16 01 08 dca · 2016-01-08 · not to declare a cash dividend on its common stock for the fourth...

the distressed company alert

a division of new generation research, inc.

Volume 14, No. 1 | January 8, 2016 Page | 1

VOLUME 14, NO. 1 | JANUARY 8, 2016

New Generation Research’s weekly newsletter that monitors and reports on companies showing signs of financial distress.

PAGE COMPANY CATEGORY 4 AdCare Health Systems, Inc. Dividend Omission 5 Cliffs Natural Resources Inc. Low Rating 6 iHeartMedia, Inc. Low Rating 7 Neiman Marcus Group, Inc. Low Rating 8 Nuverra Environmental Solutions, Inc. Miscellaneous 9 RCS Capital Corporation Miscellaneous 10 SFX Entertainment, Inc. Miscellaneous 11 Stone Energy Corporation Low Rating

12 2015 Year in Review

17 Profile Updates 19 Watch List 20 Bankruptcies

Profile Highlights

AdCare Health Systems, Inc.

On January 4, 2016, AdCare Health Systems, Inc. announced its Board of Directors decided not to declare a cash dividend on its common stock for the fourth quarter of 2015. The Board will continue to evaluate the Company’s dividend policy throughout 2016. The Board believes that it is prudent and appropriate to retain capital to focus on specific areas of long-term value creation and near-term investments to maximize shareholder value. The Company anticipates the need to make certain capital and other expenditures in 2016 in its existing leased facilities in order to maximize rental revenues and keep the facilities competitive in their respective markets. In addition, management and the Board anticipate having better clarity in several areas that may impact AdCare’s financial position by the end of the first quarter, including professional liability costs and the timing of the collection of patient accounts receivable. While each of the above issues and other issues are not individually significant, the possible aggregate effects of such issues impacted the Board’s decision to suspend the Company’s cash dividend on the common stock.

Profile Highlights continued on next page…




Profile Highlights, continued Cliffs Natural Resources Inc.

On January 5, 2016, Moody’s Investors Service downgraded Cliffs Natural Resources Inc.’s corporate family and probability of default ratings to Caa1 and Caa1-PD from B1 and B1-PD respectively, as well as its senior secured 1st lien notes to B1 from Ba2, its senior secured 2nd lien notes to B3 from B1 and its senior unsecured notes to Caa2 from B3. According to Moody’s, the downgrade reflects the deterioration in the Company’s debt protection metrics and increase in leverage as a result of continued downward movement in iron ore prices and weak fundamentals in the US steel industry, which are resulting in lower shipment levels. Moody’s further states that the Caa1 CFR reflects the contract nature of Cliffs US iron ore operations, which allow the Company to achieve a realized price in excess of the seaborne prices. The rating also considers the Company’s material presence as a domestic iron ore producer and its symbiotic relationship with the US steel mills iHeartMedia, Inc.

On January 7, 2016, Standard & Poor’s Ratings Services lowered its corporate credit rating on iHeartMedia, Inc. to CCC from CCC+ and the issue-level rating on its subsidiaries, Clear Channel Outdoor Holding, Inc.’s (CCOH’s) and iHeartCommunications, Inc.’s debt by one notch. According to Standard & Poor’s, the downgrades follow CCOH’s announcement that it has reached an agreement to sell a portion of its outdoor assets to Lamar Media Corp. for $458.5 million. “Although the asset sale will be beneficial to iHeartMedia’s liquidity and modestly beneficial to the company’s very high leverage, we believe there are still substantial risks surrounding the long-term viability of its capital structure,” said Standard & Poor’s credit analyst Jeanne Shoesmith. “We believe iHeartCommunications may use existing cash and a portion of the asset sale proceeds to repurchase debt at discounted levels, which we would view as tantamount to default, based on our criteria.”

Neiman Marcus Group, Inc. On January 7, 2016, Standard &

Poor’s Ratings Services lowered its corporate credit rating on the Neiman Marcus Group, Inc. to B- from B, its senior secured credit facilities to B- from B and its second-lien secured debt facility to CCC from CCC+. “The downgrade reflects our expectation that the department store industry’s operating environment will remain weak amid apparel industry trends that we think will remain soft in 2016, given the heightened industry competition, declining mall traffic, and the shifting trend in consumer spending towards restaurants, services and etc.,” said credit analyst Helena Song. “This results in a reduction in our forecast for Neiman Marcus’ sales and EBITDA margins, following the company’s weakened performance with negative same store sales in fiscal 1st quarter ended Oct 31, 2015. The reduction in our operating forecasts leads to us to expect negative to neutral free operating cash flow generation in fiscal 2016 in conjunction with adjusted leverage in the high 7x range, both worse than our previous expectations. We assess the comparable ratings analysis as ‘negative’ noting comparable ‘B’ rated credits given the company’s lack of positive free operating cash flow and adjusted leverage well above the 5x to 6x range.”

Profile Highlights continued on next page…




Profile Highlights, continued Nuverra Environmental Solutions, Inc.

According to recent press and people with knowledge of the matter, Nuverra Environmental Solutions, Inc. has been working with investment bank Lazard Ltd on restructuring its debt. Nuverra has been looking at several financial restructuring options, including a potential debt exchange, the people said. In December, the Company announced that it mutually agreed with XTO Energy Inc. to terminate its contract for water-related midstream services in McKenzie County, ND, due to the dramatic change in market conditions since the contract was executed in November 2014. Mark Johnsrud, Chairman of the Board and Chief Executive Officer, said, “With current low oil prices and substantially reduced drilling activities, there is significant uncertainty regarding customer activities in 2016. Because of these and other factors, we were compelled to end the contract.”

