial and economic interests in the Invesco Senior Income Loan
Origination Trust, a Massachusetts Business Trust, which in turn
owns all beneficial and economic interests in the LLC.
VVR is led by Glenn Brightman, Principal Executive Officer; and
Adrien Deberghes, Principal Financial Officer. The Trust can be
reached through:
Glenn Brightman
Invesco Senior Income Trust
1555 Peachtree Street, N.E., Suite 1800
Atlanta, GA 30309
Tel: (713) 626-1919
Mavenir Systems, Inc. provides software-based networking solutions.
The Company offers internet protocol based voice, videos,
communication, and messaging services, as well as multimedia
subsystem, evolved packet core, and session border controller.
MAWSON INFRASTRUCTURE: Posts $19.9-Mil. Net Loss in First Quarter
-----------------------------------------------------------------
Mawson Infrastructure Group Inc. filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q reporting a
net loss of $19.97 million on $18.77 million of total revenues for
the three months ended March 31, 2024, compared to a net loss of
$11.38 million on $7.67 million of total revenues for the three
months ended March 31, 2023.
As of March 31, 2024, the Company had $67.71 million in total
assets, $54.69 million in total liabilities, and $13.01 million in
total stockholders' equity.
The Company said, "We believe our near-term working capital
requirements will continue to be funded through a combination of
the cash we expect to generate from future operations, our existing
funds, external debt facilities that may be available to us,
further issuances of shares, and other potential sources of
capital, monetization, or funds. We believe a combination of these
opportunities are expected to be adequate to fund our longer-term
operations needed over the next twelve months. For our business
growth, it is expected we may continue investing in expanding our
infrastructure, expanding and/or upgrading our miners, and/or other
equipment and will require additional working capital in the
short-term and long-term. As of March 31, 2024, we had an
aggregate of $19.13 million of debt all of which is overdue for
repayment unless we refinance or renegotiate the terms. In
addition, the Celsius deposit of $15.33 million is the subject of
an ongoing legal dispute."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1218683/000121390024043743/ea0206030-10q_mawson.htm
About Mawson
Headquartered in Midland, Pennsylvania, Mawson Infrastructure Group
Inc. is a 'Digital Infrastructure' Company, which operates (through
its subsidiaries) data centers for the generation of Bitcoin
cryptocurrency in the United States. Because Mawson takes part in
Bitcoin mining, it is often referred to as a Bitcoin miner. The
Company has three primary businesses – digital currency or
Bitcoin self-mining, customer co-location and related services, and
energy markets.
Boston, Massachusetts-based Wolf & Company, P.C., the Company's
auditor since 2023, issued a "going concern" qualification in its
report dated March 29, 2024, citing that the Company has incurred
net losses since its inception, and had negative working capital
and will need additional funding to continue operations. This
raises substantial doubt about the Company's ability to continue as
a going concern.
MEDASSETS SOFTWARE: Invesco VVR Marks $774,000 Loan at 37% Off
--------------------------------------------------------------
Invesco Senior Income Trust ("VVR") has marked its $774,000 loan
extended to MedAssets Software Intermediate Holdings, Inc. (nThrive
TSG) to market at $484,323 or 63% of the outstanding amount, as of
February 29, 2024, according to a disclosure contained in VVR's
Form N-CSR for the fiscal year ended February 29, 2024, filed with
the U.S. Securities and Exchange Commission.
VVR is a participant in a Second Lien Term Loan to MedAssets
Software. The loan accrues interest at a rate of 12.19% (1 mo. USD
LIBOR + 8.00%) per annum. The loan matures on December 17, 2029.
VVR is a Delaware statutory trust registered under the Investment
Company Act of 1940, as amended, as a closed-end management
investment company. VVR may participate in direct lending
opportunities through its indirect investment in the Invesco Senior
Income Loan Origination LLC, a Delaware limited liability company.
VVR owns all beneficial and economic interests in the Invesco
Senior Income Loan Origination Trust, a Massachusetts Business
Trust, which in turn owns all beneficial and economic interests in
the LLC.VVR may participate in direct lending opportunities through
its indirect investment in the Invesco Senior Income Loan
Origination LLC, a Delaware limited liability company. VVR owns all
beneficial and economic interests in the Invesco Senior Income Loan
Origination Trust, a Massachusetts Business Trust, which in turn
owns all beneficial and economic interests in the LLC.
VVR is led by Glenn Brightman, Principal Executive Officer; and
Adrien Deberghes, Principal Financial Officer. The Trust can be
reached through:
Glenn Brightman
Invesco Senior Income Trust
1555 Peachtree Street, N.E., Suite 1800
Atlanta, GA 30309
Tel: (713) 626-1919
Headquartered in Alpharetta, Ga., MedAssets Software Intermediate
Holdings, Inc. (dba nThrive) provides healthcare revenue cycle
management software-as-a-service (SaaS) solutions, including
patient access, charge integrity, claims management, contract
management, analytics and education.
MEDPLUS URGENT: Robert Byrd Named Subchapter V Trustee
------------------------------------------------------
David Asbach, Acting U.S. Trustee for Region 5, appointed Robert
Byrd, Esq., at Byrd & Wiser, as Subchapter V trustee for MedPlus
Urgent Clinic, LLC.
Mr. Byrd will be paid an hourly fee of $275 for his services as
Subchapter V trustee and will be reimbursed for work-related
expenses incurred.
Mr. Byrd declared that he is a disinterested person according to
Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Robert A. Byrd, Esq.
Byrd & Wiser
P.O. Drawer 1939
Biloxi, MS 39533
Telephone: (228) 432-8123
Facsimile: (228) 432-7029
Email: rab@byrdwiser.com
About MedPlus Urgent Clinic
MedPlus Urgent offers urgent care and wellness services with the
convenience of walk-in hours until 7 pm, 7 days a week.
MedPlus Urgent Clinic, LLC filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. D. Miss. Case No.
24-11163) on April 23, 2024, listing $1 million to $10 million in
both assets and liabilities. The petition was signed by Samantha
Logan as managing member.
Craig M. Geno, Esq. at the Law Offices Of Craig M. Geno, PLLC
represents the Debtor as counsel.
MEXCALITO TACO-BAR: Wins Cash Collateral Access Thru June 6
-----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Massachusetts
authorized Mexcalito Taco-Bar, Inc. to use cash collateral, on an
interim basis, in accordance with the budget, through June 6,
2024.
As previously reported by the Troubled Company Reporter, the Debtor
proceeded with the Chapter 11 filing in order to invoke the
automatic stay and attempt to reorganize its debt and continue its
operations in light of (i) the decline and eventual closing of the
Debtor's Amherst, MA location; and (ii) certain short-term business
loans and Merchant Cash Advance agreements with daily and weekly
repayment terms that were overly burdensome to the Debtor (and
potentially in violation of Massachusetts usury laws).
The Debtor was impacted by COVID and rising costs, and the
profitability of the Amherst location decreased significantly in
2023 leading to reduced hours of operation. At the same time, the
Debtor opened its Northampton location in 2023, which was more
successful. However, both locations were part of the Debtor's
operations, and the Northampton location was forced to carry the
Amherst location financially. Much of the debt listed on the
Debtor's schedules was a result of the Amherst location trying to
stay financially afloat. At the end of 2023, the Amherst location
was closed.
Webbank/Toast Financial and Amsterdam Capital Group assert an
interest in the Debtor's cash collateral.
The Debtor estimates there is approximately $115,445 in other
unsecured debt outstanding as of the date of filing.
The Debtor estimates that, as of the Petition Date, the total value
of its primary assets (excluding goodwill or value as a going
concern), is approximately $73,075, which primarily includes: (i)
equipment and food inventory: (ii) cash on hand: (iii) accounts
receivable.
The Debtor's revenues at the Northampton location have remained
largely consistent throughout the past year, however the
difficulties of the Amherst location caused the Debtor to look at
alternative options for working capital. Starting in the summer of
2023, the Debtor entered into several Merchant Cash Advance
agreements, which are essentially short-term loans similar to
factoring contracts.
Furthermore, the Debtor had entered into several loan agreements
with Webbank Toast Capital that were tied to the Debtor's
point-of-sale systems and paid out of the Debtor's credit card
sales. The effective interest rates of these loans appear to be
usurious under Massachusetts law.
As adequate protection, the secured creditors of the Debtor will be
granted continuing liens in the Debtor's assets and properties to
the extent such liens are valid and proper and existed
pre-petition. Said replacement liens and security interests will
secure an amount of secured creditors' claim equal to the aggregate
diminution, if any, subsequent to the Petition Date, in the value
of secured creditor's collateral, whether resulting from the use of
cash collateral, the imposition of the automatic stay, or
otherwise.
A further hearing on the matter is set for June 6 at 10:30 a.m.
A copy of the order is available at https://urlcurt.com/u?l=PdxtlF
from PacerMonitor.com.
About Mexcalito Taco-Bar, Inc.
Mexcalito Taco-Bar, Inc. operates a Mexican restaurant located at
271 Main Street, Northampton, MA known as Mexcalito Taco Bar, which
is open for lunch and dinner.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Mass. Case No. 24-30170) on April 16,
2024. In the petition signed by Antonio Marquez Diaz, president,
the Debtor disclosed up to $100,000 in assets and $500,000 in
liabilities.
Judge Elizabeth D. Katz oversees the case.
Robert E. Girvan III, Esq., at Weiner Law Firm, P.C., represents
the Debtor as legal counsel.
MICROVISION INC: Incurs $26.3 Million Net Loss in First Quarter
---------------------------------------------------------------
MicroVision, Inc., filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $26.31 million on $956,000 of revenue for the three months ended
March 31, 2024, compared to a net loss of $19.03 million on
$782,000 of revenue for the three months ended March 31, 2023.
As of March 31, 2024, the Company had $124.18 million in total
assets, $30.38 million in total liabilities, and $93.80 million in
total shareholders' equity.
The Company has incurred significant losses since inception. The
Company has funded operations to date primarily through the sale of
common stock, convertible preferred stock, warrants, the issuance
of convertible debt and, to a lesser extent, from development
contract revenues, product sales, and licensing activities. At
March 31, 2024, the Company had $44.3 million in cash and cash
equivalents and $28.8 million in short-term investment securities.
The Company also has approximately $128.2 million availability left
on its existing $150.0 million ATM facility that was put in place
in the first quarter of 2024. Based on the Company's current
operating plan, the Company anticipates that it has sufficient cash
and cash equivalents to fund its operations for at least the next
12 months.
Management Comments
"Energized by global OEM feedback that MicroVision offers the best
technical and commercial solutions, we remain confident in our
engagement with automotive OEMs and our prospects in high-volume,
top-tier, passenger-vehicle RFQs," said Sumit Sharma, MicroVision's
chief executive officer. "As we navigate current headwinds in the
automotive industry and lidar sector with a healthy balance of
optimism and realism, we are aggressively pursuing near-term
revenue opportunities in industrial markets and with partnership
opportunities, as well as continuing our ethos of fiscal
discipline."
"I remain committed to steering MicroVision and firmly establishing
it as a leading automotive OEM supplier of lidar hardware and
software solutions," continued Sharma.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/65770/000149315224018637/form10-q.htm
About Microvision
Microvision, Inc. -- @ www.microvision.com -- is a global developer
and supplier of lidar hardware and software solutions focused
primarily on automotive lidar and advanced driver-assistance
systems (ADAS) markets where it can deliver safe mobility at the
speed of life. The Company offers a suite of light detection and
ranging, or lidar, sensors and perception and validation software
to automotive OEMs, for ADAS and autonomous vehicle (AV)
applications, as well as to complementary markets for
non-automotive applications including industrial, robotics and
smart infrastructure.
MicroVision reported a net loss of $82.84 in 2023, a net loss of
$53.09 in 2022, a net loss of $43.20 million in 2021, a net loss of
$13.63 million in 2020, a net loss of $26.48 million in 2019, and a
net loss of $27.25 million in 2018.
MJW MARKETING: Court OKs Interim Cash Collateral Access
-------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Washington
authorized MJW Marketing, Inc. to use cash collateral, on an
interim basis, in accordance with the budget, with a 15% variance.
The Debtor requires the use of cash collateral to pay post-petition
operating expenses including post-petition payroll and related
taxes that come due prior to the final hearing on cash collateral.
Specifically, the Debtor is permitted to use cash collateral for
the purposes of satisfying prepetition payroll obligations and
associated payroll taxes and insurance for the Debtor's employee on
May 17, 2024 which includes payment for the pre-petition period of
April 28, 2024 through May 3, 2024.
As adequate protection for the Debtor's use of the cash collateral
on an interim basis, the Court grants Columbia Bank replacement
liens in the Debtor's post-petition cash, accounts receivable and
inventory, and the proceeds of each of the foregoing, to the same
extent and priority as any duly perfected and unavoidable liens in
cash collateral held secured creditors as of the petition date, to
the extent that any cash collateral of Secured Creditors are
actually used by the Debtor.
In accordance with the approved Budget, the Debtor is authorized to
remit to the Sub Chapter V Trustee, Michael DeLeo the sum of $250
per week beginning June 1, 2024 and continuing weekly thereafter to
be held for payment of Trustee fees pending further order of the
Court.
A final hearing on the matter is set for May 31, 2024 at 9:30 a.m.
A copy of the order is available at https://urlcurt.com/u?l=WgCEfm
from PacerMonitor.com.
About MJW Marketing, Inc.
MJW Marketing, Inc. is a liquidation store offering tech products,
fashion, outdoor gear, hardware, kitchenware, furniture--even
groceries.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. W.D. Wash. Case No. 24-11118) on May 3,
2024. In the petition signed by Michael (Mick) Weed, the Debtor
disclosed $672,401 in assets and $3,118,730 in liabilities.
Judge Timothy W. Dore oversees the case.
Thomas D. Neeleman, Esq., at NEELAMAN LAW GROUP, P.C., represents
the Debtor as legal counsel.
MOLD-RITE PLASTIC: Invesco VVR Marks $3.2MM Loan at 18% Off
-----------------------------------------------------------
Invesco Senior Income Trust ("VVR") has marked its $2,216,000 loan
extended to Mold-Rite Plastics LLC (Valcour Packaging LLC) to
market at $1,822,260 or 82% of the outstanding amount, as of
February 29, 2024, according to a disclosure contained in VVR's
Form N-CSR for the fiscal year ended February 29, 2024, filed with
the U.S. Securities and Exchange Commission.
VVR is a participant in First Lien Term Loan to Mold-Rite Plastics.
The loan accrues interest at a rate of 9.19% (1 mo. USD LIBOR +
3.75%) per annum. The loan matures on October 4, 2028.
VVR is a Delaware statutory trust registered under the Investment
Company Act of 1940, as amended, as a closed-end management
investment company. VVR may participate in direct lending
opportunities through its indirect investment in the Invesco Senior
Income Loan Origination LLC, a Delaware limited liability company.
VVR owns all beneficial and economic interests in the Invesco
Senior Income Loan Origination Trust, a Massachusetts Business
Trust, which in turn owns all beneficial and economic interests in
the LLC.VVR may participate in direct lending opportunities through
its indirect investment in the Invesco Senior Income Loan
Origination LLC, a Delaware limited liability company. VVR owns all
beneficial and economic interests in the Invesco Senior Income Loan
Origination Trust, a Massachusetts Business Trust, which in turn
owns all beneficial and economic interests in the LLC.
VVR is led by Glenn Brightman, Principal Executive Officer; and
Adrien Deberghes, Principal Financial Officer. The Trust can be
reached through:
Glenn Brightman
Invesco Senior Income Trust
1555 Peachtree Street, N.E., Suite 1800
Atlanta, GA 30309
Tel: (713) 626-1919
Mold-Rite Plastics, LLC produces and distributes plastic products.
The Company offers hinged single flap dispensing, strap caps,
plugs, disc tops, open spouts, cover caps, and jars. Mold-Rite
Plastics markets its products to pharmaceutical, food, chemical,
personal care, and automotive sectors.
NASHVILLE SENIOR: PCO Report Raises Concern Over Workforce Issues
-----------------------------------------------------------------
Teresa Teeple, the patient care ombudsman, filed a report regarding
the quality of patient care provided at the nursing home operated
by Nashville Senior Care, LLC and its affiliates.
The PCO directed a representative, District Ombudsman Melinda
Lunday, to make frequent visits to McKendree Village. Ms. Lunday
has visited McKendree Village three times from February 23 to April
5. Terri Pickford, District Ombudsman, made a visit to Waynesboro
Health and Rehabilitation on March 26.
During most visits of Ms. Lunday to the nursing home section of the
facility, residents and/or staff reported that staffing was not
sufficient to meet resident needs, especially during nights and
weekends. When talking with staff during one visit, they reported
that there were not enough staff to bathe and pass out food trays
to residents timely and that the residents would have to shower
during night shift or wait until trays are passed to do so.
On another visit, staff reported to Ms. Lunday that, at times, with
low staffing numbers, they had to choose between distributing
medications timely and helping residents with their care needs.
During several visits, Ms. Lunday also witnessed nursing home
residents being awoken for meals; meal trays were left next to
sleeping residents, allowing the meals to get cold.
Ms. Lunday responded to a complaint that a resident with diabetes
was sent to a dialysis appointment without first being provided
necessary medication by nursing staff. This resulted in a drop in
blood pressure during her dialysis appointment. Thankfully, the
dialysis center was able to administer the medication to stabilize
her.
Throughout the visits of Ms. Lunday, there have continued to be
issues with food trays being left around and not removed after
mealtimes, as well as bagged garbage sitting in hallways at times,
which poses potential safety and infection control issues. These
issues have been brought to the attention of facility
administration for resolution.
A copy of the ombudsman report is available for free at
https://urlcurt.com/u?l=5X1PxR from Stretto, Inc., claims agent.
About Nashville Senior Care
Nashville Senior Care, LLC and affiliates are comprised of five
senior living communities and one Medicare-certified home health
agency affiliated with the Trousdale Foundation. All of the real
estate associated with the senior living communities is owned by
the Debtors.
The Debtors sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Tenn. Lead Case No. 23-02924) on Aug.
14, 2023. In the petitions signed by Thomas Johnson, executive
director, Nashville Senior Care disclosed $50 million to $100
million in assets and $100 million to $500 million in liabilities.
Judge Marian F. Harrison oversees the cases.
The Debtors tapped McDonald Hopkins LLC as general bankruptcy
counsel; EmergeLaw, PLC as co-counsel; and Houlihan Lokey Capital,
Inc. as investment banker. Stretto, Inc. is the notice, claims and
balloting agent.
On Aug. 31, 2023, the U.S. Trustee for Region 8 appointed an
official committee of unsecured creditors in these Chapter 11
cases. The committee tapped Womble Bond Dickinson (US), LLP and
Dunham Hildebrand, PLLC as legal counsel, and Rock Creek Advisors,
LLC as financial advisor.
Teresa Teeple is the patient care ombudsman appointed in the
Debtors' Chapter 11 cases.
NEP GROUP: Fitch Affirms 'B-' LongTerm IDR, Outlook Stable
----------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Rating
(IDR) for NEP Group Holdings, Inc and related entities at 'B-'.
Fitch has also affirmed the first lien issue ratings at 'B+'/'RR2'
and the second lien issue ratings at 'CCC'/'RR6'. The Rating
Outlook is Stable.
The 'B-' IDR reflects NEP's significant scale and a high proportion
of contracted revenue, alongside anticipated improvement in FCF
generation. Fitch projects NEP's FCF to increase by approximately
$140 million in FY24, leading to breakeven margins for the year and
consistently positive FCF throughout the rating horizon. Despite
this, Fitch notes that NEP's capital intensive business model and
leverage profile could impact its ability to refinance upcoming
maturities in FY26.
The Stable Outlook is based on its assumption of strong organic
revenue growth in FY24 driven by major events such as the Paris
Olympics, the U.S. Elections and the UEFA European Championship.
Fitch anticipates a more stable market for the Live Events segment
after the resolution of the Writers Guild of America and the Screen
Actors Guild strikes in 2023.
KEY RATING DRIVERS
Improved Liquidity: Fitch expects NEP to generate breakeven FCF in
FY24 and positive FCF over the rest of the rating horizon. Although
NEP's FCF was negative for the past three years due to elevated
capex needs for new secured long-term production contracts, it
improved by approximately 200bps in FY23. The company has guided to
lower capex intensity in the near to medium term which should
result in increasingly positive FCF over the rating horizon. Fitch
expects capex for FY24 to be $90 million lower than FY23 and
maintained at comparable levels for FY25 onwards.
As of Dec. 31, 2023, NEP's liquidity comprised $49 million in cash
and $54 million (net of outstanding letters of credit) available
under its $245 million revolver. Additional sources of liquidity
include proceeds from the disposal of non-core assets in 1Q24,
capacity under a secured capital lease financing facility and
committed equity investment. The company has not publicly disclosed
the quantum of these additional sources of liquidity but Fitch
believes they are sufficient to cover additional strategic growth
initiatives the company may pursue.
Operating Profile Improvements: Fitch believes NEP is well
positioned for growth in FY24 due to revenue from major events such
as the Paris Olympics, the U.S. Elections and the UEFA European
Championship and key contracts like the USCP NASCAR facility coming
online in the year. The Live Events/Virtual studio segment will
also benefit from steadier market conditions following the
resolution of the industry strikes in 2023. Fitch has forecasted
revenue and adjusted-EBITDA growth of 11% and 25% respectively for
FY24 with EBITDA margins in the low 20s reflecting savings from the
company's cost efficiency program.
The company has stated a commitment to cash flow management
including a focus on working capital efficiencies and procurement
savings opportunities.
Declining EBITDA Leverage: EBITDA leverage declined to 7x in
December 2023 in line with Fitch's expectations. The decline was
driven by improved profitability in FY23 from new business wins and
execution of the company's cost improvement initiatives which was
marginally offset by headwinds from the industry strikes. Leverage
could trend below 5.5x by FY25 via meaningful revenue and EBITDA
growth. The company has refined its go-to-market strategy and is
focused on contracts with higher hurdle rates that translate to
quality EBITDA margin growth.
Refinancing Risks: NEP amended its first lien credit agreement on
Dec. 14, 2023 which extended the maturity of its first lien term
loans and revolving facility by one year to 2026. As a result of
the extension, approximately 100% of the outstanding debt stack of
$2.4 billion (including second lien debt) will come due between May
and October 2026. The amendment introduced additional PIK interest
of 1.5% on the term loans and a 2% exit fee upon repayment. Fitch
views the amendment as neutral for the company's 'B-' IDR as it
pushes a large maturity wall and refinancing risks to FY26 and
increases the company's interest burden via incremental PIK.
Strong Revenue and Cash Flow Visibility: A significant portion of
NEP's revenues are derived from contracts generally ranging from
three to 10 years with price escalators and "take or pay"
arrangements. The contracts are all event-based and cover recurring
specific events. Longer-term sports contracts tend to be
co-terminus with a network's sport broadcast rights, while live
events are shorter term. The contractual nature of revenues
provides strong visibility and stability of future cash flows.
Management stated that approximately 85% of the broadcast services
and 60% of the live events segments' revenues for FY24 are
contracted and recurring.
