Manistique Papers, Cordia IP, Jefferson County: Bankruptcy
August 15, 2011, 8:46 AM EDTBy Carla Main
(This report contains items about companies both in bankruptcy and not in bankruptcy. Updates with Jefferson County in Other Updates and Capmark and Foxwoods in Briefly Noted.)
Aug. 15 (Bloomberg) -- Manistique Papers Inc., a 97-year- old producer of recycled paper products, filed for bankruptcy protection after announcing it was shuttering operations.
The company, founded in 1914 in Manistique, Michigan, listed assets of $10 million to $50 million and debt of $50 million to $100 million in Chapter 11 documents filed Aug. 12 in U.S. Bankruptcy Court in Wilmington, Delaware.
Manistique, known as MPI, was the first manufacturer of recycled content newsprint in North America, according to its website. The company ceased production Aug. 5, according to court papers.
The paper mill’s largest unsecured creditors include Houston-based WM Recycle America LLC, with a claim of $2.3 million; Cloverland Electric, based in Dafter, Michigan, with a claim of $1.5 million; and Continental Paper Grading Co., based in Chicago, with a claim of $552,707, court papers show.
The case is In re Manistique Papers Inc., 11-12562, U.S. Bankruptcy Court, District of Delaware (Wilmington).
New Filings
Cordia IP Files for Bankruptcy Protection in New York
Cordia IP Corp., a company that sells adaptable domestic and international calling plans, filed Aug. 12 for Chapter 11 protection in bankruptcy court in White Plains, New York, court files showed.
The debtor, based in Rye, New York, declared assets of as much as $10 million and liabilities of as much as $50 million, according to court files. The largest unsecured claim case $13.5 million, held by Cordia Communications Co., an affiliate company located in Winter Garden, Florida, according to court papers.
Cordia Corp., TSI Prepaid LLC, and 116 Consulting Inc. each hold more than a five percent interest in Cordia IP.
Cordia Communications Co., a local exchange carrier, filed Chapter 11 May 1 in Florida. The company was authorized in July by the bankruptcy judge in Orlando, Florida, to sell the business to Birch Communications Inc.
The Florida case is In re Cordia Communications Inc., 11- 06493, U.S. Bankruptcy Court, Middle District of Florida (Orlando).
The New York case is Cordia IP Corp, 11-br-23631, U.S. Bankruptcy Court, Southern District of New York (White Plains).
Other Updates
Centaur Wins Permission for Litigation Trust and Adviser
Casino and racetrack operator Centaur LLC secured an order Aug. 9 allowing it to establish the litigation trust described in its confirmed plan of reorganization, according to the order signed by U.S. Bankruptcy Judge Kevin Carey.
Centaur may also retain FTI Consulting, Inc. as a financial adviser and pre-effective date litigation trustee. Pre-effective date suits relate to claims that cannot be avoided in the bankruptcy.
The debtor obtained approval of its reorganization plan at a Feb. 18 confirmation hearing. For Bloomberg coverage of the hearing, click here.
Centaur LLC and 12 affiliates filed Chapter 11 petitions in March 2010. Affiliates Centaur PA Land LP and Valley View Downs LP had filed for bankruptcy reorganization in October 2009 to keep a project alive in Pennsylvania. All the companies are subsidiaries of closely held Centaur Inc., which isn’t in bankruptcy.
The March filings listed assets of $584 million and debt of $681 million. The newer cases resulted from the failure to make payments due in October 2009 on a $382.5 million first-lien debt and a $192 million second-lien credit. The companies have horse racing and gambling facilities in five markets in Indiana and Colorado.
The companies own Hoosier Park, a casino and horse racetrack, in Anderson, Indiana, along with three offtrack betting parlors in Indiana. Fortune Valley Hotel & Casino in Central City, Colorado, was sold. The companies generated revenue of $277.5 million in 2009.
The newer case is Centaur LLC, 10-10799, and the first case was In re Centaur PA Land LP, 09-13760, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Jefferson County Extends Creditor Talks After Rejecting Deal
Jefferson County, Alabama, officials extended until mid- September talks with creditors holding $3.14 billion of sewer bonds after rejecting a proposed settlement to avert what would be the biggest U.S. municipal bankruptcy.
County commissioners said they wanted to take a larger role in the negotiations, which have been led by Governor Robert Bentley and his chief of staff. The commission approved a resolution to negotiate directly with the creditors, the largest of which is JPMorgan Chase & Co.
Justin Perras, a JPMorgan spokesman in New York, declined to comment.
The decision to extend the talks until Sept. 16 came after the five-member panel outlined concerns with an offer by bondholders to settle the crisis. The county of 660,000, home to Birmingham, the state’s largest city, has struggled after a sewer-bond refinancing collapsed during the 2008 credit squeeze.
Its woes intensified when the state Legislature declined to act after a court struck down an occupational tax in March. The tax generated about a quarter of the county’s general-fund revenue, and officials have put more than 500 employees on unpaid leave.
Terms of the creditors’ latest offer include four scenarios for raising sewer rates to support a $2.33 billion debt refinancing by June 30, 2012.
The base-case scenario, which doesn’t include $1 billion in bond insurance, would amount to a 25 percent rate increase over 18 months, which Commissioner George Bowman called excessive. The others called for increases ranging from 6.1 percent to 7.1 percent in the first three years, with 3 percent annual boosts for the next 36 years. Commissioners suggested those proposals may be acceptable.
Creditors would get back $2.07 billion, or about 33 percent less than the amount outstanding. Another $233 million would go to a debt-service reserve fund. Commissioner Jimmie Stephens said he was disappointed the creditors hadn’t agreed to cap the interest rate for the borrowing.
