the distressed company alert a division of new generation research, inc. Volume 15, No. 1 | January 6, 2017 Page | 1 VOLUME 15, NO. 1 | JANUARY 6, 2017 New Generation Research’s weekly newsletter that monitors and reports on companies showing signs of financial distress. PAGE COMPANY CATEGORY 3 AFGlobal Corporation Low Rating 4 CGG Miscellaneous 5 JRjr33, Inc. Miscellaneous 6 2016 Year in Review 15 Profile Updates 17 Watch List 18 Bankruptcies AFGlobal Corporation (f/k/a Ameriforge Group, Inc.) On January 5, 2017, S&P Global Ratings lowered its corporate credit rating on AFGlobal Corporation to CCC- from CCC, its first-lien debt rating to CCC- from CCC and its second-lien debt rating to C from CC. “The downgrade follows Ameriforge’s announcement that it has hired advisors to evaluate potential strategic opportunities to enhance its liquidity and address its capital structure,” said S&P Global Ratings’ credit analyst David Lagasse. “We believe the company is likely to announce a restructuring that we would view as distressed within the next six months.” S&P Global considers an exchange offer as distressed, or tantamount to default, if they believe the offer implies that investors will receive less value than the promise of the original securities and if they view the offer as distressed rather than purely opportunistic. CGG In Form 6-K filed on January 5, 2017, CGG, in this context, with a market environment expected to remain similar in 2017 and to continue to weigh on its revenues, the Company considers that the Group’s debt level is too high. It intends to commence discussions with all the stakeholders in their various jurisdictions in order to achieve a financial restructuring. The objective of this restructuring would be to provide the Company with a level of indebtedness and cost of debt that is substantially reduced and sustainably adapted to its revenues. To that end, the Company will make proposals to its creditors and to its shareholders. The market will be informed in due time of the outcome of these discussions. In order to facilitate discussions with all stakeholders, the Company wishes to have the ability to request the appointment of an ‘ad hoc representative’ which requires the agreement of the relevant creditors, in accordance with the various credit agreements and bond documents. Profile Highlights on next page…
Transcript
the distressed company alert
a division of new generation research, inc.
Volume 15, No. 1 | January 6, 2017 Page | 1
VOLUME 15, NO. 1 | JANUARY 6, 2017
New Generation Research’s weekly newsletter that monitors and reports on companies showing signs of financial distress.
AFGlobal Corporation (f/k/a Ameriforge Group, Inc.) On January 5, 2017, S&P Global Ratings lowered its corporate credit rating on AFGlobal
Corporation to CCC- from CCC, its first-lien debt rating to CCC- from CCC and its second-lien debt rating to C from CC. “The downgrade follows Ameriforge’s announcement that it has hired advisors to evaluate potential strategic opportunities to enhance its liquidity and address its capital structure,” said S&P Global Ratings’ credit analyst David Lagasse. “We believe the company is likely to announce a restructuring that we would view as distressed within the next six months.” S&P Global considers an exchange offer as distressed, or tantamount to default, if they believe the offer implies that investors will receive less value than the promise of the original securities and if they view the offer as distressed rather than purely opportunistic.
CGG
In Form 6-K filed on January 5, 2017, CGG, in this context, with a market environment expected to remain similar in 2017 and to continue to weigh on its revenues, the Company considers that the Group’s debt level is too high. It intends to commence discussions with all the stakeholders in their various jurisdictions in order to achieve a financial restructuring. The objective of this restructuring would be to provide the Company with a level of indebtedness and cost of debt that is substantially reduced and sustainably adapted to its revenues. To that end, the Company will make proposals to its creditors and to its shareholders. The market will be informed in due time of the outcome of these discussions. In order to facilitate discussions with all stakeholders, the Company wishes to have the ability to request the appointment of an ‘ad hoc representative’ which requires the agreement of the relevant creditors, in accordance with the various credit agreements and bond documents.
Profile Highlights on next page…
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Volume 15, No. 1 | January 6, 2017 Page | 2
Profile Highlights, continued JRjr33, Inc.
In Form 10-Q filed on December 30, 2016, JRjr33, Inc. filed their consolidated financial information for the quarter ended September 30, 2016. The condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business. As of September 30, 2016, the Company had an accumulated deficit of approximately $61.3 million and recurring losses from operations. The Company also had negative working capital of approximately $22.1 million and debt of approximately $14.2 million as of September 30, 2016. The Company is in negotiations with current debt holders to restructure and extend payment terms of the existing short term debt as well as potentially refinancing the debt. The Company is seeking additional funds to finance its immediate and long-term operations. The successful outcome of future financing activities cannot be determined at this time and there is no assurance that if achieved, the Company will have sufficient funds to execute its intended business plan or generate positive operating results.
