November 27, 2018 – The Debtors requested Court authority to enter into debtor-in-possession (“DIP”) financing arrangements which would provide interim access of up to $6 million [Docket No. 8]. The motion states, “The Debtors seek authorization to obtain DIP Financing under a multiple-draw super-priority senior secured term loan facility in an aggregate principal amount not to exceed $20 million (the ‘DIP Facility’) agented by Riverstone Credit Management LLC (the ‘DIP Agent’). The Debtors seek interim authority to draw up to $6 million under the DIP Facility. The proceeds of the DIP Facility, which the Debtors estimate will be sufficient to finance the Chapter 11 Cases, will be used (a) for working capital and general corporate purposes of the Debtors, (b) to pay fees and expenses related to the DIP Credit Agreement and the Chapter 11 Cases, and (c) to repay in full all obligations in connection with the Prepetition Incremental Loans….Based on the extensive negotiations that took place, the Debtors believe that these are the only terms on which the DIP Lender will provide the financing. As the DIP Facility proceeds are necessary and the only financing available at this time and funds the process by which creditors and equity stakeholders might have some basis for recovery….In addition to the DIP Facility, the Debtors require the continued use of their existing Cash Collateral. The Prepetition Secured Parties, as the requisite parties with an interest in such Cash Collateral have consented to the Debtors’ continued use of Cash Collateral subject to the terms of the Interim Order.”
Key Terms:
- DIP Facility; Borrowing Limits: Senior secured superpriority debtor-in-possession financing facility, consisting of a delayed draw term loan credit facility in an aggregate principal amount of up to $20 million, which shall be available, subject to the terms and conditions set forth in the Interim Order and the other DIP Loan Documents. During the Interim Period, $6.0 million will be made available in a single draw. Upon entry of the Final Order and thereafter until the Termination Date, up to $20 million will be made available in multiple draws as set forth in the DIP Credit Agreement.
- Use of DIP Proceeds and Cash Collateral: The proceeds from the DIP Facility and the Cash Collateral will be used to in accordance with the terms and conditions of a rolling 13-week DIP Budget (subject to variances permitted under the DIP Credit Agreement) and for no other purpose.
- Payments on Prepetition Debt: On the Closing Date, a portion of the Interim DIP Loans shall be used to repay in full the principal amount of the Prepetition Incremental Loans, plus all accrued and unpaid interest, fees, and any other amounts owed with respect to the Prepetition Incremental Loans and interest on the Prepetition Debt.
- Interest Rate: Interest rate of LIBOR plus 15.00%, payable on the Maturity Date. After the occurrence and denying the continuance of an Event of Default, the interest rate shall be the interest rate then in effect plus 2.00% per annum.
- Fees: Upfront fee of 2.50% of all commitments payable on the Closing Date.
- Maturity: The DIP Facility shall mature on the earliest to occur of (i) the 150th calendar day after the Petition Date, (ii) the 40th calendar day after the Petition Date unless, on or prior to such date, the Final Order shall have been entered, (iii) the date on which the Bankruptcy Court denies approval of, or indicates that it will note approve, the Final Order, (iv) the date on which substantial consummation of a plan of reorganization filed in any of the Cases that is confirmed pursuant to an order of the Bankruptcy Court has occurred, (v) the date on which consummation of a sale of all or substantially all of the assets of the Debtors has occurred, and (vi) the acceleration of the loans and termination of all commitments in accordance with the DIP Loan Documents
- DIP Collateral: All assets and property of the Debtors other than Avoidance Actions (including any proceeds of Avoidance Actions).
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