The bondholders’ seven-page plan calls for the creation of an independent sewer authority that would manage the system. A majority of its board members would be appointed by the governor.
For more, click here.
For more on Jefferson County’s financing, click here.
Briefly Noted
Capmark Ends ‘Extensive’ Talks to Sell Majority Stake in Bank
Capmark Financial Group Inc., the bankrupt commercial lender, said it ended “extensive negotiations” to sell a controlling stake in its bank subsidiary to an unidentified third party.
Discussions over the Capmark Bank unit ended because of “general market conditions,” the Horsham, Pennsylvania-based company said in a statement Aug. 12 on its website. A confirmation hearing for Capmark’s reorganization plan is scheduled for Aug. 19, according to the statement.
Capmark, part-owned by Goldman Sachs Group Inc., filed for bankruptcy protection in October 2009 with debt of about $21 billion. While in bankruptcy, the firm sold its loan-servicing unit to Warren Buffett’s Berkshire Hathaway Inc. and Leucadia National Corp. in a deal valued at $468 million.
The case is In re Capmark Financial Group Inc., 09-13684, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Foxwoods Owner in Talks to Restructure Debt, WSJ Says
The Mashantucket Pequot Tribal Nation, owner of the Foxwoods Resort Casino in Ledyard, Connecticut, is in talks with banks and bondholders to restructure more than $2 billion in debt, the Wall Street Journal reported, citing unidentified people familiar with the matter.
Bank of America Corp. and Wells Fargo & Co. are among banks negotiating with the tribe, according to the newspaper. Under the terms of the proposed deal, the tribe’s debt burden would be “about $1.5 billion and creditors would receive “new debt with more lenient repayment terms,” the WSJ said.
Corporate Debt
Macy’s Meets Debt Goal as Stockholders Wait For Buybacks
Macy’s Inc. shareholders, who have been waiting four years for the second-biggest U.S. department-store chain to resume stock buybacks as it slashed debt, may need to wait even longer.
The retailer has cut long-term borrowings by 37 percent since 2008 and achieved an investment-grade rating from Standard & Poor’s in May, according to data compiled by Bloomberg. Macy’s had $9.1 billion of debt at the start of 2008, according to a government filing, after paying $17.8 billion to buy May Department Stores Co. in 2005 and using $3 billion on share buybacks in 2007 just before the U.S. had its worst recession since the Great Depression and consumer spending dropped.
While Chief Financial Officer Karen Hoguet said in an Aug. 10 conference call that Macy’s reached its goal of reducing leverage to 2.7 times earnings before interest, taxes, depreciation and amortization and the Cincinnati-based company can consider share buybacks as soon as the fourth quarter, the economy may limit the retailer’s cash disbursements.
Jim Sluzewski, a Macy’s spokesman, declined to comment.
For more, click here.
Downgrade
South Street Securities Downgraded From AAA, S&P Says
South Street Securities LLC saw its long-term issuer credit rating lowered to AA+ from AAA by Standard & Poor’s Ratings Services Aug. 12, according to a statement by the ratings company.
“Our outlook on South Street Securities LLC is negative,” S&P said in the statement.
S&P’s rating on South Street Securities is limited by its rating on Fixed Income Clearing Corp. because of South Street Securities’ “significant credit exposure” to that company, the ratings company said in the statement.
The rating action followed S&P’s downgrade of Fixed Income Clearing’s long-term issuer credit rating to AA+ from AAA, S&P said. The issuer credit rating on South Street Securities “is unlikely to be higher” than the issuer credit rating on Fixed Income Clearing “as long as this significant counterparty exposure remains,” S&P said.
Statistics
Foreclosure Filings in U.S. Plunge 35% to Lowest in Four Years
U.S. foreclosure filings dropped 35 percent last month to the lowest level in almost four years as lenders and state and federal agencies increased efforts to keep delinquent borrowers in their homes, RealtyTrac Inc. said.
A total of 212,764 properties received default, auction or repossession notices, the fewest in 44 months, the Irvine, California-based data seller said Aug. 12. Filings fell on a year-over-year basis for the 10th straight month, and were down 4 percent from June. One in 611 households got a notice.
The decline in foreclosure notices began last year when attorneys general across the country began probing a practice known as “robo-signing,” in which lenders and servicers pushed through default documents without verifying their accuracy. Now federal and state officials are also contributing to the slowdown with payment assistance and loan modifications, RealtyTrac said.
For more, click here.
Junk Bond Losses Mount in Worst Month Since 2008
Speculative-grade bonds worldwide are inflicting the biggest losses on investors since November 2008 amid the credit- market seizure on mounting evidence that the global economy is in danger of tumbling into recession.
First Data Corp., the credit-card processor acquired by KKR & Co. for $27.5 billion in 2007, and Dallas-based Energy Future Holdings Corp. led declines of 4.6 percent this month for high- yield, high-risk debt, according to the Bank of America Merrill Lynch Global High Yield Index. Investors withdrew an unprecedented $2.1 billion from junk mutual funds on Aug. 9, research firm EPFR Global said.
Junk bonds are losing favor after gaining 96 percent from the end of 2008 through last month as the U.S. economy grows at a pace that the Federal Reserve is calling “considerably slower” than expected, threatening the neediest borrowers’ ability to pay their debts.
--With assistance from Michael Bathon and Dawn McCarty in Wilmington, Delaware; Jonathan Keehner, Tim Catts, Tara Lachapelle, Martin Z. Braun and Mary Childs in New York; Dan Levy in San Francisco; Margaret Newkirk in Atlanta; William Selway and Cotton Timberlake in Washington; and Simone Baribeau in Miami. Editor: Glenn Holdcraft
To contact the reporter on this story: Carla Main in New Jersey at Cmain2@bloomberg.net.
To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net
