American Tire Distributors – Seeks Approval to Compensate Wells Fargo for Efforts in Arranging Exit Financing

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November 19, 2018 – American Tire Distributors requested Court approval of work fee letter in connection with its anticipated exit financing, and payment of fees and expenses thereunder [Docket No. 344]. The exit financing motion explains, “The Debtors’ restructuring support agreement and plan of reorganization contemplate that their approximately $980 million DIP facility will be refinanced with an exit facility at emergence. Accordingly, after the Petition Date, the Debtors and their advisors conducted a marketing process for an exit facility, leveraging the prepetition DIP marketing process.  In consultation with the ad hoc bondholder group, the Debtors selected Wells Fargo, as lead arranger, subject to the Court’s approval through entry of the confirmation order. Between now and emergence, the Debtors have requested that Wells Fargo conduct legal and business diligence and prepare and negotiate the exiting financing documentation. In return, Wells Fargo requested that the Debtors enter into the Work Fee Letter, which includes customary provisions for reimbursement of Wells Fargo’s reasonable and documented fees and expenses, including reasonable and documented legal fees and expenses, and provides for a $250,000 deposit against those fees and expenses….Shortly after the Petition Date, the Debtors, in consultation with their investment banker, Moelis & Company (‘Moelis’), and other advisors, commenced a marketing process for the Exit Facility. During the course of this marketing process, the Debtors and Moelis contacted five potential lead arrangers of the Exit Facility (the ‘Potential Lenders’).  The Potential Lenders included the existing lead arranger of the DIP Facility, Bank of America Merrill Lynch (‘BAML’), as well as Wells Fargo Bank (‘Wells Fargo’) and Royal Bank of Canada (‘RBC’).”   

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