понедельник, 22 ноября 2010 г.

Hines Nurseries, Tribune, Blockbuster: Bankruptcy

(This report contains items about companies both in bankruptcy and not in bankruptcy. Adds new filing by Hines Nurseries as first item and Aquilex in Downgrade.)

Oct. 13 (Bloomberg) -- Black Diamond Capital Management LLC purchased Hines Nurseries Inc. in a bankruptcy sale in January 2009 and put the commercial nursery back into Chapter 11 last night in Delaware, listing asset of $179.3 million and debt totaling $86.7 million.

In addition to being the owner, Black Diamond affiliate Black Diamond Commercial Finance LLC is a secured creditor holding all of the $8 million term loan and $16 million subordinated loan. In addition, Black Diamond has 53 percent of the $48.6 million asset-backed loan.

Hines, based in Irvine, California, said in a statement that the new bankruptcy resulted from “greater than expected declines in revenue” combined with “significant increases in production and distribution costs.”

Hines has eight nurseries in Arizona, California, Oregon and Texas. Hines owns 2,700 acres and leases another 850. Net sales in 2009 were $123.5 million. For the first half of 2010, revenue was $69.7 million. Debt includes $71.4 million in secured obligations and $8.7 million owing to trade suppliers.

The new Chapter 11 case is to be financed with a $20 million loan from Black Diamond that will have priority over existing secured debt. The existing secured lenders are consenting to being primed, court papers say. On an interim basis, $5 million will be available. Court papers say that definitive documents on the loan are being worked out.

Hines has 800 customers, including Home Depot Inc., Lowe’s Cos. and Wal-Mart Stores Inc. The press release said customers can place orders for 2011 “with confidence.”

The $48.6 million asset-backed loan is a revolving credit with a first lien on inventory and accounts receivable. The term loan has a first lien on real estate and fixed assets, and a second lien on collateral for the revolving credit.

Hines filed under Chapter 11 the first time in August 2008. Black Diamond at the time owned a majority of the $175 million in 10.25 percent senior notes.

Black Diamond was authorized to buy the business in December 2008 after no other bids were made at auction. The resulting reorganization plan, confirmed in January 2009, paid secured creditors in full on their $35.9 million in claims while providing as much as $12 million toward debt owing to suppliers both before and after the bankruptcy filing.

At the time of the first bankruptcy, Hines had seven nurseries that generated $215 million in sales during 2007. Assets in the first reorganization were listed at $297 million against $317 million in debt.

The new case is In re Consolidated Horticulture Group LLC, 10-13308, U.S. Bankruptcy Court, District of Delaware (Wilmington). The prior case was In re Hines Horticulture Inc., 08-11922, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Tribune Sweetens Plan, Brings Unsecured Creditors on Board

Tribune Co. won support from the official creditors’ committee for a revised reorganization plan that builds on the settlement with lenders Oaktree Capital Management LP and Angelo Gordon & Co. announced in September.

To win support from the committee, $120 million cash will be contributed, allowing bondholders to receive $420 million, for a 32.7 percent recovery, Tribune said in a statement. Trade suppliers for the publisher’s operating companies will be paid in full.

Tribune said it will file a revised plan and disclosure statement by Oct. 15, the deadline set by the bankruptcy judge this month for the company and any creditors to submit reorganization proposals.

The newest version of the settlement brings together Oaktree, Angelo Gordon and JPMorgan Chase Bank NA, who own what the press release said are “significant amounts” of debt issued in the first and second phases of the leveraged buyout in 2007. The arrangers for the bridge loan and the debt issued in the second part of the LBO are providing a backstop to ensure that the entire $120 million in additional cash is available.

As before, a litigation trust would be created under the plan to prosecute lawsuits against advisers, directors and officers involved in the LBO. The first $90 million recovered by the trust will go to unsecured creditors, including bondholders.

After the settlement was announced in late September, a lawyer for the creditors’ committee said it was “simply not adequate.”

Tribune withdrew a reorganization plan in August after the examiner issued a report saying there was some likelihood that the second phase of the leveraged buyout in December 2007 could be attacked successfully as a constructively fraudulent transfer. The examiner found less likelihood that the first phase of the transaction, in June 2007, could be unraveled as a fraudulent transfer.

For a summary of some of the examiner’s conclusions, click here for the July 27 Bloomberg bankruptcy report. Tribune’s abandoned plan would have forced a settlement of the LBO claims on terms that some creditors opposed.

For details of the withdrawn plan, the proposed settlement and the parties’ arguments, click here for the April 13 Bloomberg bankruptcy report. For a rundown on the plan announced in late September by Tribune, Oaktree, and Angelo Gordon, click here for the Sept. 29 Bloomberg bankruptcy report.

The $13.7 billion leveraged buyout in 2007 was led by Sam Zell.

Tribune is the second-largest newspaper publisher in the U.S. It listed $13 billion in debt for borrowed money and assets of $7.6 billion in the Chapter 11 reorganization begun in December 2008. It owns the Chicago Tribune, Los Angeles Times, six other newspapers and 23 television stations.