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Category: Low Rating
AFGlobal Corporation (f/k/a Ameriforge Group, Inc.) 945 Bunker Hill Road, Suite 500 Houston, TX 77024 713 393-4200 Officers: Curtis Samford -- President & C.E.O.
SIC: 3462 Iron and Steel Forgings Employees: 1,616 Company Website: www.afglobal.com
Bank Debt: First Lien Sr. Secured Term B Loan due 2019, $540.0 million / Second Lien Secured Term Loan due 2020, $235.0 million / First Lien Sr. Secured Revolver due 2017, $110.0 million Business: AFGlobal Corporation designs and manufactures various products for various industries in the United States and internationally. It offers custom backyard systems, well completion equipment, riser systems and buoyancy, subsea systems and insulation products, pressure control equipment, pressure vessels, drilling rig substructure and drilling mast designs and other oil and gas related products and fully integrated systems to the oil and gas industry, including the onshore, offshore, subsea, well completion and refinery/petrochemical sectors. The Company also provides power unit components/systems, precision machined parts, aero engine components/systems, fuel delivery components/systems, nacelle rings, landing gears and repair and overhaul services to commercial and military aerospace and space exploration. In addition, it offers combustion components/systems, hot gas path components/systems, precision manufactured components, large fabricated skids, forged fabricated rings and casings, flanges and fittings, after-market services and other sub-components and fully integrated systems to thermal and nuclear power markets, and renewable. AFGlobal Corporation was formerly known as Ameriforge Group Inc. and changed its name to AFGlobal Corporation in May 2013. Financials Not Available Event: On January 5, 2017, S&P Global Ratings lowered its corporate credit rating on AFGlobal Corporation to CCC- from CCC, its first-lien debt rating to CCC- from CCC and its second-lien debt rating to C from CC. “The downgrade follows Ameriforge’s announcement that it has hired advisors to evaluate potential strategic opportunities to enhance its liquidity and address its capital structure,” said S&P Global Ratings’ credit analyst David Lagasse. “We believe the company is likely to announce a restructuring that we would view as distressed within the next six months.” Source: S&P Profile Number: 725-5786
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Category: Miscellaneous
CGG Avenue du Maine BP 191 Cedex 15 Paris, Ile-de-France 75755 33 1 64 47 45 00 Officers: Jean-George Malcor -- C.E.O. Stephane-Paul Frydman -- C.F.O.
SIC: 1382 Oil and Gas Field Exploration Services Employees: 7,000 Company Website: www.cggveritas.com Auditor: Barbier Frinault & Autres
Securities: Ticker: CGG Exchange: NYSE Common Stock; 708,260,768 shares outstanding as of March 4, 2016 (CUSIP: 12531Q204) 6 1/2% Senior Notes due 2021; $604,920,000 outstanding (CUSIP: 204384AB7) 6 7/8% Senior Notes due 2022; $419,440,000 outstanding (CUSIP: 12531TAB5) Business: CGG, a geoscience company, provides geological, geophysical and reservoir services to the oil and gas exploration and production industry in North America, the Central and South Americas, Europe, Africa, the Middle East and the Asia Pacific. The Company’s Acquisition segment offers geophysical acquisition services, including land, marine, airborne and seabed. Its Geology, Geophysics & Reservoir segment develops and licenses multi-client seismic surveys; processes seismic data; sells seismic data processing and reservoir characterization software under the geovation, Hampson-Russell, Jason and Insight Earth brands; provides geoscience and petroleum engineering consulting services, and data management services and software. The Company was formerly known as Compagnie Générale de Géophysique — Veritas SA and changed its name to CGG in 2013. Balance Sheet: ($millions) 12/31/2015 12/31/2014 Total Current Liabilities $1,055.30 $1,209.70 Total Long Term Debt $2,787.60 $2,606.90 Total Liabilities $4,154.60 $4,314.80 Total Current Assets $1,771.90 $2,029.60 Total Assets $5,513.00 $7,061.00 Income Statement: ($millions, except per share data) 12/31/2015 12/31/2014 12/31/2013 Period 12 months ending 12 months ending 12 months ending Revenue $2,100.90 $3,095.40 $3,765.80 Net Income $-1,450.20 $-1,154.40 $-698.80 Earnings Per Share $-8.19 $-6.52 $-3.95 Event: In Form 6-K filed on January 5, 2017, CGG, in this context, with a market environment expected to remain similar in 2017 and to continue to weigh on its revenues, the Company considers that the Group’s debt level is too high. It intends to commence discussions with all the stakeholders in their various jurisdictions in order to achieve a financial restructuring. Source: Form 6-K / Profile Number: 725-6132
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Category: Miscellaneous
JRjr33, Inc. 2950 North Harwood Street, 22nd Floor Dallas, TX 75201 469 913-4115 Officers: John P. Rochon -- C.E.O., President & Chairman Christopher L. Brooks -- C.F.O.