RCS Capital Corporation

On January 4, 2016, RCS Capital Corporation announced that it has reached an agreement in principle with certain of its key stakeholders for a new investment of $150 million and the restructuring of its debt and capital structure. To implement its financial restructuring, RCS Capital intends to file a voluntary petition for a pre-arranged Chapter 11 bankruptcy in late January 2016.

On January 6, 2016, Moody’s Investors Service downgraded RCS Capital Corporation’s corporate family rating to Caa3 from Caa1 and its $575 million senior secured first lien term loan and $25 million revolving credit facility to Caa2 from Caa1. Moody’s said its rating actions follow RCS’s announcement that it has agreed in principle with the majority of its first- and second-lien debt holders to amend its capital structure in a pre-arranged Chapter 11 bankruptcy filing.

SFX Entertainment, Inc. In form 8-K filed on January 7, 2016,

SFX Entertainment, Inc. announced that in connection with its obligations under its Forbearance and Amendment Agreement, the Company has retained financial advisory firm FTI Consulting, Inc. to serve as the Company’s Chief Restructuring Officer to facilitate a reorganization. There can be no assurance that the Company will be successful in identifying or implementing, on favorable terms or at all, any financial or strategic alternatives, which may include restructuring the Company’s debt, the issuance of additional equity or debt, or the sale of some or all of the Company’s assets. The Company may consider utilizing the available protections under the federal bankruptcy laws. FTI will assist the Company in evaluating and assessing various restructuring and strategic alternatives, including working with management to analyze and optimize operations and financial performance. Stone Energy Corporation

On January 7, 2016, Moody’s Investors Service downgraded Stone Energy Corporation’s corporate family rating to B3 from B2, its probability of default rating to B3-PD from B2- PD and its senior unsecured notes to Caa1 from B3. “Low oil and natural gas prices will drive down Stone’s earnings and cash flows in 2016, sharply increasing financial leverage and weakening liquidity,” said Sajjad Alam, Moody’s AVP-Analyst. “Stone is facing a potential covenant breach in 2016 and a looming $300 million debt maturity in March 2017.” According to Moody’s, the B3 CFR reflects Stone’s declining reserves, earnings and cash flow tends, increasing financial leverage, cash flow concentration in the Gulf of Mexico and ongoing high reinvestment requirements to maintain production.




Category: Preferred Dividend Omission

AdCare Health Sytems, Inc. 1145 Hembree Road Roswell, GA 30076 678 869-5116 Officers: William McBride, III -- Chairman & C.E.O. Allan J. Rimland -- President & C.F.O.

Federal Tax ID: 31-1332119 SIC: 8051 Skilled Nursing Care Facilities Employees: 3,414 Company Website: www.adcarehealth.com Auditor: KPMG LLP

Securities: Ticker: ADK Exchange: NYSE Common Stock; 19,348,769 shares outstanding as of March 27, 2015 (CUSIP: 00650W300) 10 7/8% Series A Preferred Stock due 2049; 2,113,235 shares outstanding (CUSIP: 00650W409) Business: AdCare Health Systems, Inc., through its subsidiaries, owns, operates and manages skilled nursing facilities and assisted living facilities in the states of Arkansas, Georgia, North Carolina, Ohio, Oklahoma and South Carolina. The Company’s facilities provide a range of health care services to patients and residents, including skilled nursing and assisted living services, social services, various therapy services and other rehabilitative and healthcare services for long-term residents and short-stay patients. As of September 22, 2015, the Company owned, leased, or managed for third parties 39 facilities. It also leased three owned and subleased five leased skilled nursing and rehabilitation facilities to local third-party operators in the states of Alabama and Georgia. The Company was formerly known as Passport Retirement, Inc. and changed its name to AdCare Health Systems, Inc. in 1995. Balance Sheet: ($millions) 12/31/2014 12/31/2013Total Current Liabilities $65.35 $69.24Total Long Term Debt $118.10 $128.10Total Liabilities $186.18 $199.13Total Current Assets $52.42 $58.74Total Assets $135.59 $226.43 Income Statement: ($millions, except per share data) 12/31/2014 12/31/2013 Period 12 months ending 12 months ending Revenue $193.31 $185.75 Net Income $-14.41 $-13.36 Earnings Per Share $-0.82 $-0.86 Event: On January 4, 2016, AdCare Health Systems, Inc. announced its Board of Directors decided not to declare a cash dividend on its common stock for the fourth quarter of 2015. The Board will continue to evaluate the Company’s dividend policy throughout 2016. The Board believes that it is prudent and appropriate to retain capital to focus on specific areas of long-term value creation and near-term investments to maximize shareholder value. Source: Form 8-K / Profile Number: 672-6044




Category: Low Rating

Cliffs Natural Resources Inc. 200 Public Square Cleveland, OH 44114 216 694-5700 Officers: Lourenco Goncalves -- Chairman, President & C.E.O. Terrance M. Paradie -- E.V.P. & C.F.O.

