June 3, 2019 – The Debtors requested Court authority to (i) access $94.5mn in debtor-in-possession (“DIP”) financing ($42.0mn on an interim basis) and (ii) use cash collateral [Docket No. 19]. $27.5mn of the DIP financing will be used to roll-up prepetition debt ($12.0mn of which will be rolled-up upon issuance of the interim DIP order).
The DIP motion states, “The Debtors' businesses are cash intensive, with significant daily costs for inventory replenishment, shipping and delivery, sales and marketing, employee obligations, and the costs of providing support services (e.g., customer services) to the Debtors' Florist Network Members. As such, the Debtors require immediate access to postpetition financing and the use of Cash Collateral to operate their businesses, preserve value, and pursue their restructuring goals…. Immediate and ongoing access to funding under the DIP Facility is intended to demonstrate to customers, employees, vendors, suppliers, and other key constituencies that the Debtors have sufficient resources available to meet their obligations in the ordinary course during these cases. Absent funds available under the DIP Financing, access to Cash Collateral and the cooperation of key business partners at this critical early stage, the Debtors could (a) face a significant interruption in their businesses; (b) face diminished customer confidence in the "FTD" brand name; and (c) undermine the support of important groups on whom the Debtors' businesses and restructuring depend, which, in turn, would hinder their ability to preserve the value of their estates.”
Key Terms of the DIP Facility
- Borrower: FTD Companies, Inc.
- Guarantors: Each Restricted Subsidiary of Borrower
- DIP Agent: Bank of America, N.A
- DIP Lenders: Exclusively comprised of Prepetition Lenders
- Commitment: On an interim basis, during the period prior to entry of the Final Order, subject to the terms of the Interim Order, the Approved Budget and the DIP Documents, an aggregate principal amount not to exceed $42,000,000.00 ("Interim Borrowings"). The maximum principal amount that may be borrowed following entry of the Final Order cannot exceed $94,485,608.00 (inclusive of any outstanding Interim Borrowings) (the "Maximum Commitment").
- Interest Rate and Premiums: The DIP Facility shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the sum of the Base Rate plus the Applicable Rate. The Base Rate is defined as "for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 0.50%, and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its "prime rate". The Applicable Rate is defined as 6.0% per annum.
- Default Interest: Upon the occurrence and during the continuance of any Event of Default, at the election of the Required Lenders, all outstanding Obligations shall bear interest at a fluctuating interest rate per annum equal to the Default Rate to the fullest extent permitted by applicable Laws. Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable on demand. The Default Rate is defined as (a) with respect to any Obligation for which a rate is specified, a rate per annum equal to two percent (2%) in excess of the rate otherwise applicable thereto and (b) with respect to any Obligation for which a rate is not specified or available, a rate per annum equal to the Base Rate plus the Applicable Rate for Revolving Loans plus two percent (2%), in each case, to the fullest extent permitted by applicable Law.
- Commitment Fee: The Company shall pay to the Administrative Agent, for the account of each Lender in accordance with its Applicable Percentage, a commitment fee (the "Commitment Fee") in Dollars equal to the product of (i) one-half of one percent (0.50%) per annum times (ii) the actual daily amount by which the Aggregate Revolving Commitments exceed Outstanding Amount of Revolving Loans subject to adjustment as provided in Section 2.15 of the DIP Credit Agreement. For the avoidance of doubt, the Commitment Fee shall be determined based upon the full $94,485,608.00 of Revolving Commitments prior to entry of the Final Order. The Commitment Fee shall accrue at all times during the applicable Availability Period, including at any time during which one or more of the conditions in Article V of the DIP Credit Agreement is not met, and shall be due and payable monthly in arrears on the second Business Day of each month, commencing with the first such date to occur after the Closing Date, and on the last day of the Availability Period.
- Upfront Fee: The Borrower shall pay to the Administrative Agent, for the account of each Lender in accordance with its Applicable Percentage, an upfront fee equal to the product of (i) two and one-half percent (2.5%) times (ii) the Aggregate Revolving Commitments (the "Upfront Fee"). The Upfront Fee shall be due and payable upon entry of the Interim Order.
- Administrative Agent Fee: The Company shall pay to the Administrative Agent for its own account, in Dollars, fees in the amounts and at the times specified in the Fee Letter. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.
- Maturity/Termination Date: The earliest to occur of (in each case, the "Maturity Date"): (i) the date that is three (3) months following the Petition Date; (ii) the date which is thirty (30) days following the entry of the Interim Order if the Court has not entered the Final Order on or prior to such date; (iii) the acceleration of the DIP Loans and the termination of the commitments to make the DIP Loans resulting from the occurrence of an Event of Default (iv) the effective date of a confirmed plan of reorganization in the Chapter 11 Cases; (v) the filing of a motion by the Debtors seeking dismissal of any or all of the Chapter 11 Cases, the dismissal of any or all of the Chapter 11 Cases, the filing of a motion by the Debtors seeking to convert of any or all of the Chapter 11 Cases to a case under chapter 7 of the Bankruptcy Code, the conversion of any or all of the Chapter 11 Cases to a case under chapter 7 of the Bankruptcy Code or the appointment or election of a trustee under chapter 11 of the Bankruptcy Code, a responsible officer or an examiner with enlarged powers relating to the operation of the Debtors' business under section 1106 of the Bankruptcy Code; (vi) the effective date of a sale of all or substantially all of the assets of the Debtors; and (vii) the filing or support by any Debtor of a plan of reorganization or liquidation (a "Plan") that is not otherwise acceptable to the DIP Agent and the Required DIP Lenders in their sole discretion, other than a Plan which purports to pay the DIP Obligations and the Prepetition Obligations in cash in full on the effective date of such plan.
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