July 22, 2019 – The Debtors requested Court authority to access (i) $100.0mn in debtor-in-possession (“DIP”) financing, including $65.0mn on interim basis, (the “DIP Term Loan”) and (iii) use of cash collateral [Docket No. 37]. The DIP facility as proposed also includes an option to borrow an additional $20.0mn (the "Incremental Facility").
The motion states, “By this Motion, the Debtors request that the Court approve $100 million in senior secured debtor-in-possession financing (the ‘DIP Financing’) provided to the Debtors by those certain existing term loan lenders or affiliates or subsidiaries thereof, including on behalf of, as the investment advisors to, or managers of, certain investment vehicles and certain other lenders from time to time (the ‘DIP Lenders’), with Cortland Capital Markets Services LLC, as administrative and collateral agent (in such capacities, the ‘DIP Agent’ and, collectively with the DIP Lenders, the ’DIP Secured Parties’). If approved, the Debtors will use the proceeds of the DIP Financing to, among other things, maximize value for stakeholders and ensure adherence to health, safety, and environmental obligations while pursuing other significant sources of value for their estates, including property and business interruption insurance claims for the losses caused by the Girard Point Incident.
The use of cash collateral alone would be insufficient to meet the Debtors’ post-petition liquidity needs. While the use of Cash Collateral will allow the Debtors to continue operations in the short-term, and conduct critical operations including the shut down and idling of the Debtors’ refining facilities, removal of elevated risk chemicals, and placement of equipment in a safe state; this cash on its own is insufficient to fund the Chapter 11 Cases. The DIP Financing provides additional liquidity that is essential to fund the administrative cost of these Chapter 11 Cases, conduct a marketing and sale process to identify value-maximizing transactions, and to pay certain critical suppliers and other participants in the Debtors’ supply chain in the ordinary course. Without access to the DIP Financing, the Debtors likely would need to liquidate in the near term, to the serious detriment of their stakeholders, and in a manner that could create unnecessary risk to the community.
The Debtors believe that the DIP Financing gives the Debtors access to liquidity that is necessary to ensure that the Debtors have sufficient liquidity to stabilize their operations, provide for necessary safing of their facilities, and fund the administration of these chapter 11 cases as the Debtors seek to implement a restructuring process. Finally, the Debtors believe that the DIP Financing is on the most favorable terms available, presents the best—and likely only— option for the Debtors to sell their businesses as a going concern, was negotiated in good faith and at arm’s length, and will allow the Debtors to maximize the value of their estates for the benefit of all parties in interest.”
Key Terms of the DIP Facility:
- Borrower: PES Holdings, LLC.
- Guarantor(s): All Debtor affiliates of the Borrower.
- Lenders: Those certain Existing Term Loan Lenders that have agreed to provide commitments to fund the DIP Facility.
- Term: Initial Maturity Date, April 30, 2020.
- Commitment: Aggregate committed principal amount of up to $100.0mn with an Initial Commitment of $65.0mn, and an option to draw up to an additional $20.0mn of Incremental Loans.
- Interest Rates:
- Each Eurodollar Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurodollar Rate determined for such day plus the Applicable Margin.
- Each ABR Loan shall bear interest at a rate per annum equal to the ABR plus the Applicable Margin.
- (i) If all or a portion of the principal amount of any Loan shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), all overdue Loans shall bear interest at a rate per annum equal to in the case of the Loans, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of Section 2.09(c) plus 2% and (ii) if all or a portion of any interest payable on any Loan or other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate then applicable to ABR Loans under the relevant Facility plus 2% in each case, with respect to clauses (i) and (ii) above, from the date of such non-payment until such amount is paid in full (as well after as before judgment).
- DIP Funding Fee. Each DIP Facility Lender shall receive a funding fee in an amount equal to 8% of any Loan made by such DIP Facility Lender payable in cash on the earliest to occur of (I) the repayment of such Loan, (II) the Maturity Date and (III) the acceleration of the Loan.
- Undrawn Fee: Each DIP Lender shall receive an undrawn fee in an amount equal to 3% per annum of the undrawn outstanding commitments of such Lender under the DIP Facility, payable in cash on the earliest to occur of (I) the repayment of such Loan, (II) the Maturity Date and (III) the acceleration of the Loan.
- Financial Covenant: Minimum liquidity to be no less than $2,500,000 plus an agreed amount of post-trigger carevout, tested weekly.
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