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October 27, 2020 – The Court hearing the Studio Movie Grill Holdings cases issued an interim order authorizing the Debtors’ to access $7.0mn of new money, debtor-in-possession (“DIP”) financing, (ii) roll-up $16.2mn of prepetition debt and (iii) use cash collateral [Docket No. 52].
The current tranche of interim DIP financing is part of a $22.8mn new money package being provided by prepetition lenders led by Goldman Sachs Specialty Lending Group, L.P. The roll-up is also part of a two stage process, with the balance of what is in total a $45.6mn roll-up (or 2 times the DIP financing) to occur after issuance of a final DIP order. That order is to be considered at a November 17th hearing (objections due by November 10th).
The Debtors requesting motion [Docket No. 15] notes, “The DIP Facility and Cash Collateral will permit the Debtors to, among other things, preserve the value of their bankruptcy estates, continue operating their business in an orderly fashion, maintain business relationships with vendors, suppliers, and customers, meet ongoing business payroll disbursements, maintain employee morale, and satisfy other working capital and operational needs.
Absent immediate access to the loans under the DIP Facility and use of Cash Collateral, the Debtors would likely have to curtail or even cease business operations to the material detriment of creditors, employees, and other parties in interest. Accordingly, it is critically important that the Debtors have access to the funds made available under the DIP Facility and authorization to use Cash Collateral at the onset of the Chapter 11 Cases. The Debtors anticipate using the DIP Facility to fund their day-to-day operations and refinance a portion of the Prepetition Secured Indebtedness, all to preserve value for their bankruptcy estates. This available liquidity (either through the DIP Facility or Cash Collateral use or both) is necessary for the Debtors to demonstrate to their customers, suppliers, vendors, and employees that they have sufficient capital to ensure continuation of ongoing operations.”
Key Terms of the DIP Facility:
- Lenders: (a) Goldman Sachs Bank USA, as successor in interest to Goldman Sachs Specialty Lending Holdings, Inc., and (b) one or more affiliates of Crestline Management, L.P. or funds or other institutions with respect to which Crestline Management, L.P. serves as investment manager.
- New Money Commitment: $7.0mn on an interim basis, and $22.8mn on a final basis, cumulative of any amounts advanced on the interim basis.
- Roll-Up/Refinancing: A deemed refinancing of obligations under the Prepetition Credit Agreement in an amount equal to (1) on an interim basis, two times the new money Interim DIP Loans plus $2.2mn on account of obligations under the Prepetition Credit Agreement relating to advances made in connection with the Third Amendment and (2) on a final basis, two times the DIP Loan Commitments minus the Interim DIP Loans.
- Interest Rate: Interest on the outstanding DIP Loans shall accrue at a rate per annum equal to the Adjusted LIBOR Rate plus 8.00%, payable monthly in cash as to new money DIP Loans, and payable in-kind as to the DIP Refinancing.
- Unused Commitment Fee: 1.00%
- Exit Fee: 2.00% of the DIP New Money Commitments (prior to giving effect to any DIP Loan) payable to the DIP Lenders at the earlier of (i) acceleration of the DIP Loans or (ii) the Maturity Date
- Maturity: All commitments of the DIP Lenders under the DIP Facility shall terminate at the earliest of: a. the date which is [one hundred twenty] days after the Petition Date; b. either (i) the entry of an order pursuant to section 363 of the Bankruptcy Code approving the sale not otherwise consented to by the Debtors, the DIP Lenders and the DIP Agent of substantially all of the Debtors’ assets or (ii) closing of a sale consented to by the DIP Lenders, the DIP Agent and the requisite Lenders of substantially all of the Debtors’ assets pursuant to section 363 of the Bankruptcy Code; c. the effective date of any plan of reorganization; d. the entry of an order for the conversion of any of the Debtors’ bankruptcy cases to a case under Chapter 7 of the Bankruptcy Code; e. the entry of an order for the dismissal of any of the Debtors’ bankruptcy cases; f. the date the DIP Loan becomes due and payable in full under the DIP Facility Documents, whether by acceleration or otherwise; g. thirty (30) days after the Petition Date, if the Final Order has not been entered by such date (which date may be extended with the prior written consent of the DIP Agent and requisite Lenders); h. appointment of a chapter 11 trustee; or i. the occurrence of a Post-Petition Default as defined below and the giving by the DIP Agent (with consent of the Requisite Lenders) of five (5) days prior written notice of termination to the Debtor representative (provided no such notice will be required if any financing order expires); or j. the date on which the Bankruptcy Court approves the extension of any other credit facilities to any of the Debtors over the objection of the DIP Agent (with consent of the Requisite Lenders) (each of the foregoing, as applicable, the “Maturity Date”).
- Plan Milestones
- Deadline for interim DIP order: 3 business days after the Petition Date
- Deadline for interim DIP order: 30 days after the Petition Date
- Deadline to file Chapter 11 Plan and Disclosure Statement: 60 days after the Petition Date
- Deadline for Disclosure Statement hearing (and Approval of DS): 85 days after the Petition Date
- Deadline for Plan confirmation hearing: 120 days after the Petition Date
- Deadline for Plan confirmation order: 3 business days after the Plan confirmation hearing
- Deadline for Plan Effectiveness: 135 days after the Petition Date
- Sale Milestones
- Deadline to file bidding procedures motion: 10 days after the Petition Date
- Deadline for hearing on bidding procedure and bidding procedures order: 45 days after the Petition Date
- Bid Deadline: 75 days after the Petition Date
- Deadline to commence auction: 5 days after the Bid Deadline
- Deadline for sale order: 10 days after the Bid Deadline
- Deadline to complete sale transaction: 90 days after the Petition Date
The Debtors' declaration in support of first day filings provides: "SMG estimates that secured claim[s] as of the Petition Date in respect of its pre-petition secured credit facility in an approximate amount of at least $104,123,984.28 for unpaid principal, plus any and all interest, fees, costs, expenses, charges, and other claims, debts, or obligations of the Debtors to the agent and lenders under the pre-petition secured credit facility.
SMG's unsecured obligations consist of, among other things, payments still due under leases that have not been terminated, payments due to film studios in licensing fees, and taxes that accrued before the Petition Dates but were not paid. As of the Petition Dates, SMG estimates that its collective outstanding unsecured obligations totaled approximately $231.1 million ('Estimated Unsecured Claim Amount'), which includes loans from TSO SMG Note Investment Aggregator L.P. in the approximate amount of $82.0 million."
Prepetition and DIP Commitments
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