Large and Growing End Markets: NEP focuses on the sports and
entertainment markets, both of which have demonstrated consistent
growth, excluding exogenous shocks. Live sports programming remains
one of the few opportunities generating large "appointment" viewing
audiences in an increasingly fragmented media landscape. The
company has executed on key contracts with Apple (MLS), the PGA,
NASCAR and a five year deal with the National Women's Soccer
League. The company has also made strategic lighting investments in
the U.S. and Middle East markets to support strong growth from
concert/touring volumes and recovery of corporate live events.
Significant Leading Market Position: Fitch's ratings incorporate
NEP's position as the largest global outsourced provider of
production solutions for broadcasts and live events. NEP provides
the broadcast equipment, post production, video display and
software-based creative technology to the largest live sports and
entertainment events including the NFL, ESPN, Super Bowl,
Wimbledon, The Grammys and the Oscars.
The company's broadcast division reported key wins with MLS, Apple,
PGA, LIV Golf and NASCAR. NEP's asset and global client base drives
their competitive advantage. The company estimates its broadcast
services segment is significantly larger than the next largest
competitor, however, is of similar size to peers operating in the
live events space.
Capital Intensive Nature: NEP has historically operated at a
capital intensity level of 15%-20% which is expected to step down
to 10% over the near to medium term as the company seeks to improve
FCF. Most capex is success-based and is tied to revenue and cash
flow growth. Contract renewals for Broadcast services are typically
for three years to eight years with majority of system upgrades
occurring after four years to six years of a longer-term contract.
Parent-Subsidiary Linkage: Fitch links the IDRs of NEP Group
Holdings, Inc., NEP Group, Inc., NEP/NCP Holdco, Inc., NEP II, Inc.
and NEP Europe Finco B.V. in accordance with Fitch's criteria.
Strong legal, strategic and operational incentives equalize the
IDRs. NEP Group Holdings, Inc., is the filer of the group's
financial statements.
DERIVATION SUMMARY
NEP's 'B-' IDR is supported by the company's significant scale,
high proportion of contracted revenue, improved FCF generation and
leverage profile.
KEY ASSUMPTIONS
- Fitch expects low-teens growth in FY24 driven primarily by new
contract wins, growth in existing key contracts and major events
including the Olympics, Euro Championship and the U.S. Elections.
FY24 will also benefit from a steadier market following the
resolution of the industry strikes in 2023. Thereafter, Fitch
expects consolidated single digit revenue growth, driven by growth
in demand for live events;
- Fitch expects EBITDA margins in the low 20% range reflecting
savings from cost management initiatives;
- Fitch expects capex to decline by ~$90 million in FY24, in line
with management's forecast; thereafter, capex intensity should
normalize to ~10% over the rating horizon;
- Fitch expects significant improvements in FCF in line with
management's guidance. FCF growth will be driven primarily by (i)
EBITDA growth, (ii) capex moderation following years of significant
investments (iii) working capital efficiencies and (iv) procurement
savings opportunities;
- Fitch expects NEP to frequently borrow and repay borrowing on the
revolving facility due to the timing of cash outflows and inflows
inherent in the business model. Fitch also expects the revolver and
term loans to be further extended or refinanced before their
respective maturities in 2026;
- Interest rate assumptions: three-month term SOFR with ARRC spread
adjustments.
RECOVERY ANALYSIS
The recovery analysis assumes that NEP would be reorganized as a
going-concern (GC) in bankruptcy rather than liquidated. Fitch has
assumed a 10% administrative claim.
Going-Concern Approach
The GC LTM EBITDA of $295 million contemplates insolvency resulting
from inadequate liquidity amid recessionary stress. In this
scenario, Fitch assumed that the company is unable to renew its
large contracts, ceding share to competitors in the space, leading
to depressed EBITDA and an unsustainable capital structure. It also
reflects Fitch's view of a sustainable, post-reorganization EBITDA
level upon which Fitch bases the enterprise valuation.
An enterprise valuation multiple of 6.0x EBITDA is applied to the
GC EBITDA to calculate a post-reorganization enterprise value. The
company's platform acquisitions are transacted on average between
4.8x-6.0x, while its smaller bolt-on acquisitions close in the
range of 3.5x-4.5x. While the above transaction multiples are lower
than the 6.0x used for NEP, these targets operated on a smaller
scale with a less-developed footprint than NEP.
The recovery analysis assumes that the full $245 million is drawn
on the first lien revolver. The recovery analysis implies a
'B+'/'RR2' rating with 71% recovery on the first lien senior
secured debt and a 'CCC'/'RR6' with no recovery on the senior
second lien secured debt.
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- EBITDA leverage sustained below 6.5x;
- Sustained positive FCF generation;
- CFO-Capex/total debt sustained near 2.5%.
Factors That Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- EBITDA Interest coverage sustained below 1.0x;
- Increasingly negative FCF;
- Fitch's view of heightened refinancing risk.
LIQUIDITY AND DEBT STRUCTURE
Liquidity: Fitch is forecasting neutral/breakeven FCF for NEP in
FY24 and positive FCF over the rest of the rating horizon. FCF
improvement will stem from significantly lower capex intensity per
management's guidance. Fitch projects capex for FY24 to be $90
million lower than FY23 and maintained at comparable levels for
FY25 onwards. The lower capex, coupled with EBITDA growth should
improve FCF for FY24 by approximately $140 million.
NEP has numerous sources for liquidity including: (i) $49 million
in cash and equivalents as of December 2023; (ii) approximately $54
million (net of outstanding letters of credit) available under its
$245 million revolver, (iii) proceeds from the disposal of non-core
assets in 1Q24 and (iv) additional capacity under a secured capital
lease financing facility and committed equity investment. The
company has not publicly disclosed the quantum of these additional
sources of liquidity.
Per the credit agreement, the revolver size reduced to $245 million
from $250 million until maturity in May 2026.
Debt: As of Dec. 31, 2023, NEP had $2.4 billion in debt
outstanding; approximately 100% of NEP's outstanding debt mature in
2026 following an extension of the maturity date for the company's
first lien facilities. Fitch believes refinancing risk to be
significant but relatively manageable due to the stability of the
business model in typical economic cycles.
NEP Group, Inc., NEP/NCP Holdco, Inc., NEP's main operating
subsidiary, and NEP II, created to facilitate revolver borrowings
to NEP Europe Finco B.V. (NEP Europe), are co-borrowers of the
first lien and second lien U.S. secured credit facilities. NEP
Europe is the borrower of the first lien secured Euro term loan.
Both the U.S. and Euro loans are guaranteed by NEP's domestic
subsidiaries while the Euro term loan is also guaranteed by NEP
Europe's subsidiaries organized in the U.K., Netherlands, Sweden
and Luxembourg. In addition, the Euro loans benefit from additional
collateral not available to the U.S. loans. However, the credit
agreement contains a collateral allocation mechanism that equalizes
both first lien lender groups' aggregate credit risk and recovery
in the event of a default. As such, the issue ratings are
equalized.
ISSUER PROFILE
NEP is the largest global outsourced provider of customized
broadcast solutions to live sports, entertainment and corporate
events and virtual production capabilities. NEP has been expanding
globally and has leading market positions in the U.S., U.K.,
Europe, Asia and Australia.
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
----------- ------ -------- -----
NEP Group Holdings,
Inc. LT IDR B- Affirmed B-
NEP/NCP Holdco,
Inc. LT IDR B- Affirmed B-
Senior Secured
2nd Lien LT CCC Affirmed RR6 CCC
senior secured LT B+ Affirmed RR2 B+
NEP II Inc LT IDR B- Affirmed B-
Senior Secured
2nd Lien LT CCC Affirmed RR6 CCC
senior secured LT B+ Affirmed RR2 B+
NEP Group, Inc. LT IDR B- Affirmed B-
Senior Secured
2nd Lien LT CCC Affirmed RR6 CCC
senior secured LT B+ Affirmed RR2 B+
NEP Europe Finco
B.V. LT IDR B- Affirmed B-
senior secured LT B+ Affirmed RR2 B+
NEUEHEALTH INC: Incurs $4.18 Million Net Loss in First Quarter
--------------------------------------------------------------
Neuehealth, Inc., filed with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q reporting a net loss of $4.18
million on $245.10 million of total revenue for the three months
ended March 31, 2024, compared to a net loss of $169.46 million on
$300.55 million of total revenue for the three months ended March
31, 2023.
As of March 31, 2024, the Company had $1.11 billion in total
assets, $1.35 billion in total liabilities, $98.76 million in
redeemable noncontrolling interests, $747.48 million in redeemable
series A preferred stock, $172.94 million in redeemable series B
preferred stock, and a total stockholders' deficit of $1.26
billion.
Neuehealth said, "We believe that the existing cash, investments,
and available liquidity will not be sufficient to satisfy our
anticipated cash requirements for the next twelve months following
the date the condensed consolidated financial statements contained
in this Form 10-Q are issued, for items such as IFP risk adjustment
payables, medical cost payables, any remaining obligation to the
deconsolidated entity, and other liabilities. These conditions
raise substantial doubt about the Company's ability to continue as
a going concern. In response to these conditions, management
continues to implement a restructuring plan to reduce capital needs
and our operating expenses in the future to drive positive
operating cash flow and increase liquidity. Additionally, the
Company is actively engaged with the Board of Directors and outside
advisors to evaluate additional financing. In addition, the
Company may not fully collect the contingent consideration
associated with the sale of the California Medicare Advantage
business or be able to obtain additional liquidity on acceptable
terms, as both of these matters will be subject to market
conditions that are not fully within the Company's control. The
Company will be unable to satisfy its obligations unless it obtains
additional liquidity or takes other management actions. As a
result, the Company has concluded that management's plans do not
alleviate substantial doubt about the Company's ability to continue
as a going concern."
Management Comments
"We had a strong start to the year, continuing to advance our
value-driven, consumer-centric care model as we build on our strong
relationships with providers and payors to make high-quality
healthcare more accessible and affordable for all populations
across the ACA Marketplace, Medicare, and Medicaid," said Mike
Mikan, president and CEO of NeueHealth. "We expanded our
operations in Central Florida and continue to focus on proactive
consumer engagement as we deliver a more coordinated, personalized
care experience. We believe we are well-positioned to build on our
First Quarter results and expect to continue to drive long-term,
sustainable growth in both our NeueCare and NeueSolutions segments
this year."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1671284/000167128424000037/bhg-20240331.htm
About NeueHealth
NeueHealth Inc. -- www.neuehealth.com -- is a value-driven
healthcare company which aims to make healthcare accessible and
affordable to all populations across the ACA Marketplace, Medicare,
and Medicaid. NeueHealth delivers clinical care to over 460,000
health consumers through owned clinics and unique partnerships with
over 3,000 affiliated providers. The Company also enables
independent providers and medical groups to thrive in
performance-based arrangements through a suite of technology and
services scaled centrally and deployed locally.
Minneapolis, Minnesota-based Deloitte & Touche LLP, the Company's
auditor since 2020, issued a "going concern" qualification in its
report dated March 28, 2024, citing that the Company has a history
of operating losses, negative cash flows from operations and does
not have sufficient cash on hand or available liquidity to meet its
obligations, that raise substantial doubt about its ability to
continue as a going concern.
NEVER SLIP: $30MM DIP Loan from Antares Has Final OK
----------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware authorized
Never Slip Holdings, Inc. and affiliates to use cash collateral and
obtain postpetition financing, on a final basis.
The Debtor is permitted to obtain senior secured priming and
superpriority postpetition financing, which if approved on a final
basis would consist of (x) a letter of credit facility for up to
$800,000, and (y) a term loan facility for up to $30 million, of
which an initial amount of $20 million will be made available upon
entry of the Interim Order.
Antares Capital LP, serves as administrative agent and collateral
agent, under the DIP facility.
The DIP facility will be used to: (A) fund, among other things,
ongoing working capital, general corporate expenditures and other
financing needs of the Debtors, (B) convert on a cashless basis up
to $83.9 million of the outstanding principal amount of the Loans
under the Prepetition First Lien Credit Agreement and up to $6.168
million of the outstanding principal amount of the Loans under the
Prepetition Sidecar Credit Agreement in connection with the DIP
Term Loans to DIP Obligations under the DIP Loan Documents, as
provided in the Final Order, (C) pay adequate protection amounts to
the Prepetition First Lien Secured Parties, (D) pay transaction
fees and other costs and expenses of administration of the Cases,
and (E) pay fees and expenses (including accrued and unpaid
reasonable and documented attorneys' fees and expenses) and
interest owed to the DIP Secured Parties under the DIP Loan
Documents and the Final Order.
The Debtors are required to comply with these milestones:
(a) Immediately following the Petition Date, the marketing
process related to the Debtors' Sale must be initiated.
(b) No later than five calendar days after the Petition Date,
the Bankruptcy Court must have entered the Interim DIP Order
authorizing and approving, on an interim basis, the DIP Facility
(including the Commitments, all documents and lender fees related
thereto, and the payment of the fees and expenses of the
Administrative Agent's and Prepetition First Lien Agents'
advisors.
(c) No later than five calendar days after the Petition Date,
the Debtors must file a motion, in form and substance acceptable to
the Administrative Agent and the Required Lenders, requesting (x)
an order from the Bankruptcy Court (i) approving the proposed bid
procedures attached to the Sale Motion related to the sale of
substantially all of the assets of the Debtors, and (y) an order
from the Bankruptcy Court approving the sale of the Debtors' assets
to the highest and best bidder for such assets pursuant to Section
363 of the Bankruptcy Code determined in accordance with the Bid
Procedures.
(d) No later than 35 calendar days after the Petition Date,
the Bankruptcy Court must have entered the Final DIP Order
authorizing and approving, on a final basis, the DIP Facility
(including the Commitments, all documents and lender fees related
thereto, and the payment of the fees and expenses of the
Administrative Agent's and Prepetition First Lien Agents'
advisors.
(e) No later than 35 calendar days after the Petition Date,
the Debtors must have obtained the Bid Procedures Order, in form
and substance reasonably satisfactory to the Administrative Agent
and the Required Lenders.
(f) No later than 45 days after the Petition Date, the Debtors
must have completed an auction, as necessary, in connection with
the Sale in accordance with the Bid Procedures Order.
(g) No later than 50 days after the Petition Date, in the
discretion of the Administrative Agent at the direction of the
Required Lenders, the Bankruptcy Court must have entered a final
order approving a Sale.
The Debtors have an immediate need to obtain the DIP Facility and
use cash collateral to, among other things, permit the orderly
continuation of the operation of their businesses, to maintain
business relationships with vendors, suppliers, and customers, to
make payroll, to make capital expenditures, to satisfy other
working capital and operational needs, to complete the Debtors'
marketing and sale process, and to otherwise preserve the value of
the Debtors' estates.
Pursuant to the First Lien Credit Agreement, dated October 27,
2015, among (i) SHO Holding I Corporation, as borrower, (ii) the
guarantors party thereto, (iii) the other financial institutions
party thereto, and (iv) Antares Capital LP, as administrative agent
and collateral agent, the Prepetition Initial First Lien Lenders
agreed to extend loans and other financial accommodations to the
Borrower.
As of the Petition Date, the applicable Debtors owed the
Prepetition First Lien Secured Parties, an aggregate principal
amount of not less than $257.107 million with respect to the Term
Loans, not less than $25.125 million with respect to the Revolving
Loans, and not less than $800,000 with respect to the LC
Obligations.
Pursuant to the Second Lien Credit Agreement, dated as of October
27, 2015, among (a) SHO Holding I Corporation, as borrower, (b) the
guarantors party thereto, (c) the other financial institutions
party thereto, and (d) Ares Capital Corporation, as administrative
agent and collateral agent, the Prepetition Second Lien Lenders
agreed to extend loans and other financial accommodations to the
Borrower pursuant to the Prepetition Second Lien Loan Documents.
As of the Petition Date, the applicable Debtors owed the
Prepetition Second Lien Secured Parties an aggregate principal
amount of not less than $147.292 million with respect to the
Loans.
As adequate protection, the Prepetition First Lien Agents and
Prepetition Second Lien Agent, will receive, adequate protection
liens and allowed superpriority administrative claims.
A copy of the order is available at https://urlcurt.com/u?l=m4a1k1
from PacerMonitor.com.
About Never Slip Holdings, Inc.
Never Slip Holdings, Inc. and affiliates, including affiliates
Shoes for Crews, Inc., SHO Holding I Corporation, SHO Holding II
Corporation, SFC Canada, Inc., and Sunrise Enterprises, LLC, are
the category creator of slip resistant footwear and other safety
products for employers, employees, and individual consumers. The
Debtors sought protection under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. D. Del. Lead Case No. 24-10663) on April 1, 2024. In
the petition signed by Christopher Simm, chief financial officer,
Never Slip Holdings disclosed up to $500 million in assets and up
to $1 billion in liabilities.
Judge Laurie Selber Silverstein oversees the case.
The Debtors tapped ROPES & GRAY LLP as general bankruptcy counsel,
CHIPMAN BROWN CICERO & COLE, LLP as co-bankruptcy counsel, SOLOMON
PARTNERS SECURITIES, LLC as investment banker, BERKELEY RESEARCH
GROUP, LLC as financial advisor, OMNI AGENT SOLUTIONS, INC. as
claims agent, and C STREET ADVISORY GROUP, LLC as strategic
communications advisor.
NFH LEASING: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: NFH Leasing, LLC
117 Broadway
Nordheim, TX 78141
Chapter 11 Petition Date: May 15, 2024
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 24-60019
Judge: Hon. Christopher M. Lopez
Debtor's Counsel: Joshua N. Eppich, Esq.
BONDS ELLIS EPPICH SCHAFER JONES LLP
420 Throckmorton Street, Suite 1000
Fort Worth, TX 76102
Tel: 817-405-6900
Email: Joshua@bondsellis.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $0 to $50,000
The petition was signed by Brad Walker as chief restructuring
officer.
A copy of the Debtor's list of 20 largest unsecured creditors is
now available for download. Follow this link to get a copy today
https://www.pacermonitor.com.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/FNNMV6A/NFH_Leasing_LLC__txsbke-24-60019__0001.0.pdf?mcid=tGE4TAMA
NISOURCE INC: Fitch Assigns 'BB+' Rating on Jr. Subordinated Notes
------------------------------------------------------------------
Fitch Ratings has assigned a first-time 'BB+' rating to NiSource
Inc's (NI; BBB/Stable) planned fixed-to-fixed rate reset junior
subordinated notes. Proceeds from the offering will be used for
general corporate purposes. The securities are eligible for 50%
equity credit based on Fitch's hybrid methodology. Features
supporting the equity categorization of these debentures include
their junior subordinate priority, the option to defer interest
payments on a cumulative basis for up to 10 years on each occasion
and no step-up.
NI's credit profile is supported by its 100% regulated gas and
electric utility operations in six states. Furthermore, the recent
closing of the partial sale of 19.9% of Northern Indiana Public
Service Company (NIPSCO; BBB/Stable) will provide additional
funding for NI's aggressive growth capex program while improving
its financial flexibility.
KEY RATING DRIVERS
NIPSCO Sale Completed: On Dec. 31, 2023, NI completed the sale of a
19.9% non-controlling equity interest in NIPSCO for $2.16 billion.
NI used the proceeds to pay down debt and reduce FFO leverage to
levels consistent with its 'BBB' IDR.
Low Business Risk: NI's ratings and Rating Outlook are supported by
stable cash flows and earnings from 100% regulated gas and electric
utilities in six states. Pro forma for the NIPSCO transaction, the
gas rate base is 69% the total rate base. Gas distribution
utilities benefit from supportive recovery mechanisms and less
exposure to environmental mandates. Four states have legislations
that prohibit municipalities from banning natural gas use. While
Maryland, at a county level, is the only state within NI's service
territory that restricts the use of fossil fuel, including natural
gas, in buildings, however, Maryland makes up a very small portion
of NI's customers and cash flow. Fitch considers Ohio, Pennsylvania
and Indiana -- NI's top three service territories -- to be among
the most supportive jurisdictions in the U.S.
Supportive Regulation: Gas utilities have revenue decoupling in
Ohio, Maryland and Virginia; weather normalization in Pennsylvania,
Maryland, Virginia and Kentucky; and straight fixed variable rates
in Ohio. All of NI's gas utilities use infrastructure trackers
except in Pennsylvania. Gas rates in Indiana are nearly 50% fixed
for residential and commercial customers. Approximately 50% of the
total revenue is non-volumetric.
Gas utilities in Indiana, Kentucky and Ohio have authorized ROEs of
9.85%, 9.35% and 9.60% respectively. Other gas utilities have ROEs
for infrastructure programs ranging from 9.275% to 9.700%. Maryland
did not have a specified ROE in its latest 2023 rate case.
NIPSCO electric's authorized ROE is 9.80%, compared with the
industry average of mid-9%. In Indiana, the Transmission,
Distribution and Storage System Improvement Charge statute provides
for cost recovery between rate cases for safety, reliability and
modernization, and allows for pre-approval of a seven-year plan of
eligible investments. Up to 80% of eligible costs can be recovered
using semi-annual trackers. Transmission projects are regulated by
the Federal Energy Regulatory Commission (FERC), which enjoy
forward-looking rates and construction work in progress recovery
with over 10% ROE.
NIPSCO Last Rate Case Constructive: Fitch views NIPSCO's last
electric rate case settlement approval favorably. On March 10,
2023, NIPSCO filed a settlement which allows for a $262 million
base rate increase based on a 9.8% ROE and 51.63% equity layer. The
ROE was higher than the industry average of mid-9%. Under the
settlement, NIPSCO agreed to withdraw a variable cost tracker (VCT)
for its coal-fired generation plants and replace it with a new
environmental cost tracker (ECT). The ECT allows a few categories
of costs than the VCT and totals about $29.9 million annually. The
commission fully adopted and approved the settlement in August
2023.
Elevated Capex: Capex continues to rise. Over the 2024-2028 period,
Fitch expects NI's base capex plan of about $16.4 billion
supporting annual rate base growth of about 8%-10%. The capex was
increased by $400 million reflecting additional renewable solar
investments from $16 billion at 1Q2024 earnings call. Most projects
are small, providing flexibility in execution. NI's robust capex
program is mainly supported by infrastructure modernization
legislations and riders in all its service territories. Renewable
projects are pre-approved, reducing regulatory uncertainties.
Cleaner Generation: NI plans to retire all coal generation by 2028.
As of Dec. 31, 2023, 42% (1,177MW) of NIPSCO's nameplate generation
capacity is from coal generation. It remains on track to retire R.M
Schahfer's remaining two coal units by the end of 2025. Michigan
City will retire by 2028 subject to approval by MISO. NI proposed
that the retiring units be replaced by demand side management
resources, solar, energy storage and upgrades to the Sugar Creek
Generating Station. Two vintage gas peaking units at the R.M.
Schahfer Generating Station are expected to retire by 2028. NISPCO
proposed a natural gas peaking unit to replace these units in its
2021 Integrated Resource Plan.
Credit Metrics Expected to Improve: Over the last three years, NI's
credit metrics were affected by the Merrimack Valley gas
explosions, the pandemic, an asset sale in Massachusetts, one-time
expenses associated with the NiSource Next initiative and
unfavorable weather. The FFO leverage ratio averaged above 6.0x.
