December 9, 2022 – Further to the Court’s November 14th bidding procedures order [Docket No. 77] and an auction held on December 7th/8th, the Debtors have now filed the asset purchase agreement (the “APA") agreed with SyBridge Digital Solutions LLC* (“Purchaser,” $13.3mn purchase price) in respect of a sale of substantially all of their assets [Docket No. 172].
* The Purchaser is an affiliate of Sybridge Technologies, a portfolio company of private equity house Crestview Partners which created Sybridge in 2019 and funded it with $200.0mn. For Sybridge, this is the "fourteenth acquisition in three years."
On November 7, 2022, Fast Radius, Inc. and two affiliated debtors (Nasdaq: FSRD; “Fast Radius” or the “Debtors”) filed for Chapter 11 protection noting estimated assets between $50.0mn and $100.0mn; and estimated liabilities between $50.0mn and $100.0mn (assets and liabilities at $69.3mn and $55.2mn, respectively, as at June 30, 2022). At filing, the Debtors, a "never profitable" cloud manufacturing and digital supply chain company (largely using 3-D printing and injection molding manufacturing processes) cited disappointing net proceeds from a De-SPAC transaction and the failure of out-of-court sale efforts as necessitating the Chapter 11 filings.
Key Terms of APA:
- Seller: Fast Radius, Inc
- Purchaser: SyBridge Digital Solutions LLC
- Purchase Price: $13,321,000
In a press release announcing its intended acquisition, Sybridge provides that: "its wholly-owned affiliate, SyBridge Digital Solutions LLC, has been selected as the winning bidder of certain assets of Fast Radius, Inc. ('Fast Radius') [OTCMKTS: FSRD]. The sale is subject to bankruptcy court approval and is expected to close before the end of 2022. SyBridge is acquiring most of the operating assets of Fast Radius, and intends to make offers of employment to a majority of current Fast Radius employees. Under SyBridge, Fast Radius will continue to operate and build its digital manufacturing and software business and will go to market under the Fast Radius brand name. This transaction represents Sybridge's fourteenth acquisition since inception in 2019.
The Debtors are looking to build on an "extensive prepetition marketing process" that ultimately came up short when a strategic investor backed out of a "cash-for-equity transaction that would have effectively taken the Company private" and left the Debtors "forced to pivot to an expedited filing for chapter 11."
Notwithstanding recent, extensive marketing that failed to elicit interest, the Debtors pushed for an expedited timetable (December 9th sale hearing), with their hurry in large part necessitated by the absence of a viable funding source (again following extensive marketing efforts). The Debtors note as to their predicament (marketing efforts in respect of both financing and an asset sale coming up short):
"As part of the prepetition marketing process, the Debtors and their advisors worked to identify potential sources for debtor in possession financing to extend the timeline to bridge to consummation of a sale transaction. Unfortunately, due to their asset profile and their prepetition secured lenders’ unwillingness to provide incremental liquidity (or to consent to being primed), the Debtors have no present offers for postpetition funding. Against this backdrop, the Debtors and their advisors believe that any no [sic] postpetition financing will be available, if at all, unless and until there are qualifying bids that evidence sufficient value with respect to their current secured lenders, thus obviating the need for an expedited sale process."
Bidding Procedure Motion
The motion [Docket No. 17] states, “The Debtors are seeking approval of the Bidding Procedures to establish an open process for the solicitation, receipt, and evaluation of bids on a timeline that allows the Debtors to consummate a sale of the Assets (the ‘Sale’). The Debtors are seeking approval of the Bidding Procedures to establish an open process for the solicitation, receipt, and evaluation of bids on a timeline that allows the Debtors to consummate a Sale of the Assets in a manner that maximizes value for the estate. As explained…the current marketing process for the Assets began well before the Petition Date, in July 2022.
The Bidding Procedures are designed to generate the highest or otherwise best available recoveries to the Debtors’ stakeholders by encouraging prospective bidders to submit competitive, value-maximizing bids for the Assets.”
