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American Gilsonite Company D.I.P. Financing Approval Sought

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American Gilsonite Company filed with the U.S. Bankruptcy Court a motion to obtain post-petition financing, use cash collateral, grant certain protections to prepetition secured parties and schedule a final hearing.

The motion explains, “The DIP Financing is the linchpin of the Prepackaged Plan and the numerous transactions to be entered into by the Debtors in connection therewith. Upon their exit from chapter 11, the Debtors estimate that the Company will have approximately $9.83 million (assuming a December 31, 2016 emergence date) of cash on their balance sheet to operate their reorganized business. The DIP Financing is initially being provided by the Consenting Second Lien Noteholders…that are members of an Ad Hoc Group and are signatories to the Restructuring Support Agreement with the Debtors (the ‘RSA’). Following entry of the Interim Order…eligible Second Lien Noteholders will be offered the opportunity to become lenders under the DIP Financing, pursuant to a syndication process….To obtain the liquidity necessary to administer these chapter 11 cases and continue their mining operations in the ordinary course of business, the Debtors have procured and seek approval of a $30 million senior secured postpetition term loan facility…by and among AGC, as borrower, each of the other Debtors as guarantors, and the DIP Lenders.”

The motion continues, “The DIP Credit Agreement provides the Debtors with interim funding of $22.5 million, net of original issue discount and backstop payments payable to the Initial DIP Lenders, upon entry of the Interim Order and, upon entry of the Final Order, allows the Debtors to make an additional draw of $7.5 million. The initial draw will be used to repay the amounts owed under the First Lien Credit Agreement plus accrued interest and fees. The remaining $7.5 million drawn will be used for general corporate and administration purposes, subject to an agreed upon budget. During the interim period, the Debtors will use the cash on their balance sheet and generated from operations, with the consent of the Requisite Noteholders and Second Lien Trustee on the terms and conditions in the Interim Order.” The Financing will bear an interest rate of 9.00 % + LIBOR, subject to a 1.00% LIBOR floor. Default Interest Rate: + 2.00% per annum.

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