Category: Insight

Fund Flows & Issuance: According to a Wells Fargo report, flows week to date were $0.4 billion and year to date flows stand at -$34.0 billion. New issuance for the week was $10.2 billion and year to date HY is at $131.2 billion, which is -22% over the same period last year. 

(Bloomberg) High Yield Market Highlights

• The primary market looks set to hibernate for the rest of this month.
• Starwood’s $300 million five-year senior notes offering has not finalized terms yet, may price today
• Investors continued to vote for junk bonds with an inflow for the week ended August 15, the third consecutive positive week
• Retail funds have seen inflows in five of the last six weeks
• Yields fell, spreads were steady, stocks rebounded, VIX dropped, commodities recovered and oil rose slightly
• CCCs beat single-Bs and BBs, with a YTD return of 4.16

(PR Newswire) Aircastle Corporate and Senior Unsecured Credit Ratings Upgraded to Baa3 by Moody’s

• Aircastle announced that Moody’s Investors Service has raised the Company’s corporate family and senior unsecured credit ratings to Baa3 from Ba1 based on Aircastle’s improved performance prospects, reduced fleet risk, conservative capital position and effective liquidity management.
• Mike Inglese, Aircastle’s Chief Executive Officer, stated, “Aircastle is now part of a select group of global aircraft leasing companies with investment grade credit ratings from all three major rating agencies.  We are very pleased that Moody’s, S&P and Fitch recognize the strength of Aircastle’s business platform and our unique position in the industry.”  Mr. Inglese continued, “As the leading investor in the secondary aircraft market, Aircastle is positioned to continue to grow in a disciplined and profitable manner.  We believe that three investment grade credit ratings will substantially broaden Aircastle’s liquidity base and funding access, and should enable us to efficiently raise competitively priced capital in the global markets to further drive profitable growth.”  

(Company Filing) Dish CFO resigns

• Mr. Steven E. Swain notified DISH Network that he was resigning as Senior Vice President and Chief Financial Officer effective August 22, 2018.
• The Boards of Directors designated Paul W. Orban as the principal financial officer.
• Mr. Orban, age 50, has served as our Senior Vice President and Chief Accounting Officer since December 2015 and is responsible for all aspects of our accounting and tax departments including external financial reporting, technical accounting policy, income tax accounting and compliance and internal controls for DISH Network.  Mr. Orban served as our Senior Vice President and Corporate Controller from September 2006 to December 2015 and as our Vice President and Corporate Controller from September 2003 to September 2006.  Since joining DISH Network in 1996, Mr. Orban has held various positions of increasing responsibility in our accounting department.  Prior to DISH Network, Mr. Orban was an auditor with Arthur Andersen LLP.  Mr. Orban is a certified public accountant and has an undergraduate degree in Accounting from the University of Colorado.

(Investor’s Business Daily) Diamondback Energy Expands In Permian With Energen Buy

• Shale producer Diamondback Energy agreed to buy Energen in an all-stock deal valued at $9.2 billion, setting up Diamondback to be the Permian Basin’s No. 3 producer.
• Under the deal, which includes Energen’s net debt of $830 million, shareholders will receive 0.6442 shares of Diamondback common stock for each share of Energen common stock. This represents a price of $84.95 per share based on the closing price of Diamondback common stock on Monday. The transaction has been unanimously approved by the boards of directors of each company.
• Earlier this month, Diamondback agreed to acquire all leasehold interests and related assets of Ajax Resources for $900 million in cash and 2.58 million shares of common stock.
• Management said the Energen buy should close at the end of Q4 and will add to per-share earnings and per-share cash flow in 2019, supporting increases in capital returned to shareholders. But Diamondback will maintain its dividend and assess growth in capital returns in 2019. Earlier this year, the company initiated an annual cash dividend of 50 cents a share.
• “This transaction represents a transformational moment for both Diamondback and Energen shareholders as they are set to benefit from owning the premier large-cap Permian independent with industry leading production growth, operating efficiency, margins and capital productivity supporting an increasing capital return program,” said Diamondback Energy CEO Travis Stice in a statement.  