Federal Tax ID: 34-1464672 SIC: 1081 Metal Mining Services Employees: 5,386 Company Website: www.cliffsnaturalresources.com Auditor: Deloitte & Touche LLP

Securities: Ticker: CLF Exchange: NYSE Common Stock; 153,279,552 shares outstanding as of February 23, 2015 (CUSIP: 18683K101) 7 3/4% 2nd Lien Secured Notes due 2020; $544,156,000 outstanding (CUSIP: 18683KAG6) 8 1/4% Senior Secured Notes due 2020; $540,000,000 outstanding (CUSIP: 18683KAH4) 6 1/4% Senior Notes due 2040; $492,815,000 outstanding (CUSIP: 18683KAC5) Business: Cliffs Natural Resources Inc., a mining and natural resources company, produces iron ore and metallurgical coal. It operates five iron ore mines that produces iron ore pellets in Michigan and Minnesota; Koolyanobbing complex situated in northeast of the town of Southern Cross, which produces lump and fines iron ore; and two metallurgical coal mines located in Alabama and West Virginia. The Company also owns interests in the Decar Property situated in British Columbia; and the Labrador Trough South property located in Fermont, Québec. The Company was formerly known as Cleveland-Cliffs Inc. Balance Sheet: ($millions) 12/31/2014 12/31/2013Total Current Liabilities $958.60 $1,085.50Total Long Term Debt $2,962.30 $3,022.60Total Liabilities $4,898.30 $6,237.60Total Current Assets $1,448.90 $1,560.00Total Assets $3,164.00 $13,121.90 Income Statement: ($millions, except per share data) 12/31/2014 12/31/2013 12/31/2012 Period 12 months ending 12 months ending 12 months ending Revenue $4,623.70 $5,691.40 $5,872.70 Net Income $-7,224.20 $361.80 $-1,126.60 Earnings Per Share $-47.52 $2.37 $-6.32 Event: On January 5, 2016, Moody’s Investors Service downgraded Cliffs Natural Resources Inc.’s corporate family and probability of default ratings to Caa1 and Caa1-PD from B1 and B1-PD respectively, as well as its senior secured 1st lien notes to B1 from Ba2, its senior secured 2nd lien notes to B3 from B1 and its senior unsecured notes to Caa2 from B3. According to Moody’s, the downgrade reflects the deterioration in the Company’s debt protection metrics and increase in leverage as a result of continued downward movement in iron ore prices and weak fundamentals in the US steel industry, which are resulting in lower shipment levels. Source: Moody’s / Profile Number: 672-5751





iHeartMedia, Inc. 200 East Basse Rd. San Antonio, TX 78209 210 822-2828 Officers: Robert W. Pittman -- Chairman & C.E.O. Richard J. Bressler -- President & C.F.O.

Federal Tax ID: 26-0241222 SIC: 4832 Radio Broadcasting Stations Employees: 14,500 Company Website: www.clearchannel.com Auditor: Ernst & Young LLP

Securities: Ticker: IHRT Exchange: OTC Common Stock; 29,307,583 (Class A) shares outstanding as of February 11, 2015 10 5/8% Senior Secured Notes due 2023; $950,000,000 outstanding (CUSIP: 45174HAC1) 10% Senior Notes due 2018; $850,000,000 outstanding (CUSIP: 184502BT8) 9% Senior Secured Notes due 2021; $1,750,000,000 outstanding (CUSIP: 184502BG6) Business: iHeartMedia, Inc. operates as a diversified media and entertainment company in the United States. It operates through three segments: iHeartMedia, Americas Outdoor Advertising and International Outdoor Advertising. The iHeartMedia segment owns 858 radio stations, which include 246 AM and 612 FM radio stations. The Americas Outdoor Advertising segment owns or operates approximately 103,000 display structures. The International Outdoor Advertising segment owns and operates approximately 540,000 displays. The Company was formerly known as CC Media Holdings, Inc. and changed its name to iHeartMedia, Inc. in September 2014. iHeartCommunications, Inc., f/k/a Clear Channel Communications, Inc., is a wholly-owned of iHeartMedia, Inc. and Clear Channel Outdoor Holdings, Inc. is its publicly traded subsidiary. Balance Sheet: ($millions) 12/31/2014 12/31/2013Total Current Liabilities $1,364.29 $1,763.62Total Long Term Debt $20,322.41 $20,030.48Total Liabilities $23,705.50 $23,793.90Total Current Assets $2,180.14 $2,513.29Total Assets $14,040.24 $15,097.30 Income Statement: ($millions, except per share data) 12/31/2014 12/31/2013 12/31/2012 Period 12 months ending 12 months ending 12 months ending Revenue $6,318.53 $6,243.04 $6,246.88 Net Income $-793.80 $-606.90 $-424.48 Earnings Per Share $-9.46 $-7.31 $-5.23 Event: On January 7, 2016, Standard & Poor’s Ratings Services lowered its corporate credit rating on iHeartMedia, Inc. to CCC from CCC+ and the issue-level rating on its subsidiaries, Clear Channel Outdoor Holding, Inc.’s (CCOH’s) and iHeartCommunications, Inc.’s debt by one notch. According to Standard & Poor’s, the downgrades follow CCOH’s announcement that it has reached an agreement to sell a portion of its outdoor assets to Lamar Media Corp. for $458.5 million. Source: S&P / Profile Number: 672-4735





Neiman Marcus Group, Inc. 1618 Main St. Dallas, TX 75201 214 743-7600 Officers: Karen W. Katz -- President & C.E.O. Donald T. Grimes -- E.V.P., C.F.O. & C.O.O.