Fitch expects FFO leverage to improve and remain below its
downgrade sensitivity threshold in the next few years following
debt paydown from NIPSCO's minority interest sale proceeds and
equity issuances to support elevated capex growth.
Parent Sub Linkage: NI and NIPSCO's standalone credit profiles are
the same. NIPSCO has very small amount of debt as it relies NI
solely for liquidity and capital access. NI has not issued any new
debt at the operating company levels and doesn't plan to do so
going forward. The legacy public debt which will be repaid as they
mature. NIPSCO's standalone credit profile is not analytically
meaningful.
DERIVATION SUMMARY
NI's fully regulated business model provides predictable earnings
and cash flow, compared with Southern Company Gas (BBB+/Stable),
which invests in unregulated operations. NI's business model,
geographic diversification and supportive regulations mitigate its
relatively weak credit metrics. Similar to IPALCO Enterprises, Inc.
(BBB-/Stable), which also operates in Indiana, NI's subsidiary
NIPSCO has coal generation.
However, NI's operation is diversified and gas focused compared
with IPALCO's single-state electric generation. Both NI and IPALCO
are executing a large capex program. Fitch expects both NI and
IPALCO's FFO leverage to be in the high-5x for the next few years.
NI's larger scale and asset mix result in the one-notch IDR
difference from IPALCO, although their FFO leverage ratios are
similar.
KEY ASSUMPTIONS
- Capex of about $16.4 billion in total between 2024 and 2028;
- Normal weather;
- Hybrids will receive 50% equity content.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- NI and NIPSCO could be upgraded if the consolidated FFO leverage
is consistently below 5.0x.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Consolidated FFO leverage sustains above 6.0x with low
probability of recovery;
- Material adverse changes in NI's regulatory construct that result
in unexpected lag or disallowance in recovering capex.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: NI continues to have sufficient liquidity. As
of Dec. 31, 2023, it had about $2.2 billion of unrestricted cash
and $790 million availability under its $1.85 billion unsecured
revolving credit facility.
NI is required to maintain total debt to total capitalization that
does not in exceed 0.70 to 1 under the credit facility. There are
no debt maturities in 2024 and about $1.26 billion due in 2025.
ISSUER PROFILE
NiSource Inc. (NI) is a fully regulated utility holding company
whose regulated subsidiaries provide natural gas and electricity to
3.8 million customers across six states.
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
----------- ------
NiSource Inc.
junior subordinated LT BB+ New Rating
NITRO FLUIDS: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: Nitro Fluids, LLC
117 Broadway
Nordheim, TX 78141
Chapter 11 Petition Date: May 15, 2024
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 24-60018
Judge: Hon. Christopher M. Lopez
Debtor's Counsel: Joshua N. Eppich, Esq.
BONDS ELLIS EPPICH SCHAFER JONES LLP
420 Throckmorton Street, Suite 1000
Fort Worth, TX 76102
Tel: 817-405-6900
Email: Joshua@bondsellis.com
Estimated Assets: $50 million to $100 million
Estimated Liabilities: $50 million to $100 million
The petition was signed by Brad Walker as chief restructuring
officer.
A copy of the Debtor's list of 20 largest unsecured creditors is
now available for download. Follow this link to get a copy today
https://www.pacermonitor.com.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/EKMQTZY/Nitro_Fluids_LLC__txsbke-24-60018__0001.0.pdf?mcid=tGE4TAMA
NORTHWEST BIOTHERAPEUTICS: Posts $18.3M Net Loss in First Quarter
-----------------------------------------------------------------
Northwest Biotherapeutics, Inc. filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q reporting a
net loss of $18.31 million on $284,000 of total revenues for the
three months ended March 31, 2024, compared to a net loss of $10.65
million on $880,000 of total revenues for the three months ended
March 31, 2023.
As of March 31, 2024, the Company had $28.57 million in total
assets, $82.04 million in total liabilities, $19.81 million in
mezzanine equity, and a total stockholders' deficit of $73.28
million.
The Company has incurred annual net operating losses since its
inception. The Company used approximately $12.4 million of cash in
its operating activities during the three months ended March 31,
2024.
Northwest Biotherapeutics said, "The Company does not expect to
generate material revenue in the near future from the sale of
products and is subject to all of the risks and uncertainties that
are typically faced by biotechnology companies that devote
substantially all of their efforts to research and development
("R&D") and clinical trials and do not yet have commercial
products. The Company expects to continue incurring annual losses
for the foreseeable future. The Company's existing liquidity is
not sufficient to fund its operations, anticipated capital
expenditures, working capital and other financing requirements
until the Company reaches significant revenues. Until that time,
the Company will need to obtain additional equity and/or debt
financing, especially if the Company experiences downturns in its
business that are more severe or longer than anticipated, or if the
Company experiences significant increases in expense levels
resulting from being a publicly-traded company or from expansion of
operations. If the Company attempts to obtain additional equity or
debt financing, the Company cannot assume that such financing will
be available to the Company on favorable terms, or at all.
"Because of recurring operating losses and operating cash flow
deficits, there is substantial doubt about the Company's ability to
continue as a going concern for at least one year from the date of
this filing."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1072379/000141057824000741/nwbo-20240331x10q.htm
About Northwest Biotherapeutics
Northwest Biotherapeutics, Inc. is a biotechnology company focused
on developing personalized immune therapies for cancer. The
Company has developed a platform technology, DCVax, which uses
activated dendritic cells to mobilize a patient's own immune system
to attack their cancer.
Tampa, Florida-based Cherry Bekaert LLP, the Company's auditor
since 2021, issued a "going concern" qualification in its report
dated March 5, 2024, citing that the Company has recurring losses
and negative cash flows from operations that raise substantial
doubt about its ability to continue as a going concern.
NOVABAY PHARMACEUTICALS: Posts $3.21-Mil. Net Loss in First Quarter
-------------------------------------------------------------------
Novabay Pharmaceuticals, Inc., filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q reporting a
net loss of $3.21 million on $2.63 million of net total sales for
the three months ended March 31, 2024, compared to a net loss of
$1.74 million on $2.34 million of net total sales for the three
months ended
March 31, 2023.
As of March 31, 2024, the Company had $5.36 million in total
assets, $5.20 million in total liabilities, and $160,000 in total
stockholders' equity.
Novabay said, "The Company has sustained operating losses for the
majority of its corporate history and expects that its 2024
expenses will exceed its 2024 revenues, as the Company continues to
invest in its commercialization efforts. Additionally, the Company
expects to continue incurring operating losses and negative cash
flows until revenues reach a level sufficient to support ongoing
growth and operations. Accordingly, the Company has determined
that its planned operations raise substantial doubt about its
ability to continue as a going concern for a period of at least
twelve months from the date of issuance of these unaudited
condensed consolidated financial statements. Additionally,
changing circumstances may cause the Company to expend cash
significantly faster than currently anticipated, and the Company
may need to spend more cash than currently expected because of
circumstances beyond its control that impact the broader economy
such as periods of inflation, supply chain issues, global pandemics
and international conflicts (e.g., the conflicts between Israel and
Hamas, Russia and Ukraine, and China and Taiwan).
"The Company's long-term liquidity needs will be largely determined
by the success of our commercialization efforts. To address the
Company's current liquidity and capital needs, the Company has and
continues to evaluate different plans and strategic transactions to
fund operations, including: (1) raising additional capital through
debt and equity financings or from other sources; (2) reducing
spending on operations, including reducing spending on one or more
of its sales and marketing programs or restructuring operations to
change its overhead structure; (3) out-licensing rights to certain
of its products or product candidates, pursuant to which the
Company would receive cash milestones or an upfront fee; (4)
entering into license agreements to sell new products; and/or (5)
the divestiture of certain business or product lines and related
assets. The Company may issue securities, including common stock,
preferred stock, convertible debt securities and warrants through
additional private placement transactions or registered public
offerings, which may require the filing of a Form S-1 or Form S-3
registration statement with the Securities and Exchange Commission
("SEC"). While the Company believes that the proceeds from the
2023 Private Placement and the 2023 Warrant Reprice Transaction ...
and the DERMAdoctor Divestiture improved the Company's liquidity in
the near term, there is no assurance that the Company will be
successful in executing additional capital raising strategies at
levels necessary to address the Company's ongoing and future cash
flow and liquidity needs. Accordingly, the Company continues to
evaluate different plans and strategies to address the Company's
capital and liquidity needs, as well as evaluating potential other
strategic alternatives and transactions."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1389545/000143774924015679/nby20240331_10q.htm
About Novabay
Headquartered in Emeryville, California, NovaBay Pharmaceuticals,
Inc. -- http://www.novabay.com-- develops and sells scientifically
created and clinically proven eyecare and skincare products. The
Company's leading product, Avenova Antimicrobial Lid and Lash
Solution, or Avenova Spray, is proven in laboratory testing to have
broad antimicrobial properties as it removes foreign material
including microorganisms and debris from the skin around the eye,
including the eyelid.
San Francisco, California-based WithumSmith+Brown, PC, the
Company's auditor since 2010, issued a "going concern"
qualification in its report dated March 26, 2024, citing that the
Company has sustained operating losses for the majority of its
corporate history and expects that its 2024 expenses will exceed
its 2024 revenues, as the Company continues to invest in its
commercialization efforts. Additionally, the Company expects to
continue incurring operating losses and negative cash flows until
revenues reach a level sufficient to support ongoing growth and
operations. Accordingly, the Company has determined that its
planned operations raise substantial doubt about its ability to
continue as a going concern.
NUO THERAPEUTICS: Incurs $709K Net Loss in First Quarter
--------------------------------------------------------
NUO Therapeutics, Inc., filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $708,781 on $234,577 of total revenue for the three months ended
March 31, 2024, compared to a net loss of $855,755 on $61,100 of
total revenue for the three months ended March 31, 2023.
As of March 31, 2024, the Company had $1.24 million in total
assets, $909,385 in total liabilities, and $333,448 in total
stockholders' equity.
NUO said, "We believe based on the operating cash requirements and
capital expenditures expected for the next twelve months that our
current resources and projected revenue from sales of Aurix
products are insufficient to support our operations for the next 12
months. As such, we believe that substantial doubt about our
ability to continue as a going concern exists. The unaudited
condensed consolidated financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
"Even assuming we succeed in raising sufficient additional funds in
the near future to avoid a cessation of business operations, we
require additional capital and will seek to continue financing our
operations with external capital for the foreseeable future. Any
equity financing may cause further substantial dilution to our
stockholders and could involve the issuance of securities with
rights senior to the common stock. Any debt financing may require
us to comply with additional onerous financial covenants and
restrict our business operations. Our ability to complete
additional financings is dependent on, among other things, market
reception of the Company and perceived likelihood of success of our
business model, the state of the capital markets at the time of any
proposed equity or debt offering, state of the credit markets at
the time of any proposed loan financing, and on the relevant
transaction terms, among other things. We may not be able to
obtain additional capital as required to finance our efforts,
through equity or debt financing, other transactions, or any
combination thereof, on satisfactory terms or at all.
Additionally, any such financing, if at all obtained, may not be
adequate to meet our capital needs and to support our operations."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1091596/000143774924017125/aurx20240331_10q.htm
About NUO Therapeutics
Headquartered in Houston, TX, Nuo Therapeutics, Inc. is a
regenerative therapies company focused on developing and marketing
products for chronic wound care primarily within the U.S. The
Company commercializes innovative cell-based technologies that
harness the regenerative capacity of the human body to trigger
natural healing. The use of autologous (i.e., from self, the
patient's own) biological therapies for tissue repair and
regeneration is part of a clinical strategy designed to improve
long-term recovery in inherently complex chronic conditions with
significant unmet medical needs.
Houston, Texas-based Marcum LLP, the Company's auditor since 2017,
issued a "going concern" qualification in its report dated April
19, 2024, citing that the Company has incurred significant losses
and needs to raise additional funds to meet its obligations and
sustain its operations. These conditions raise substantial doubt
about the Company's ability to continue as a going concern.
PEACOCK JEWELERS: Unsecureds to Split $315K in Subchapter V Plan
----------------------------------------------------------------
Peacock Jewelers, LLC filed with the U.S. Bankruptcy Court for the
Middle District of Tennessee a First Amended and Restated Plan of
Reorganization under Subchapter V dated April 30, 2024.
The Debtor is a jewelry store in the Hillsboro Village area of
Nashville, Tennessee and filed suit against its insurer carrier for
declining coverage for theft of over 500,000.00 in diamonds.
This Plan of Reorganization proposes to pay the allowed claimants
in this case from cash flow from the Debtor's business operations
and future income.
Non-priority unsecured creditors holding allowed claims will
receive pro rata distributions from the ongoing cash flow of the
debtor.
Class 5 shall consist of the allowed unsecured claims not entitled
to priority and not expressly included in the definition of any
other class. The claims in this class shall be paid a pro-rate
distribution of $315,000.00 commencing on the Effective Date of the
plan, payable at the rate of $5250.00 per month, until the total
amount specified herein has been paid. Should this class not vote
in favor of this class, then the payments specified herein shall be
continued until all claimants in this class are paid in full.
The Debtor anticipates the funds to meet the plan payments shall
come from the daily operations of the Debtor's jewelry business.
A full-text copy of the First Amended and Restated Plan dated April
30, 2024 is available at https://urlcurt.com/u?l=u9Ad5S from
PacerMonitor.com at no charge.
Attorney for the Debtor:
Steven L. Lefkovitz, Esq.
Lefkovitz & Lefkovitz, PLLC
908 Harpeth Valley Place
Nashville, TN 37221
Telephone: (615) 256-8300
Facsimile: (615) 255-4516
Email: slefkovitz@lefkovitz.com
About Peacock Jewelers
Peacock Jewelers, LLC is a jewelry store owner in Nashville, Tenn.
Peacock Jewelers filed a petition under Chapter 11, Subchapter V of
the Bankruptcy Code (Bankr. M.D. Tenn. Case No. 23-03951) on Oct.
27, 2023, with up to $1,561,828 in total assets and up to $659,163
in total liabilities. Paul G. Wilson, chief 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.
PINNACLE FOODS: Walter Dahl of Dahl Law Named Subchapter V Trustee
------------------------------------------------------------------
The U.S. Trustee for Region 17 appointed Walter Dahl, Esq., a
partner at Dahl Law, as Subchapter V trustee for Pinnacle Foods of
California LLC.
Mr. Dahl will be compensated at $485 per hour for his services as
Subchapter V trustee and will be reimbursed for work-related
expenses incurred.
In court filings, Mr. Dahl declared that he is a disinterested
person according to Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Walter R. Dahl
Dahl Law
2304 "N" Street
Sacramento, CA 95816-5716
Telephone: (916) 446-8800
Telecopier: (916) 741-3346
Email: wdahl@dahllaw.net
About Pinnacle Foods of California
Pinnacle Foods of California LLC owns a commercial property located
at 3004 N. Blackstone Avenue, Fresno, CA valued at $780,000 and a
commercial property located at 5227 E. Kings Canyon Road, Fresno,
CA valued at $770,000.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Calif. Case No. 24-11015) on April 22,
2024, with $2,077,748 in assets and $4,509,986 in liabilities.
Imran Damani, president, signed the petition.
Judge Rene Lastreto II presides over the case.
Michael Jay Berger, Esq. at the LAW OFFICES OF MICHAEL JAY BERGER
represents the Debtor as legal counsel.
PLANTATION JEWELERS: Files Emergency Bid to Use Cash Collateral
---------------------------------------------------------------
Plantation Jewelers, Inc. asks the U.S. Bankruptcy Court for the
Middle District of Florida, Orlando Division, for authority to use
cash collateral and provide adequate protection.
Specifically, the Debtor requests that the Court authorize the
Debtor's use of cash collateral notwithstanding any lien retained
by the U.S. Small Business Administration or the Inferior Interests
as of the Petition Date. The Debtor requests authority to use cash
to fund ordinary business operations and necessary expenses in
accordance with the cash budget.
The Debtor will require the use of cash collateral to continue to
operate its business for the next eight weeks, and, depending on
the month, a greater or lesser amount will be required each
comparable period thereafter. Debtor will use the cash collateral
to make payroll, pay suppliers and vendors, and pay other ordinary
course expenses to maintain its business, which may be subject to
the SBA's security interest.
The Debtor requests a hearing date on or before May 15, 2024. The
date is requested to ensure the Debtor timely payment of payroll
and avoids a travel conflict for the Debtor's counsel. Emergency
relief is also requested as the Debtor is in constant need to pay
its operating expenses to ensure its business generates the maximum
amount of potential revenue.
Prior to the Petition Date, the Debtor obtained financing from the
SBA, which is purportedly secured by a lien on the Debtor's cash
and/or cash equivalents. The SBA may assert a first priority
security interest in the Debtor's cash and cash equivalents by
virtue of a UCC-1 Financing Statement filed with the State of
Florida on January 20, 2021 (See UCC-1 #202105927864). The
outstanding balance owed to the SBA is approximately $100,000. At
present, the Debtor is not aware of any other parties who may
assert an inferior interest in its cash or cash equivalents.
As adequate protection for the use of cash collateral, the Debtor
proposes to grant the SBA and the inferior interests holding a
replacement lien on its post-petition cash collateral to the same
extent, priority, and validity as its pre-petition liens, to the
extent its use of cash collateral results in a decrease in value of
their interests in the cash collateral. As demonstrated by the
Budget, Debtor will continue to operate on a positive cash flow
basis during the interim eight-week period.
A copy of the motion is available at https://urlcurt.com/u?l=K6ERcy
from PacerMonitor.com.
About Plantation Jewelers, Inc.
Plantation Jewelers, Inc. is a closely held Florida for-profit
corporation formed in 2002 by Alex Ramos which specializes in the
sale of custom design jewelry and jewelry repairs.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (M.D. Fla. Case No. 6:24-bk-02350-TPG) on May 10,
2024. In the petition signed by Ramos, the Debtor disclosed up to
$100,000 in assets and up to $500,000 in liabilities.
Daniel A. Velasquez, Esq., at Latham Luna Eden & Beaudine LLP,
represents the Debtor as legal counsel.
PRA GROUP: S&P Rates New $400MM Senior Unsecured Notes 'BB'
-----------------------------------------------------------
S&P Global Ratings assigned its 'BB' issue rating to PRA Group
Inc.'s proposed issuance of $400 million of senior unsecured notes
due 2030. The company will use the net proceeds to repay existing
borrowings on its North American revolving credit facility ($504
million outstanding as of March 31, 2024). The '4' recovery rating
on the new issuance indicates its expectation of average recovery
(30%-50%; rounded estimate: 35%) in the event of default.
As of March 31, 2024, PRA Group's leverage, measured as debt to
EBITDA, was 5.3x, compared with 5.4x as of Dec. 31, 2023. The new
transaction is leverage neutral. We think PRA is well positioned to
capitalize on the increased supply and favorable pricing trends in
its sector, which should enable the company to lower its debt to
EBITDA to 4.0x-5.0x in 2024 and 2025.
The elevated leverage in 2023 primarily stemmed from a negative
change in expected recoveries in the first quarter that affected
earnings throughout the year. That said, the company has since
reported a notable improvement in its changes in expected
recoveries, to $52 million in first-quarter 2024 from negative $37
million last year.
The stable outlook indicates that S&P expects PRA to retain its
leading market position and keep financial leverage below 5x. It
also expects PRA to continue to optimize its funding by issuing
incremental unsecured debt.
QHSLAB INC: Recurring Losses Raise Going Concern Doubt
------------------------------------------------------
QHSLab, Inc. disclosed in a Form 10-Q Report filed with the U.S.
Securities and Exchange Commission for the quarterly period ended
March 31, 2024, that substantial doubt exists about its ability to
continue as a going concern.
The Company has incurred losses since inception, is highly
leveraged, and has only recently begun to generate cash from
operations.
"We had an accumulated deficit of $4,001,783 at March 31, 2024,
generated net losses of $18,525 and $468,362 for the three months
ended March 31, 2024 and the year ended December 31, 2023,
respectively, and generated cash from operations of $56,572 in the
quarter ended March 31, 2024, and used $159,627 of cash in
operations in the year ended December 31, 2023. We are currently in
default of our obligations under our OID Notes and the note
incurred to acquire assets related to our AllergiEnd products.
These factors, among others, raise substantial doubt about our
ability to continue as a going concern for a reasonable period of
time," QHSLab explained.
The continuation of the Company's business is dependent upon its
ability to achieve increased positive cash flows and profitability
and, pending such achievement, future issuances of equity or other
financings to fund ongoing operations. However, access to such
funding may not be available on commercially reasonable terms, if
at all.
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/34534a7c
About QHSLab, Inc.
Beach, Fla.-based QHSLab, Inc. is a medical device technology and
software-as-a-service company focused on enabling primary care
physicians to increase their revenues by providing them with
relevant, value-based tools to evaluate and treat chronic disease
as well as provide preventive care through reimbursable
procedures.
As of March 31, 2024, the Company has $1,731,151 in total assets,
$2,113,293 in total liabilities, and $382,142 in total
stockholders' deficit.
QUEST SOFTWARE: Invesco VVR Marks $4.7MM Loan at 20% Off
--------------------------------------------------------
Invesco Senior Income Trust ("VVR") has marked its $4,716,000 loan
extended to Quest Software US Holdings, Inc. to market at
$3,756,063 or 80% of the outstanding amount, as of February 29,
2024, according to a disclosure contained in VVR's Form N-CSR for
the fiscal year ended February 29, 2024, filed with the U.S.
Securities and Exchange Commission.
VVR is a participant in a First Lien Term Loan to Quest Software
US. The loan accrues interest at a rate of 9.71% (3 mo. Term SOFR +
4.25%) per annum. The loan matures on February 1, 2029.
VVR is a Delaware statutory trust registered under the Investment
Company Act of 1940, as amended, as a closed-end management
investment company. VVR may participate in direct lending
opportunities through its indirect investment in the Invesco Senior
Income Loan Origination LLC, a Delaware limited liability company.
VVR owns all beneficial and economic interests in the Invesco
Senior Income Loan Origination Trust, a Massachusetts Business
Trust, which in turn owns all beneficial and economic interests in
the LLC.VVR may participate in direct lending opportunities through
its indirect investment in the Invesco Senior Income Loan
Origination LLC, a Delaware limited liability company. VVR owns all
beneficial and economic interests in the Invesco Senior Income Loan
Origination Trust, a Massachusetts Business Trust, which in turn
owns all beneficial and economic interests in the LLC.
VVR is led by Glenn Brightman, Principal Executive Officer; and
Adrien Deberghes, Principal Financial Officer. The Trust can be
reached through:
Glenn Brightman
Invesco Senior Income Trust
1555 Peachtree Street, N.E., Suite 1800
Atlanta, GA 30309
Tel: (713) 626-1919
Quest Software provides software solutions. The Company offers
enterprise software that identities, users and data, streamlines IT
operations, and hardens cyber security from the inside out. Quest
Software serves customers in the United States.
RECEPTION MEZZANINE: Fitch Lowers LongTerm IDR to B-, Outlook Neg.