Federal Tax ID: 98-0534701 SIC: 5960 Nonstore Retailers Employees: 582 Company Website: www.jrjrnetworks.com Auditor: BDO USA, LLP
Securities: Ticker: JRJR Exchange: NYSE Common Stock; 36,085,324 shares outstanding as of June 27, 2016 (CUSIP: 46645Q106) Business: JRjr33, Inc., together with its subsidiaries, operates direct-to-consumer brands in the United States and internationally. The Company operates through five segments: Gourmet Food, Home Décor, Nutritional and Wellness, Publishing and Printing and Other. The Company offers hand-crafted baskets and a line of products for the home, including pottery, cleaning, health, beauty, home and outdoor products; hand-crafted spices, oils and other food products; nutritional supplements and skin care products; gourmet food products; stationery and paper products; and vinyl expressions for display on walls, as well as other household products through a network of independent sales representatives. The Company was formerly known as CVSL Inc. and changed its name to JRjr33, Inc. in March 2016. Balance Sheet: ($millions) 12/31/2015 12/31/2014 Total Current Liabilities $38.84 $24.65 Total Long Term Debt $12.78 $4.32 Total Liabilities $71.56 $48.32 Total Current Assets $37.72 $21.29 Total Assets $82.50 $57.31 Income Statement: ($millions, except per share data) 12/31/2015 12/31/2014 Period 12 months ending 12 months ending Revenue $138.35 $108.81 Net Income $-18.88 $-23.67 Earnings Per Share $-0.39 $-0.40 Event: In Form 10-Q filed on December 30, 2016, JRjr33, Inc. filed their consolidated financial information for the quarter ended September 30, 2016. The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business. As of September 30, 2016, the Company had an accumulated deficit of approximately $61.3 million and recurring losses from operations. Source: Form 10-Q Profile Number: 725-6460
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2016 Year in Review
The following companies were profiled in the Distressed Company Alert and subsequently filed for Chapter 11 in 2016: Bankruptcy
Date Company Event Date Event 05/04/16 Aeropostale, Inc. 03/25/16 Miscellaneous
11/14/16 American Apparel, Inc. * 10/28/16 Miscellaneous
10/24/16 American Gilsonite Company, Inc. 08/31/16 Low Rating
06/09/16 Low Rating
12/09/15 Low Rating
10/05/16 Ameritrans Capital Corporation ** 10/02/12 Audit Concern
01/11/16 Arch Coal, Inc. 09/30/15 Low Rating
05/04/15 Low Rating
02/02/15 Low Rating
05/08/14 Low Rating
10/07/13 Low Rating
03/16/09 Low Rating
07/23/07 Low Rating
03/09/16 Aspect Software Parent Inc. 12/07/15 Low Rating
11/15/16 Xtera Communications, Inc. 11/07/16 Miscellaneous
*Private company at time of bankruptcy filing **Chapter 7 ***Chapter 15
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Distressed Company Alert Profile Updates Bonanza Creek Energy, Inc. – Chapter 11 – January 4, 2017
Bonanza Creek Energy and six affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 16-10015. The Company, which is engaged primarily in acquiring, developing, exploiting and producing oil and gas properties, is represented by Mark D. Collins of Richards, Layton & Finger. A corporate release notes that the filing was initiated in order to pursue a Joint Prepackaged Plan of Reorganization in accordance with a restructuring support agreement (RSA) with certain of noteholders and one of their crude oil purchase and sale counterparties - NGL Crude Logistics - and its parent - NGL Energy Partners. The Joint Prepackaged Plan and related Disclosure Statement were filed concurrent with the petition. The release further notes that the RSA and plan provide for a substantial deleveraging transaction, pursuant to which Bonanza Creek Energy will equitize approximately $867 million of its existing unsecured bond obligations and enhance liquidity via a $200 million rights offering for new equity, which will be backstopped by certain unsecured noteholders. The RSA and Plan also provide that Company’s existing shareholders, in exchange for the releases by such shareholders of the released parties will receive 4.5% of reorganized Bonanza Creek Energy’s equity as of the effective date of the plan (subject to dilution by a rights offering for new equity, a management incentive plan, and warrants for existing equity holders) and three-year warrants to acquire up to 7.5% of equity in reorganized Bonanza Creek Energy. Richard Carty, Bonanza Creek Energy’s C.O.O., comments, “The filing of our prepackaged bankruptcy cases with the Bankruptcy Court is a significant milestone in the process to achieve financial stability and reposition Bonanza Creek with a strengthened liquidity position to execute on our extensive asset development opportunities.”
