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December 31, 2020 – The Court hearing the Unipharma cases issued an order (i) authorizing the Debtors to enter into an asset purchase agreement with stalking horse NHTV (AIV) ULM BIDCO LLC (the “Stalking Horse Bidder” with a $20.0mn credit bid), (ii) approving proposed bidding procedure for a sale of the Debtors' assets and (iii) scheduling an auction/sale timetable culminating in a January 20th auction and a January 21st sale hearing [Docket No. 158].
The Stalking Horse Bidder is an acquisition entity formed by holders of debt issued under the Debtors' September 2018 Senior Secured Loan Agreement ($69.6mn outstanding as at the Petition date) and is fronted by Morgan Stanley affiliate MS Capital Partners Adviser Inc. The "Stalking Horse Bid Agreement" is attached to Docket No. 19 at Exhibit A (beginning page 35).
There is no break-up fee, but there is an initial cash overbid increment of $500k and the Debtors' are obliged to cover the reasonable expenses of the Stalking Horse Bidder (up to $750k, although capped at $500k for purposes of determining a qualified bid), an amount which will be added on to any third party bid.
Notwithstanding the absence of a break-up fee, any third party bidders will have a lot more to contend with then the $20.0mn credit bid. In addition to factoring in the expense reimbursement and the initial overbid amount, qualified bids must include cash consideration sufficient to settle the Debtors' prepetition and DIP debt.
The Debtors' requesting motion [Docket No. 19] states, “[t]he Debtors, in the exercise of their reasonable business judgment, have determined that the most effective way to maximize the value of the Debtors’ estates for the benefit of their constituents was to seek bankruptcy protection and to sell their business and assets through the Sale pursuant to Bankruptcy Code section 363. In order to satisfy the requirement of the DIP facility and maintain the support of the DIP Lender, customers and vendors, and maintain the Debtors’ employee base, it is in the best interests of the Debtors and their estates to move expeditiously with a sale process, as discussed herein.
On November 10, 2020, the Debtors, retained SOLIC Capital Advisors, LLC and SOLIC Capital, LLC (collectively, ‘SOLIC’) to provide the Debtors with, among other things, Neil F. Luria as their Chief Restructuring Officer and marketing and transactional services to market the Debtor’s assets for the Sale.
Consistent with terms of the retention of SOLIC, the Debtors began a formal marketing process during early November for a sale of the Purchased Assets. Since being retained, SOLIC has approached 165 potential purchasers, including both strategic and financing buyers. Subsequently, the Debtors executed confidentiality agreements with 19 potential buyers, who were provided a preliminary confidential information. SOLIC has begun holding calls with many of these parties to facilitate the diligence needed to submit non-binding financing proposals.
Although the Debtors have not yet received, as of the date of the filing of this Motion, any non-binding purchase proposals, SOLIC will continue to market the Debtors’ assets during the postpetition period with the goal of obtaining competing bid by the mid-January Bid Deadline. The Debtors believe that, based on consultations with SOLIC, the marketing period, which will have spanned more than two months covering the period both before the commencement of, and during these bankruptcy cases by the time any proposed Auction is held in late January, 2021, represents a reasonable and sufficient period during which to solicit bids on all or substantially all of the Debtors’ assets. The Debtors believe that the marketing efforts will be sufficient to ensure the highest or otherwise best offer.
The Debtors also believe that, based on consultations with SOLIC, the Bidding Procedures negotiated with the Stalking Horse Bidder will result in the highest or otherwise best offer for all or substantially all of the Debtors’ assets.”
Key Terms of Stalking Horse APA:
- Buyer: NHTV (AIV) ULM BIDCO LLC (prepetition lenders led by Morgan Stanley affiliate MS Capital Partners Adviser Inc.)
- Sellers: Unipharma, LLC and Tamarac 10200, LLC
- Purchase Price and Deposit: (i) $20.0mn (the “Credit Bid Amount”); plus (ii) the assumption by Buyer of (A) the remaining outstanding Debt under the loan Documents as of the Closing Date and (B) if Buyers so elects by written notice to Sellers no later than ten (10) Business Days prior to Closing, such amount of outstanding Debt under the DIP Documents as set forth in such notice (Collectively, the “Assumed Debt”); Plus (iii) the assumption by Buyer of the other Assumed Liabilities. The portion of the Purchase Price payable under clause (i) shall be paid by means of a credit against the total amounts due and owing under the loan documents as of the closing Date. In no event shall the Credit Bid Amount be payable by Buyer in cash.
- Bidder Protections: No break-up fee for these credit bidding lenders and an expense reimbursement for "all reasonable and documented out-of-pocket fees and expenses (capped at $750k). A "Competing Qualified Bid” shall mean a Bid that, in accordance with the Bidding Procedures Order, (i) is submitted by the bid deadline established by the Bankruptcy Court, (ii) includes cash consideration of not less than the sum of the Purchase Price (including the amount of the Assumed Debt as of the Closing Date) plus (A) all amounts outstanding under the DIP Documents, plus (B) the Expense Reimbursement (up to $500k for purposes of calculating a qualified bid) and (C) an initial cash overbid of $500k and (iii) assumes the Assumed Liabilities (other than the Assumed Debt).
- Sale Objection Deadline: January 14, 2021
- Bid Deadline: January 18, 2021
- Auction: January 20, 2021
- Sale Hearing: January 21, 2021, and if additional time is required, the Sale Hearing may be continued without further notice to January 22, 2021.
- Deadline to close the sale: February 5, 2020
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