(Bloomberg) Amazon Is Said to Be in Running to Buy Landmark Movie Chain

• Amazon.com Inc. is in the running to acquire Landmark Theaters, a move that would vault the e-commerce giant into the brick-and-mortar cinema industry, according to people familiar with the situation.
• The company is vying with other suitors to acquire the business from Wagner/Cuban Cos., which is backed by billionaire Mark Cuban and Todd Wagner, according to the people, who asked not to be identified because the discussions are private. The chain’s owners have been working with investment banker Stephens Inc. on a possible sale, the people said. No final decisions have been made, and talks could still fall apart.
• Pushing into movie theaters would follow Amazon’s expansion into myriad other forms of media, including a film and TV studio and music service. With Landmark, it gets a chain focused on independent and foreign films with more than 50 theaters in 27 markets, including high-profile locations in New York, Philadelphia, Chicago, Los Angeles and San Francisco.
• Landmark’s theaters are known for art-house fare, and some high-end locations include coffee bars or lounges, setting them apart from the typical movie experience.
• “This is probably a move to get broader distribution of film content,” said Leo Kulp, an analyst with RBC Capital Markets LLC. “Netflix had been discussed as a potential buyer of Landmark for a similar reason.”

Fund Flows & Issuance:  According to a Wells Fargo report, flows week to date were $0.6 billion and year to date flows stand at -$34.3 billion.  New issuance for the week was $6.5 billion and year to date HY is at $121.0 billion, which is -24% over the same period last year. 

(Bloomberg)  High Yield Market Highlights

• The U.S. junk bond issuance onslaught continued yesterday, with five more deals for $4.6 billion priced and strong oversubscription. This week was, the second busiest year-to-date, and most active since March.
• Global risk appetite took a hit this morning on Turkey contagion worries
• Demand for high-yield bonds in the primary market was most evident in the pricing of BMC Software, a CCC- credit funding an LBO by KKR
• Orders exceeded $4.5b for the $1.475b issue which priced at 9.75%, the wide end of talk after tightening from initial whispers of 10%
• HCA Inc drove-by with a $2b 2-tranche offering on orders of about $7.5b, more than 3.5x the size of the offering; priced at tight end of talk
• Marriott Vacations had orders of ~$3.8b, 5x the size of the offering, priced through talk
• Earlier in the week, Springleaf Finance and Wellcare Health were oversubscribed multiple times
• Junk bond yields are under some pressure as new supply hit, oil dropped for the second straight session and stocks retreated amid continuing trade tensions with China
• CCCs stay on top as they beat BBs and single-Bs, with YTD return of 4.64%
• IG bonds are down 2.36% YTD
• Goldman expects big boost to junk bond issuance from a rebound in acquisition activity by high yield-rated buyers

(CAM Note)  Moody’s upgrades debt of Penske Automotive Group

• The Moody’s upgrade was based on Penske’s continually improving credit profile. Additionally, Moody’s appreciates the diversity of Penske which helps insulate the Company from headwinds.

(CAM Note)  S&P downgrades debt of AMC Entertainment

• The S&P downgrade was based on their assessment that discretionary cash flow could turn negative for 2018. Therefore, leverage is likely to remain elevated.  However, S&P did note that AMC has adequate sources of liquidity to fund operations.

(Los Angeles Times)  Tribune Media terminates sale to Sinclair Broadcast Group, seeks $1 billion in damages

• Sinclair Broadcast Group’s proposed $3.9-billion deal to acquire Tribune Media is dead.
• Tribune announced Thursday that it is terminating the merger agreement first announced in May 2017. The companies had the option to kill the sale if it had not closed by Aug. 8.
• Tribune also said it filed a breach-of-contract lawsuit against Sinclair in Delaware Chancery Court, alleging it failed to make its best effort at getting regulatory approval of the sale. Tribune is seeking $1 billion in damages.
• “In light of the FCC’s unanimous decision … our merger cannot be completed within an acceptable timeframe, if ever,” Tribune Media Chief Executive Peter Kern said in a statement. “This uncertainty and delay would be detrimental to our company and our shareholders. Accordingly, we have exercised our right to terminate the merger agreement, and, by way of our lawsuit, intend to hold Sinclair accountable.”
• The merger has been on hold since the Federal Communications Commission voted July 19 to have the proposal reviewed by an administrative court, a process that has a history of killing such deals.
• Sinclair’s plan to buy Tribune’s 42 TV had been expected to benefit from President Trump’s appointment of FCC Chairman Ajit Pai, who is considered a strong proponent of deregulation of the broadcast industry.
• But Pai raised concerns about how Sinclair planned to divest some Tribune stations in order to meet the national cap on TV-station ownership. Under Sinclair’s plan, Tribune stations in Chicago, Dallas and Houston would have been sold to entities that had business ties to Sinclair for prices under market value. Sinclair also would have retained control of the stations even after the divestiture.