In Form 6-K filed on January 4, 2017, Ultrapetrol (Bahamas) Limited announced an extension of both (a) the deadline by which the Company must receive votes from certain of its creditors on its previously announced proposed prepackaged plan of reorganization under chapter 11 of the U.S. Bankruptcy Code and (b) the deadline by which the Company must receive consents on a resolution of its shareholders to approve a substantial sale of its assets, each of which had been set to expire at 4:00 p.m. New York City time, on January 4, 2017. The vote solicitation period and the time by which consents on the shareholder resolution must be received have been extended to 4:00 p.m. New York City time, on January 26, 2017 (unless further extended by the Company). Any further extensions will similarly be noticed by press release. All other terms and conditions of the consent solicitation remain unchanged. Holders who have already properly delivered their consents do not need to deliver new consents or take any other action in response to this extension.
Previous DCA Event: Miscellaneous 11/18/2016 (Restructuring Support Agreement)
Distressed Company Alert Profile Updates, continued Vanguard Natural Resources, LLC – Second Interest Payment Made
On January 3, 2017, Vanguard Natural Resources, LLC paid the second $37.5 million deficiency payment installment under the Senior Secured Reserve-Based Credit Facility. In connection with this planned payment, Vanguard completed a monetization of substantially all of its commodity and interest rate hedges with net proceeds totaling $11.7 million on December 19, 2016. The Company used these net proceeds along with $6.0 million in net proceeds from recent asset sales and $19.8 million from cash on hand to make this $37.5 million deficiency payment.
The following companies had their ratings affirmed:
Willbros Group, Inc. – S&P Global Ratings Corporate credit rating affirmed at CCC+
Yingde Gases Group Company Limited – S&P Global Ratings Corporate credit rating affirmed at CCC- Senior unsecured notes rating affirmed at CC
The following companies had their ratings upgraded:
AM General, LLC – Moody’s Investors Service Corporate family rating upgraded to B3 from Caa1 Probability of default rating upgraded to B3-PD from Caa1-PD
AM General, LLC – S&P Global Rating Corporate credit rating raised to B- from CCC
Autoparts Holdings Limited – Moody’s Investors Service Corporate family rating upgraded to B3 from Caa2 Probability of default rating upgraded to B3-PD from Caa2-PD
GulfMark Offshore, Inc. – S&P Global Rating Corporate credit rating raised to CCC- from CC Senior unsecured notes rating raised to CCC from CC
The following companies had their ratings withdrawn:
Answers Corporation – S&P Global Ratings
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a division of new generation research, inc.
Volume 15, No. 1 | January 6, 2017 Page | 17
Distressed Company Alert Watch List The following companies had their ratings downgraded, but not quite low enough:
DCP Midstream Operating LP (Denver, CO) – Moody’s Investors Service Corporate family rating downgraded to Ba2 from Ba1 Probability of default rating downgraded to Ba2-PD from Ba1-PD Senior Unsecured Regular Bond/Debentures downgraded to Ba2 from Ba1
Team Health, Inc. (Knoxville, TN) – S&P Global Ratings Corporate credit rating lowered to B from B+
** Please note that we will not have profiles on the above companies until, or unless, they qualify for our criteria, which is defined on the last page of this issue. * Previously profiled in the DCA
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Volume 15, No. 1 | January 6, 2017 Page | 18
Bankruptcies The data provided below offers a snapshot of Chapter 7 & Chapter 11 filings that have occurred since the prior reporting period for which the petitioning company has sales of at least $1 million. Additional information on companies that have filed for bankruptcy can be found at BankruptcyData.com.
