December 13, 2018 – The Court hearing the Dixie Electric case approved the Debtors’ Joint Pre-packaged Plan of Reorganization [Docket No. 127] and the adequacy of the related Disclosure Statement [Docket No. 18]. Further to their voting in favor of the Plan, (i) 100% of the secured lenders holding debt in Class 1 agreed to exchange approximately $285mn in debt for 98.25% of the equity in reorganized Dixie and (ii) a single holder of debt in Class 4 agreed to exchange an $8mn unsecured for the remaining 1.75% of reorganized Dixie.
Overview of Restructuring
On October 26, 2018, Dixie Electric announced that it had entered into a restructuring support agreement (the “RSA”) with an ad hoc group (the “Ad Hoc Group”) of its secured lenders (the “Secured Lenders”) holding more than two-thirds of the principal amount of its secured loans, along with certain other supporting parties, on the terms of a financial restructuring that is expected to result in the extinguishment of approximately $295 million in secured and unsecured debt and the provision by the Ad Hoc Group of additional liquidity in the form of a $30 million exit credit facility. The RSA provides for operations to continue as usual, without interruption, with employees, suppliers, vendors, contract counterparties and trade creditors to be paid in full in the ordinary course. Under the terms of the RSA, the Secured Lenders will receive 98.25% of the equity in reorganized Dixie (subject to dilution by a management incentive plan, “MIP”) in exchange for extinguishing their secured loans. The remaining 1.75% equity in reorganized Dixie will be distributed to the lender under the Company’s unsecured loan (also subject to dilution by a management incentive plan).
Effective Date Events
On the Effective Date of the Plan:
- The reorganized Debtors will enter into a new first lien facility (the “New First Lien Facility”) which will provide a term loan facility in an aggregate principal amount of $30 million. Loans under the New First Lien Credit Facility agreement will mature 5 years from the effective date and will bear interest at a rate of LIBOR plus 10.00% per annum on drawn amounts, with a LIBOR floor of 1.00%.
- The Secured Loan Claims shall be cancelled and discharged and the liens on and other security interests in the collateral with respect thereto shall be released and terminated, and, in exchange therefor, each Holder of Secured Loan Claims will receive its pro rata share of 98.25% of the New Common Stock, subject to dilution by the MIP. On the Effective Date, the Prepetition Secured Credit Agreement shall be cancelled and be of no further force or effect.
- The Unsecured Loan Claims shall be cancelled and discharged, and, in exchange therefor, each Holder of Unsecured Loan Claims will receive its pro rata share of 1.75% of the New Common Stock, subject to dilution by the MIP.
- The Prepetition Unsecured Loan Agreement shall be cancelled and be of no further force or effect.
- The Existing Parent Interests shall be cancelled, and the Consenting Equityholder shall receive no recovery under the Plan.
- The New Board will be comprised of 5 members, 4 of whom will be selected by members of the Ad Hoc Group and 1 of whom will be the Chief Executive Officer of the Company.
Summary of classes, claims, voting rights and expected recoveries:
- Class 1 (“Secured Loan Claims”) is impaired and entitled to vote on the Plan. Expected recovery is approximately 33%. Holders will receive their pro rata share 98.25% of the Company’s post-emergence equity, subject to dilution by equity granted under the Company’s MIP.
- Class 2 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Expected recovery is 100%. Holders are expected to be paid in cash, subject to alternative arrangements agreed by the Debtors, secured lenders and holders of the claims.
- Class 3 (“General Unsecured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Expected recovery is 100%.
- Class 4 (“Unsecured Loan Claims”) is impaired and entitled to vote on the Plan. Expected recovery is approximately 22%. Holders will receive their pro rata share of 1.75% of the Company’s post-emergence equity, subject to dilution by equity granted under the Company’s MIP.
- Class 5 (“Intercompany Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Expected recovery is 100%. Each allowed Intercompany Claim will be adjusted, continued, contributed to capital or discharged, as determined by the secured lenders in consultation with the Debtors.
- Class 6 (“Intercompany Interests”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Expected recovery is 100%. On the effective date, all allowed Intercompany Interests will be reinstated and otherwise rendered unimpaired pursuant to section 1124 of the Bankruptcy Code.
- Class 7 (“Existing Parent Interests”) is impaired, deemed to reject and not entitled to vote on the Plan. Expected recovery is 0%. On the effective date, all Existing Parent Interests will be cancelled.
Read more Bankruptcy News
The post Dixie Electric – Court Approves Plan and Disclosure Statement, Reorganized Dixie Set to Emerge $293mn of Debt Lighter appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.