Federal Tax ID: 20-3509435 SIC: 5311 Department Stores Employees: 15,100 Company Website: www.neimanmarcus.com Auditor: Ernst & Young LLP

Securities: 8% Senior Notes due 2021; $960,000,000 outstanding (CUSIP: 570254AA0) 8 3/4% Senior Notes due 2021; $600,000,000 outstanding (CUSIP: 570254AB8) 7 1/8% Senior Secured Notes due 2028; $125,000,000 outstanding (CUSIP: 640204AB9)

Bank Debt: First Lien Sr. Secured Term Loan due 2020, $2,094.0 million / First Lien Sr. Secured ABL Revolver due 2018, $900.0 million Business: Neiman Marcus Group, Inc., through its subsidiaries, operates as an omni-channel luxury fashion retailer primarily in the United States. It provides women’s couture and designer apparel, contemporary sportswear, men’s clothing and accessories, children’s apparel, handbags, shoes, cosmetics and precious and designer jewelry; and decorative home accessories, fine China products, crystal and silver products and gift items. As of September 15, 2015, it operated 41 full-line Neiman Marcus stores located in 18 states and the District of Columbia; and 43 Last Call stores in 16 states. The Company also operates 2 Bergdorf Goodman stores, including a dedicated men’s store in New York City; THERESA flagship store in Munich, Germany; and 5 CUSP stores. Balance Sheet: ($millions) 08/01/2015 08/01/2014Total Current Liabilities $837.83 $856.68Total Long Term Debt $4,681.31 $4,580.50Total Liabilities $7,329.10 $4,469.20Total Current Assets $1,384.70 $1,409.77Total Assets $8,875.76 $8,761.73 Income Statement: ($millions, except per share data) 08/01/2015 08/01/2014 08/01/2013 Period 12 months ending 12 months ending 12 months ending Revenue $5,095.09 $4,839.30 $4,648.20 Net Income $14.95 $-147.20 $163.70 Event: On January 7, 2016, Standard & Poor’s Ratings Services lowered its corporate credit rating on the Neiman Marcus Group, Inc. to B- from B, its senior secured credit facilities to B- from B and its second-lien secured debt facility to CCC from CCC+. “The downgrade reflects our expectation that the department store industry’s operating environment will remain weak amid apparel industry trends that we think will remain soft in 2016, given the heightened industry competition, declining mall traffic, and the shifting trend in consumer spending towards restaurants, services and etc.,” said credit analyst Helena Song. Source: S&P / Profile Number: 672-4862




Category: Miscellaneous

Nuverra Environmental Solutions, Inc. 14624 N. Scottsdale Rd., Suite 300 Scottsdale, AZ 85254 602 903-7802 Officers: Mark D. Johnsrud -- C.E.O., President Gregory J. Heinlein -- E.V.P. & C.F.O.

Federal Tax ID: 26-0287117 SIC: 1389 Oil and Gas Field Services, not Elsewhere Classified Employees: 2,400 Company Website: www.nuverra.com Auditor: KPMG LLP

Securities: Ticker: NES Exchange: NYSE Common Stock; 27,912,221 shares outstanding as of March 13, 2015 (CUSIP: 67091K203) 9 7/8% Senior Notes due 2018; $400,000,000 outstanding (CUSIP: 422680AE8)

Bank Debt: First Lien Sr. Secured ABL Revolver due 2018, $125.0 million Business: Nuverra Environmental Solutions, Inc. provides full-cycle environmental solutions to customers focused on the development and ongoing production of oil and natural gas from shale formations in the United States. It offers environmental solutions for unconventional oil and gas exploration and production, including the delivery, collection, treatment, recycle and disposal of restricted environmental products used in the development of unconventional oil and natural gas fields in the Bakken, Utica, Eagle Ford, Mississippian Lime and Permian Shale areas, as well as the Haynesville, Marcellus, and Barnett Shale areas. The Company was formerly known as Heckmann Corporation and changed its name to Nuverra Environmental Solutions, Inc. in May 2013. Balance Sheet: ($millions) 12/31/2014 12/31/2013Total Current Liabilities $96.20 $124.54Total Long Term Debt $592.50 $549.71Total Liabilities $718.60 $766.39Total Current Assets $154.70 $161.69Total Assets $871.60 $1,410.76 Income Statement: ($millions, except per share data) 12/31/2014 12/31/2013 12/31/2012 Period 12 months ending 12 months ending 12 months ending Revenue $536.30 $525.82 $256.67 Net Income $-515.60 $-232.29 $2.53 Earnings Per Share $-19.76 $-4.01 $0.61 Event: According to recent press and people with knowledge of the matter, Nuverra Environmental Solutions, Inc. has been working with investment bank Lazard Ltd on restructuring its debt. Nuverra has been looking at several financial restructuring options, including a potential debt exchange, the people said. Source: Recent Press Profile Number: 672-5761





RCS Capital Corporation 405 Park Ave., 14th Floor New York, NY 10022 866 904-2988 Officers: Edward M. Weil, Jr. -- C.E.O. Brian D. Jones -- C.F.O.