(Bloomberg)  Private-Prison REITs Expand Empires Thanks to Tax Advantages

• A big part of the success stems from Trump’s plan to spend nearly $2.8 billion next year expanding immigrant detention capacity by 30 percent from 2017. More than 70 percent of undocumented immigrants were held in private prisons last year, according to nonprofit group In the Public Interest.
• Use of the tax code plays a role, too. CoreCivic and GEO, the biggest U.S. prison companies, are classified as real estate investment trusts. That means almost all their profits from property-related operations are tax free as long as they’re distributed to shareholders through dividends.
• The tax rules incentivize CoreCivic and GEO to build and lease detention facilities rather than only manage them. They’re doing just that.
• Boca Raton, Florida-based GEO owned or leased 102 prisons in the U.S. last year, up from 65 in 2013, when it became a REIT.
• CoreCivic, based in Nashville, Tennessee, reduced managed-only contracts to seven last year from 16 in 2013, the year it also became a REIT. Facilities it owns and manages or leases grew to 82 from 53.
• “For the past five years, we’ve been very thoughtful about rebidding on CoreCivic Safety’s managed-only contracts when they are up for expiration,” CoreCivic spokeswoman Amanda Gilchrist said in an email. “The margins in the managed-only business are very low, and we are dependent on the government partner to maintain the real estate asset, including maintaining all critical security and life safety systems.”
• Both companies also have business lines whose revenue is taxable.

(CAM Note)  Both GEO and CoreCivic reported 2nd quarter results that exceeded analysts’ estimates and raised guidance for the year.

Fund Flows & Issuance:  According to a Wells Fargo report, flows week to date were $0.2 billion and year to date flows stand at -$34.9 billion.  New issuance for the week was $1.7 billion and year to date HY is at $114.5 billion, which is -25% over the same period last year. 

(Bloomberg)  High Yield Market Highlights

• Issuance-starved investors scrambled for Intelsat, the first Ca-rated sale of 2018, placing more than $4 billion in orders for what started as a $1 billion deal.
• Offering upsized to $1.25b highlighting demand for credit rated lower than triple-C as investors move deeper down the risk spectrum for yield
• FS Energy and PGT Innovations also oversubscribed by 3x-4x, priced at tight end of talk, as investors made a beeline to rare new issues after a long drought
• Yesterday was the busiest issuance session in more than three weeks
• S. corporate high-yield funds returned to inflow
• CCCs continued to beat other fixed income assets with 4.53% YTD returns
• Investment-grade bonds down 2.62% YTD
• Strong technicals, steady economic growth, healthy corporate earnings and low default rate is backdrop for high yield
• Default rate projected to decline to 1.5% by April 2019 from current 3.7%, according to Moody’s

(Company Release)  Seagate Technology Announces CFO Resignation

• David H. Morton, Jr., executive vice president and chief financial officer at Seagate, will leave the company for a senior finance executive role at another company. Morton has agreed to assist in the orderly transition of his CFO responsibilities and will leave the company on August 3, 2018. His departure is not based on any disagreement with the company’s accounting principles, practices or financial statement disclosures.
• Dave Mosley, president and chief executive officer said, “On behalf of the board of directors and executive team at Seagate, I would like to thank Dave for his contributions over his 20+ year tenure at the company. As chief financial officer, Dave championed company-wide efforts to create shareholder value through optimizing our financial model, strengthening the company’s balance sheet and driving strategic investments. We wish Dave the best in his future endeavors.”
• Dave Morton said, “It has been a tremendous career experience working at Seagate and I am proud of the successful transitions we have accomplished in the business over the last few years. Seagate is well positioned with a strong operational and financial foundation to continue to achieve its strategic goals and create shareholder value.”
• Seagate will be initiating a search for a successor CFO and has named Kathryn R. Scolnick interim CFO. Kathryn has been a senior finance executive at Seagate for six years leading the company’s investor relations and treasury operations.

