January 17, 2019 – The Court hearing the Checkout Holding case issued a final order [Docket No. 222] (i) authorizing the Debtors to obtain $275.0mn in debtor-in-possession (“DIP”) financing (including a roll-up of $150mn in prepetition first lien debt) and (ii) approving the Debtors’ request for confidential treatment of the entirety a DIP fee letter entered into between the Debtors and JPMorgan Chase Bank, N.A., in its capacity as administrative agent and arranger (“JPMorgan”) [Docket No. 95]. On December 13, 2018, the Court had approved interim access to $60mn of DIP financing.
As previously cited from the Debtors’ motion requesting DIP financing [Docket No. 106], “The Debtors require immediate access to DIP Financing and the authority to use cash collateral to ensure that they have sufficient liquidity to operate their businesses and administer their estates in the ordinary course. The Debtors are entering chapter 11 with a de minimis cash balance and their operating cash flow is insufficient to fund projected ongoing operations and expenses, including expenses associated with these Chapter 11 Cases. In addition to the funding needs of the Debtors’ businesses in the ordinary course and the expenses associated with these Chapter 11 Cases, the commencement of chapter 11 proceedings may further strain the Debtors’ liquidity due, among other things, to the nature of the Debtors’ businesses and its important counterparties and customers.”
The final order states, “The DIP Facility is hereby approved on a final basis. The Debtors are hereby authorized to (i) continue incurring and performing under the DIP Documents, (ii) subject to the terms of the DIP Credit Agreement, borrow up to $125,000,000.00 and (iii) incur the DIP Roll-Up Loans. The proceeds of the DIP Loans shall be used for, subject to the terms of this Final Order, the DIP Documents and the Approved Budget.”
Summary of Key DIP Facility Terms
- Borrower: Checkout Holding Corp.
- Guarantors: Each of the Persons set forth on the signature pages that are parties hereto as “Parent Guarantors,” and each of the Wholly-Owned Domestic Subsidiaries of the Borrower from time to time parties hereto as “Subsidiary Guarantors,” each as a debtor and debtor-in-possession
- Lenders: Each lender from time to time party to the DIP Credit Agreement including each “Lender” under and as defined in the Pre-Petition First Lien Credit Agreement that elects, by notice to the Administrative Agent and the Borrower, to become a lender hereunder
- DIP Agent: JPMorgan
- DIP Facility: A secured term loan credit facility in an aggregate principal amount of $275mn
- Borrowing Limits: Upon entry of the Interim Order, $60mn. Following entry of the Final Order (as defined below), and subject to the terms of the DIP Credit Agreement, an additional $65mn (and $150mn being rolled up on a final basis).
- Interest Rates & Fees:
- The Eurocurrency Rate or Base Rate, as applicable, plus the Applicable Rate per annum; where “Applicable Rate” means (i) with respect to any Roll-Up Loans, a percentage per annum for Eurocurrency Rate Loans or Base Rate Loans equal to 5.50% or 4.50%, respectively, and (ii) with respect to any New-Money Loans, a percentage per annum equal to (x) in the case of Eurocurrency Rate Loans 10.00% or (y) in the case of Base Rate Loans 9.00%, as applicable
- Default interest at 2% per annum
- Certain additional fees and expenses, including, (i) a closing payment in an amount equal to 2.00% of the DIP Commitments, payable in cash at closing; (ii) a ticking premium equal to 5.00% per annum on the actual daily amount of unused DIP Commitments, payable on a monthly basis; and (iii) an administrative agent fee, payable in cash at closing
- Maturity Date: June 14, 2019
- Use of DIP Proceeds: Proceeds of the DIP Loans under the DIP Facility and the Use of Cash Collateral will be used solely for the following:
(a) working capital and letters of credit,
(b) other general corporate purposes of the Debtors;
(c) permitted payment of costs of administration of these Chapter 11 Cases;
(d) payment of such other prepetition obligations as consented to by the DIP Agent, such consent not to be unreasonably withheld, and as approved by this Court;
(e) payment of interest, fees and expenses (including without limitation, legal and other professionals’ fees and expenses of the DIP Agent and DIP Lenders) owed under the DIP Documents;
(f) payment of certain adequate protection amounts to the Prepetition First Lien Secured Parties;
(g) subject to entry of a Final Order, the roll-up of a portion of the Prepetition First Lien Obligations into DIP Obligations; and
(h) payment of the Carve-Out.