Federal Tax ID: 38-3894716 SIC: 6211 Security Brokers, Dealers, and Flotation Companies Employees: 1,942 Company Website: www.rcscapital.com Auditor: PricewaterhouseCoopers LLP

Securities: Ticker: RCAP Exchange: NYSE Common Stock; 73,657,002 shares outstanding as of March 6, 2015 (CUSIP: 74937W102) 5% Senior Notes due 2021 ; $120,000,000 outstanding (CUSIP: 74937WAA0)

Bank Debt: First Lien Sr. Secured Term Loan due 2019, $575.0 million / First Lien Sr. Secured Revolver due 2017, $25.0 million / First Lien Sr. Secured Term Loan due 2021, $150.0 million Business: RCS Capital Corporation engages in the independent retail advice, wholesale distribution, investment banking, capital markets, investment management and investment research businesses. The Company offers independent retail advices, financial products and investment solutions through a network of independent channel broker-dealers and registered investment advisers; and multi-product distribution platform of direct investment program offerings to independent broker-dealers and the retail financial advisor community. The Company was formerly known as 405 Holding Corporation and changed its name to RCS Capital Corporation in February 2013. Balance Sheet: ($millions) 12/31/2014 12/31/2013Total Long Term Debt $804.41 $33.10Total Liabilities $1,631.34 $120.17Total Assets $2,466.63 $336.53 Income Statement: ($millions, except per share data) 12/31/2014 12/31/2013 12/31/2012 Period 12 months ending 12 months ending 12 months ending Revenue $2,102.20 $975.07 $287.50 Net Income $-119.64 $98.02 $7.41 Earnings Per Share $-5.55 $0.29 $0.00 Event: On January 4, 2016, RCS Capital Corporation announced that it has reached an agreement in principle with certain of its key stakeholders for a new investment of $150 million and the restructuring of its debt and capital structure. To implement its financial restructuring, RCS Capital intends to file a voluntary petition for a pre-arranged Chapter 11 bankruptcy in late January 2016. Source: Press Release Profile Number: 672-5997





SFX Entertainment, Inc. 430 Park Avenue, Sixth Floor New York, NY 10022 646 561-6400 Officers: Robert F.X. Sillerman -- Chairman & C.E.O. Richard Rosenstein -- C.F.O.

Federal Tax ID: 90-0860047 SIC: 7900 Amusement and Recreation Services Employees: 625 Company Website: www.sfxii.com Auditor: Ernst & Young LLP

Securities: Ticker: SFXE Exchange: NASDAQ Common Stock; 93,205,508 shares outstanding as of March 10, 2015 (CUSIP: 784178303) 9 5/8 2nd Lien Secured Notes due 2019; $285,000,000 outstanding (CUSIP: 784178AF2) 9 5/8 2nd Lien Secured Notes due 2019; $10,000,000 outstanding (CUSIP: 784178AG0)

Bank Debt: First Lien Sr. Secured Revolver due 2017, $30.0 million Business: SFX Entertainment, Inc. engages in the production of live events and digital entertainment content that focuses on the electronic music culture (EMC) and other festivals. The Company produces and promotes live EMC festivals and events; produces music tours; and sells event tickets through a ticketing platform, as well as provides merchandising and related services. Its live events and brands include Tomorrowland, TomorrowWorld, Mysteryland, Sensation, Stereosonic, Electric Zoo, Disco Donnie Presents, Life in Color, Nature One, Mayday, Decibel, Q-Dance, Awakenings, React Presents, Beatport, Flavorus, Paylogic and others. The Company also manages event-driven nightclubs. Balance Sheet: ($millions) 12/31/2014 12/31/2013Total Current Liabilities $129.65 $90.15Total Long Term Debt $295.30 $74.70Total Liabilities $448.49 $223.56Total Current Assets $98.76 $118.70Total Assets $710.33 $574.99 Income Statement: ($millions, except per share data) 12/31/2014 12/31/2013 12/31/2012 Period 12 months ending 12 months ending 12 months ending Revenue $354.45 $170.46 $24.82 Net Income $-130.77 $-116.72 $-16.16 Earnings Per Share $-1.49 $-1.70 $-0.44 Event: In Form 8-K filed on January 7, 2016, SFX Entertainment, Inc. announced that in connection with its obligations under its Forbearance and Amendment Agreement, the Company has retained financial advisory firm FTI Consulting, Inc. to serve as the Company’s Chief Restructuring Officer to facilitate a reorganization. Source: Form 8-K / Profile Number: 672-5915





Stone Energy Corporation 625 E. Kaliste Saloom Road Lafayette, LA 70508 337 237-0410 Officers: David H. Welch – President, C.E.O. & Chairman Kenneth H. Beer -- E.V.P., C.F.O.

Federal Tax ID: 72-1235413 SIC: 1311 Crude Petroleum and Natural Gas Employees: 384 Company Website: www.stoneenergy.com Auditor: Ernst & Young LLP

Securities: Ticker: SGY Exchange: NYSE Common Stock; 55,916,305 shares outstanding as of February 24, 2015 (CUSIP: 861642103) 1 3/4% Senior Notes due 2017; $300,000,000 outstanding (CUSIP: 861642AN6) 7 1/2% Senior Notes due 2022; $775,000,000 outstanding (CUSIP: 861642AM8)

Bank Debt: First Lien Sr. Secured Revolver due 2019; $900.0 million Business: Stone Energy Corporation, an independent oil and natural gas company, engages in the acquisition, exploration, exploitation development and operation of oil and gas properties in the Gulf of Mexico and the Appalachia region. As of December 31, 2014, it had estimated proved oil and natural gas reserves of approximately 915 billion cubic feet of gas equivalent. Balance Sheet: ($millions) 12/31/2014 12/31/2013Total Current Liabilities $303.91 $371.16Total Long Term Debt $1,041.04 $1,027.08Total Liabilities $1,917.01 $2,278.27Total Current Assets $530.71 $552.42Total Assets $3,018.61 $3,248.56 Income Statement: ($millions, except per share data) 12/31/2014 12/31/2013 12/31/2012 Period 12 months ending 12 months ending 12 months ending Revenue $795.54 $974.18 $951.49 Net Income $-189.54 $117.63 $149.43 Earnings Per Share $-3.60 $2.36 $3.03 Event: On January 7, 2016, Moody’s Investors Service downgraded Stone Energy Corporation’s corporate family rating to B3 from B2, its probability of default rating to B3-PD from B2- PD and its senior unsecured notes to Caa1 from B3. “Low oil and natural gas prices will drive down Stone’s earnings and cash flows in 2016, sharply increasing financial leverage and weakening liquidity,” said Sajjad Alam, Moody’s AVP-Analyst. “Stone is facing a potential covenant breach in 2016 and a looming $300 million debt maturity in March 2017.” Source: Moody’s Profile Number: 672-4352