The case is In re Tribune Co., 08-13141, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Blockbuster Estimates $152 Million Eight-Month Net Loss

Blockbuster Inc. estimated it had a $65.7 million operating loss for the first eight months of 2010 on total revenue of $2.19 billion.

Earnings before interests, taxes, depreciation and amortization for the period were $300,000, the movie-rental chain said yesterday in a regulatory filing. The net loss for the first 34 weeks was $152.2 million.

Before the Sept. 23 Chapter 11 filing, Blockbuster negotiated a reorganization plan with holders of 80 percent of the senior notes. The plan would give the new stock to holders of the $630 million in 11.75 percent senior-secured notes. General unsecured creditors would have warrants for 3 percent of the stock. Holders of the $300 million in 9 percent subordinated notes wouldn’t receive anything.

The financing for Blockbuster’s reorganization requires approval of a disclosure statement explaining the Chapter 11 plan by Jan. 15 and approval of the reorganization plan itself by March 15. The plan is yet to be filed.

Dallas-based Blockbuster has 5,600 stores, including 3,300 in the U.S. and the remainder abroad. Among the U.S. stores, 3,000 are owned and the remainder are franchised.

The petition listed assets of $1.02 billion against debt of $1.47 billion. Blockbuster estimated it owes $57 million in accounts payable in addition to the secured and subordinated notes.

The case is In re Blockbuster Inc., 10-14997, U.S. Bankruptcy Court, Southern District New York (Manhattan).

Mesa Creditors May File Reorganization Plan Jan. 15

Mesa Air Group Inc. in substance will allow the official creditors’ committee to file its own reorganization proposal if the regional airline’s Chapter 11 plan isn’t confirmed in the meantime.

Mesa filed its reorganization plan in September, allowing the bankruptcy judge in New York to schedule a hearing on Oct. 26 for approval of the explanatory disclosure statement. If the disclosure statement is sanctioned for dissemination to creditors, the confirmation hearing for approval of the plan could be scheduled sometime around December.

When the bankruptcy judge in August extended Mesa’s exclusive right to propose a plan, the order provided that so- called exclusivity would be extended automatically from Oct. 21 to Dec. 1 unless the creditors’ committee were to object. In a court filing on Oct. 8, the committee reported that Mesa agreed to allow the committee to file a plan of its own after Jan. 15.

For details of the plan and the treatment of creditors of each of the different Mesa companies, click here for the Sept. 21 Bloomberg bankruptcy report.

Mesa filed under Chapter 11 in January with a fleet of 178 aircraft. At the time, 130 were operating to provide 700 daily departures serving 127 cities in 41 states, Canada and Mexico. After rejecting aircraft leases, Phoenix-based Mesa is now operating 77 aircraft making 575 departures a day.

Mesa listed assets of $976 million against debt totaling $869 million. Liabilities include $393 million on loans secured by 24 owned aircraft, $26 million on three note issues and $33.6 million secured by 20 other aircraft.

In addition, there was $1.62 billion in potential liability on aircraft leases. Mesa operates regional aircraft under code- sharing agreements with US Airways Group Inc., UAL Corp.’s United Airlines and Delta Air Lines Inc.

The case is In re Mesa Air Group Inc., 10-10018, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Thompson Publishing Gets Final Approval for $3 Million Loan

Thompson Publishing Holding Co., a publisher of newsletters and loose-leaf services on regulatory issues, secured final approval yesterday for $3 million in financing to support the reorganization begun Sept. 21.

At yesterday’s hearing, the bankruptcy judge in Delaware also approved auction procedures. The hearing for approval of the sale is scheduled for Nov. 19. Revised auction rules and procedures resulting from yesterday’s hearing weren’t yet on file.

The financing agreement requires holding the auction by Nov. 17, with the sale-approval hearing no more than five business days later. The loan will also be defaulted if Thompson loses the exclusive right to propose a plan or a plan is filed without the lenders’ “prior written consent.”

When Thompson sought Chapter 11 relief, the objective was to hold an auction where the first-lien lenders would buy the company in exchange for $42 million in secured debt. The lenders also will assume liabilities on subscriptions and obligations to employees.

Thompson has 300 products and 70,000 subscribers. The Washington-based company expects revenue to drop this year to $49 million. Debt includes $122.6 million owing on first-lien debt with PNC Bank NA serving as agent. Second-lien creditors, owed $43.5 million, have Ableco Finance LLC as agent.

Controlled by Avista Capital Partners LP, Thompson generated 74 percent of income from subscription. The company also arranges conferences and employee training events.

The case is In re Thompson Publishing Holding Co., 10- 13070, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Barzel Still Evaluating Feasibility of Liquidating Plan

Barzel Industries Inc., previously a steel processor and manufacturer, for a fourth time is seeking an expansion of the exclusive right to propose a Chapter 11 plan. If granted by the bankruptcy court at an Oct. 26 hearing, the new deadline for filing a plan would be March 15, the 18-month maximum permitted in bankruptcy law.

As it did in the prior two motions for longer exclusivity, Barzel said it continues evaluating whether “a liquidating plan is appropriate and feasible.”