Prepetition Marketing Process
The Debtors' motion continues: "In light of growing liquidity challenges, beginning in July of 2022, the Debtors and their advisors commenced an extensive prepetition marketing process to explore all potential strategic alternatives, including sales and capital markets solutions. The Debtors engaged investment bankers Citigroup Global Markets Inc. and Lincoln Partners Advisors LLC ('Lincoln') to assist in exploring all potential strategic alternatives. The Debtors and their investment bankers contacted over 275 potentially interested parties as part of this prepetition process, entered into more than 50 nondisclosure agreements, and held more than 20 management presentations. Potential investors and/or acquirors also had access to a virtual data room with approximately 1,000 documents—which is in addition to the commercial and financial information already publicly available via SEC filings. This process yielded a variety of proposals, including a financing transaction and other licensing arrangements—neither of which proved actionable or sufficient on a standalone basis to adequately capitalize the Debtors.
More specifically, the Debtors were in advanced discussions with one particular strategic investor. On September 29 and 30, 2022, the Debtors and such party engaged in substantial, in-person diligence. On October 7, 2022, the strategic investor submitted an indication of interest to acquire the Debtors. On October 19, 2022, the Debtors entered into an exclusivity agreement with that party in furtherance of a cash-for-equity transaction that would have effectively taken the Company private, delivered a return for existing equity, and left existing creditors unimpaired. However, due, in part, to exogenous factors such as an unsolicited takeover bid of that potential acquiror, the deal could not move forward as contemplated by early November. This development limited the Debtors’ alternatives because of their liquidity profile and truncated window within which to source an acceptable out-of-court transaction to avoid a default under the Prepetition Loan Agreements. Accordingly, the Debtors were left with limited liquidity and forced to pivot to an expedited filing for chapter 11.
The Debtors and their advisors continue to market the Debtors’ business with hopes of identifying a strategic or market participant to serve as a stalking horse bidder (a 'Stalking Horse Bidder') or other bidder in a chapter 11 process. In conjunction with their exploration of strategic alternatives, the Debtors have established and maintained consistent communication with key stakeholders, including their secured lenders. The Debtors have used this dialogue, which has involved substantial diligence, discussion, and interaction among the relevant parties, to keep its creditor constituencies apprised (to the extent practicable) of the status of its marketing process and extend maturity dates to allow for a more comprehensive ability to consummate a valuemaximizing transaction.
Despite consistent efforts to conserve cash, the Debtors and their advisors have moved with urgency as they anticipate substantial liquidity challenges around mid-December, absent material developments.
Although parties continue to express serious interest in the Debtors’ business, in light of the Debtors’ limited available liquidity, and after considering all of their alternatives, the Debtors determined that an in-court sale process would best preserve liquidity and maximize value, and the Debtors anticipate seeking approval of appropriate bidding procedures to continue their prepetition marketing process in court.
As part of the prepetition marketing process, the Debtors and their advisors worked to identify potential sources for debtor in possession financing to extend the timeline to bridge to consummation of a sale transaction. Unfortunately, due to their asset profile and their prepetition secured lenders’ unwillingness to provide incremental liquidity (or to consent to being primed), the Debtors have no present offers for postpetition funding. Against this backdrop, the Debtors and their advisors believe that any no [sic] postpetition financing will be available, if at all, unless and until there are qualifying bids that evidence sufficient value with respect to their current secured lenders, thus obviating the need for an expedited sale process.
About the Debtors
According to the Debtors: “Fast Radius, Inc. is a cloud manufacturing and digital supply chain company. The Fast Radius Cloud Manufacturing Platform™ provides software applications and manufacturing solutions that help engineers design, make, and fulfill commercial-grade parts, when and where they are needed. This enables companies to manufacture and ship parts easily, flexibly, and sustainably. Founded in 2017, Fast Radius, Inc. is headquartered in Chicago with offices in Atlanta, Louisville, and Singapore, and microfactories in Chicago and at the UPS Worldport facility in Louisville, KY.
Corporate Structure Chart
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