2015 Year in Review

The following companies were profiled in the Distressed Company Alert and subsequently filed for Chapter 11 in 2015: Bankruptcy

Date Company Event Date Event 10/14/15 Affirmative Insurance Holdings, Inc. 03/31/15 Audit Concern

08/22/12 Low Rating

07/02/15 Afren plc** 01/23/15 Low Rating

02/18/15 Allen Systems Group, Inc. 04/10/14 Low Rating 08/29/13 Low Rating 11/19/12 Low Rating 08/21/12 Low Rating 05/24/12 Low Rating

03/10/15 Allied Nevada Gold Corp. 02/17/15 Miscellaneous 11/25/14 Low Rating 03/28/14 Low Rating 08/15/13 Low Rating

02/08/15 Altegrity, Inc. 02/03/15 Miscellaneous 09/12/14 Low Rating 05/08/14 Low Rating 01/28/14 Low Rating 04/04/13 Low Rating 01/25/13 Low Rating 06/29/12 Low Rating 05/10/10 Low Rating

10/05/15 American Apparel, Inc. 08/12/15 Low Rating 08/29/14 Low Rating 06/19/14 Miscellaneous 02/24/14 Low Rating 11/19/13 Low Rating 03/31/11 Audit Concern

05/08/15 American Eagle Energy Corporation 03/30/15 Audit Concern 01/22/15 Low Rating

10/02/15 American Natural Energy Corporation 05/14/14 Audit Concern 04/01/13 Audit Concern 03/30/12 Audit Concern 03/31/11 Audit Concern 03/31/10 Audit Concern

Continued on next page…




2015 Year in Review, continued

Bankruptcy Date Company Event Date Event

03/16/15 American Spectrum Realty, Inc. 02/12/15 Dividend Omission 10/31/14 Audit Concern

07/10/15 Berau Capital Resources Pte Ltd.** 05/19/15 Low Rating 01/14/15 Low Rating 11/07/14 Low Rating

09/01/15 Black Elk Energy Offshore Operations, LLC 08/11/15 Miscellaneous 01/16/15 Low Rating 04/25/14 Low Rating 06/07/13 Low Rating 09/17/12 Low Rating 12/09/11 Low Rating

03/09/15 BPZ Resources, Inc. 03/04/15 Low Rating

02/04/15 Cache, Inc. 01/23/15 Miscellaneous

01/15/15 Caesars Entertainment Operating Co., Inc. 12/15/14 Low Rating 06/06/14 Miscellaneous 03/28/14 Low Rating 04/05/13 Low Rating

03/03/15 Cal Dive International, Inc. 01/16/15 Miscellaneous 10/16/14 Miscellaneous

03/12/15 Chassix Inc. 02/17/15 Miscellaneous 11/20/14 Low Rating 11/14/14 Debt at Discount 12/10/13 Low Rating 06/06/12 Low Rating

06/14/15 Colt Defense LLC (Colt Holding Co. LLC) 04/01/15 Miscellaneous 02/11/15 Low Rating 11/13/14 Low Rating 09/19/14 Low Rating 07/17/13 Low Rating 05/24/12 Low Rating 02/28/12 Low Rating 05/26/11 Low Rating

12/11/15 Cubic Energy, Inc. 11/10/14 Audit Concern 09/28/12 Audit Concern 09/28/09 Audit Concern







03/11/15 Doral Financial Corporation 05/02/14 Low Rating 12/17/12 Low Rating 09/09/09 Low Rating 03/20/09 Low Rating 06/26/07 Low Rating

03/08/15 Dune Energy, Inc. 10/11/11 Low Rating 12/03/09 Low Rating 09/16/09 Low Rating

11/05/15 Escalera Resources Co. 04/15/15 Audit Concern 03/09/15 Dividend Omission

11/09/15 Essar Steel Algoma Inc.** 10/08/15 Low Rating 04/22/15 Low Rating

04/07/15 EveryWare Global, Inc. 04/01/15 Miscellaneous 05/15/14 Covenant Violation

11/10/15 Far East Energy Corporation* 03/31/14 Audit Concern

04/19/15 Frederick’s of Hollywood Inc.*** 10/25/13 Audit Concern

07/19/15 Great Atlantic & Pacific Tea Company, Inc. 06/19/15 Miscellaneous 02/25/13 Low Rating

09/18/15 HII Technologies, Inc. 07/15/15 Default

01/20/15 Hipcricket, Inc. 05/14/14 Audit Concern

12/29/15 KaloBios Pharmaceuticals, Inc. 03/16/15 Audit Concern

06/23/15 Local Corporation 03/27/15 Audit Concern 04/02/13 Audit Concern

12/15/15 Magnum Hunter Resources Corporation 10/09/15 Dividend Omission 05/12/15 Low Rating 01/16/15 Low Rating 12/13/12 Low Rating