(b) other general corporate purposes of the Debtors;
(c) permitted payment of costs of administration of these Chapter 11 Cases;
(d) payment of such other prepetition obligations as consented to by the DIP Agent, such consent not to be unreasonably withheld, and as approved by this Court;
(e) payment of interest, fees and expenses (including without limitation, legal and other professionals’ fees and expenses of the DIP Agent and DIP Lenders) owed under the DIP Documents;
(f) payment of certain adequate protection amounts to the Prepetition First Lien Secured Parties;
(g) subject to entry of a Final Order, the roll-up of a portion of the Prepetition First Lien Obligations into DIP Obligations; and
(h) payment of the Carve-Out.
- Milestones: The Loan Parties shall have caused the following to occur by the times and dates set forth below:
(a) Commencement of solicitation by December 12, 2018
(b) Interim DIP order entered by no later than 5 calendar days after the Petition Date
(c) Either (A) the NCS JV Agreements have been amended to the satisfaction of the Requisite First Lien Lenders or (B) a motion to reject the NCS JV Agreements is pending before the Bankruptcy Court by no later than 30 calendar days after the Petition Date,
(d) The Bankruptcy Court shall have entered an order authorizing the assumption of this Agreement by no later than 45 calendar days after the Petition Date
(e) The Final DIP Order shall have been entered by no later than 40 calendar days after the Petition Date
(f) Either (A) the NCS JV Agreements have been amended to the satisfaction of the Requisite First Lien Lenders or (B) the Bankruptcy Court has entered an order rejecting the NCS JV Agreements by no later than 85 calendar days after the Petition Date
(g) The Bankruptcy Court shall have entered an order approving the Disclosure Statement by no later than 85 calendar days after the Petition Date
(h) The Bankruptcy Court shall have entered an order confirming the Plan by no later than 125 calendar days after the Petition Date
(i) The Effective Date shall have occurred by no later than 140 calendar days after the Petition Date
Use of Cash Collateral
The Debtors further requested Court authority to use cash collateral. The motion states, “The Debtors require immediate access to DIP Financing and the authority to use cash collateral to ensure that they have sufficient liquidity to operate their businesses and administer their estates in the ordinary course. The Debtors are entering chapter 11 with a de minimis cash balance and their operating cash flow is insufficient to fund projected ongoing operations and expenses, including expenses associated with these Chapter 11 Cases. In addition to the funding needs of the Debtors’ businesses in the ordinary course and the expenses associated with these Chapter 11 Cases, the commencement of chapter 11 proceedings may further strain the Debtors’ liquidity due, among other things, to the nature of the Debtors’ businesses and its important counterparties and customers.”
The Debtors further requested Court authority to use cash collateral. The motion states, “The Debtors require immediate access to DIP Financing and the authority to use cash collateral to ensure that they have sufficient liquidity to operate their businesses and administer their estates in the ordinary course. The Debtors are entering chapter 11 with a de minimis cash balance and their operating cash flow is insufficient to fund projected ongoing operations and expenses, including expenses associated with these Chapter 11 Cases. In addition to the funding needs of the Debtors’ businesses in the ordinary course and the expenses associated with these Chapter 11 Cases, the commencement of chapter 11 proceedings may further strain the Debtors’ liquidity due, among other things, to the nature of the Debtors’ businesses and its important counterparties and customers.”
On December 17, 2018, the Debtors filed an execution version of the Credit Agreement entered into in respect of the DIP Facility [Docket No. 132].
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