------------------------------------------------------------------
Fitch Ratings has downgraded Reception Mezzanine Holdings, LLC's
and Reception Purchaser, LLC's (dba STG Logistics, Inc.) Long-Term
Issuer Default Ratings (IDRs) to 'B-' from 'B'. Fitch has also
downgraded the senior secured revolver and term loan to 'B'/'RR3'
from 'B+'/'RR3'. The Rating Outlook is Negative.
The downgrade and Negative Outlook reflect Fitch's expectation that
STG's FCF, coverage and leverage metrics will continue to
deteriorate in 2024. Liquidity risk has also risen, but the
near-term risk is moderated by a $30 million equity contribution.
Fitch believes the intermodal freight environment will begin to
improve in the near term, supporting stronger performance after
2024.
Resolution of STG's Negative Outlook is contingent on strengthening
cash flow and liquidity, likely as a result of an improvement in
the operating environment. Fitch projects a deterioration in STG's
liquidity position in 2024 but that it will remain above minimum
operating levels.
Fitch would consider downgrading STG's ratings in the next 12-18
months if Fitch expects a deeper contraction in liquidity or if
challenges realizing a recovery lead to heightened refinancing
risk. To avoid a downgrade the company must also address the
medium-term potential that it could pursue a distressed debt
exchange, as defined in Fitch's "Corporate Rating Criteria," if it
is unable to improve its cash flow profile.
KEY RATING DRIVERS
Diminished Internal Financial Flexibility: Fitch believes STG's
financial flexibility has diminished as cash burn rose in late 2023
and expects FCF to be meaningfully negative in 2024. The risk of a
continued cash flow burn and reliance on a market turnaround are
reflected in the Negative Outlook. Moderating the risk is the
three-year runway to STG's first maturity, the $60 million revolver
in 2027, followed by the term loan in 2028. Fitch also believes STG
has an adequate liquidity position to manage to a recovery though
extended market pressures and operating execution are key risks to
the liquidity profile.
Based on Fitch's assumptions of a gradual improvement in freight
rates, volume growth from new containers and drayage business wins,
execution on over $20 million of incremental cost savings in 2024
and a steady cost structure thereafter, FCF will improve to mildly
negative in 2025 and could approach $30 million in 2026. The recent
independent contractor litigation and potential for unexpected cash
costs are also risks to the cash flow forecast.
Supportive Sponsor Adds Liquidity: Fitch views the sponsor's
supportive position favorably and indicative of confidence in a
turnaround in STG's performance. The recent credit agreement
amendment provides for $30 million of additional liquidity in
exchange for covenant headroom, temporarily replacing maintenance
of net leverage with a minimum liquidity requirement. The
additional cash mitigates risks of a near-term liquidity challenge.
Based on its forecast, STG's liquidity position will modestly
decline throughout the year to around $75 million or more at
YE2024. This level is moderately above minimum operation
requirements.
Weak Leverage, Coverage Metrics: Both EBITDAR fixed charge coverage
and EBITDA interest coverage are declining to under 1.0x in 2024, a
relatively weak level for the rating, before beginning to improving
to about 1.0x in 2025 and then to the mid-1.0x range in 2026.
Fitch-calculated EBITDA leverage is expected to peak in 2024, over
10x, before improving toward the low-8x in 2025 and high-5x in
2026. The estimate is elevated for the 'B-' rating. While there is
currently a leverage covenant holiday lasting through Sept. 30,
2025, STG will need to meet the 7.0x maximum once the covenant
resumes at YE25.
Freight Downturn Challenges Performance: The persistence of the
weak intermodal freight environment paired with cost inflation
drove a deeper than expected decline in earnings and cash flow in
late 2023 and the weak operating environment is likely to last into
2024. However, Fitch expects the market to improve in 2H24 assuming
truckload capacity continues to exit and that the consumer economy
is stable. Assuming modest annual growth in freight rates from late
2023 levels, Fitch expects EBITDA of around $75 million in FY2024,
down from roughly $100 million in 2023. With rate improvement and
operating leverage in the intermodal business, Fitch forecasts
EBITDA improving to around $100 million in 2025 and around $145
million in 2026.
Economic conditions remain a risk to STG's performance over the
next two years, longer-term fundamentals such as truck-to-rail
conversions, improving rail service and potential for an
increasingly sustainability focused-shipper base still indicate
growing long-term demand.
Decent Market Position: Fitch estimates that STG occupies a
top-four market position as an intermodal and drayage service
provider with coverage at eight of 10 major U.S. ports and numerous
inland distribution locations. Its position is supported by its
ability to offer end-to-end solutions for shippers, network of
third-party transport and established relationships insulates its
position. The drayage, brokerage and logistics markets in which STG
operates remain competitive and likely constrain EBITDA margins to
the low-double digits or below.
Intermodal Cyclicality: The intermodal industry is cyclical,
reflecting high exposure to consumer and industrial markets that
can weigh on volumes and yields. Fitch believes the industry has
limited pricing power, given the reliance on third party
transporters and the availability of the substitutive trucking
industry. Intermodal pricing reflects broader trucking conditions
given the substitutive nature of rail intermodal and truckload
shipping
DERIVATION SUMMARY
STG competes in the fragmented transportation and logistics market
with a number of public large-scale peers such as J.B. Hunt, Hub
Group, Forward Air (BB-/Negative) and CH Robinson. However, many of
these peers have a variety of services extending beyond directly
related intermodal shipments or rail brokerage. Key fundamental
considerations to the industry include the competitive environment
and cyclicality associated with freight markets. These larger peers
have stronger credit quality as a result of their larger operating
footprint, stronger market position and healthier capitalization.
STG's B-/Negative rating reflects the potential deterioration of
its financial flexibility as a result of a cyclically weak point in
the operating environment coupled with the recent inflationary
environment that is driving negative FCF. STG's credit metrics are
also weak relative transportation and logistics issuers in the 'B'
rating category with EBITDA interest coverage around 1.0x and
EBITDA leverage around 8.0x or above through 2025.
KEY ASSUMPTIONS
- Revenue of about $1.7 billion in 2024 and revenue growth in the
mid-single digits through 2026, with growth led by pricing recovery
from improving operating conditions;
- EBITDA margin declines to around 4% in 2024, while realizing cost
savings, before high operating leverage supports margin progression
towards 6%-8% over the next two years;
- Capex remains around $12 million - $13 million and working
capital investment is low;
- SOFR in the 4%-5% range through the forecast.
RECOVERY ANALYSIS
The recovery analysis assumes that STG would be reorganized as a
going concern in bankruptcy rather than liquidated. Fitch has
assumed a 10% administrative claim.
Fitch estimates STG's GC EBITDA at $135 million. The GC EBITDA
estimate reflects Fitch's view of a sustainable,
post-reorganization EBITDA level upon which Fitch bases the
enterprise valuation. This estimate reflects a potential weakening
of the economy leading to disruption in the intermodal logistics
market and/or the loss of several significant customers. It also
reflects corrective measures taken in the reorganization to offset
the adverse conditions that triggered default such as cost cutting,
contract repricing and industry recovery.
Fitch assumes STG would receive a GC recovery multiple of 4.0x in
this scenario. This multiple is applied to the GC EBITDA to
calculate a post-reorganization enterprise value (EV). Ultimately
STG's 4.0x multiple is driven by the company's size and scale and
by comparable EV valuations among logistics providers. It also
considers the 6.25x multiple underpinning the March/22 XPOI
acquisition.
Fitch's recovery scenario assumes STG's $60 million revolver is
fully drawn. These assumptions generate a 'B' rating and an 'RR3'
Recovery Rating for the senior secured debt.
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Positive FCF generation and improving liquidity profile,
including revolver availability of 50% or more;
- Sustained EBITDAR fixed-charge coverage above 1.5x and/or EBITDA
interest coverage above 2.0x;
- Mid-cycle EBITDAR leverage below 6.0x and/or EBITDA leverage
below 5.5x.
Factors That Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Deteriorating financial flexibility including cash position
approaching $50 million;
- Sustained EBITDA interest coverage below 1.5x, EBITDAR fixed
charge coverage below 1.0x and/or negative FCF;
- Increasing likelihood that STG may pursue a distressed debt
exchange (as defined in Fitch's "Corporate Rating Criteria").
Factors That Could, Individually or Collectively, Lead to Outlook
Stabilization
- EBITDA interest coverage above 1.5x and/or EBITDAR fixed charge
coverage above 1.0x, neutral to positive FCF and ability to address
its net leverage covenant when testing resumes
LIQUIDITY AND DEBT STRUCTURE
Declining Liquidity: As of Dec. 31, 2023, STG had $118 million of
cash no remaining availability under its $60 million revolving
credit facility. Subsequent to YE 23, STG received $30 million in
cash contributions from its sponsors to bolster liquidity. STG's
term loan amortizes at $8 million per year. The revolver matures
first in March 2027, followed by the term loan in 2028.
Lease Treatment: Fitch capitalizes operating lease costs at 8.0x,
consistent with its treatment for real estate assets under lease.
For finance leases, Fitch utilizes the reported liability since
these leases are predominately for intermodal containers, which all
carry discounted purchase options at the end of their 4-5-year
lease term.
ISSUER PROFILE
STG is a provider of integrated, port-to-door containerized
logistic services including drayage, transloading, warehousing,
fulfilment, rail brokerage and final-mile solutions. It serves the
continental U.S. including major ports.
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
----------- ------ --------
-----Reception Mezzanine
Holdings, LLC LT IDR B- Downgrade B
Reception Purchaser, LLC LT IDR B- Downgrade B
senior secured LT B Downgrade RR3 B+
REPIDA INC: Voluntary Chapter 11 Case Summary
---------------------------------------------
Debtor: Repida, Inc.
180 Pembroke St., Fl. 1
Brooklyn, NY 11235
Business Description: The Debtor offers trucking services.
Chapter 11 Petition Date: May 16, 2024
Court: United States Bankruptcy Court
Northern District of Illinois
Case No.: 24-07281
Debtor's Counsel: Saulius Modestas, Esq.
MODESTAS LAW OFFICES, P.C.
401 S. Frontage Rd.
Ste. C
Burr Ridge, IL 60527-7115
Tel: 312-251-4460
Fax: 312-277-2586
Email: smodestas@modestaslaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Ion Repida as president.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/VV4LKBI/Repida_Inc__ilnbke-24-07281__0001.0.pdf?mcid=tGE4TAMA
RHP HOTEL: Moody's Hikes Rating on Senior Unsecured Notes to Ba3
----------------------------------------------------------------
Moody's Ratings upgraded RHP Hotel Properties, LP's backed senior
unsecured rating to Ba3 from B1, and affirmed RHP Hotel Properties,
LP's Ba3 backed senior secured bank credit facilities ratings and
Ryman Hospitality Properties, Inc's (collectively "Ryman") Ba3
Corporate Family Rating. Ryman's Speculative Grade Liquidity rating
remains unchanged at SGL-2. The outlooks remains stable.
The senior unsecured rating upgrade reflects the increased
unencumbered pool as a result of Ryman's refinancing of the Gaylord
Rockies property secured loan with unsecured debt, leaving the REIT
with minimal remaining secured debt in the capital stack. Given the
high ratio of unencumbered assets to unsecured debt, Moody's is now
rating the senior unsecured debt at the same level as the senior
secured debt. The CFR and senior secured rating affirmations
reflect Ryman's improved operating performance, due in large part
to the recovery of leisure transient and longer-term group demand,
which has resulted in key metrics that are closer to pre-pandemic
levels. The stable outlook reflects Ryman's bookings on long-term
contracts, which provide a high level of visibility into future
revenues.
RATINGS RATIONALE
Ryman's CFR reflects its high-quality portfolio comprised primarily
of six large convention center hotels with resort-style amenities
and focused primarily on group-oriented business (reservations of
large blocks of rooms). The ratings also reflect its plans to grow
mostly through redevelopment, joint ventures and acquisitions
rather than ground-up development and its historically sound credit
profile and solid leverage metrics. Ryman's key credit challenges
continue to be its material asset and manager concentration with
all of Ryman's primary assets managed by one hotel operator,
Marriott International, Inc. (Baa2 stable). The ratings also
reflect the inherent cyclicality and volatility of the lodging
sector, driven by its sensitivity to consumer demand and sentiment,
which could weigh on the future performance of Ryman and the
lodging sector in a potential economic downturn.
Ryman's SGL-2 speculative grade liquidity rating reflects Moody's
view over the next twelve months that the REIT will maintain a
solid liquidity profile considering near-term funding needs. As of
March 31, 2024, liquidity is supported by approximately $465
million of unrestricted cash, almost full revolver availability of
approximately $695.7 million ($4.3 million outstanding letters of
credit) which expires in May 2027 (not including options to extend
up to another year), and modest growth related capital projects or
projected commitments of $290-$360 million in the near-term. The
REIT does not have any debt maturities until January 2026 when a
$131 million CMBS loan for Block 21 matures.
The stable rating outlook reflects Moody's expectation that Ryman
will continue to improve operating and cash flow performance, such
that leverage normalizes at or below its pre-pandemic target range
over the near-term.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Upward rating movement would be predicated on improving performance
over several quarters, significant asset diversification, and
improving fixed charge coverage from current levels.
Downward rating pressure would result from the following on a
consistent basis: occupancy, RevPAR and earnings deteriorate from
current levels, and/or Net Debt/EBITDA remain above 5.0x.
Significant operating challenges or failure to maintain adequate
liquidity could also lead to downward ratings pressure.
Ryman Hospitality Properties, Inc is a REIT specializing in
group-oriented, destination hotel assets in urban and resort
markets.
The REIT's owned assets primarily include a network of six upscale,
meetings-focused resorts and suites that are managed by lodging
operator Marriot International, Inc. under the Gaylord Hotels and
JW Marriott brands.
The principal methodology used in these ratings was REITs and Other
Commercial Real Estate Firms published in February 2024.
RICEBRAN TECHNOLOGIES: Incurs $1.8-Mil. Net Loss in First Quarter
-----------------------------------------------------------------
RiceBran Technologies filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $1.86 million on $2.12 million of revenues for the three months
ended March 31, 2024, compared to a net loss of $2.03 million on
$1.95 million of revenues for the three months ended March 31,
2023.
As of March 31, 2024, the Company had $5.05 million in total
assets, $9.74 million in total liabilities, and a total
stockholders' deficit of $4.73 million.
The Company has incurred losses and generated negative cash flows
from operations since its inception. As of March 31, 2024, the
Company had an accumulated deficit of $335.1 million and cash and
cash equivalents of $0.4 million.
"Our history of operating losses and negative operating cash flows
from continuing operations raises substantial doubt about our
ability to continue as a going concern within one year from the
date of this filing. Due to these historical losses and negative
cash flows, management has considered various strategic
alternatives."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1063537/000143774924016302/ribt20240331_10q.htm
About RiceBran
RiceBran Technologies is a specialty ingredient company focused on
the development, production, and marketing of products derived from
traditional and ancient small grains. The Company creates and
produces products utilizing proprietary processes to deliver
improved nutrition, ease of use, and extended shelf-life, while
addressing consumer demand for all natural, non-GMO and organic
products.
Whippany, New Jersey-based WithumSmith+Brown, PC, the Company's
auditor since 2023, issued a "going concern" qualification in its
report dated March 29, 2024, citing that the Company has an
accumulated deficit at Dec. 31, 2023 and, since inception, has
suffered significant operating losses and negative cash flows from
operations that raise substantial doubt about its ability to
continue as a going concern.
ROCHESTER HOLDING: Court OKs Interim Cash Collateral Access
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Georgia,
Atlanta Division, authorized the Rochester Holding Company of
Georgia, LLC to use cash collateral, on an interim basis, in
accordance with the budget.
The Debtor has an obligation to US Bank Trust Company, NA as
Trustee for Velocity Commercial Capital Loan Trust 2022-4 that is
secured by a real estate commonly knows as 2260 Lake Harbin Road
Morrow, GA. This debt is serviced by PHH Mortgage. As of the
Petition Date, the Debtor was obligated to US Bank in an
approximate amount of $305,749, which is evidenced by a Deed to
Secure Debt, Security Agreement and Assignment of Rents and
Leases.
The Debtor has an obligation to US Bank Trust Company, NA as
Trustee for Velocity Commercial Capital Loan Trust 2019-1 that is
secured by a real estate commonly known as 254 North Main St, Unit
B. Jonesboro, GA. As of the Petition Date, the Debtor was obligated
to US Bank in an approximate amount of $161,800, which is evidenced
by a Deed to Secure Debt, Security Agreement and Assignment of
Rents and Leases granted by the Debtor.
The Debtor has an obligation to Superior Loan Servicing that is
secured by a real estate commonly known as 122 Moultrie Road Albany
GA. As of the Petition Date, the Debtor was obligated to SLS in an
approximate amount of $54,000, which is evidenced by a Deed to
Secure Debt, and Assignment of Rents and Leases, Fixture Filing,
and Security Agreement granted by the Debtor.
As adequate protection, the Secured Parties are granted
post-petition liens against the same types of property of the
Debtor, to the same validity, extent and priority, as existed as of
the Petition Date.
Commencing on May 1, 2024, or retroactive thereto, depending on
date of entry of this Order, and continuing on the 1st day of each
month thereafter, until further order of the Court, Debtor will
remit monthly postpetition payments to Secured Creditors.
The events that constitute an "Event of Default" include:
-- Debtor will violate or fail to timely satisfy, post-petition,
any term or condition of this Consent Order or the Loan Documents.
-- A trustee or examiner is appointed under Chapter 11 of the
Code without the consent of Secured Creditor. and
-- Debtor sells or encumbers any item of property subject to
Secured s liens (including, without limitation, the Cash
Collateral), without the prior written consent of Secured Creditor.
A copy of the order is available at https://urlcurt.com/u?l=6TDyir
from PacerMonitor.com.
About The Rochester Holding
The Rochester Holding Company of Georgia LLC is a limited liability
company.
The Rochester Holding Co. of Georgia LLC sought relief
underSubchapter V of Chapter 11 of the U.S. Bankruptcy Code (Bankr.
N.D. Ga. Case No. 24-50006) on January 1, 2024. In the petition
filed by Cornelia Spence, as managing member, the Debtor reports
assets between $500,000 and $1 million and liabilities of $100,000
and $500,000.
Judge Barbara Ellis-Monro oversees the case.
The Debtor is represented by Richard K. Valldejuli, Jr., Esq.
RODA LLC: UST Seeks to Appoint Kenneth Eiler as Chapter 11 Trustee
------------------------------------------------------------------
Gregory M. Garvin, the Acting U.S. Trustee for Region 18, asks the
U.S. Bankruptcy Court for the District of Oregon to approve the
appointment of Kenneth S. Eiler as Chapter 11 trustee for Roda, LLC
and Roy MacMillan.
The appointment was made pursuant to the order from the U.S.
Bankruptcy Court for the District of Oregon on April 19.
The United States Trustee shall set the initial trustee's bond at
$80,000, subject to change. The Chapter 11 Trustee shall file the
bond with the clerk of the court.
To the best of the United States Trustee's knowledge, Mr. Eiler's
connections with the Debtor, creditors, and other
parties-in-interest, their respective attorneys and accountants,
the United States Trustee, and persons employed in the Office of
the United States Trustee are limited to the connections set forth
in Mr. Eiler's Verified Statement.
A copy of the application is available for free at
https://urlcurt.com/u?l=MTZsyB from PacerMonitor.com.
About Roda LLC
Roda, LLC, a company in Washington County, Ore., sought protection
under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Ore. Case
No. 23-30250) on Feb. 6, 2023. In the petition signed by its
managing member, Roy MacMillan, the Debtor disclosed up to $10
million in both assets and liabilities.
Judge Teresa H. Pearson oversees the case.
The Debtor tapped Tara J. Schleicher, Esq., at Foster Garvey PC as
bankruptcy counsel; Intellequity Legal Services, LLC as special
counsel; Thomas L. Strong CPA PC as accountant; and Boverman &
Associates, LLC as business consultant.
SAM & MIKO: Files for Bankruptcy, Online Auction Ends May 23
------------------------------------------------------------
Samko & Miko Toy Warehouse the family run business, formerly
located in Richmond Hill, Ontario, has filed for bankruptcy and
Dodick Landau Inc. has been appointed as Trustee. Started over 60
years ago, the company was a trailblazer in the discount toy
industry. Samko & Miko was known for selling top brand children's
toys and books at unbeatable prices. Their seasonal warehouse sales
and travelling pop up stores have been a staple in the Canadian toy
market for six decades.
After facing a changing and challenging retail landscape the
company filed for bankruptcy. Danbury Global Ltd. and A.D. Hennick
& Associates Inc. will be liquidating their remaining inventory
through an online auction.
"There is over $850,000 at retail of brand-new toys, games and
books to be sold in one day" said Jon Ordon, CEO of Danbury
Global.
The online auction will run from May 16(th) to May 23(rd) and
includes a massive selection of outdoor activity toys, baby &
toddler products, actions figures, animals, trucks, blocks, dolls,
arts & crafts, boards games, books and so much more from all the
top brands, including: Mattel, Hasbro, Fisher-Price, Crayola,
Barbie, Disney, Little Tykes, and more
"With well over 40,000 toys and 20,000 books, this is a great
opportunity to stock up with gifts for your kids, or to buy items
for resale" Alex Hennick, President of A.D. Hennick & Associates
added.
Everything is being sold without reserves at the auction, so the
highest bidders will take all.
Additional information can be found at:
https://danburyglobal.com/samko-toy-warehouse/
About Danbury Global Ltd.
Danbury Global is a hands-on provider of asset monetization
solutions focused on the disposition of retail and wholesale
inventories, as well as industrial machinery and equipment.
Danbury's services include, but are not limited to, retail store
closings, orderly liquidations of wholesale inventories, and onsite
and online public auctions.
About A.D. Hennick & Associates Inc.
A.D. Hennick & Associates works together with Manufacturers,
Distributors, Landlords and Bankruptcy Trustees to provide
liquidation solutions for excess inventory, cancelled orders, and
distressed assets. With a reputation for honesty, integrity, and
fairness, we work with a wide variety of industries to quickly
maximize value for liquidated stock while protecting brand images.
About Samko & Miko Toy Warehouse
Sam & Miko Toy Warehouse is where you can find fun and educational
toys, books, games, crafts and so much more. Its features most of
the top brand toys together with lesser-known ones as well, giving
an unbiased and independent opinion on what’s hot and what’s
not. When it comes to seeking out the best in top kid’s toys, you
have certainly come to the right place. Toys that encourage
curiosity and challenge thinking are important and it takes a
personal interest in choosing products that awaken creativity,
encourage curiosity and develop imagination, challenge thinking and
offer child hours of fun.
SANDVINE CORP: Invesco VVR Marks $289,000 Loan at 52% Off
---------------------------------------------------------
Invesco Senior Income Trust ("VVR") has marked its $289,000 loan
extended to Sandvine Corp. to market at $137,477 or 48% of the
outstanding amount, as of February 29, 2024, according to a
disclosure contained in VVR's Form N-CSR for the fiscal year ended
February 29, 2024, filed with the U.S. Securities and Exchange
Commission.
VVR is a participant in a Second Lien Term Loan to Sandvine. The
loan accrues interest at a rate of 13.43% (1 mo. Term SOFR + 8.00%)
per annum. The loan matures on November 2, 2026.