09/30/15 MediaShift, Inc. 05/17/07 Audit Concern

06/22/15 Midway Gold Corp. 05/21/15 Miscellaneous 03/16/15 Audit Concern







07/15/15 Milagro Oil & Gas, Inc. 12/23/13 Low Rating 04/18/13 Low Rating 03/29/13 Audit Concern 11/27/12 Low Rating 03/20/12 Low Rating

11/10/15 Millennium Health, LLC*** 10/19/15 Low Rating 09/01/15 Low Rating 07/28/15 Low Rating

10/01/15 Miller Energy Resources, Inc. (Cook Inlet) 05/06/15 Dividend Omission

06/25/15 Molycorp, Inc. 05/28/15 Miscellaneous 03/16/15 Audit Concern 11/26/14 Distressed Debt Exch. 06/19/14 Low Rating 08/13/12 Low Rating

10/15/15 Nord Resources Corporation 11/24/14 Miscellaneous 03/27/13 Audit Concern 03/29/12 Audit Concern 03/31/11 Audit Concern 03/31/10 Audit Concern 03/31/09 Audit Concern 03/26/08 Audit Concern

05/12/15 Patriot Coal Corporation 04/24/15 Miscellaneous 11/26/14 Low Rating

03/17/15 Quicksilver Resources Inc. 02/17/15 Miscellaneous 09/26/14 Low Rating 08/06/14 Miscellaneous 05/24/13 Low Rating 06/27/12 Low Rating 03/02/09 Low Rating

09/09/15 Quiksilver, Inc. 06/11/15 Low Rating 09/01/14 Debt at Discount 06/12/13 Low Rating 10/16/12 Low Rating 10/07/09 Low Rating 03/17/09 Low Rating 01/15/09 Low Rating







10/26/15 RAAM Global Energy Company 03/31/15 Audit Concern 02/09/15 Low Rating 07/31/14 Low Rating

07/15/15 Sabine Oil & Gas Corporation 05/22/15 Low Rating 03/31/15 Audit Concern 02/12/15 Low Rating 12/19/14 Debt at Discount 03/05/14 Low Rating

09/16/15 Samson Resources Corporation 08/14/15 Miscellaneous 03/31/15 Audit Concern 02/17/15 Low Rating 12/12/14 Low Rating 09/24/13 Low Rating

06/18/15 Saratoga Resources, Inc. 04/13/15 Audit Concern 03/19/15 Miscellaneous

12/31/15 Swift Energy Company 12/01/15 Miscellaneous 06/23/15 Low Rating

12/08/15 TransCoastal Corporation 03/31/15 Audit Concern 04/15/14 Audit Concern

02/27/15 University General Health System, Inc. 07/03/14 Audit Concern 10/21/13 Audit Concern 04/16/12 Audit Concern

07/15/15 Walter Energy, Inc. 04/15/15 Miscellaneous 09/26/14 Debt at Discount 06/27/14 Low Rating 03/19/14 Low Rating 07/24/13 Low Rating

01/15/15 Wet Seal, Inc., The 11/25/14 Miscellaneous 12/28/04 Miscellaneous 08/19/04 Miscellaneous

04/06/15 Xinergy, Ltd. 11/17/14 Miscellaneous 01/30/13 Low Rating 06/28/12 Low Rating 04/30/12 Low Rating




Distressed Company Alert Profile Updates Swift Energy Company – Chapter 11 – December 31, 2015

Swift Energy and eight affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 15-12670. The Company, which is engaged in the exploration, development, production and acquisition of oil and natural gas properties, is represented by Daniel J. DeFranceschi of Richards Layton & Finger. Concurrent with its petition, the Company also filed a Joint Prepackaged Plan of Reorganization and related Disclosure Statement. The Disclosure Statement explains, “Like the industry as a whole, the Debtors’ recent performance has been significantly impacted by the extreme and continuing decline in oil and natural gas prices….Notwithstanding the Debtors’ cost-reduction initiatives and other efforts to improve their liquidity profile, the decline in oil and natural gas prices continued to adversely affect the Debtors’ liquidity.” Swift Energy subsequently reached a restructuring support agreement (RSA) with holders of a majority of its senior notes, under which the Company will convert all senior notes to equity. Under the RSA, existing equity holders are to retain 4% of the Company’s equity on a fully diluted basis, subject only to dilution as a result of a proposed new management incentive program. In addition to the retained equity, existing equity holders are also to receive warrants for up to 30% of the post-petition equity exercisable upon the Company reaching certain benchmarks pursuant to the terms of proposed new warrants. The Company has arranged up to $75 million of debtor-in-possession financing from a group of senior noteholders to provide additional liquidity to fund the business through the Chapter 11 process. Swift Energy expects to restructure, amend or refinance its pre-petition $330 million secured revolving credit facility as part of its Plan. Pursuant to the RSA, Dean Swick, a managing director at Alvarez and Marsal, has been appointed to act as chief restructuring officer during the Chapter 11 process.