(CAM Note)  Morton will fill the Chief Accounting Officer role at Tesla

(Bloomberg)  NY Regulator Rescinds Charter Merger Approval 

• The New York State Public Service Commission revoked its approval of the 2016 merger between Charter Communications and Time Warner Cable because Charter did not provide the public benefits promised on which the approval was conditioned
• Commission directed its counsel to bring enforcement action against the company
• Commission directed Charter to pay $1 million to New York Treasury for missing the June milestone for expanding its service network, bringing the total amount of payments to $3 million
• Charter is also ordered to file a plan with the Commission within 60 days to ensure an orderly transition to a successor provider, or providers
• The Commission says the company repeatedly failed to meet deadlines and attempted to “skirt obligations to serve rural communities”
• Charter says in a statement that Spectrum has extended the reach of broadband network to more than 86,000 New York homes and businesses since merger
• Charter Communications has a “very strong legal case” in New York State and will litigate if needed against New York regulators, according to comments by management on its 2Q earnings call.

(Business Wire)  Arconic Reports Second Quarter 2018 Results

• Arconic Inc. reported second quarter 2018 results, for which the Company reported revenues of $3.6 billion, up 10% year over year. Organic revenue was up 5% year over year, driven by higher volumes in the commercial transportation, automotive, aerospace engines, defense, and building and construction markets. This was partially offset by unfavorable aerospace wide-body production mix, and the negative impact of $38 million related to the settlements of certain customer claims.
• Second quarter 2018 operating income was $324 million, up 1% year over year. Operating income excluding special items was $381 million, down 2% year over year, reflecting the impact of a $23 million charge related to a physical inventory adjustment in one facility, unfavorable aerospace wide-body production mix, and continued challenges in the Rings and Disks operations, mostly offset by higher volumes and net cost savings.
• Arconic Chief Executive Officer Chip Blankenship said, “In the second quarter, Arconic delivered strong organic revenue growth and doubled adjusted free cash flow. We announced contract awards at the Farnborough International Airshow, providing groundwork for exciting growth with valued customers. We have initiated the sale process of our Building and Construction Systems business as the first outcome of our ongoing strategy review. Our team is delivering operational improvements where we need it the most. While there is plenty of work yet to be done, we are driving progress and generating positive momentum.”
• Arconic ended the second quarter 2018 with cash on hand of $1.5 billion. Cash provided from operations was $176 million; cash used for financing activities totaled $35 million; and cash provided from investing activities was $117 million. Adjusted Free Cash Flow for the quarter was $289 million.

Fund Flows & Issuance:  According to a Wells Fargo report, flows week to date were flat and year to date flows stand at -$35.1 billion.  New issuance for the week was $1.4 billion and year to date HY is at $112.7 billion, which is -24% over the same period last year. 

(Bloomberg)  High Yield Market Highlights

• Issuance-starved junk bond investors made a beeline to Party City, the lone new issue yesterday, as the market headed for its slowest month for sales since January 2016. Yields fell to a five-week low across ratings, shrugging off fund outflows.
• Party City got orders of about $1.6b for a $500m offering and priced at the tight end of talk
• YTD supply is $112.7, lowest since 2009, down 24% year-on-year
• CCCs yields dropped to six-month low yesterday
• CCCs continued to beat other fixed-income assets, with a year-to-date return of 4.5%, the highest so far this year
• IG bonds are down 2.75% YTD
• High- yield backdrop is benign, including steady economic growth, healthy corporate earnings, low default rate

(Globe Newswire)  CoreCivic Enters Into New Agreement With Federal Government to Utilize the La Palma Correctional Center

• CoreCivic announced that the Federal Government has entered into a new agreement to utilize CoreCivic’s 3,060-bed La Palma Correctional Center in Eloy, Arizona.  More specifically, the city of Eloy has agreed to modify an existing Intergovernmental Agreement with Immigration and Customs Enforcement (ICE) to add the La Palma facility as a place of performance, while also permitting the U.S. Marshals Service (USMS) to utilize capacity at the facility at any time in the future.  ICE currently expects to house up to 1,000 adult detainees at the La Palma facility under the new agreement and may house additional populations at the facility, subject to availability.  No family units or unaccompanied minors will be placed in the facility.
• The La Palma Correctional Center currently houses approximately 2,500 inmates from the state of California.  The State has begun to withdraw its population at the facility and announced plans earlier this year to ultimately discontinue utilization by January 2019.  Capacity at the facility will be made available to the Federal Government under the new agreement as additional State inmate populations exit the facility.  Under the terms of our agreement, the federal and state populations will not mix while both government entities utilize the facility.
• The new contract commences on July 24, 2018, and has an indefinite term, subject to termination by either party with 90 days’ written notice.  Updated full year 2018 financial guidance reflecting the impact of this new agreement will be provided with the issuance of the Company’s second quarter 2018 financial results on Wednesday, August 8, 2018.