VVR is a Delaware statutory trust registered under the Investment
Company Act of 1940, as amended, as a closed-end management
investment company. VVR may participate in direct lending
opportunities through its indirect investment in the Invesco Senior
Income Loan Origination LLC, a Delaware limited liability company.
VVR owns all beneficial and economic interests in the Invesco
Senior Income Loan Origination Trust, a Massachusetts Business
Trust, which in turn owns all beneficial and economic interests in
the LLC.VVR may participate in direct lending opportunities through
its indirect investment in the Invesco Senior Income Loan
Origination LLC, a Delaware limited liability company. VVR owns all
beneficial and economic interests in the Invesco Senior Income Loan
Origination Trust, a Massachusetts Business Trust, which in turn
owns all beneficial and economic interests in the LLC.
VVR is led by Glenn Brightman, Principal Executive Officer; and
Adrien Deberghes, Principal Financial Officer. The Trust can be
reached through:
Glenn Brightman
Invesco Senior Income Trust
1555 Peachtree Street, N.E., Suite 1800
Atlanta, GA 30309
Tel: (713) 626-1919
Sandvine Corporation, headquartered in Waterloo, Ontario, Canada,
and owned by funds affiliated with Francisco Partners, provides
network and application intelligence solutions to mobile, fixed,
cable, satellite and Wi-Fi service providers, and governments
globally.
SERVICE PROPERTIES: Moody's Cuts Gtd. Unsecured Notes Rating to B2
------------------------------------------------------------------
Moody's Ratings downgraded Service Properties Trust's ("SVC")
guaranteed and non-guaranteed senior unsecured ratings to B2 and B3
from B1 and B2, respectively, and its senior unsecured shelf rating
to (P)B3 from (P)B2. In addition, Moody's downgraded the senior
secured rating to B2 from B1 and the backed senior unsecured shelf
rating to (P)B2 from (P)B1. In the same action, Moody's assigned B2
ratings to SVC's proposed guaranteed senior unsecured notes due
2032 and 2034. The Speculative Grade Liquidity rating remains
unchanged at SGL-4. The Corporate Family Rating is affirmed at B2
and the outlook remains negative.
The proceeds from the proposed $1.2 billion guaranteed senior
unsecured notes and existing liquidity will be used to repay SVC's
$800 million notes and $350 million notes that each come due in
2025.
The downgrade of SVC's senior unsecured ratings reflects the REIT's
weak operating performance and deteriorating cash flow trends,
which is impacting key credit metrics. In particular, Moody's
expects weakness from SVC's hotel operations and higher interest
costs from the new $1.2 billion notes will keep fixed charge
coverage below 1.7x over the coming year. This leaves the REIT with
limited cushion on its bond covenants, which requires debt service
coverage of at least 1.5x. Fixed charge coverage could decline
further in the coming years, absent a material improvement in the
REIT's hotel operations, as SVC will need to refinance $800 million
of notes with a weighted average cost of 5% that mature in 2026.
SVC has been successful in refinancing looming maturities, however
this has been in the form of higher cost debt, some of which
includes encumbrance of higher-quality assets. This leaves SVC with
weakened flexibility as it continues to address future refinancing
needs.
The negative outlook reflects weak operating trends and the risk
that the cushion in SVC's debt service coverage covenant in the
bond indenture will erode further.
Following the action, SVC's guaranteed senior unsecured notes are
rated at the same level as the REIT's B2 CFR. This reflects SVC's
evolving capital structure, where the majority of its debt now
consists of first mortgage liens or unsecured bonds with subsidiary
guarantees.
RATINGS RATIONALE
SVC's CFR reflects its high financial leverage and weak fixed
charge coverage and an operating environment that will make it
challenging for the company to meaningfully reduce leverage in the
near term. Moody's expects growth, particularly for SVC's hotel
portfolio, to moderate going forward due to recessionary pressures
stemming from inflationary headwinds and higher interest rates.
First quarter 2024 results were unexpectedly weak with RevPAR down
3.5% year-over-year, driven by a 90 basis point decline in average
daily rate and 160 basis point decline in occupancy. The weakness
was driven by softening in transient and business travel across
SVC's select service portfolio, in addition to disruptions due to
hotel renovations. Excluding active renovation projects, RevPAR was
still down 1.1% versus the prior year period.
Despite these challenges, SVC's ratings are supported by the
company's meaningful scale and its portfolio mix, including hotels
and net lease service and necessity-based retail properties, which
provide diversification to cash flows. The ratings also reflect the
value of its unencumbered asset pool, which the company has
leveraged successfully in recent transactions to manage its capital
needs. Pro forma for the new senior unsecured notes and subsequent
repayment of 2025 maturities, SVC will have over $7 billion in
unencumbered assets on a book value basis.
SVC's SGL-4 rating reflects a weak liquidity profile given expected
sources and uses over the next 24 month period. Pro forma liquidity
is comprised of $87 million in cash on hand and full availability
under SVC's $650 million secured credit facility due June 2027,
which was downsized from $800 million in its June 2023 refinancing.
Debt maturities after the proposed issuance and pay down of 2025
maturities include $800 million due in 2026, $850 million due in
2027, and $1 billion due in 2028. Moody's expects the company to
manage its near-term maturities primarily through additional
secured debt funding and/or higher cost of capital unsecured debt,
though traditional refinancing will be harder to come by due to the
REIT's weak financial profile. SVC maintains a certain level of
financial flexibility with a large, unencumbered portfolio of about
$7 billion but the size and quality of this pool continues to
diminish with the delivery of first lien mortgages and equity
interests on certain higher quality properties to secure
obligations. Moody's also notes that the REIT retains limited
cushion on the debt service coverage covenant within its bond
indenture.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A downgrade of SVC's ratings could occur should the company fail to
maintain sufficient liquidity related to near-term maturities or if
it continues to materially encumber more assets. Fixed charge
coverage below 1.5x, Net Debt/EBITDA above 11.5x, or a
deterioration in operating performance could also lead to a
downgrade.
SVC's ratings could be upgraded if the REIT were to maintain ample
long-term liquidity. A return to an unsecured funding strategy,
improving Net Debt/EBITDA below 8.5x and fixed charge coverage
closer to 2.0x, as well as demonstration of earnings stability on a
sustained basis, particularly in its hotel business, would also
support an upgrade.
Service Properties Trust is a real estate investment trust (REIT)
which owns a diverse portfolio of hotels and net lease service
retail (businesses that sell non-physical goods and services) and
necessity-based retail properties across the United States and in
Puerto Rico and Canada. SVC is managed by the operating subsidiary
of The RMR Group Inc., an alternative asset management company
headquartered in Newton, MA.
The principal methodology used in these ratings was REITs and Other
Commercial Real Estate Firms published in February 2024.
SERVICE PROPERTIES: S&P Rates Guaranteed Unsecured Notes 'BB'
-------------------------------------------------------------
S&P Global Ratings assigned its 'BB' issue-level rating and '1'
recovery rating to Service Properties Trust's (SVC) guaranteed
senior unsecured notes due 2029 and 2032. The '1' recovery rating
indicates its expectation of very high (90%-100%; rounded estimate
95%) recovery in the event of a payment default. The company plans
to use the proceeds from the notes to redeem its outstanding $350
million 4.5% senior unsecured notes and $800 million 7.5%
guaranteed senior unsecured notes due 2025.
S&P said, "Our 'B+' issuer credit rating, stable outlook, and other
issue-level ratings are unchanged. We view the company addressing
its 2025 maturities well in advance and accessing the unsecured
debt market positively. However, credit protection metrics remain
pressured, and the company's weighted average interest rate will
likely increase modestly following this transaction. Additionally,
while operating performance has been relatively stable in recent
quarters, we expect limited EBITDA growth in 2024, resulting in
minimal change in the company's credit protection metrics."
ISSUE RATINGS—RECOVERY ANALYSIS
Key analytical factors
-- Certain subsidiaries guarantee SVC's revolving credit facility,
which is secured by an equity pledge of the subsidiary guarantors
owning the 72 properties within the revolver collateral group.
-- The senior secured notes are fully and unconditionally
guaranteed by subsidiaries that own the 70 travel center properties
in addition to the unencumbered unsecured subsidiary guarantees
that are also provided to the guaranteed senior unsecured notes.
-- Remaining existing senior unsecured notes issued by SVC do not
benefit from any subsidiary guarantees.
-- S&P estimates a gross recovery value of $5.16 billion assuming
a blended capitalization rate of 9.86% and net operating income
(NOI) value of $509 million at emergence.
-- S&P assumes the revolving credit facility is 65% drawn at
default, with the company acquiring new properties at an 8.5% cap
rate.
S&P's simulated default scenario considers a 2028 payment default,
due to a deep economic recession that significantly reduces
consumer demand for hotels and impairs the company's occupancy and
operator rent coverage for its properties in its net lease
portfolio. A significant loss in rental revenue for an extended
period would compromise SVC's ability to generate adequate cash
flow to service its debt and other fixed charge obligations such as
maintenance costs.
Simulated default assumptions
-- Simulated year of default: 2028
-- Blended stress on NOI: 25%
-- NOI at emergence: $509 million
-- Blended capitalization rate: 9.86%
Simplified waterfall
-- Gross recovery value: $5.16 billion
-- Property-level costs (5%): $258 million
-- Aggregate property-level debt (less deficiency claims): $476
million
-- Aggregate residual value: $4.43 billion
-- Administrative expenses (5%): $221 million
-- Net recovery value: $4.21 billion
-- Secured notes collateral recovery value: $672 million
-- Secured notes outstanding: $1.04 billion
-- Secured notes deficiency claim: $371 million
-- Unencumbered value from subsidiary guarantors: $2.89 billion
-- Guaranteed unsecured senior notes outstanding: $1.71 billion
-- Secured notes deficiency claim: $371 million
-- Total guaranteed unsecured claims: $2.08 billion
-- Recovery expectations for guaranteed unsecured notes:
(90%-100%, rounded estimate 95%)
-- Total recovery for secured notes (including recovery from
deficiency claim): $1.04 billion
-- Secured notes outstanding: $1.04 billion
-- Recovery expectations for secured notes: (90%-100%, rounded
estimate 95%)
-- Total recovery for unsecured (nonguaranteed) notes (including
residual value from revolver collateral): $1.01 billion
-- Aggregate unsecured nonguaranteed note debt outstanding: $2.48
billion
-- Recovery expectations for unsecured (nonguaranteed) notes:
30%-50%, rounded estimate 40%)
All debt amounts include six months of prepetition interest,
principal amortization payments made up to the default year, and
debt obligations that mature before the default year. S&P assumes
they are refinanced at similar terms, with maturity dates extended
to the default year or later.
*The '1' recovery rating reflects very high (90%-100%) recovery for
the senior secured noteholders and guaranteed senior unsecured
noteholders. S&P said, "Per our criteria, there is no recovery
rating cap when the issuer credit rating is in the 'B' category or
lower. As a result, our 'BB' rating on the senior unsecured notes
is two notches above our 'B+' issuer credit rating. However, for
unsecured notes subordinate to issues with subsidiary guarantees,
we rate that debt 'B+' based on average (30%-50%) recovery and a
recovery rating of '4'."
SINTX TECHNOLOGIES: Incurs $886K Net Loss in First Quarter
----------------------------------------------------------
SINTX Technologies, Inc., filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $886,000 on $687,000 of total revenue for the three months ended
March 31, 2024, compared to a net loss of $293,000 on $539,000 of
total revenue for the three months ended March 31, 2023.
As of March 31, 2024, the Company had $17.56 million in total
assets, $7.63 million in total liabilities, and $9.93 million in
total stockholders' equity.
SINTX said, "If the Company seeks to obtain additional equity
and/or debt financing, such funding is not assured and may not be
available to the Company on favorable or acceptable terms and may
involve significant restrictive covenants. Any additional equity
financing is also not assured and, if available to the Company,
will most likely be dilutive to its current stockholders. If the
Company is not able to obtain additional debt or equity financing
on a timely basis, the impact on the Company will be material and
adverse. These uncertainties raise substantial doubt about our
ability to continue as a going concern. The consolidated financial
statements do not include any adjustments that might result from
the outcome of these uncertainties."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1269026/000149315224018961/form10-q.htm
About SINTX Technologies
Headquartered in Salt Lake City, Utah, SINTX Technologies, Inc. --
https://ir.sintx.com/ -- is an advanced ceramics company that
develops and commercializes materials, components, and technologies
for biomedical, technical, and antipathogenic applications. The
core strength of SINTX Technologies is the manufacturing, research,
and development of advanced ceramics for external partners.
Lehi, Utah-based Tanner LLC, the Company's auditor since 2017,
issued a "going concern" qualification in its report dated March
27, 2024, citing that the Company has recurring losses from
operations and negative operating cash flows and needs to obtain
additional financing to finance its operations. These issues raise
substantial doubt about its ability to continue as a going concern.
SORENSON COMMUNICATIONS: S&P Withdraws 'B-' Issuer Credit Rating
----------------------------------------------------------------
S&P Global Ratings withdrew all its ratings on Sorenson
Communications LLC, including its 'B-' issuer credit rating. The
company requested the withdrawal following the completion of its
refinancing and the full repayment of its rated debt. At the time
of the withdrawal, S&P's outlook on Sorenson was stable.
SPHERE 3D: Incurs $4.48 Million Net Loss in First Quarter
---------------------------------------------------------
Sphere 3D Corp. filed with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q reporting a net loss of $4.48
million on $6.95 million of total revenues for the three months
ended March 31, 2024, compared to a net loss of $3.49 million on
$3.03 million of total revenues for the three months ended March
31, 2023.
As of March 31, 2024, the Company had $41.95 million in total
assets, $5.01 million in total current liabilities, $9.47 million
in temporary equity, and $27.47 million in total shareholders'
equity.
The Company has recurring losses from operations and incurred a net
loss of approximately $4.5 million for the three months ended March
31, 2024. Management has projected that based on the Company's
hashing rate at March 31, 2024, cash on hand may not be sufficient
to allow the Company to continue operations and there is
substantial doubt about the Company's ability to continue as a
going concern within 12 months from the date of issuance of the
financial statements if the Company is unable to raise additional
funding for operations.
Sphere 3D said, "We expect our working capital needs to increase in
the future as we continue to expand and enhance our operations.
Our ability to raise additional funds for working capital through
equity or debt financings or other sources may depend on the
financial success of our then current business and successful
implementation of our key strategic initiatives, financial,
economic and market conditions and other factors, some of which are
beyond our control. Further equity financings may have a dilutive
effect on shareholders and any debt financing, if available, may
require restrictions to be placed on our future financing and
operating activities. We require additional capital and if we are
unsuccessful in raising that capital at a reasonable cost and at
the required times, or at all, we may not be able to continue our
business operations in the cryptocurrency mining industry or we may
be unable to advance our growth initiatives, either of which could
adversely impact our business, financial condition and results of
operations."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1591956/000159195624000012/any-20240331.htm
About Sphere 3D
Sphere 3D Corp. (NASDAQ: ANY) -- Sphere3D.com -- is a
cryptocurrency miner growing its industrial-scale Bitcoin mining
operation through the capital-efficient procurement of
next-generation mining equipment and partnering with best-in-class
data center operators. Sphere 3D is dedicated to growing
shareholder value while honoring its commitment to strict
environmental, social, and governance standards.
Houston, Texas-based MaloneBailey, LLP, the Company's auditor since
2022, issued a "going concern" qualification in its report dated
March 13, 2024, citing that the Company has suffered recurring
losses from operations and does not expect to have sufficient
working capital to fund its operations that raises substantial
doubt about its ability to continue as a going concern.
SPIRIT AIRLINES: Fitch Lowers Rating on 2017-1 Cl. B Certs to 'B+'
------------------------------------------------------------------
Fitch Ratings has downgraded Spirit Airlines' 2017-1 class B
certificates to 'B+' from 'BB'. The downgrade is driven by Fitch's
recent downgrade of Spirit's Issuer Default Rating (IDR) to 'CCC'
from 'B-'. Fitch has also affirmed the 2017-1 class AA certificates
at 'A+', the class A certificates at 'A' and the 2015-1 class A
certificates at 'A'.
The class A certificates are derived through Fitch's top-down
approach, while the class B certificates are notched off of the
underlying airline rating. The class A certificates are supported
by healthy overcollateralization. Loan-to-values (LTVs) for both
the 2017-1 and 2015-1 transactions remain relatively steady since
Fitch's last review, and base values for the A321s and A320s in
these portfolios have performed in line with Fitch's standard
depreciation assumptions over the last year.
Should Spirit enter bankruptcy, Fitch would further downgrade the
class B certificates. However, modest LTVs and good recovery
prospects may support ratings in the low 'B' or high 'CCC' range.
The class AA and A certificate ratings remain supported by solid
collateral coverage.
KEY RATING DRIVERS
2017-1 Class AA and Class A Certificates: The class AA certificate
ratings are primarily driven by Fitch's top-down approach, which
implies a 'AA-' rating. However, Spirit's IDR of 'CCC' caps the
class AA certificates at 'A+', given senior tranches are precluded
from reaching the 'AA' category under Fitch's EETC criteria if the
underlying airline is rated 'B-' or lower.
The ratings for the class A certificates for both the 2017-1 and
2015-1 transactions are derived through Fitch's top-down approach.
Loan-to-values (LTVs) for both transactions have increased slightly
since Fitch's last review, but they maintain a moderate level of
cushion at the current rating category. Both also benefit from
strong levels of overcollateralization with LTVs at 84.9% for the
2015-1 certificates and 91.6% for the 2017-1 certificates in
Fitch's 'A' level stress scenario.
The weaker headroom on the 2017-1s is offset by strong market
values for both A320 and A321CEO aircraft, which are trading above
current base values.
Class B Certificate Ratings: Fitch typically notches subordinated
tranche EETC ratings from the airline's IDR based on three primary
variables: 1) the affirmation factor (0-3 notches) 2) the presence
of a liquidity facility, (0-1 notch) and 3) recovery prospects (0-1
notch). The four-notch uplift from Spirit's 'CCC' IDR reflects a
moderate-to-high affirmation factor (+2 notches), the benefit of a
liquidity facility (+1 notch), and solid recovery prospects in a
stress scenario (+1). In addition, the LTVs on the 2017-1 class B
certificates pass Fitch's 'BB' level stress test with limited
headroom, further supporting the 'B+' rating.
Affirmation Factor: Fitch chose not to assign the maximum +3 notch
affirmation factor uplift for the 2017-1s. While Fitch views the
likelihood of affirmation in a distress scenario as high, the
uplift is limited by the shrinking proportion of Spirit's total
fleet represented by the transaction as the company continues to
grow. The collateral aircraft are also becoming marginally less
attractive as Spirit takes delivery of more A320 and A321 NEOs,
which are more fuel efficient. However, on April 8, 2024 Spirit
agreed with Airbus to defer all aircraft that were scheduled to be
delivered in the second quarter of 2025 through the end of 2026 to
2030-2031. This included 6 A320NEOS and 9 A321NEOs originally
expected in 2025 but does not include the direct-lease aircraft
scheduled for delivery in that period, one in both the second and
third quarter of 2025.
Although Spirit's fleet is growing, the two EETCs still make up a
sizeable proportion of its assets. The 2017-1 pool contains 12
aircraft, or around 7% of Spirit's fleet. The A321's larger size
allows the company to add capacity on denser routes without
necessarily adding additional frequencies. The larger gauge of the
A321 also leads to a lower cost per available seat mile compared to
its smaller cousins, which is key to Spirit's low-cost strategy.
DERIVATION SUMMARY
The class AA certificates and class A certificates rated in both of
Spirit's EETC transactions are in line with other EETC class AA and
A certificate ratings in Fitch's coverage. The level of
overcollateralization and LTVs are consistent with similar-rated
certificates.
The class B certificates are rated slightly lower than other
subordinated EETC certificates with similar credit profiles, given
Spirit's constrained IDR ('CCC').
KEY ASSUMPTIONS
Key assumptions within the rating case for the issuer include a
harsh downside scenario in which Spirit declares bankruptcy,
chooses to reject the collateral aircraft, and where the aircraft
are remarketed in the midst of a severe slump in aircraft values.
Fitch's models also incorporate a full draw on liquidity facilities
and include assumptions for repossession and remarketing costs. At
the 'A' level, Fitch stresses all aircraft (A320 and A321CEOs) in
both the 2015-1 and 2017-1 transactions at 25%. This is the
midpoint of Fitch's tier 1 aircraft stress rat es (20-30%).
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
Class AA and A Certificates: The class AA and A certificate ratings
are primarily based on a top-down analysis based on the value of
the collateral. Upgrades may be driven by stable or increasing
values for the A321 and A320 along with continued principal
amortization leading to improved collateral coverage. An upgrade to
the class AA certificates is unlikely, given Spirit's IDR is at
'CCC'.
Class B Certificates:
The class B certificates are linked to Spirit's corporate rating.
Therefore, if Spirit were upgraded to 'CCC+' the class B
certificates would be upgraded as well.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
Class AA and A Certificates:
Negative rating actions could be driven by an unexpected decline in
collateral values. Senior tranche ratings could also be affected by
a perceived change in the affirmation factor or deterioration in
the underlying airline credit. The transaction ratings may be
impacted in the future by pressures on A320 CEO family values or
changes in value stress rates utilized in Fitch's models as the
A320 NEO family becomes a more dominant presence in the global
aircraft market.
Class B Certificates:
The class B certificates are linked to Spirit's corporate rating.
Therefore, if Spirit were downgraded to 'CCC-' the class B
certificates would be downgraded as well. Fitch currently views the
Affirmation Factor for each Spirit EETC as moderate. This could
weaken over time as the collateral aircraft age and become a
smaller portion of Spirit's total fleet. Negative actions could be
driven by lower recovery prospects driven by weaker aircraft
values.
LIQUIDITY AND DEBT STRUCTURE
Liquidity Facilities:
2017-1: The AA and A certificates benefit from dedicated 18-month
liquidity facilities which will be provided by Commonwealth Bank of
Australia, New York Branch (A+/F1/Stable).
2015-1: The class A certificates feature an 18-month liquidity
facility provided by Natixis (A/F1/Stable).
ISSUER PROFILE
Spirit Airlines, Inc. is a Florida-based ultra-low cost air
carrier.
Entity/Debt Rating Prior
----------- ------ -----
Spirit Airlines Pass
Through Trust
Certificates Series
2017-1
senior secured LT A Affirmed A
senior secured LT A+ Affirmed A+
senior secured LT B+ Downgrade BB
Spirit Airlines Pass
Through Trust
Certificates Series
2015-1
senior secured LT A Affirmed A
SPIRIT AIRLINES: Reports $142.6MM Net Loss in 2024 First Quarter
----------------------------------------------------------------
Spirit Airlines filed with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q reporting a net loss of $142.6
million for the three months ended March 31, 2024, compared to a
net loss of $103.9 million for the three months ended March 31,
2023.
