GCX Limited – Plan Supplement Includes Liquidation Analysis, Financial Projections, and Details of the New Board
November 20, 2019 – The Debtors filed a Plan Supplement to their Joint Pre-Packaged Chapter 11 Plan [Docket No. 156] in anticipation of their December 4th Plan confirmation hearing.
The Supplement attached the following documents:
- Exhibit A: Liquidation Analysis
- Exhibit B: Financial Projections
- Exhibit C: New Directors and Officers Disclosure
- Exhibit D: New First Lien Facility Credit Agreement
- Exhibit E: New Second Lien Documents
- Exhibit F: New Intercreditor Agreement
- Exhibit G: Shareholders’ Agreement Term Sheet
- Exhibit H: Summary of Marketing Efforts
- Exhibit I: Description of Transaction Steps
- Exhibit J: Management Incentive Plan Term Sheet
- Exhibit K: Employee Arrangements
- Exhibit L: Rejection Schedule
- Exhibit M: Schedule of Non-Released Parties and Retained Causes of Action
Liquidation Analysis
The Debtors provide, notably in respect of the all important Class 3 (Senior Secured Note Claims) : "Based on the assumptions outlined herein, the Debtors project they would realize $148.2 million (Low Case) to $209.4 million (High Case) in gross liquidation proceeds from their encumbered assets in a chapter 7 liquidation, representing 15% to 21% of aggregate net book value, excluding intercompany receivables and investments in affiliates & subsidiaries. After estimated asset sale commissions and auction fees, chapter 7 administrative claims and operating expenses, the carve-out for accrued and unpaid estate professional fees, costs for collection of receivables, and repayment of the projected loans under the DIP Credit Agreement, recovery to Holders of Senior Secured Notes is estimated to range from $72.8 million to $133.3 million, or a recovery rate of 20% to 36% of the $365,872,5002 in Senior Secured Note Claims. Holders of General Unsecured Claims, including the Senior Secured Note deficiency Claims are not expected to realize any recoveries in a chapter 7 liquidation. Holders of GCX Interests are not expected to realize any recoveries in a chapter 7 liquidation.
The estimated recovery for Holders of Senior Secured Note Claims is based on a comparison of the post-petition debt reinstated totaling $200 million and adjusted enterprise values expressed by offers obtained during the Debtors’ marketing and sale process in connection with a potential Sale Transaction. As explained in the Summary of Marketing Efforts included as Exhibit H to the Plan Supplement, there was no actionable offer in an amount equal to the Senior Secured Note Claims. Given these reference points, the Debtors estimate the Holders of Senior Secured Note Claims will receive a recovery well below 100% under the Plan, but more than the estimated 20% to 36% recovery that the Holders of Senior Secured Note Claims would receive under a hypothetical chapter 7 liquidation.
Financial Projections
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