NORDAM Group – Court Approves $340 million in Exit Financing from J.P. Morgan and Related Seal

November 29, 2018 – The Court hearing the NORDAM Group case approved the Debtors’ exit financing motion and also approved a related motion requesting confidential treatment of portions of exit financing documents filed with the Court [Docket No. 723]. 

 

In the motion requesting authority to enter into the exit facilities [Docket No, 694], the Debtors explain “Through this process, the Debtors propose entering into the Engagement Letter dated November 21, 2018 by which J.P. Morgan Chase Bank, N.A. (‘JPM’) will act as the Debtors’ sole and exclusive arranger, on a best efforts basis, for each of: (a) a senior  secured revolving asset-based loan facility in an aggregate principal amount of up to $100 million (the ‘Exit ABL Facility’) and (b) a senior secured term loan facility in an aggregate principal amount of up to $240 million (the ‘Exit Term Loan Facility’ and, together with the Exit ABL Facility, the ‘Exit Facilities’), and which Engagement Letter further provides for a customary expense reimbursement and indemnity in favor of JPM as set forth more fully therein. In consideration for JPM’s undertakings in this regard, and subject to the Court’s approval, the Debtors will enter into the related Fee Letter dated November 21, 2018, by which the Debtors have agreed to pay certain additional and customary fees in connection with the closing of the Exit Facilities (collectively, the ‘Fees’).”

 

As previously reported in respect of the seal motion [Docket Nos. 696 ], “The commercially sensitive Confidential Information here concerns the relationship and commercial contract terms between the Debtors and JPM, including the Fees to be paid to JPM as consideration for JPM’s arrangements of and commitments to the Exit Facilities and fees and other pricing to be paid to the lenders under the Exit Facilities. Importantly, redacting and filing under seal the Confidential Information is consistent with industry practice and party expectations. Given the highly competitive nature of the investment banking and finance lending industries, disclosure of such pricing information would give JPM’s competitors a strategic advantage on pricing and thereby impair its ability to bid and compete for future financings…. Second, disclosure of any potential pricing terms could result in higher borrowing costs or more restrictive terms in the Exit Facilities. The Fees and other pricing terms are integral components of the negotiations regarding the Exit Facilities, and therefore disclosure of the Fees and other pricing terms could lead to JPM demanding higher rates for the Exit Facilities for the Debtors so as to avoid setting adverse precedent in the marketplace for future deals. Third, JPM has indicated that redacting and sealing the Exit Financing Motion and Fee Letter is one of the protections required as a condition precedent for entering into the Engagement Letter and facilitating syndication of the Exit Facilities.”