(CNBC)  Hospital operator HCA lifts full-year forecast as admissions rise

• S. hospital operator HCA Healthcare reported a 24.8 percent rise in quarterly profit and boosted its full-year earnings forecast on higher patient admissions
• The upbeat results, coming from the largest U.S. for-profit hospital operator, allayed concerns that patients were delaying non-emergency surgeries due to worries about soaring out-of-pocket medical costs.
• Net income attributable to HCA rose to $820 million in the second quarter ended June 30, from $657 million a year earlier.
• Revenue rose to $11.53 billion from $10.73 billion a year ago, while revenue per equivalent admission rose 2.1 percent.
• Same-facility equivalent admissions, which include patients who stay in the hospital overnight and those who are treated on an outpatient basis, rose 2.8 percent.

(Business Wire)  Spectrum Brands Holdings Reports Financial Results

• Effective July 13, 2018, the HRG merger was completed resulting in the merger of Spectrum Brands and its former majority shareholder HRG Group, Inc. As a result of the legal form of the merger, HRG Group, Inc. has emerged as the surviving legal entity and renamed as Spectrum Brands Holdings, Inc., with a combined shareholder group of the two former entities, and will continue to operate as a global consumer products company similar to the legacy Spectrum Brands company.
• Net sales of $945.5 million in the third quarter of fiscal 2018 increased 9.6 percent compared to $862.9 million last year. Excluding the impact of $4.9 million of favorable foreign exchange and acquisition sales of $14.5 million, organic net sales increased 7.3 percent versus the prior year.
• Adjusted EBITDA of $206.4 million in the third quarter of fiscal 2018 increased 3.6 percent compared to $199.3 million in fiscal 2017.
• “I am pleased to report to you today that the turnaround of our HHI and GAC business units is well under way,” said David Maura, Chairman and CEO of Spectrum Brands Holdings. “While we have much more progress to make and will be investing in further efficiency measures over the next 12 months, I am thrilled that the leadership changes we have made and the focus on restoring the ownership accountability culture of our Company are already reading through to positive financial results. To execute 14.7 percent sales growth in our HHI division and a 12.5 percent top-line growth in our GAC division is gratifying, and a testament to what is possible with new leadership, new culture and an intense passion to win from our employee partners in these divisions.
• “As we are regaining operating momentum, we are on track to deliver the improved performance we promised in the second half of this fiscal year,” Maura said. “As such, we reiterate our fiscal 2018 adjusted EBITDA guidance for continuing operations of $600-$617 million and total company adjusted free cash flow of $485-$505 million.”

Fund Flows & Issuance: According to a Wells Fargo report, flows week to date were -$0.6 billion and year to date flows stand at -$35.1 billion. New issuance for the week was $2.7 billion and year to date HY is at $111.3 billion, which is -24% over the same period last year. 

(Bloomberg) High Yield Market Highlights

• Supply eludes the U.S. high-yield bond market, which is on track for the slowest July for new issuance since 2008. Two deals are expected to price today, and no new issues were added to the calendar.
• July has traditionally been a light month for junk bond sales, with an average supply of $15.5b the last five years
• Year-to-date supply is lowest since 2009
• Supply is down 24% year-over- year
• Junk bonds spread and yields were resilient yesterday amid faltering stocks and rising VIX
• High yield spreads and yields were little changed
• CCCs are at a 5-month low yield
• High yield has been operating in a friendly environment backed by the supply shortage, steady economic growth with no imminent threat of recession, healthy corporate earnings, low default rate

(The Economist) Netflix suffers a big wobble

• Even the most celebrated firms have their hiccups. On July 16th Netflix, an online-streaming giant, presented disappointing news to investors: it had added just 5.2m new subscribers in the second quarter of 2018, well below its projected number of 6.2m. Shares plunged by 14%.
• This most recent bout of volatility may say more about the firm’s soothsaying abilities than the strength of its underlying business. Although Netflix’s subscriber growth fell short of its own projections, it was still in line with that of past quarters. In percentage terms, Netflix registered a bigger miss against projected subscriber growth in the second quarter of 2016, when its shares fell by 13%.
• When asked this week to explain the forecasting error, Netflix’s chief executive, Reed Hastings, responded that the company never worked out what happened in 2016 either, “other than that there is some lumpiness in the business”. It is possible that subscriber growth fell short of expectations because none of the shows Netflix released last quarter captivated audiences in the way that past hits such as “House of Cards” have. Data from Metacritic, a review-aggregator, show its users gave Netflix shows released in the past quarter an average score of just 6.4 out of 10, well below the online streamer’s historical average of 7.2.  