"While we reported a loss in the first quarter 2024, we are making
progress towards our financial goals. I thank the entire Spirit
team for their continued focus on running a reliable operation and
delivering value to our Guests as we implement our go-forward
standalone plan. There are numerous steps to rollout the plan in a
successful, orderly fashion, but we are on track and we are excited
to unveil the milestones to you over the coming months," said Ted
Christie, Spirit's President and Chief Executive Officer.
"The competitive environment remains challenging due to elevated
capacity in many of the markets we serve. Nevertheless, we are
confident that the strategic changes we are implementing, together
with our cost saving initiatives, will allow Spirit to compete
effectively in today's marketplace and drive continuous improvement
in the years ahead."
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/ensaf5s2
About Spirit Airlines
Spirit Airlines Inc. is a major United States ultra-low cost
airline headquartered in Miramar, Florida, in the Miami
metropolitan area.
As of March 31, 2024, the Company had $9.5 billion in total assets,
$8.5 billion in total liabilities, and $1 billion in total
stockholders' equity.
* * *
In January 2024, S&P Global Ratings lowered its issuer credit
rating on Spirit Airlines to 'CCC+' from 'B'. S&P also lowered its
ratings on Spirit's enhanced equipment trust certificates (EETCs)
in line with the lower issuer rating. The negative outlook
reflects S&P's view that Spirit's capital structure is vulnerable
and dependent on favorable market conditions or a significant
improvement in its financial performance to address its upcoming
debt maturities.
Also in January 2024, Moody's Investors Service downgraded its
ratings of Spirit Airlines, including the corporate family rating
to Caa2 from Caa1 and probability of default rating to Caa2-PD from
Caa1-PD. Moody's also downgraded the backed senior secured rating
assigned to Spirit IP Cayman Ltd.'s 8% senior notes, which are
secured by the company's loyalty program and brand IP, to Caa2 from
B2. The speculative grade liquidity rating remains unchanged at
SGL-3 and the rating outlook remains negative. The downgrade of
the corporate family rating to Caa2 reflects Moody's belief that
the potential of a default has increased since Judge William Young
ruled in January that the agreed acquisition by JetBlue Airways
Corp. would be anti-competitive and a violation of the Clayton Act.
The downgrades of the CFR as well as of the senior notes secured by
Spirit's loyalty program IP and brand IP reflect the increased
potential of a default and less than a full recovery, whether in a
formal reorganization or if the senior secured notes are refinanced
or retired for less than face value. The Caa2 instrument rating
incorporates a negative one notch override of the LGD model to
reflect the potential for a more than nominal loss on the
instrument in a restructuring or exchange scenario. Following the
ruling on January 16, the market price of the Notes fell to around
50 from the low to mid-70s since mid-November. The notes price has
increased to the low 60s following the announcement that Spirit and
JetBlue would appeal the District Court's ruling.
Moody's continues to expect Spirit's operations to generate an
operating loss in 2024 and again in 2025 on a reported basis.
Moody's forecasts about breakeven operating cash flow in 2024, an
improvement from its forecast for negative $150 million in 2023.
Moody's projects cash to fall from the $1.1 billion on hand on Sep.
30, 2023, towards $700 million by the end of 2024.
The Company's $300 million revolver expires on Sept. 30, 2025.
Alternate sources of liquidity are very limited.
In September 2023, Egan-Jones Ratings Company maintained its 'CCC+'
foreign currency and local currency senior unsecured ratings on
debt issued by Spirit Airlines, Inc.
STRAITLINE PUMPS: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Straitline Pumps, LLC
13750 San Pedro Ave.
Suite 560
San Antonio, TX 78232
Chapter 11 Petition Date: May 15, 2024
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 24-60020
Judge: Hon. Christopher M. Lopez
Debtor's Counsel: Joshua N. Eppich, Esq.
BONDS ELLIS EPPICH SCHAFER JONES LLP
420 Throckmorton Street, Suite 1000
Fort Worth, TX 76102
Tel: 817-405-6900
Email: Joshua@bondsellis.com
Estimated Assets: $50 million to $100 million
Estimated Liabilities: $50 million to $100 million
The petition was signed by Brad Walker as chief restructuring
officer.
A copy of the Debtor's list of 20 largest unsecured creditors is
now available for download. Follow this link to get a copy today
https://www.pacermonitor.com.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/KAWBTKI/Straitline_Pumps_LLC__txsbke-24-60020__0001.0.pdf?mcid=tGE4TAMA
TALEN ENERGY: Moody's Alters Outlook on 'B1' CFR to Positive
------------------------------------------------------------
Moody's Ratings has changed the outlook of Talen Energy Supply, LLC
to positive from stable. Moody's also affirmed the ratings of
Talen, including its B1 Corporate Family Rating and B1-PD
Probability of Default Rating, the Ba3 senior secured rating on its
notes, term loans and revolving credit facility as well as the B3
rating on the senior unsecured revenue bonds issued by the
Pennsylvania Economic Development Financing Authority (PEDFA).
Talen's Speculative Grade Liquidity (SGL) rating was upgraded to
SGL-1 from SGL-2.
RATINGS RATIONALE
"The positive outlook reflects Moody's expectation that Talen's
financial profile will improve following a power purchase agreement
executed with Amazon and debt repayment," stated Edna Marinelarena,
Moody's Assistant Vice President. On March 4, 2024, Talen announced
the sale of its 960 MW Cumulus data center campus to Amazon.com,
Inc. (Amazon, A1 stable). As part of the transaction, Talen
entered in to an initial 10-year, fixed price PPA with Amazon to
supply power to the data center. Talen and Amazon also executed a
separate agreement that will allow for Talen to receive additional
revenue from the sale of the associated carbon free energy
produced.
The positive outlook also considers Talen's reduced exposure to
wholesale power market volatility as a result of the nuclear
production tax credits (PTC) included in the Inflation Reduction
Act of 2022. When incorporating the additional contracted cash flow
from the Amazon PPA, Talen's risk profile and insulation from the
merchant power markets both improve further.
Talen used some of the proceeds from the data center sale to repay
an outstanding $186 million loan at Cumulus, which Moody's had
consolidated into Talen's debt profile because of Talen's majority
ownership stake in Cumulus Digital Holdings LLC (Cumulus Digital).
Talen also purchased the remaining about 5% equity stake in Cumulus
Digital for $38 million. At year-end December 31, 2023, Talen had
about $2.8 billion of long-term debt outstanding, which was reduced
to about $2.6 billion after the loan repayment.
At year-end December 31, 2023, Talen's financial metrics were
strong including its ratio of cash flow from operations before
changes in working capital (CFO pre-WC) to debt at about 15%.
Moody's project that Talen's ratio could be sustained above its
established threshold for a possible upgrade of 13%, or 9% after
adjusting for nuclear fuel, over the long-term because of the
contracted nature of the PPA revenue and the company's modest
capital needs. Talen's debt to EBITDA, which was 6.3x in 2023, is
projected to decline closer to 4.0x in 2025 and could decline to
about 3.5x thereafter based on incremental sales under the Amazon
PPA.
These projections assume there will no new long-term debt over the
next several years and EBITDA of about $700 million as a result of
the benefit from both the nuclear PTC and the PPA revenues, plus
any growth related to the PPA increments. Additionally, Moody's see
Talen generating positive free cash flow of about $200 million to
$300 million over the next several years due to flat capital
spending averaging about $200 million annually.
Talen's B1 rating is supported by its nuclear and fossil fuel power
plant operations that produced strong cash flow in 2023. The robust
cash flow production was largely driven by the high wholesale
market prices in 2022 and 2023, which has benefitted Talen into
2024 given the company's highly hedged position of more than 80% of
its generation. Talen's credit further incorporates the higher
business risk stemming from its ownership stake of Cumulus
Digital.
On May 1, 2024, Talen announced that it had closed on the sale of
its 1.7 GW of natural gas generating assets located in Texas to San
Antonio (City of) TX Combined Util. Ent. (CPS Energy, Aa2 stable)
for $785 million (gross proceeds). Moody's view the sale of these
assets as having no material negative impact on Talen's overall
business profile because they represented about 14% of total owned
generation, although the company is now more concentrated in the
PJM Interconnection RTO (PJM). The majority of Talen's cash flow
production has historically been derived from its 10.7 GW of
nuclear, natural gas and coal fired power plants located in PJM and
these assets now represent about 98% of total generation.
Liquidity
The SGL-1 rating reflects Talen's very good liquidity over the next
12 to 18 months. At March 31, 2024, Talen had about $597 million in
cash and cash equivalents and, including the Texas asset and data
center sales, Moody's estimate Talen's cash flow for 2024 will be
about $1.3 billion. This compares favorably to about $200 million
of estimated capital expenditures and $9 million in annual
amortization of debt. The company also announced the upsizing of
its remaining stock repurchase program to $1.0 billion from $300
million, which could adversely affect liquidity if aggressively
executed.
Talen has access to a $700 million senior secured revolving bank
credit facility, which is largely available with about $156 million
outstanding for letters of credit at March 31, 2024. The revolver's
only financial covenant is a springing maximum consolidated first
lien net leverage ratio that has escalated quarterly since
emergence from bankruptcy. At the start, at June 30, 2023 the ratio
max was 2.75x, increasing to 3.0x at September 30, 2023, 3.5x at
December 31, 2023, 4.0x at March 31, 2024 and 4.25x at June 30,
2024 and thereafter. At March 31, 2024, Talen was comfortably in
compliance with the covenant at a first lien net leverage ratio and
reported a total net leverage ratio of 1.2x as of May 6, 2024 cash
position. Moody's expect the company to continue to meet these
financial covenants and maintain adequate headroom.
Outlook
The positive outlook incorporates Moody's expectation that Talen's
financial profile will improve as more of its cash flow is derived
from contracted revenue sources. Moody's expect Talen's generating
assets to operate with a high availability and capability factors,
thereby generating strong cash flow that will support higher credit
metrics including a ratio of CFO pre-WC to debt above 13%, or 9%
after adjusting for nuclear fuel expense. Additionally, Moody's
expect the company to generate positive free cash flow and incur no
additional new debt for the next several years, which should
support an improvement in credit quality.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors the could lead to an upgrade
A rating upgrade could be considered if Talen continues to
demonstrate a track record of operating and financial stability, as
well as strong liquidity, that results in higher credit metrics,
including a ratio of CFO pre-WC to debt sustained above 13%, or 9%
after adjusting for nuclear fuel expense, while continuing to
generate positive free cash flow.
Factors that could lead to a downgrade
A rating downgrade could result if Talen's cash flow decreases or
leverage increases, leading to a ratio of CFO pre-WC to debt below
9%, or 6% after adjusting for nuclear fuel expense. If Talen's
plant operations deteriorate, margins are negatively affected by
lower power prices, its digital businesses are unsuccessful, there
is an increase in operating costs or weakened liquidity, a
downgrade could also occur.
Talen Energy Supply is an independent power producer with about
10.7 GW of generating capacity and is wholly-owned by Talen Energy
Corporation (TEC), an OTC-listed holding company headquartered in
Houston, TX. TEC conducts all its business activities through
Talen.
Talen owns 100% of Cumulus Digital and 100% equity investment in
other Cumulus subsidiaries focused on renewable energy and battery
storage development projects. Cumulus Digital, through its
subsidiaries, owns an interest in a Bitcoin mining facility
adjacent to the Susquehanna power plant, and previously owned the
data center campus that was sold to Amazon.
LIST OF AFFECTED RATINGS
Issuer: Talen Energy Supply, LLC
Affirmations:
LT Corporate Family Rating, Affirmed B1
Probability of Default Rating, Affirmed B1-PD
Senior Secured Bank Credit Facility, Affirmed Ba3
Senior Secured Regular Bond/Debenture, Affirmed Ba3
Upgrades:
Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2
Outlook Actions:
Outlook, Changed To Positive From Stable
Issuer: Pennsylvania Economic Dev. Fin. Auth.
Affirmations:
Senior Unsecured Revenue Bonds, Affirmed B3
The principal methodology used in these ratings was Unregulated
Utilities and Unregulated Power Companies published in December
2023.
TERRASCEND CORP: Incurs $14.8 Million Net Loss in First Quarter
---------------------------------------------------------------
TerrAscend Corp. filed with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q reporting a net loss of $14.85
million on $80.63 million of net revenue for the three months ended
March 31, 2024, compared to a net loss of $22.77 million on $69.40
million of net revenue for the three months ended March 31, 2023.
As of March 31, 2024, the Company had $655.5 million in total
assets, $423.4 million in total liabilities, and $232.1 million in
total shareholders' equity.
At March 31, 2024, the Company had an accumulated deficit of
$717,398,000. During the three months ended March 31, 2024, the
Company incurred a net loss from continuing operations.
Additionally, as of March 31, 2024 the Company's current
liabilities exceeded its current assets due to loans maturing
within the current year. Therefore, the Company expects that it
may need to refinance this debt or access additional capital to
continue to fund its operations.
Terracend said, "The aforementioned indicators raise substantial
doubt about the Company's ability to continue as a going concern
for at least one year from the issuance of these Consolidated
Financial Statements. The Company believes this concern is
mitigated by steps it has taken, or intends to take to improve its
operations and cash position, including: (i) identifying access to
future capital required to pay down or refinance the Company's
maturing debt, (ii) improved cashflow growth from the Company's
consolidated operations, particularly TerrAscend's operations in
New Jersey and most recently Maryland with conversion to adult-use
sales, and (iii) various cost and efficiency improvements."
Management Comments
"For the first quarter, revenue and Adjusted EBITDA increased
materially year-over-year and we delivered another quarter of
strong positive Free Cash Flow," stated Jason Wild, executive
chairman of TerrAscend. "Independent of reform, we enter this
exciting stretch with the right team and high-performing assets.
There are also multiple catalysts on the horizon that would further
amplify our results going forward. In Pennsylvania, adult use
appears to be closer than ever given recent legislative activities
and comments from the Governor. At the federal level, the recent
news around DEA rescheduling is encouraging and, if implemented,
would dramatically improve our balance sheet and profitability.
Finally, one of TerrAscend's major differentiators is our 'wide
open map'. This enables us to strike extremely accretive deals to
enter additional attractive states via best in breed operators. We
can't wait to share more details on this front when appropriate."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1778129/000095017024056868/tsndf-20240331.htm
About Terrascend
Headquartered in Ontario, Canada, Terracend Corp. --
www.terrascend.com -- is a cannabis company that has vertically
integrated licensed operations in Pennsylvania, New Jersey,
Michigan, Maryland and California. In addition, the Company has
retail operations in Ontario, Canada with a majority-owned
dispensary in Toronto, Ontario, Canada. Notwithstanding the fact
that various states in the United States have implemented medical
cannabis laws or have otherwise legalized the use of cannabis, the
use of cannabis remains illegal under U.S. federal law for any
purpose, by way of the Controlled Substances Act of 1970 (the
"Controlled Substances Act").
Toronto, Canada-based MNP LLP, the Company's auditor since 2017,
issued a "going concern" qualification in its report dated March
14, 2024, citing that the Company has incurred a net loss from
continuing operations and has a net capital deficiency that raise
substantial doubt about its ability to continue as a going concern.
TIPPETT STUDIO: Court OKs Interim Cash Collateral Access
--------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of California,
authorized Tippett Studio, Inc. to use the cash collateral of Itria
Ventures, Inc. and the U.S. Small Business Administration and
provide adequate protection, on an interim basis, in accordance
with the budget.
As previously reported by the Troubled Company Reporter, prior to
filing the Chapter 11 bankruptcy, the Debtor and Phantom Digital
Effects Ltd. entered into a term sheet whereby Phantom will invest
$3 million in the Debtor in exchange for 80% of the equity of the
reorganized debtor pursuant to a confirmed Chapter 11 plan of
reorganization.
Pursuant to the Investment Agreement, Phanom provided an initial
$300,000 (Phantom has actually advanced $179,950 above the
$300,000) payment to the Debtor and $700,000 in working capital to
fund the Debtor during the Chapter 11 bankruptcy. Upon confirmation
of a plan of reorganization in the bankruptcy consistent with the
terms of the Investment Agreement, Phantom will provide the $2
million balance of the Investment to fund payments subject to a
confirmed plan of reorganization.
Upon the filing of the bankruptcy case, the Debtor has $16,318 its
deposit accounts located at US Bank.
While the now terminated chief executive officer Sanjay Das was in
charge of the Debtor's operations, on July 24, 2020 the Debtor
borrowed $150,000 for the SBA pursuant to the standard SBA Loan
Authorization and Agreement. Pursuant to the SBA Loan Agreement,
the Debtor granted the SBA a security interest in the Debtor's
assets. The SBA filed an UCC-1 Financing Statement with the
Secretary of State of California. As of the filing of the
bankruptcy case, the balance owed to the SBA is $150,000.
Unlike the single loan transaction with the SBA which included
reasonable repayment terms including a 3.75% interest rate and a 30
year repayment period, beginning in March 2019 through December 31,
2022, the Debtor borrowed up to $850,000 from Itria pursuant to a
Receivable Sale Agreement. Those loans were incorporated into a
settlement agreement dated March 27, 2023. Itria has filed several
UCC-1 Financing Statements with the Secretary of State of
California. These "hard money loans" have resulted in material
disruptions in the Debtor's ability to meet its cash flow
obligations and will need to be either paid in full paid off over a
reasonable period of time and a reasonable interest rate as part of
a plan of reorganization. The Itria Loan is personally guaranteed
by the Debtor's founder Phillip Tippett and his wife, Jules who
have also pledged their home as collateral to partially secure the
Itria Loan. The current balance owed to Itria is $585,000 and the
Debtor is making monthly payments to Itria in the amount of
$20,000.
The Debtor borrowed $200,000 from Dan Lanigan subject to the
secured promissory note and pledge specific movie props as
collateral.
In order to provide adequate protection to the Secured Creditors,
the Debtor will agree subject to Court approval to pay the monthly
payments to Secured Creditors until those claims are modified by
stipulation, motion or by a plan of reorganization.
The court said a further hearing on the matter is set for May 22,
2024 at 9:30 a.m.
A copy of the order is available at https://urlcurt.com/u?l=c7MjvP
from PacerMonitor.com.
About Tippett Studio, Inc.
Tippett Studio, Inc. is an established evergreen Media Production
house enabling film makers and creative directors to realize their
vision through creation of high-end digital effects for feature
films, episodic content, commercials and immersive experiences.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Cal. Case No. 24-40657) on May 1,
2024. In the petition signed by Gary Mundell, president and chief
executive officer, the Debtor disclosed $5,362,065 in assets and
$9,826,417 in liabilities.
Chris Kuhner, Esq., at KORNFIELD, NYBERG, BENDES, KUHNER & LITTLE
P.C., represents the Debtor as legal counsel.
TONIX PHARMACEUTICALS: Recurring Losses Raise Going Concern Doubt
-----------------------------------------------------------------
Tonix Pharmaceuticals Holding Corp. disclosed in a Form 10-Q Report
filed with the U.S. Securities and Exchange Commission for the
quarterly period ended March 31, 2024, that substantial doubt
exists about its ability to continue as a going concern.
The Company has suffered recurring losses from operations and
negative cash flows from operating activities. At March 31, 2024,
the Company had working capital of approximately $9.6 million and
had an accumulated deficit of approximately $615.6 million. The
Company held cash and cash equivalents of approximately $7 million
as of March 31, 2024. During the fourth quarter of 2023, the
Company engaged CBRE, an international real estate brokerage firm,
to potentially find a strategic partner for, or buyer of, its
Advanced Development Center in North Dartmouth, Massachusetts, to
align with the Company's current business objectives and
priorities. As of March 31, 2024, the Company does not have a
commitment in place to sell the building.
The Company believes that its cash resources at March 31, 2024 and
the gross proceeds of $4.4 million, that it raised from an equity
offering in the second quarter of 2024, will not meet its operating
and capital expenditure requirements through the second quarter.
The Company continues to face significant challenges and
uncertainties and must obtain additional funding through public and
private financing and collaborative arrangements with strategic
partners to increase the funds available to fund operations.
However, the Company may not be able to raise capital on terms
acceptable to the Company, or at all. Without additional funds, it
may be forced to delay, scale back or eliminate some of its
research and development activities, or other operations and
potentially delay product development in an effort to maintain
sufficient funds to continue operations. If any of these events
occurs, its ability to achieve development and commercialization
goals would be adversely affected, and the Company may be forced to
cease operations.
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/37utbs47
About Tonix Pharmaceuticals
Chatham, N.J.-based Tonix Pharmaceuticals Holding Corp., through
its wholly owned subsidiary Tonix Pharmaceuticals, Inc., is a
fully-integrated biopharmaceutical company focused on developing
and commercializing therapeutics to treat and prevent human disease
and alleviate suffering.
As of March 31, 2034, the Company has $135.3 million in total
assets, $27.2 in total liabilities, and $108.1 million in total
stockholders' equity.
TRANS-LUX CORP: Incurs $1.3 Million Net Loss in First Quarter
-------------------------------------------------------------
Trans-Lux Corporation filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $1.27 million on $2.62 million of total revenues for the three
months ended March 31, 2024, compared to a net loss of $858,000 on
$4.35 million of total revenues for the three months ended March
31, 2023.
As of March 31, 2024, the Company had $7.86 million in total
assets, $23.38 million in total liabilities, and a total
stockholders' deficit of $15.53 million.
Trans-Lux said, "The Company is dependent on future operating
performance in order to generate sufficient cash flows in order to
continue to run its businesses. Future operating performance is
dependent on general economic conditions, as well as financial,
competitive and other factors beyond our control, including the
impact of the current economic environment, the spread of major
epidemics (including coronavirus) and other related uncertainties
such as government imposed travel restrictions, interruptions to
supply chains, extended shut down of businesses and the impact of
inflation. In order to more effectively manage its cash resources,
the Company had, from time to time, increased the timetable of its
payment of some of its payables, which delayed certain product
deliveries from our vendors, which in turn delayed certain
deliveries to our customers.
"There is substantial doubt as to whether we will have adequate
liquidity, including access to the debt and equity capital markets,
to continue as a going concern over the next 12 months from the
date of issuance of this Form 10-Q. The Company continually
evaluates the need and availability of long-term capital in order
to meet its cash requirements and fund potential new
opportunities."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/99106/000151316224000065/tnlx-20240331.htm
About Trans-Lux
Headquartered in New York, New York, Trans-Lux Corporation --
http://www.trans-lux.com-- is a supplier of LED technology for
display applications. The essential elements of these systems are
the real-time, programmable digital products that the Company
designs, manufactures, distributes and services. Designed to meet
the digital signage solutions for any size venue's indoor and
outdoor needs, these displays are used primarily in applications
for the financial, banking, gaming, corporate, advertising,
transportation, entertainment and sports markets. The Company
operates in two reportable segments: Digital product sales and
Digital product lease and maintenance.
New Haven, CT-based Marcum LLP, the Company's auditor since 2015,
issued a "going concern" qualification in its report dated April
1,
2024, 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.
TRUGREEN LP: Invesco VVR Marks $1.4MM Loan at 21% Off
-----------------------------------------------------
Invesco Senior Income Trust ("VVR") has marked its $1,401,000 loan
extended to TruGreen L.P. to market at $1,104,209 or 79% of the
outstanding amount, as of February 29, 2024, according to a
disclosure contained in VVR's Form N-CSR for the fiscal year ended
February 29, 2024, filed with the U.S. Securities and Exchange
Commission.