Barzel sold most of the assets in November 2009 for $75 million to Norwood, Massachusetts-based Chriscott USA Inc. Later, secured lenders agreed to a settlement where they received a release of claims in return for giving up $800,000 from sale proceeds.

Barzel had 15 facilities. Its petition listed assets of $366 million against debt totaling $385 million, including $315 million on senior secured notes. Another $18.4 million was owing on an asset-backed loan with a first lien on accounts receivable.

The case is In Barzel Industries Inc., 09-13204, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Brookstone Makes New Offer for Second-Lien Note Exchange

Specialty retailer Brookstone Inc. is inching closer to completing an exchange offer for the $170 million in 12 percent second-lien notes due 2012.

The newly revised offer will pay $20 million in cash at the rate of $975 for each $1,000 bond. For the remainder, holders will receive new 13 percent second-lien notes maturing in 2014 at the rate of $900 in new notes for each $1,000 in old notes.

The revised offer already has been accepted by holders of more than two-thirds of the old notes. As a result, the collateral for the old notes will be released for any holders that don’t accept the new notes in exchange.

For noteholders, the new offer is an improvement over older versions. At one point, noteholders were given the option of receiving 80 percent in cash for part of the notes or a new second-lien note for $800 due in 2017.

Brookstone, based in Merrimack, New Hampshire, was acquired in October 2005 in a $422 million transaction by a group including JW Childs Associates LP, Temasek Holdings Pte and OSIM International Ltd.

Brooklyn Apartment Project to Reorganize in White Plains

The owner of a 70-year-old apartment house on Fillmore Avenue in Brooklyn, New York, filed for Chapter 11 protection yesterday in White Plains, New York.

The mortgage lender, owed $31 million, began foreclosure and installed a receiver in March 2009. The project owner said in a court filing that the vacancy rate increased to 40 percent during the receivership.

The owners intended to perform capital improvements, raise rents so the property would no longer be rent stabilized, and convert the units into luxury condominiums.

The appraised value of the property is $14.5 million, the petition says. The property is owned by the Dedvukaj family.

The case is In re Hoti Enterprises LP, 10-24129, U.S. Bankruptcy Court, Southern District New York (White Plains).

Point Blank Reports $2.3 Million Net Loss in August

Point Blank Solutions Inc., a manufacturer of soft body armor for the military and law enforcement, reported a $2.3 million net loss in August on net sales of $20.6 million. The operating loss for the month before non-recurring expenses was $1.95 million.

Point Blank has a plant and head office in Pompano Beach, Florida, and a second plant in Jacksboro, Tennessee. Revenue in 2009 was more than $153 million. The petition listed assets of $64 million against debt totaling $68.5 million. Debt included a $10.5 million secured loan paid off by financing for the Chapter 11 case. Point Blank said it also owes $28.2 million to trade suppliers. The former chief executive officer and chief operating officer were convicted in September of orchestrating a $185 million fraud.

The case is In re Point Blank Solutions Inc., 10-11255, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Aquilex Lowered to B3 Corporate on Customer Deferrals

Aquilex Holdings LLC, a provider of cleaning and maintenance services for the energy industry, was demoted one notch yesterday by Moody’s Investors Service to a B3 corporate rating.

Moody’s said the action was based on the overall economy resulting in “substantial customer deferral of projects.”

Annual revenue for Atlanta-based Aquilex is $430 million, Moody’s said.

First Amendment-Bankruptcy, Stock Awards, Default Rates: Audio

First Amendment limitations on the reach of the automatic stay, an alleged end-run on limitations on stock awards to company managers, another decision by new bankruptcy judge Shelley Chapman in New York, and the continuing decline in junk- bond default rates are discussed in the new bankruptcy podcast on the Bloomberg terminal and Bloomberglaw.com. To listen, click here.

District Judge Allows Stay Ruling by Bankruptcy Judge

When there were three lawsuits pending regarding the same disputes, a federal district judge in New Mexico allowed the bankruptcy judge to determine which suits violated the automatic stay and which should go forward.

The bankruptcy trustee had a lawsuit pending in U.S. Bankruptcy Court in Colorado. In addition, there was a lawsuit on the same subject matter filed in U.S. District Court in New Mexico and a later lawsuit in U.S. District Court in Colorado. In the district court suits, the parties essentially switched positions, where the plaintiff in one suit was the defendant in the other.

Under the first-to-file rule, U.S. District Judge Robert Brack in Santa Fe, New Mexico, ruled that the suit in his court was the first filed. Consequently, Brack said that the suit in district court in Colorado should be stayed pending the outcome of the suit in his court.

There was another catch, though. Brack ruled that the suits in his court and in the other district court were possibly in violation of the automatic stay resulting from the Colorado bankruptcy case.

Brack therefore stayed his case while allowing the bankruptcy judge to decide whether the automatic stay prevented the suit in his court from going forward.

The case is DT Land Development LLC v. West LB AG, 09- 00844, U.S. District Court, District of New Mexico (Santa Fe).

--With assistance from Michael Bathon and Dawn McCarty in Wilmington, Delaware. Editors: Stephen Farr, Fred Strasser.

To contact the reporter on this story: Bill Rochelle in New York at wrochelle@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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