(The New York Times) As Momentum for Sinclair Deal Stalls, Tribune Considers Options

• The Sinclair Broadcast Group’s plan to create a broadcasting behemoth that it hoped would rival Rupert Murdoch’s Fox News appears to be coming to an end.
• Already the largest local television operator in the nation, Sinclair agreed last year to buy the rival TV group Tribune Media for $3.5 billion. The deal would have given the combined company control of broadcasters reaching seven in 10 households across the country, including in New York, Chicago and Los Angeles.
• But in light of the Federal Communications Commission’s draft order this week questioning whether Sinclair was sufficiently transparent in how it represented the deal to regulators and whether a merger would be in the public interest, Tribune said in a statement Thursday that it was “evaluating its implications and assessing all of our options.”
• The merger agreement allows either side to walk away from the deal if it does not close by Aug. 8. Sinclair declined to comment.
• This week has brought a stunning shift in momentum for a deal that once seemed almost assured of being completed, thanks in no small part to policy changes proposed or enacted by the F.C.C. and advocated by Sinclair. The commission had also eased a cap on how many stations a broadcaster can own and relaxed a restriction on advertising revenue and other resources shared by television stations.
• But on Monday, the agency’s chairman, Ajit Pai — who is the subject of an investigation by the office of the F.C.C.’s inspector general regarding his new policies — said he had “serious concerns” about the Sinclair-Tribune merger. Mr. Pai asked the agency’s four commissioners to hand off its review of the merger to an administrative law judge to determine the legality of Sinclair’s proposal.

(Aluminium Insider) Arconic Lands Long-Term Aluminium Sheet Supply Contract With Boeing

• Value-added aluminium firm Arconic announced Monday a new, long-term contract with The Boeing Company to supply the aerospace firm with aluminium sheet and plate for the entirety of its offerings from Boeing Commercial Airplanes.
• This latest contract is the biggest to date, and it builds upon a deal signed by Arconic’s predecessor-in-interest with Boeing four years ago. Arconic and its predecessors have a longstanding relationship to provide wing skins for the entirety of Boeing’s metallic-structured airplanes, and this week’s agreement adds structural plate to the slate, which is used on a wide swath of Boeing’s offerings, including the 787 and 777X.
• Arconic plans to use materials produced by its Very Thick Plate Stretcher (VTPS), which is a program that began last year and is capable of stretching thicker aluminium plate than any competing process. Additionally, Arconic will begin offering aluminium plate treated by its new horizontal heat-treat furnace, which it expects to begin qualifications next year.
• Per Arconic, the principal challenge faced by composite wing makers is maintaining structural strength as wing surfaces increase. Arconic says its processes have allowed aircraft manufacturers like Boeing to address this problem, which has, in turn, led to a significant uptick in demand for its composite aluminium sheet solutions.

(The Wall Street Journal) Arconic Draws Interest From Buyout Firms 

• Aerospace-parts maker Arconic Inc. ARNC -2.59% is the subject of takeover interest from private-equity firms, according to people familiar with the matter.
• The company has received expressions of interest from buyout firms including Apollo Global Management APO -1.93% LLC, the people said.
• A takeover of Arconic would be a relatively big deal, especially for private equity. The New York company, which was known as Alcoabefore the aluminum maker broke itself up, currently has a market value of $8.3 billion, so with a typical premium it could go for north of $10 billion in a sale. Arconic also has $6.4 billion in debt.
• No deal is imminent, and there is no guarantee there will be one.

(CAM Note) HCA debt was upgraded one notch by S&P

• The upgrade reflects the company’s credit profile, cash flow growth, and free cash flow generation.

(CAM Note) Ingles debt was upgraded one notch by Moody’s

• The upgrade reflects the company’s real estate base, stable gross margins, and same store sales numbers in the context of a competitive food retail landscape.