May 30, 2019 – The Debtors filed a motion requesting authority to enter into each of: (i) a commitment letter (the "Commitment Letter") in respect of a new $350.0mn ABL credit facility, (ii) an engagement letter in respect of a new $1.2bn term loan, (iii) an engagement letter in respect of new $450.0mn of senior unsecured notes and (iv) fee letters related to each of the above [Docket No. 473].
The motion states, “Solicitation of the Plan is underway, and the Debtors are on the precipice of confirming a Plan that has overwhelming support at every level of the Debtors’ capital structure, maximizes recoveries to all of the Debtors’ creditors, and substantially de-levers the Debtors’ balance sheet. Under the Plan, the Reorganized Debtors intend to enter into and borrow under a new asset-based credit facility contemplated by the ABL Commitment Letter (the ‘New ABL Credit Facility’) and the term loan contemplated by the Term Loan Engagement Letter (the ‘New Term Loan’) and issue senior unsecured notes as contemplated by the Notes Engagement Letter (the ‘New Notes’), which, in the aggregate, will give the Reorganized Debtors approximately $2 billion in debt financing upon emergence. These borrowings are necessary to fund distributions under the Plan, repay the Debtors’ DIP Facilities, and allow the Debtors to successfully emerge from chapter 11 with sufficient post-emergence liquidity. More immediately, though, the Debtors need to take the critical step of entering into the Commitment and Engagement Letters and the Fee Letters with the Arrangers in order to facilitate the New ABL Credit Facility, the New Term Loan, and the New Notes being in place upon the Debtors’ emergence from chapter 11.
The New Debt is expected to provide the Debtors with up to approximately $2,000,000,000 in debt financing, in the aggregate, which will permit the Debtors to repay the DIP Facilities, make other distributions contemplated under the Plan, and leave them with adequate liquidity for post-emergence operations.
Key Terms of the ABL Commitment Letter
The ABL Commitment Letter contemplates a $350.0mn secured, asset-based revolving credit facility, including a $150.0mn sub-facility in the form of letters of credit, subject to certain borrowing base requirements at an interest rate substantially consistent with the Debtors’ prepetition asset-based revolving credit agreement.
Roles, Syndication: The Debtors will engage each of JPMorgan, CSLF, Wells Fargo, Barclays, Citi, DBSI and Goldman Sachs as joint bookrunners and joint lead arrangers (the “ABL Lead Arrangers” and, together with the initial lenders and their respective affiliates, the “Financial Institutions”) for structuring, arranging and syndication of the New ABL Credit Facility. Each of the ABL Lead Arrangers will use commercially reasonable efforts to assemble a syndicate of financial institutions (which shall not include certain ineligible institutions specified by the Debtors) as lenders under the New ABL Credit Facility to provide the necessary asset-based revolving financing commitments of up to $350,000,000. JPMorgan will act as sole administrative agent and collateral agent under the New ABL Credit Facility, except that the Debtors may appoint co-agents and co-managers reasonably acceptable to the Financial Institutions. The Debtors have agreed to assist the ABL Lead Arrangers in forming a syndicate, including, among other things, making the Debtors’ management available for meetings with prospective lenders, assisting in the preparation of marketing materials, and providing certain information reasonably requested by JPMorgan and CSLF.
Key Terms of the New Term Loan Engagement Letter
Roles, Syndication: The Debtors will engage each of JPMorgan, CSLF, Citi, Goldman Sachs, Barclays and DBSI as joint bookrunners and joint lead arrangers (the “Term Loan Lead Arrangers”) for structuring, arranging and syndication of the New Term Loan. Each of the Term Loan Lead Arrangers will use commercially reasonable efforts to assemble a syndicate of banks, financial institutions and other institutional lenders (which shall not include certain ineligible institutions specified by the Debtors) as lenders (the “Lenders”) under the New Term Loan to provide the necessary term loan financing commitments of up to $1,200,000,000. JPMorgan will act as sole administrative agent and sole collateral agent under the New Term Loan, except that the Debtors may appoint coagents and co-managers reasonably acceptable to the Term Loan Engagement Parties. The Debtors have agreed to assist the Term Loan Lead Arrangers in forming a syndicate, including, among other things, making the Debtors’ management available for meetings with prospective lenders, assisting in the preparation of marketing materials, and providing certain information reasonably requested by the Term Loan Lead Arrangers and Lenders.
Key Terms of the Notes Engagement Letter
The Notes Engagement Letter contemplates that the Notes Engagement Parties will undertake a Rule 144A or other private placement of senior unsecured notes in aggregate principal amount of $450.0mn.
The motion attached the following documents:
- Exhibit A: Proposed Order
- Exhibit B: ABL Commitment Letter
- Exhibit C: Term Loan Engagement Letter
- Exhibit D: Notes Engagement Letter (redacted in part)
The Court Scheduled a hearing to consider the motion for June 7, 2019, with objections due by June 6, 2019.
Read more Bankruptcy News
The post Hexion Holdings – Seeks Authority for Commitment and Engagement Letters in Respect of $2.0bn in Exit Financing appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.