VVR is a participant in Second Lien Term Loan to TruGreen. The loan
accrues interest at a rate of 14.07% (3 mo. Term SOFR + 8.76%) per
annum. The loan matures on November 20, 2028.
VVR is a Delaware statutory trust registered under the Investment
Company Act of 1940, as amended, as a closed-end management
investment company. VVR may participate in direct lending
opportunities through its indirect investment in the Invesco Senior
Income Loan Origination LLC, a Delaware limited liability company.
VVR owns all beneficial and economic interests in the Invesco
Senior Income Loan Origination Trust, a Massachusetts Business
Trust, which in turn owns all beneficial and economic interests in
the LLC.VVR may participate in direct lending opportunities through
its indirect investment in the Invesco Senior Income Loan
Origination LLC, a Delaware limited liability company. VVR owns all
beneficial and economic interests in the Invesco Senior Income Loan
Origination Trust, a Massachusetts Business Trust, which in turn
owns all beneficial and economic interests in the LLC.
VVR is led by Glenn Brightman, Principal Executive Officer; and
Adrien Deberghes, Principal Financial Officer. The Trust can be
reached through:
Glenn Brightman
Invesco Senior Income Trust
1555 Peachtree Street, N.E., Suite 1800
Atlanta, GA 30309
Tel: (713) 626-1919
TruGreen provides lawn care services. The Company offers healthy
lawn analysis, fertilization, tree and shrub care, weed control,
insect control, and other related services.
TTM TECHNOLOGIES: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
-----------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Ratings
(IDRs) of TTM Technologies, Inc. (TTM) and TTM Technologies China
Limited at 'BB' with a Stable Rating Outlook. Fitch has also
affirmed the senior secured debt ratings for the ABL facilities at
'BBB-'/'RR1', the term loan at 'BB+'/'RR2', and the senior
unsecured debt rating at 'BB'/'RR4'.
The ratings and Stable Outlook reflect TTM's position as a leading
manufacturer of printed circuit boards (PCBs) and complex radio
frequency (RF) components/microelectronic assemblies. The company
is well-positioned to capitalize on positive market trends in
growing end markets including aerospace & defense (A&D) and data
center computing. The rating and Outlook also reflect Fitch's
expectation that TTM will manage to moderate leverage with gross
EBITDA leverage generally around the 3x level (3.2x at Jan. 1,
2024), and possibly temporarily higher following acquisitions.
KEY RATING DRIVERS
Improved Market Position: TTM has effectively executed its strategy
to boost sales in end markets characterized by growing demand, long
product and program lifetimes, and where there is the possibility
to offer differentiated capabilities beyond PCBs. The company has
increasingly focused on the aerospace & defense end market, which
accounted for 45% of FY23 revenue, and has shifted towards
higher-value activities by supplying more complex components and
design capabilities. Less than half of A&D's revenues are derived
from PCBs. This evolution capitalizes on longer product cycles,
greater technological complexity, deeper customer engagement, lower
threat of competitive displacement, and decreased order
volatility.
The A&D end market is experiencing an uplift spurred by ongoing
global conflicts, replenishment of depleted military inventories,
and the transition towards more digitized defense systems.
Concurrently, the data center market is observing a surge in
demand, a trend Fitch expects will be sustained in the next few
years due to the extensive expansion of data center infrastructure
required to facilitate AI growth. Fitch expects these tailwinds to
support revenue expansion, even as some end markets lag.
Financial Policy and Leverage: TTM management has expressly
committed to a long-term net leverage target between 1.5x to 2.0x
and has generally maintained leverage within the range. Although
there have been instances where the net leverage ratio has
temporarily exceeded TTM's stated target following acquisitions,
the company has demonstrated a solid track-record of quickly
deleveraging following them. Gross EBITDA leverage, as calculated
by Fitch, has been around the 3x level from FY20 to FY23 (3.2x at
FYE 2023). Fitch expects TTM to organically de-leverage in FY24 due
to EBITDA growth, however, its forecast assumes that debt-funded
acquisition activity keeps gross leverage in the 3x area.
Acquisitive Growth Strategy: TTM relies heavily on acquisitions in
pursuit of its strategy. In 2022 TTM spent close to $300 million to
purchase Telephonics Corporation. The acquisition of Telephonics
aligns with the company's goal of further expanding into highly
engineered aerospace and defense offerings, and builds on its 2018
acquisition of Anaren, Inc. for almost $800 million.
Fitch believes TTM will maintain its strategy of acquiring
additional businesses with the aim of deepening its penetration in
the A&D market and strengthening its technology capabilities.
Although acquisitions may increase operational risks and
potentially cause leverage to increase temporarily, TTM has a solid
track-record of integrating acquired companies and de-leveraging
with a reasonable time-frame.
Customer Concentration: TTM's original equipment manufacturers
clients operate in concentrated markets, such as A&D, wireless
infrastructure and autos. TTM's largest single customer represented
13% of FY23 sales, and the five largest customers collectively
represented 41%. Customer concentration has been increasing over
the last few years. Nevertheless, TTM boasts a relatively broad
program portfolio within its A&D segment, which includes over 200
distinct programs, with no single program contributing more than
10% of sales
Liquidity and Financial Flexibility: As of April 1, 2024, TTM had
$440 million in cash & cash equivalents and approximately $185
million of aggregate availability on its ABLs based on letters of
credit outstanding at April 1, 2024. Fitch expects TTM to remain
meaningfully cash flow positive through the rating horizon. TTM has
minimal scheduled principal amortization ($3.5 million annually
from 2024-2026) and no debt maturities until its ABL facilities
come due in 2028. The company's significant cash balance, limited
near-term debt maturities, and expected free cash flow provide it
with ample financial flexibility.
Parent-Subsidiary Relationship: TTM is the stronger parent of its
subsidiary, TTM Technologies China Limited (weaker subsidiary).
Fitch views the strategic and operational incentives for TTM to
support TTM Technologies China Limited as high, and the legal
incentive as medium. Therefore, notching between the two entities
is equalized. TTM Technologies China Limited and co-borrower TTM
Technologies Trading (Asia) Company Limited are the borrowers on
the Asia ABL.
DERIVATION SUMMARY
TTM is well positioned comparably among industry competitors given
its top 10 position in the PCB industry, global manufacturing scale
and end-market diversification. In addition, the company's focus on
advanced-technology PCBs and higher value-added offerings, deep
engineering engagement with customers, and position as a
U.S.-domiciled PCB manufacturer with the necessary capabilities to
serve sensitive product areas in A&D and other technology markets,
position it well compared with peers.
TTM's closest Fitch-rated peers include component manufacturers,
service providers, and electronic equipment suppliers with similar
ratings such as Coherent Corp. (BB/Stable), Amkor Technology, Inc.
(BB+/Stable), MKS Instruments, Inc. (BB+/Negative), and Viavi
Solutions Inc. (BB-/Stable). In addition, TTM's indirect peers
include electronic manufacturing service (EMS) providers such as
Flex Ltd. (BBB-/Stable) and Jabil Inc. (BBB-/Stable).
TTM has weaker profitability than its closest rated peers, which
generally have EBITDA margins above 20% compared to TTM's ~13%.
Coherent Corp., a provider of engineered materials and
opto-electronic components, has moderately higher revenue, better
profitability and similar leverage on a gross basis. Fitch believes
Coherent has a more diversified business than TTM.
Amkor Technology, a leading global provider of outsourced
semiconductor assembly and test (OSAT) services, has substantially
greater revenue, lower leverage, and better profitability than
TTM.
MKS Instruments, a global provider of instruments, subsystems and
process control solutions for manufacturers of capital equipment
for the semiconductor manufacturing, industrial technologies, life
and health sciences, research and defense industries, has better
profitability than TTM. However, Fitch considers TTM to be more
diversified.
Viavi Solutions, a global provider of network test,
monitoring/assurance solutions, and optical solutions for 3D
sensing. Pro forma for Viavi's acquisition of Spirent (announced
Mar-24), leverage is forecast to be much higher than TTM's for the
foreseeable future. However, Viavi has historically had an EBITDA
margin meaningfully above that of TTM.
TTM is substantially smaller than Jabil and Flex, both of which
have revenue that exceeds TTM's by more than 10x, but at a
substantially lower level of profitability with EBITDA margins
roughly in the 5%-7% range in recent years compared to more than
13% for TTM. Fitch views these firms as having better
diversification than TTM, lower volatility of profit, and stronger
financial profiles.
KEY ASSUMPTIONS
- Revenue growth of 10% in FY24 and 8% in FY25, and 3% thereafter
mainly driven by significant growth in data center computing,
strength in A&D, and the inclusion of revenues from Fitch assumed
acquisitions;
- Fitch-adj. EBITDA margin improves to 14.4% in FY24, up from 13.0%
in FY23, due to a mix shift toward higher margin products and cost
savings from the closure of three facilities last year; Fitch
expects further EBITDA margin improvement to 15.8% in FY25 and
beyond driven mainly by improved efficiencies following the FY24
ramp of the Penang, Malaysia facility;
- Interest rates: Floating SOFR rates applicable to the ABLs and
unhedged portion of the first lien term loan of 5.2% in FY24, 4.6%
in FY25, and 4.3% in FY26 and beyond;
- Capex assumed to be around 6% of revenue in FY24 and FY25, and
under 5% thereafter;
- M&A of $450 million in FY24 and $300 million in FY26 with
acquisitions 50% debt funded;
- Share repurchases of $50 million annually.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Expectation for EBITDA leverage to be sustained below 3.0x;
- Expectation for (CFO-capex)/debt to be sustained above 15%;
- Improved diversification and increased exposure to more stable
end markets results in reduced cyclicality and improved
visibility.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Expectation for EBITDA leverage to be sustained above 4.0x due to
a change in financial policies and/or deterioration of growth and
margin expansion opportunities;
- Expectation for (CFO-capex)/debt to be sustained below 10%.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: As of April 1, 2024, TTM had $440 million in
cash & cash equivalents and approximately $185 million of aggregate
availability on its ABLs based on letters of credit outstanding at
April 1, 2024. Fitch expects TTM to remain meaningfully cash flow
positive throughout its forecast. TTM has minimal scheduled
principal amortization ($3.5 million annually from 2024-2026) and
no debt maturities until its ABL facilities come due in 2028. The
company's significant cash balance, limited near-term debt
maturities, and expected free cash flow provide it with ample
financial flexibility.
ISSUER PROFILE
TTM Technologies, Inc. (TTM) is a global manufacturer of PCBs,
engineered technology systems, RF components and RF
microwave/microelectronic assemblies. The company is one of the
largest PCB manufacturers in the world based on revenue.
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
----------- ------ -------- -----
TTM Technologies, Inc. LT IDR BB Affirmed BB
senior unsecured LT BB Affirmed RR4 BB
senior secured LT BBB- Affirmed RR1 BBB-
senior secured LT BB+ Affirmed RR2 BB+
TTM Technologies
China Limited LT IDR BB Affirmed BB
senior secured LT BBB- Affirmed RR1 BBB-
TURNONGREEN INC: Marcum LLP Raises Going Concern Doubt
------------------------------------------------------
TurnOnGreen, Inc. disclosed in a Form 10-K Report filed with the
U.S. Securities and Exchange Commission for the fiscal year ended
December 31, 2023, that its auditor expressed that there is
substantial doubt about the Company's ability to continue as a
going concern.
New York, N.Y.-based Marcum LLP, the Company's auditor since 2021,
issued a "going concern" qualification in its report dated April
11, 2024, 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.
The Company had a net loss of $4.83 million for the year ended
December 31, 2023, compared to a net loss of $4.22 million in
2022.
The Company believes that it will continue to incur operating and
net losses each quarter until at least the time it begins
significant deliveries of its products. The Company's inability to
continue as a going concern could have a negative impact on the
Company, including its ability to obtain needed financing, and
could adversely affect the trading price of the Company's common
stock. The Company intends to finance its future development
activities and its working capital needs largely through the sale
of equity securities with some additional funding from other
sources, including term notes until such time as funds provided by
operations are sufficient to fund working capital requirements.
A full-text copy of the Company's Form 10-K is available at
https://tinyurl.com/mpryy87r
About TurnOnGreen, Inc.
TurnOnGreen, Inc. (formerly known as Imperalis Holding Corp.), a
Nevada corporation, through its wholly owned subsidiaries Digital
Power Corporation and TOG Technologies Inc., is engaged in the
design, development, manufacture and sale of highly engineered,
feature-rich, high-grade power conversion and power system
solutions for mission-critical applications and processes.
As of December 31, 2023, the Company has $4.72 million in total
assets, $9.14 million in total liabilities, and $29.4 million in
total stockholders' deficit.
TYCO GROUP: Walter Dahl of Dahl Law Named Subchapter V Trustee
--------------------------------------------------------------
The U.S. Trustee for Region 17 appointed Walter Dahl, Esq., a
partner at Dahl Law, as Subchapter V trustee for Tyco Group.
Mr. Dahl will be compensated at $485 per hour for his services as
Subchapter V trustee and will be reimbursed for work-related
expenses incurred.
In court filings, Mr. Dahl declared that he is a disinterested
person according to Section 101(14) of the Bankruptcy Code.
The Subchapter V trustee can be reached at:
Walter R. Dahl
Dahl Law
2304 "N" Street
Sacramento, CA 95816-5716
Telephone: (916) 446-8800
Telecopier: (916) 741-3346
Email: wdahl@dahllaw.net
About Tyco Group
Tyco Group sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Calif. Case No. 24-11016) on April 22,
2024, with $40,000 in assets and $3,432,075 in liabilities. Imran
Damani, president, signed the petition.
Judge Rene Lastreto II presides over the case.
Michael Jay Berger, Esq. at the LAW OFFICES OF MICHAEL JAY BERGER
represents the Debtor as legal counsel.
UNITEDLEX CORP: Invesco VVR Marks $867,000 Loan at 17% Off
----------------------------------------------------------
Invesco Senior Income Trust ("VVR") has marked its $867,000 loan
extended to UnitedLex Corp. to market at $715,524 or 83% of the
outstanding amount, as of February 29, 2024, according to a
disclosure contained in VVR's Form N-CSR for the fiscal year ended
February 29, 2024, filed with the U.S. Securities and Exchange
Commission.
VVR is a participant in Term Loan to UnitedLex. The loan accrues
interest at a rate of 11.22% (1 mo. USD LIBOR + 4.75%) per annum.
The loan matures on March 20, 2027.
VVR is a Delaware statutory trust registered under the Investment
Company Act of 1940, as amended, as a closed-end management
investment company. VVR may participate in direct lending
opportunities through its indirect investment in the Invesco Senior
Income Loan Origination LLC, a Delaware limited liability company.
VVR owns all beneficial and economic interests in the Invesco
Senior Income Loan Origination Trust, a Massachusetts Business
Trust, which in turn owns all beneficial and economic interests in
the LLC.VVR may participate in direct lending opportunities through
its indirect investment in the Invesco Senior Income Loan
Origination LLC, a Delaware limited liability company. VVR owns all
beneficial and economic interests in the Invesco Senior Income Loan
Origination Trust, a Massachusetts Business Trust, which in turn
owns all beneficial and economic interests in the LLC.
VVR is led by Glenn Brightman, Principal Executive Officer; and
Adrien Deberghes, Principal Financial Officer. The Trust can be
reached through:
Glenn Brightman
Invesco Senior Income Trust
1555 Peachtree Street, N.E., Suite 1800
Atlanta, GA 30309
Tel: (713) 626-1919
UnitedLex Corporation is a Kansas-based company that provides data
management and professional services to law firms and corporate
legal departments in the areas of litigation and investigations,
intellectual property, contracts, compliance, and legal
operations.
VAPOTHERM INC: Incurs $14.8 Million Net Loss in First Quarter
-------------------------------------------------------------
Vapotherm, Inc. filed with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q disclosing a net loss of $14.84
million on $19.13 million of net revenue for the three months ended
March 31, 2024, compared to a net loss of $18.09 million on $17.73
million of net revenue for the three months ended March 31, 2023.
As of March 31, 2024, the Company had $71.91 million in total
assets, $140.39 million in total liabilities, and a total
stockholders' deficit of $68.48 million.
Vapotherm said, "Based on our recurring losses, current financial
forecasts and our continuing noncompliance with the minimum
liquidity covenant of $5.0 million...we believe our existing cash
resources and borrowing capacity under our loan agreement,
anticipated cash receipts from sales of our products and
monetization of our existing inventory balances will not be
sufficient to meet our anticipated cash requirements during the
next 12 months, which raises substantial doubt about our ability to
continue as a going concern. Given our continuing noncompliance
with the Liquidity Covenant, our term loans under our loan
agreement have become puttable at the sole discretion of our
lender. As of the date this Quarterly Report on Form 10-Q is
filed, our lender has not declared us in default on the Liquidity
Covenant. To ensure adequate liquidity, we are in discussions with
our lender about restructuring our debt and evaluating various
external financing options, although no assurance can be provided
that we will be successful in restructuring our debt or securing
additional sources of funds to support our operations, or if such
funds are available to us, that such additional financing will be
sufficient to meet our needs or on terms acceptable to us. This is
particularly true if economic and market conditions deteriorate or
if our business deteriorates. We believe our relationship with our
lender is good. If we are unable to obtain additional financing, we
would be required to curtail operations significantly, including
reducing our operating expenses which, in turn, would negatively
impact our sales, or even cease operations. Any debt restructuring
or additional financing that we raise may contain terms that are
not favorable to us and be dilutive to our stockholders. As a
result, substantial doubt exists about our ability to continue as a
going concern."
Management Comments
"In the first quarter, we made significant progress on all of our
key objectives," said Joseph Army, president and CEO. "I'd like to
thank the entire team for their efforts as we continue to drive
further adoption of our technology and prepare for next year's
launch of our Access365 home ventilation solution, which was
unveiled at MEDTRADE Dallas in March."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1253176/000095017024057002/vapo-20240331.htm
About Vapotherm
Vapotherm, Inc. (OTCQX: VAPO) -- www.vapotherm.com -- is a publicly
traded developer and manufacturer of advanced respiratory
technology based in Exeter, New Hampshire, USA. The Company
develops innovative, comfortable, non-invasive technologies for
respiratory support of patients with chronic or acute breathing
disorders. Over 4.4 million patients have been treated with the
use of Vapotherm high velocity therapy systems.
New York, New York-based Grant Thornton LLP, the Company's auditor
since 2016, issued a "going concern" qualification in its report
dated Feb. 22, 2024, citing that the Company incurred a net loss of
$58.2 million and generated a cash flow deficit from operations of
$24.3 million during the year ended Dec. 31, 2023, and as of that
date, the Company had stockholders' deficit of $55.3 million.
These conditions, along with other matters, raise substantial doubt
about the Company's ability to continue as a going concern.
VERRICA PHARMACEUTICALS: Says Losses Raise Going Concern Doubt
--------------------------------------------------------------
Verrica Pharmaceuticals Inc. disclosed in a Form 10-Q Report filed
with the U.S. Securities and Exchange Commission for the quarterly
period ended March 31, 2024, that substantial doubt exists about
its ability to continue as a going concern.
The Company has incurred substantial operating losses since
inception and expects to continue to incur significant losses for
the foreseeable future and may never become profitable. As of March
31, 2024, the Company had an accumulated deficit of $250.8 million.
For the three months ended March 31, 2024 and 2023, the Company
reported net losses of $20.3 million and $6.6 million,
respectively.
The Company believes its cash, and cash equivalents of $48.9
million as of March 31, 2024, will be sufficient to support the
Company's planned operations only into the first quarter of 2025.
The Company plans to secure additional capital in the future
through equity or debt financings, partnerships, or other sources
to carry out the Company's planned commercial and development
activities. If the Company is unable to raise capital when needed
or on attractive terms, the Company would be forced to delay,
reduce or eliminate its future commercialization efforts or
research and development programs.
"If we are unable to obtain sufficient funding, our business,
prospects, financial condition and results of operations will be
materially and adversely affected, and we may be unable to continue
as a going concern. If we are unable to continue as a going
concern, we may have to liquidate our assets and may receive less
than the value at which those assets are carried on our financial
statements, and it is likely that investors will lose all or a part
of their investment. In addition, if there remains substantial
doubt about our ability to continue as a going concern, investors
or other financing sources may be unwilling to provide additional
funding to us on commercially reasonable terms, or at all," the
Company explained.
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/yw6637vd
About Verrica Pharmaceuticals
West Chester, Pa.-based Verrica Pharmaceuticals Inc. is a
dermatology therapeutics company developing and selling medications
for skin diseases requiring medical intervention.
As of March 31, 2024, the Company has $66.3 million in total
assets, $64.8 million in total liabilities, and $1.5 million in
total stockholders' equity.
VFX FOAM: Seeks Cash Collateral Access
--------------------------------------
VFX Foam, LLC, d/b/a Themeland Studios, asks the U.S. Bankruptcy
Court for the Western District of Washington for authority to use
cash collateral and pay pre-petition wages.
Specifically, the Debtor seeks an order authorizing payment of the
Debtor's May 3, 2024 payroll for the period of April 15, 2024
through April 28, 2024 representing hours worked and commissions
earned pre-petition (iii) for an order authorizing payment of the
Debtor's May 17, 2024 payroll for the pre-petition hours worked and
commissions earned for the time period of April 29, 2024.
Over the course of 8 years, the company had experienced growth and
was on an upward trajectory. The business experienced a downturn as
a result of several factors including the Covid-19 pandemic, high
payroll costs, unforeseen costs associated with contracted
projects, and delay in project deliveries; all of which resulted in
a loss of income for the Debtor and an increase in the accumulation
of debt. The Debtor has been carrying debt forward from prior years
and has found it difficult to service both the debt and the monthly
obligations. The Debtor has made significant changes to the
business operations and has continued to see an increase in
revenue, but unfortunately has been unable to get out from under
the mounting pressures of the outstanding debt.
The Debtor seeks to use cash collateral for the period from the
petition date through August 31, 2024, or until the effective date
of the Plan whichever is earlier.
In exchange for the use of cash collateral, if appropriate, the
Debtor moves the Court to grant replacement liens on new income, to
ensure the Secured Creditors are adequately protected.
Based on a review of loan documents and a search of the Washington
State Department of Licensing, performed on May 1, 2024 and again
on May 9, 2024, the Debtor has identified 6 filers of UCC-1
financing statements. These filers are Global Financial and Leasing
Services, Corporation Service Company, as Representative/High Speed
Capital (Terminated), VF Specialty Products, LLC, U.S. Small
Business Administration, and Corporation Service Company, as
Representative Amended to Change Secured Party to Cloudfund, LLC
(Terminated).
The Debtor's cash collateral was estimated to be valued at
$76,850.
As adequate protection and for the Debtor's use of the cash
collateral, the Secured Creditor will be granted replacement liens
in the debtor's postpetition cash, accounts receivables, and the
proceeds of each of the foregoing, to the same extent and priority
as any duly perfected and unavoidable liens in cash collateral held
by the Secured Creditor as of the Petition Date, limited to the
amount of any cash collateral of the Secured Creditor as of the
petition date, to the extent that any cash collateral of the
Secured Creditor is actually, used by the Debtor.