Previous DCA Event: Miscellaneous 12/1/2015 Previous DCA Event: Low Rating 6/23/2015

Updates: 12/11/15, 8/21/15, 7/31/15, 7/24/15 Watch List: 4/3/15, 1/23/15, 1/21/14, 5/16/14, 11/18/11

For more information on this filing and other bankruptcy filings, go to www.bankruptcydata.com

Atlas Resource Partners, L.P. Previous DCA Event: Low Rating 12/23/2015

On December 23, 2015, Moody’s Investors Service downgraded the ratings on Atlas Iron Limited, including its $267 million senior secured term loan B due 2017 to Ca from Caa3 and its corporate family rating to Ca from Caa3. According to Moody’s, the rating action follows Atlas’ announcement on December 23, 2015 that it has signed a debt restructuring support agreement with 75% of its term loan B (TLB) lenders and an amendment to its existing syndicated facility agreement. S&P Lowers Ratings

On January 4, 2016, Standard & Poor’s Ratings Services lowered its issue-level rating on Atlas Resource Partners L.P.’s senior unsecured debt to CCC from CCC+. According to Standard & Poor’s, the downgrade of the senior unsecured rating and recovery rating revision incorporate S&P’s assessment of the November 23, 2015, reduction of the Company’s borrowing base on its reserve-based revolving credit facility to $700 million from $750 million and an updated estimate of proved reserve value.

Profile Updates continued on next page…




Distressed Company Alert Profile Updates, continued

Dex Media, Inc. Previous DCA Event: Update 11/23/2015

On November 23, 2015, Dex Media, Inc. announced it has entered into a first amendment to its forbearance agreement with lenders under its senior secured credit facilities. The agreement is effective through December 14, 2015, pending certain conditions. As previously announced, the Company has received a term sheet and restructuring support agreement (RSA) from the ad hoc committee of lenders holding more than 50% of its senior secured credit facilities. Further Amendment to Forbearance

On January 4, 2016, Dex Media, Inc. entered into a Third Amendment to its Forbearance Agreement (the Second Amendment to its Forbearance Agreement was entered into on December 14, 2015) by and among the Company, certain of the Company’s direct and indirect subsidiaries, JPMorgan Chase Bank, N.A. as an agent under (i) the Amended and Restated Credit Agreement; (ii) the Amended and Restated Credit; and (iii) the Amended and Restated Loan Agreement.

Pacific Exploration & Production Corporation Previous DCA Event: Low Rating 12/18/2015

On December 18, 2015, Moody’s Investors Service downgraded Pacific Exploration & Production Corporation’s corporate family rating and senior unsecured rating to Caa3 from B3. According to Moody’s, the downgrade of Pacific E&P’s ratings to Caa3 reflects Moody’s view that the Company’s risk of default has increased given weakened industry conditions, with oil prices at multi-year lows. Fitch Downgrades

On December 22, 2015, Fitch Ratings downgraded Pacific Exploration and Production Corporation’s foreign and local Long-term Issuer Default Ratings (IDRs) to CCC from B- and its senior unsecured debt ratings to CCC from B-. According to Fitch, the downgrade reflects Fitch’s expectations that the Company’s capital structure could weaken to an unsustainable level over the near term as a result of slower oil price recovery expectations. S&P Downgrades

On December 28, 2015, Standard & Poor’s Ratings Services lowered its long-term corporate credit and issue-level ratings on Pacific Exploration & Production Corporation to CCC+ from BB-. According to Standard & Poor’s, the downgrade reflects S&P’s view that Pacific’s capital structure is unsustainable in the long term and that its liquidity is weak.




Distressed Company Alert Watch List MedAssets, Inc. (Alpharetta, GA)

Corporate credit rating lowered to B from BB- (all ratings lowered)

** 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




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. DLF Inc, Riley, MI | Bankruptcy Date: 1/3/2016 Goodman And Dominguez Inc, Medley, FL | Bankruptcy Date: 1/4/2016 Mohave Agrarian Group LLC, Las Vegas, NV | Bankruptcy Date: 1/5/2016 Salem Nursing And Rehab Center Of Augusta Inc, Augusta, GA | Bankruptcy Date: 12/31/2015 John Hudson Farms Inc, Newton Grove, NC | Bankruptcy Date: 12/31/2015 J B Jones Consortium LP, San Antonio, TX | Bankruptcy Date: 12/31/2015 Premier Pain Surgery Center LLC, Scottsdale, AZ | Bankruptcy Date: 12/31/2015 Wheels Of Justice LLC, Kailua-Kona, HI | Bankruptcy Date: 12/31/2015 High-Top Holdings Inc, Hampton, GA | Bankruptcy Date: 1/4/2016 Culego Inc, Waxahachie, TX | Bankruptcy Date: 1/4/2016 Specalloy Corporation, Dothan, AL | Bankruptcy Date: 1/5/2016

Southern Inyo Healthcare District, Lone Pine, CA | Bankruptcy Date: 1/4/2016 Titan Team Management LLC, Duluth, GA | Bankruptcy Date: 1/5/2016 Small Business Development Group Inc, Rockland, ME | Bankruptcy Date: 1/5/2016 JF Lomma Inc, South Kearny, NJ | Bankruptcy Date: 1/6/2016 Encino Corporate Plaza LP, Encino, CA | Bankruptcy Date: 12/31/2015 Coastal Forklift And Hydraulics Inc, Blackshear, GA | Bankruptcy Date: 1/4/2016 Metropolitan Automotive Warehouse Inc A California Corporation, San Bernardino, CA | Bankruptcy Date: 1/6/2016 Canyon Portal II LLC, Scottsdale, AZ | Bankruptcy Date: 12/31/2015 United Marketing Communications Inc, Southlake, TX | Bankruptcy Date: 1/1/2016 Fpmc Austin Realty Partners LP, Dallas, TX | Bankruptcy Date: 1/5/2016 Swift Energy Company, Houston, TX | Bankruptcy Date: 12/31/2015

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

e-mail [email protected].




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.

16 01 08 dca · 2016-01-08 · not to declare a cash dividend on its common stock for the fourth...

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