CKP Investment LLC, Millers Cove, TX | Bankruptcy Date: 1/5/2017 10114 S Grouse Creek Circle LLC, Sandy, UT | Bankruptcy Date: 1/4/2017 Roust Corporation, White Plains, NY | Bankruptcy Date: 12/30/2016 Oilstone Energy Sercive Inc, Spring, TX | Bankruptcy Date: 12/30/2016 Akhoian Enterprises Inc, Mission Hills, CA | Bankruptcy Date: 1/4/2017 DBA Regency Hotel, Dallas, TX | Bankruptcy Date: 1/3/2017 CEDC Finance Corporation LLC, Wilmington, DE | Bankruptcy Date: 12/30/2016 New Winchester Properties LLC, Roachdale, IN | Bankruptcy Date: 1/3/2017 Nuview Molecular Pharmaceuticals Inc, Park City, UT | Bankruptcy Date: 1/3/2017 Cor Inc, Gig Harbor, WA | Bankruptcy Date: 12/30/2016 Greater St Paul Missionary Baptist Church, Oakland, CA | Bankruptcy Date: 1/4/2017
Transmar Commodity Group Ltd., Morristown, NJ | Bankruptcy Date: 12/31/2016 Triple D Hurricane Masters Inc, Ft. Lauderdale, FL | Bankruptcy Date: 12/30/2016 Conalvias USA LLC, Coral Gables, FL | Bankruptcy Date: 12/30/2016 Whaley Ranch LLC, Greybull, WY | Bankruptcy Date: 1/3/2017 Bonanza Creek Energy, Inc., Denver, CO | Bankruptcy Date: 1/4/2017 BC Grand LLC, Atlanta, GA | Bankruptcy Date: 1/2/2017 North Philadelphia Health System, Philadelphia, PA | Bankruptcy Date: 12/30/2016 Fari Shady Canyon LLC, Irvine, CA | Bankruptcy Date: 12/30/2016 Glaciercraft Boats LLC, Anchorage, AK | Bankruptcy Date: 1/3/2017 Iddings Trucking Inc, Marietta, OH | Bankruptcy Date: 12/30/2016 National Control Services Inc, Church Hill, MD | Bankruptcy Date: 12/30/2016
Bankruptcy information is provided by BankruptcyData.com’s Business Bankruptcy Filing Data Service. For information on how you can receive a daily file of business bankruptcies
Alert Categories The goal of the Distressed Company Alert newsletter is to alert subscribers of significant recent events reported by U.S. Public Companies indicating possible distress. The Categories Triggering an Alert: Default: A missed interest or principal payment on a debt obligation or the election of a company to not make a payment during or after the grace period. Covenant Violation: A violation of a covenant in an agreement or indenture governing a debt obligation. Audit Concern: A qualification as to the Company’s ability to continue as a going concern is reported by its independent accountants in an annual report. Low Rating: A major ratings agency has downgraded a Company’s publicly traded debt or any other rating to below a “B” rating, indicating vulnerability to default. Debt at Significant Discount: The Company’s public debt trades with a current yield or yield-to-maturity in excess of ten points over long-term Treasury bond rate. Distressed Debt Exchange: A debt exchange where the principal amount or interest rate is significantly reduced because the issuer is having difficulty meeting the original terms. Preferred Dividend Omission: The Company omits a dividend on its preferred stock. Miscellaneous The editors determine a recent event that represents distress or challenges the future prospects of the Company.
DISCLAIMER: Company Profiles in the Distressed Company Alert are selected by the editors because, in their
opinion, the occurrence of such an event or the existence of such a circumstance is a likely indicator of current
or prospective financial or operating difficulty. The inclusion of a profile suggests the possibility of financial
distress or the possibility that the Company may be of interest to workout professionals for some other reason.
Inclusions do not represent analysis of the condition of the Company or a definitive determination that the Company is in difficulty.
ACCURACY & COVERAGE: The information presented has been obtained from sources believed to be reliable, but accuracy cannot be guaranteed. Do not rely on the Distressed Company Alert without independent verification.
Distressed Company Alert is published weekly by New Generation Research, Inc., 1212 Hancock St., Suite LL-15, Quincy, MA 02169 Publisher: George Putnam, III; Editor: Kerry Mastroianni
Subscription Rate: $270.00 for six months or $500.00 per year. For more information, visit www.distressedcompanyalert.com. Other Publications from New Generation Research, Inc. include Bankruptcy Week--a weekly companion newsletter for BankruptcyData.com; The Bankruptcy Yearbook and Almanac--an annual compendium of bankruptcy information; The Turnaround Letter—a monthly investment newsletter. For more information on these publications, e-mail us at [email protected] or call us at (800) 468-3810.