A copy of the motion is available at https://urlcurt.com/u?l=WGJMNu
from PacerMonitor.com.
About VFX Foam, LLC
VFX Foam, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. W.D. Wash. Case No. 24-11086) on April 30,
2024. In the petition signed by Richard O'Connor, owner, the Debtor
disclosed up to $50,000 in assets and up to $10 million in
liabilities.
Judge Christopher M Alston oversees the case.
Jennifer L. Neeleman, Esq., at NEELEMAN LAW GROUP, P.C., represents
the Debtor's legal counsel.
VINTAGE WINE: Lenders Extend Forbearance Agreement Until June 4
---------------------------------------------------------------
Vintage Wine Estates, Inc. disclosed in a Form 8-K Report filed
with the U.S. Securities and Exchange Commission that on May 6,
2024, the Company and its affiliates as Borrowers, the Consenting
Lenders and the Agent under the parties' loan agreement entered
into Amendment Number One to the A&R Forbearance Agreement. The
Amendment, effective as of May 6, amends the A&R Forbearance
Agreement, to, among other things:
(a) extend the period during which the Agent and the Lenders
have agreed to forbear from enforcing their respective rights and
remedies in respect of certain events of default under the Loan
Agreement, subject to the terms and conditions therein, to June 4,
2024;
(b) extend the deadline by which the Borrowers shall make a
$10 million mandatory prepayment of the term loan to June 17, 2024;
and
(c) amend the interest rate for swingline borrowings to be
equal to one-month Adjusted Term SOFR plus 0.8% plus the Applicable
Margin for Adjusted Base Rate Revolver Loans.
As previously disclosed, on February 28, 2024, Vintage Wine
Estates, Inc., its wholly owned subsidiary Vintage Wine Estates,
Inc., certain other subsidiaries of the Borrower Agent, the lenders
party thereto, and BMO Bank N.A., as administrative agent and
collateral agent, entered into a Forbearance Agreement with respect
to the Second Amended and Restated Loan and Security Agreement,
dated of December 13, 2022, by and among the Company, the
Borrowers, the Lenders and the Agent. On April 2, 2024, the
Original Forbearance Agreement was amended and restated pursuant to
that certain Amended and Restated Forbearance Agreement.
In connection with the Amendment, the Company and the Borrowers
also agreed to pay certain fees to the Agent, including a one-time
payment to the Agent for the benefit of the Consenting Lenders
equal to five basis points on the Consenting Lenders' outstanding
loans and commitments.
The members of the lending consortium are:
* BMO BANK N.A., as successor in interest to BANK OF THE WEST,
as Agent and Lender
c/o Ron Freed, Director
* AgCountry Farm Credit Services, PCA, as Lender
c/o Lisa Caswell, Vice President Capital Markets
* Greenstone Farm Credit Services, ACA, as Lender
c/o Jake Gorter, Capital Markets Portfolio Manager
* Greenstone Farm Credit Services, FLCA, as Lender
c/o Jake Gorter, Capital Markets Portfolio Manager
* RABO AGRIFINANCE LLC, as Lender
c/o Jeff Hanson, VP-LFR
* Compeer Financial, PCA, as Lender
c/o Jeff Pavlik, Principal Credit Officer Risk
* FARM CREDIT MID-AMERICA, PCA, as Lender
c/o Tabatha Hamilton, Vice President Capital Markets
* HTLF Bank, as Lender
c/o Travis Moncada, SVP/Director
* FARM CREDIT BANK OF TEXAS, as Lender
c/o Natalie Mueller, Portfolio Manager
* COMERICA BANK, as Lender
c/o Barry Cohen, Senior Vice President
A full-text copy of the Amendment is available at
https://tinyurl.com/5df3arnj
About Vintage Wine Estates
Vintage Wine Estates, Inc. (NASDAQ: VWE) produces and sells wines
and craft spirits in the United States, Canada, and
internationally. The company offers its products under the Layer
Cake, Cameron Hughes, Clos Pegase, B.R. Cohn, Firesteed, Bar Dog,
Kunde, Cherry Pie, and others. It also owns and operates
hospitality facilities; and provides bottling, fulfillment, and
storage services to other companies on a contract basis. The
company was founded in 2019 and is headquartered in Incline
Village, Nevada.
As of Dec. 31, 2023, the Company had $502.5 million in total assets
and $391.6 million in total liabilities.
The Company cautioned in its Form 10-Q Report for the quarterly
period ended December 31, 2023 that substantial doubt exists about
its ability to continue as a going concern. According to the
Company, it did not meet certain financial debt covenants as
required per our Second Amended and Restated Loan and Security
Agreement beginning with the quarter ended December 31, 2023, which
constitutes an event of default. If the event of default is not
cured or waived, the payment of the Company's outstanding debt
under the Second A&R Loan and Security Agreement may be
accelerated. However, on February 28, 2024, the Company entered
into a forbearance agreement with respect to the Second A&R Loan
and Security Agreement under which the Agent and Lenders have
agreed to forbear from enforcing their respective rights and
remedies in respect to certain events of default under the
agreement, subject to the terms and conditions set forth in the
agreement, through March 31, 2024. If the Company does not meet the
terms of the Forbearance Agreement or if the events of default
continue past the term of the Forbearance Agreement, and if the
Agent and Lenders accelerate the maturity of the debt thereunder,
the Company does not have sufficient cash to repay the outstanding
debt.
In response to these conditions, management is actively engaged in
conversations with the lender under the Second A&R Loan and
Security Agreement regarding potential amendments and waivers to
the related financial covenants, however, whether an amendment or
waiver is obtained is not within the Company's control, and
therefore cannot be deemed probable.
VOLITIONRX LTD: Financial Strain Raises Going Concern Doubt
-----------------------------------------------------------
VolitionRx Limited disclosed in a Form 10-Q Report filed with the
U.S. Securities and Exchange Commission for the quarterly period
ended March 31, 2024, that substantial doubt exists about its
ability to continue as a going concern.
According to the Company, it has not attained profitable operations
on an ongoing basis and are dependent upon obtaining external
financing to continue to pursue our operational and strategic
plans.
For the three months ended March 31, 2024, the Company incurred a
net loss of $8.5 million, used cash flows in operating activities
of $8.3 million, and had cash and cash equivalents of $11.8 million
and an accumulated deficit of $210.9 million.
The Company has generated operating losses and has experienced
negative cash flows from operations since inception. The Company
has not generated significant revenues and expects to incur further
losses in the future, particularly from continued development of
its clinical-stage diagnostic tests, and initiation of additional
clinical trials to seek regulatory approval. The future of the
Company as an operating business will depend on its ability to
obtain sufficient capital contributions, financing and/or generate
revenues as may be required to sustain its operations. Management
plans to address the above as needed by:
(a) securing additional grant funds;
(b) obtaining additional financing through debt or equity
transactions;
(c) granting licenses and/or distribution rights to third
parties in exchange for specified up-front and/or back-end
payments; and
(d) developing and commercializing its products in an
efficient manner. Management continues to exercise tight cost
controls to conserve cash.
The Company has implemented short-term cash preservation and
cost-saving initiatives to conserve cash, however, the Company
concluded that these plans do not alleviate the substantial doubt
about the Company's ability to continue as a going concern beyond
the next 12 months.
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/y4rdymy9
About Volition
Henderson, Nev.-based VolitionRx Limited is a multi-national
epigenetics company. It has patented technologies that use
chromosomal structures, such as nucleosomes, and transcription
factors as biomarkers in cancer and other diseases.
As of March 31, 2024, the Company has $19.4 in total assets, $36.1
million in total liabilities, and $16.6 million in total
stockholders' deficit.
WC CONCRETE: Unsecureds to Split $15K in Subchapter V Plan
----------------------------------------------------------
WC Concrete, Inc. filed with the U.S. Bankruptcy Court for the
Middle District of Tennessee a Second Amended and Restated Plan of
Reorganization under Subchapter V dated April 30, 2024.
The Debtor, through accounting mistakes, accrued significant tax
obligations. The principal creditor of the Debtor is the Internal
Revenue Service and Smyrna Ready Mix.
Additionally, through levies on the bank accounts, the Debtor
defaulted in payments to concrete purveyors, which required the
Debtor to find new suppliers as well as causing the Debtor to take
out expensive loans. The Debtor was formed in 2017 and is good
standing with the state of Tennessee.
This Plan of Reorganization proposes to pay the creditors the
Debtor from cash flow from business operations and future income of
the Debtor.
Class 03 shall consist of the allowed unsecured claims not entitled
to priority and not expressly included in the definition of any
other class. This class includes, without limitation, claims
arising out of the rejection of any executory contact or unexpired
lease, each allowed claim secured by a lien on property in which
the Debtor has an interest to the extent that such claim is
determined to be unsecured to the extent that the allowed amount of
such claim exceeds the amount which such claim may be afforded
priority thereunder. The claims in this class shall be paid a
pro-rate distribution of $15,000.00 commencing on the Effective
Date of the plan, payable at the rate of $250.00 per month, until
the total amount specified herein has been paid.
The Debtor anticipates the funds to meet the plan payments shall
come from the daily operations of the Debtor's concrete
installation business.
A full-text copy of the Second Amended and Restated Plan dated
April 30, 2024 is available at https://urlcurt.com/u?l=8BpwST from
PacerMonitor.com at no charge.
Attorney for the Debtor:
Steven L. Lefkovitz, Esq.
Lefkovitz & Lefkovitz, PLLC
908 Harpeth Valley Place
Nashville, TN 37221
Telephone: (615) 256-8300
Facsimile: (615) 255-4516
Email: slefkovitz@lefkovitz.com
About WC Concrete
WC Concrete, Inc. filed a petition under Chapter 11, Subchapter V
of the Bankruptcy Code (Bankr. M.D. Tenn. Case No. 23-03939) on
Oct. 27, 2023, with $100,001 to $500,000 in assets and $500,001 to
$1 million in liabilities.
Judge Marian F. Harrison oversees the case.
Steven L. Lefkovitz, Esq., at Lefkovitz and Lefkovitz, PLLC
represents the Debtor as legal counsel.
WELCOME GROUP: Seeks Continued Cash Collateral Access
-----------------------------------------------------
Welcome Group 2, LLC and affiliates ask the U.S. Bankruptcy Court
for the District of Ohio, Eastern Division at Columbus, for
authority to continue using cash collateral and provide adequate
protection, through September 15, 2024.
The Debtors require the use of cash collateral to continue funding
necessary business expenses and to fund the costs associated with
the administration of the case.
On April 9, 2019, the Debtors executed and delivered to RSS
WFCM2019-C50-OH WG2, LLC c/o Rialto Capital Advisors, LLC a Loan
Agreement.
On April 9, 2019, the Debtors executed and delivered to Secured
Lender a Promissory Note in the original principal sum of $21.3
million.
Pursuant to Schedule 1A of the Loan Agreement, $2.475 million of
the original principal sum of the Note was allocated to Welcome
Group 2, LLC (Super 8 Zanesville), $7.8 million to Hilliard Hotels,
LLC (Hampton Inn), and $3.750 million to Dayton Hotels, LLC (Hotel
at Dayton South). In addition, $2.7 million and $4.575 million of
the original principal sum of the Note was allocated to two
additional non-debtor hotels, Elite Hospitality, LLC (Quality Inn
and Suites) and Dayton Hotels 2, LLC (Best Western Plus Englewood),
respectively.
Secured Lender filed a Complaint in the Montgomery County Common
Pleas Court against Debtors on December 28 2021, Case No. 2021 CV
05237, alleging Debtors had defaulted under the terms of the Loan
Agreement. Ultimately, the appointment of a Receiver was approved
by the Montgomery County Common Pleas Court. The Receiver took over
operational control of all three Debtor hotels and two non-debtor
affiliated hotels on August 8, 2023, almost immediately shutting
down the non-debtor affiliate hotels Quality Inn and Suites in
Obetz, Ohio and Best Western Plus in Englewood, Ohio.
The Secured Lender asserts, as security for compliance with the
terms of the Loan Agreement and Note, it properly perfected its
security interest in certain collateral owned by Hilliard Hotels,
LLC by recording (1) a mortgage recorded on April 15, 2019 with the
Shelby County, Ohio Recorder, instrument number 201900001739, (2)
an assignment of rents recorded on April 15, 2019 with the Shelby
County, Ohio Recorder, instrument number 201900003046, and (3) by
filing a UCC-1 Financing Statement on April 11, 2019 with the Ohio
Secretary of State, Initial Filing Number OH00229716850.
The Debtors and Secured Lender previously agreed to the use of cash
collateral pursuant to the current Second Extension Order. The
Debtors have complied with all terms of the Second Extension Order.
Though the Revised Budget will reflect a loss during this period,
this is in part due to added budgeted costs for legal fees in light
of the current motions and related briefing requests pending before
the Court. The Revised Budget estimated revenue is conservative,
and Debtors have adequate reserves on hand to meet all budget
requirements and continue to make adequate protection payments to
Secured Lender.
The Debtors intend to continue to provide sufficient adequate
protection to Secured Lenders in the same manner as required by the
previous Orders.
A copy of the order is available at https://urlcurt.com/u?l=RNK0gW
from PacerMonitor.com.
About Welcome Group 2
Welcome Group 2, LLC, Hilliard Hotels, LLC and Dayton Hotels, LLC
own hotels and are headquartered at 5955 E. Dublin Granville Road,
New Albany, Ohio. Debtor Hilliard Hotels owns the Hampton
Inn-Sidney, a Hilton property.
The Debtors sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Ohio Lead Case No. 23-53043) on
September 1, 2023. In the petition signed by Abhijit Vasani, as
president, InnVite Opco, Inc., sole member, the Debtor disclosed up
to $10 million in both assets and liabilities.
Judge Mina Nami Khorrami oversees the case.
Denis E. Blasius, Esq., at Thomsen Law Group, LLC, represents the
Debtor as legal counsel.
WOMEN'S CARE: Invesco VVR Marks $402,000 Loan at 22% Off
--------------------------------------------------------
Invesco Senior Income Trust ("VVR") has marked its $402,000 loan
extended to Women's Care Holdings, Inc. to market at $314,919 or
78% of the outstanding amount, as of February 29, 2024, according
to a disclosure contained in VVR's Form N-CSR for the fiscal year
ended February 29, 2024, filed with the U.S. Securities and
Exchange Commission.
VVR is a participant in a Second Lien Term Loan to Women's Care
Holdings. The loan accrues interest at a rate of 13.66% (3 mo. Term
SOFR + 8.25%) per annum. The loan matures on January 12, 2029.
VVR is a Delaware statutory trust registered under the Investment
Company Act of 1940, as amended, as a closed-end management
investment company. VVR may participate in direct lending
opportunities through its indirect investment in the Invesco Senior
Income Loan Origination LLC, a Delaware limited liability company.
VVR owns all beneficial and economic interests in the Invesco
Senior Income Loan Origination Trust, a Massachusetts Business
Trust, which in turn owns all beneficial and economic interests in
the LLC.VVR may participate in direct lending opportunities through
its indirect investment in the Invesco Senior Income Loan
Origination LLC, a Delaware limited liability company. VVR owns all
beneficial and economic interests in the Invesco Senior Income Loan
Origination Trust, a Massachusetts Business Trust, which in turn
owns all beneficial and economic interests in the LLC.
VVR is led by Glenn Brightman, Principal Executive Officer; and
Adrien Deberghes, Principal Financial Officer. The Trust can be
reached through:
Glenn Brightman
Invesco Senior Income Trust
1555 Peachtree Street, N.E., Suite 1800
Atlanta, GA 30309
Tel: (713) 626-1919
Women's Care Holdings, Inc. operates as a holding company. The
Company, through its subsidiaries, provides healthcare services.
Women's Care Holdings serves patients in the United States.
[*] More U.S. Businesses Struggling with Cash Flow, Study Shows
---------------------------------------------------------------
With current market conditions being so unstable and inflation
rising nearly every month, more U.S. businesses are struggling with
cash flow. According to Creditsafe's new research study, Perils of
Rising Debt & DSO, growing long-term debt and missed customer
payments can become the straws that broke the camel's back, putting
a strain on cash flow and pushing companies closer to bankruptcy.
Creditsafe's research found that long-term debt has increased for
over half (58%) of U.S. businesses in the last 12 months, while 74%
of businesses have seen their operating expenses increase. But
what's especially worrying is that missed customers payments are
more of the norm than the exception, with only 14% of businesses
reporting that most (76-100%) of their invoices are paid on time.
Express, the popular mall retailer, is a perfect example of how
rising debt can take its toll on the bottom line. According to a
court filing, Express had $1.2 billion in total debts as of March
2, 2024.
Plus, Creditsafe data revealed that the number of late payments
made by Express increased in the second half of 2023. These
factors, combined with its growing debt and declining sales for an
extended period, led to Express filing for bankruptcy on April 22,
highlights from the report include:
-- Missed customer payments are becoming a bigger problem for
American businesses. Creditsafe's study found that 39% of
businesses said their customers paid their invoices 1-30 days past
payment terms in the last 12 months. Plus, 46% of businesses said
their customers paid their invoices 31-60 days past payment terms
and 15% said their customers paid their invoices 61-90 days past
payment terms in the last year.
-- Invoicing mistakes, cash flow and product dissatisfaction are
leading to more missed customer payments. As our study reveals, 35%
of businesses weren't paid on time because their customers had cash
flow issues. But for 19% of businesses, their customers paid their
invoices late because they weren't satisfied with the quality of
goods or services delivered. Meanwhile, 37% of businesses said
missing PO numbers and incorrect billing information on invoices
were the reasons their customers paid late.
-- With revenue and market conditions being so unpredictable,
more businesses are creating bad debt allowances. As our study
reveals, 33% of businesses said their cash flow issues have been
caused by challenging market conditions. This isn't hard to believe
since the annual inflation rate in the U.S. rose for a second
consecutive month to 3.5% in March 2024 -- increasing from 3.2% in
February. As a result, companies are building bad debt reserves
into their cash flow. For example, 81% of businesses said they
maintain an estimated allowance for doubtful accounts as part of
their cash flow management process.
-- Trade credit: a delicate balancing act between risk and
reward. According to our study, 26% of businesses said their cash
flow issues were caused primarily by having a higher ratio of
customers using trade credit to pay for goods and services. This
makes a lot of sense given that 64% of businesses extend trade
credit to up to 30% of their entire portfolio. Plus, another 25%
extend trade credit to between 31% and 50% of their customers.
-- Cash-strapped companies with declining revenue are most
likely to pursue debt consolidation and debt restructuring.
According to our study, 84% of businesses said they're most likely
to pursue debt consolidation to get themselves out of financial
trouble. Meanwhile, 84% of businesses would go down the route of
debt restructuring.
Steve Carpenter, Country Director for North America at Creditsafe,
has seen this happen to companies enough times to know that risk
monitoring and management could go a long way toward preserving
cash flow. "When I saw our study's findings and noticed that very
few companies were being paid on time, it was a reminder of how
important it is for companies to do the proper due diligence on
their customers before they become customers. One of the best ways
to do this is by reviewing your customer's business credit report
so you see the total number of outstanding bills for the last 12
months and what portion of these bills are current and what portion
are late. Why is this important? Let's say you look at a customer's
business credit report and it shows the customer has had a poor
track record of paying their bills on time (i.e. only 30% of their
bills were paid on time in the last 12 months), that should be
taken seriously into consideration when deciding whether it makes
sense to sign a customer or not."
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.
[] BOOK REVIEW: Taking Charge
-----------------------------
Taking Charge: Management Guide to Troubled Companies and
Turnarounds
Author: John O. Whitney
Publisher: Beard Books
Softcover: 283 Pages
List Price: $34.95
Order a copy today at:
http://beardbooks.com/beardbooks/taking_charge.html
Review by Susan Pannell
Remember when Lee Iacocca was practically a national hero? He won
celebrity status by taking charge at a company so universally known
as troubled that humor columnists joked their kids grew up thinking
the corporate name was "Ayling Chrysler." Whatever else Iacocca may
have been, he was a leader, and leadership is crucial to a
successful turnaround, maintains the author.
Mediagenic names merit only passing references in Whitney's book,
however. The author's own considerable experience as a turnaround
pro has given him more than sufficient perspective and acumen to
guide managers through successful turnarounds without resorting to
name-dropping. While Whitney states that he "share[s] no personal
war stories" in this book, it was, nonetheless, written from inside
the "shoes, skin, and skull of a turnaround leader." That sense of
immediacy, of urgency and intensity, makes Taking Charge compelling
reading even for the executive who feels he or she has already
mastered the literature of turnarounds.
Whitney divides the work into two parts. Part I is succinctly
entitled "Survival," and sets out the rules for taking charge
within the crucial first 120 days. "The leader rarely succeeds who
is not clearly in charge by the end of his fourth month," Whitney
notes. Cash budgeting, the mainstay of a successful turnaround, is
given attention in almost every chapter. Woe to the inexperienced
manager who views accounts receivable management as "an arcane
activity 'handled over in accounting.'" Whitney sets out 50
questions concerning AR that the leader must deal with -- not
academic exercises, but requirements for survival.
Other internal sources for cash, including judiciously managed
accounts payable and inventory, asset restructuring, and expense
cuts, are discussed. External sources of cash, among them banks,
asset lenders, and venture capital funds; factoring receivables;
and the use of trust receipts and field warehousing, are handled in
detail. Although cash, cash, and more cash is the drumbeat of Part
I, Whitney does not slight other subjects requiring attention. Two
chapters, for example, help the turnaround manager assess how the
company got into the mess in the first place, and develop
strategies for getting out of it.
The critical subject of cash continues to resonate throughout Part
II, "Profit and Growth," although here the turnaround leader
consolidates his gains and looks ahead as the turnaround matures.
New financial, new organizational, and new marketing arrangements
are laid out in detail. Whitney also provides a checklist for the
leader to use in brainstorming strategic options for the future.
Whitney's underlying theme -- that a successful business requires
personal leadership as well as bricks and mortar, money and
machinery -- is summed up in a concluding chapter that analyzes the
qualities that make a leader. His advice is as relevant in this
1999 reprint edition as it was in 1987 when first published.
John O. Whitney had a long and distinguished career in academia and
industry. He served as the Lead Director of Church and Dwight Co.,
Inc. and on the Advisory Board of Newsbank Corp. He was Professor
of Management and Executive Director of the Deming Center for
Quality Management at Columbia Business School, which he joined in
1986. He died in 2013.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
On Thursdays, the TCR delivers a list of recently filed
Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
The Sunday TCR delivers securitization rating news from the week
then-ending.
TCR subscribers have free access to our on-line news archive.
Point your Web browser to http://TCRresources.bankrupt.com/and use
the e-mail address to which your TCR is delivered to login.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Philadelphia, Pa., USA.
Randy Antoni, Jhonas Dampog, Marites Claro, Joy Agravante,
Rousel Elaine Tumanda, Joel Anthony G. Lopez, Psyche A. Castillon,
Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and
Peter A. Chapman, Editors.
Copyright 2024. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $975 for 6 months delivered via
e-mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Peter A.
Chapman at 215-945-7000.
*** End of Transmission ***