September 3, 2019 – Further to the Debtors' bidding procedures motion [Docket No. 21], the Court hearing the Jack Cooper Ventures cases issued an order authorizing the Debtors to (i) enter into an asset purchase agreement with stalking horse bidder JC Buyer Company, Inc. (the “Stalking Horse” or "Purchaser," a credit bidding affiliate of funds managed by the Debtors' Junior Term Loan Lenders) in respect of a sale of substantially all of the Debtors' assets (the "Sale"), (ii) adopt bidding procedures in respect of the Sale, including an expense reimbursement for the Purchaser but no further bid protections, and (iii) establish an auction/sale timetable culminating in an October 10, 2019 sale hearing [Docket No. 224].
The Debtors' bidding procedures motion [Docket No. 21] gives the following background as to the proposed Sale: "Beginning in April 2019, the Debtors and their advisors entered into discussions regarding potential restructuring transactions with (a) the Debtors’ prepetition secured revolving lenders (the ‘Revolving Lenders’), (b) the Debtors’ first lien term loan lenders (the ‘First Lien Lenders’) and (c) the Debtors’ prepetition secured lenders under the 1.5 lien term loan facility and second lien term loan facility (collectively, the ‘Junior Secured Term Loans’ and the lenders thereunder, the ‘Junior Term Loan Lenders’ and, together with the Revolving Lenders and the First Lien Lenders, the ‘Prepetition Secured Parties’).
While entering into discussions with the Prepetition Secured Parties, the Debtors also began to engage in discussions with representatives of the Central States, Southeast and Southwest Areas Pension Fund (the ‘CSPF’), the largest multi-employer pension plan in which certain of the Debtors participate….During these negotiations, it became clear that the only way the Debtors would be able to reduce their pension contributions to the CSPF on a consensual basis would be to: (a) withdraw from the CSPF and trigger the Debtors’ approximately $2 billion in unsecured withdrawal liability; (b) effectuate a sale of the Debtors’ assets free and clear of all claims, liens, encumbrances and successor liability to a new employer that would then commence participation as a ‘New Employer’ under the CSPF’s ‘Hybrid Plan’ provisions with substantially reduced pension contributions; and (c) obtain ratification from the membership of the IBT of a new or modified CBA that would permit the Debtors to reduce their pension contribution obligations.
In furtherance of pursuing the consensual reduction of pension contribution obligations through a sale transaction, the Debtors and their advisors engaged in extensive negotiations with the Junior Term Loan Lenders and the other Prepetition Secured Parties, regarding a going-concern sale of substantially all of the Debtors’ assets (the ‘Sale’) to JC Buyer Company, Inc., which will be an affiliate of funds managed by the Junior Term Loan Lenders at the closing of the Sale (the ‘Stalking Horse Bidder’). These good faith and arm’s-length negotiations culminated in the Debtors and certain of the Prepetition Secured Parties entering into the Restructuring Support Agreement, dated as of August 6, 2019 (the ‘RSA’ and the parties thereto, the ‘RSA Parties’). The Prepetition Secured Parties also agreed to provide the Debtors with a post-petition financing package and the consensual use of cash collateral to enable the Debtors to pursue the Sale.
Consistent with the RSA, the Stalking Horse Bidder agreed to acquire substantially all of the Debtors’ assets on the terms set forth in the asset purchase agreement, a form of which is attached to the Bidding Procedures Order as Exhibit 1 (the ‘Stalking Horse APA’). The Stalking Horse APA contemplates a credit bid by the Stalking Horse Bidder of obligations under the DIP Term Loan Facility and the Junior Secured Term Loans (the ‘Stalking Horse Bid’) and the assumption of the Exit Facilities (as defined in the Stalking Horse APA). Importantly, the Debtors are committed to securing the highest or otherwise best bid for all of their assets and operations by marketing the assets and conducting a competitive bidding process, as set forth in the Bidding Procedures."
Key Term of Stalking Horse APA
Purchase Price (as detailed in the Stalking Horse APA): "The Purchase Price for the purchase, sale, assignment and conveyance of the Acquired Assets shall consist of:
- The Cash consideration in an aggregate amount equal to (i) the Professional Fees Amount, plus (ii) the Wind Down Amount, plus (iii) to the extent not covered by the foregoing, an additional amount that shall be sufficient to pay for any assets that cannot be acquired through a credit bid, provided that such additional amount will not exceed $1 million;
- The assumption by Buyer or a Buyer Designee, as applicable, of the Assumed Liabilities from Sellers, including the assumption of (i) all obligations under the Exit Facilities and (ii) the obligation to pay to the applicable counterparties of the applicable Assumed Contracts the Cure Costs payable by Buyer under the Stalking Horse APA; and
- The release of Sellers that are borrowers or guarantors under the Junior Credit Agreements and/or the DIP Term Loan Facility of the obligations arising thereunder or otherwise relating thereto, in an aggregate amount not less than (i) $425,000,000, minus (ii) the Cash Consideration, minus (iii) the aggregate outstanding principal amount under the (x) U.S. Revolver Facility, (y) Canadian Sub-Facility and (z) First Lien Term Loan Facility, pursuant to Section 363(k) of the Bankruptcy Code."
Bidder Protections
In order to nominally encourage potential further bidders, the Stalking Horse has agreed to limit bidder protections to an expense reimbursement fee.
Key Dates
- Bid Deadline: October 1, 2019
- Auction: October 4, 2019
- Sale Objection Deadline: October 2, 2019
- Sale Hearing: October 10, 2019
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The post Jack Cooper Ventures, Inc. – Gets Go Ahead for Bidding Procedures and Stalking Horse APA with Credit-Bidding Lenders ($425mn Bid), Schedules October 10th Sale Hearing appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.