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December 31, 2020 – The Court hearing the Unipharma cases issued a final order authorizing the Debtors to (i) access the $11.5mn balance of a $15.6mn debtor-in-possession (“DIP”) financing facility being provided by prepetition senior secured lender NHTV ULM Holdings (the “Lender,” also serving as a credit bidding stalking horse) and (ii) continue using cash collateral [Docket No. 155]. On December 11, 2020, the Court had authorized the Debtors to access a first $4.1mn tranche of the proposed DIP financing on an interim basis [Docket No. 69].
The Debtors' requesting motion [Docket No. 20] notes, “In the face of insufficient cash-on-hand, the Debtors and [investment banker] SOLIC determined that the Debtors would require post-petition financing to support their operational needs and fund the cases through the sale process and plan of liquidation.
Given the Debtors’ desire to avoid the cost and uncertainty of a post-petition DIP facility that would attempt to non-consensually prime the Senior Secured Lender, the Debtors concluded that under the circumstances acceptable third-party financing was not reasonably obtainable. Moreover, the Senior Secured Lender informed the Debtors that it would not consent to the priming of the Senior Secured Liens. Nevertheless, the Debtors, with the help of SOLIC, approached a variety of parties with the goal of determining whether the Debtors would be able to obtain third-party financing. Recognizing their need for immediate liquidity, the Debtors, with the assistance of SOLIC, began an arm’s-length process and evaluation of available alternatives.
Notwithstanding SOLIC’s outreach, no third-party has come forward with any proposal for a facility on a junior or unsecured basis to meet the Debtors’ liquidity needs. Specifically, no interested party was willing to provide (i) senior secured financing absent the explicit consent to prime the senior secured Liens (which the Senior Secured Lender would not provide), (ii) secured financing junior to the Senior Secured Liens, or (iii) financing on an unsecured basis. Given the Debtors’ challenging liquidity situation and the fact that no third-party lender was willing to provide financing on a junior basis to the existing secured facility, or to refinance in full the existing secured debt as well as provide incremental capital to fund the Debtors’ chapter 11 cases, the Debtors determined that the DIP Facility provides the best path forward for the Debtors to maximize the value of their estates in these Chapter 11 cases. Accordingly, the Debtors, with the help of their professionals, engaged the Senior Secured Lender to negotiate and execute the DIP Facility. The Debtors negotiated the DIP Documents with the Senior Secured Lender (who is also now the DIP Lender) in good faith, at arm’s-length and with the assistance of SOLIC and their counsel, and the Debtors believe that they have obtained financing on the best terms reasonably available.
Given these challenges and the anticipated funding needs of the Debtors during the sale process, the Debtors concluded proceeding with the DIP Facility is the most efficient and cost-effective way to proceed.”
Key Terms of the DIP Facility:
- Borrower: Unipharma, LLC
- Guarantor: Tamarac 10200, LLC
- Lender: NHTV ULM Holdings LLC
- Administrative Agent: None
- Commitment: An aggregate original principal amount not to exceed $15.6mn, as such commitment may be increased from time to time in the sole and absolute discretion of Lender pursuant to Section 2.08.
- Interest Rate: 10% per annum
- Default Rate: 12% per annum
- Roll-Up: $1.3mn with interim DIP order (although, as note above, the drafting of the interim order is unclear as to whether availability is with a "Final Order" or a "Closing [ie interim] Order")
- Fees and Expenses: Lender costs
- New Money: $15.6mn less the $1.3mn roll-up (ie $14.3mn), with $4.1mn available with interim DIP order.
- Maturity Date: The earliest to occur of (a) the date that is 120 days after the Petition Date (the “Scheduled Maturity Date”); provided, however, the upon Borrower’s written request received by the Lender not later than 30 days prior to the original Scheduled Maturity Date such Scheduled Maturity Date can be extended by 60 days subject to (i) no Event of Default existing at the time of such extension and (ii) accuracy of the representations and warranties in all material respects at the time of such extension and after giving effect thereto, (b) 30 days after entry by the Bankruptcy Court of the Interim Order approving the Loans (the “Interim DIP Period”), if the Final Order has not been entered by the Bankruptcy Court prior to the expiration of such 30-day period. (c) the effective date of an Acceptable Chapter 11 Plan; or (e) the date of termination of Lender’s Commitments and the acceleration of any outstanding Loans, in each case, in accordance with the terms of this Agreement.
- Use of Proceeds: (a) working capital and other general corporate purposes of the Debtors solely in accordance with the Budget (as defined in the DIP Loan Agreement); (b) payment of amounts due under the DIP Facility (as applicable), including interest and fees payable thereunder and any adequate protection payments payable pursuant to the Interim Order, in accordance with the Budget; (c) the DIP Roll-Up; (d) payment of the professional fees and expenses of administering the Chapter 11 Cases; and (e) other purposes as expressly set forth in the Interim Order, the Budget, or as expressly approved by the DIP Lender.
- Milestones: The Loan Parties shall achieve the following milestones (the “Milestones”) by the dates set forth below (or such later date as may be agreed by Lender in its sole discretion):
- Deadline to file DIP financing motion: Petition date
- Deadline to enter into stalking horse APA: Petition date
- Deadline to file bidding procedures motion: One calendar day after Petition date
- Deadline for interim DIP financing order: two calendar days after the Petition date
- Deadline to file Plan and Disclosure Statement: 10 calendar days after Petition date
- Deadline to file Schedules and SOFA: 14 calendar days after Petition date
- Deadline for bidding procedures order: 25 calendar days after Petition date
- Deadline to commence auction: 42 calendar days after Petition date
- Deadline for sale hearing and sale order: 45 calendar days after Petition date
- Deadline to close sale: 60 calendar days after Petition date
- Deadline for Plan confirmation order: 85 calendar days after Petition date
- Deadline for effectiveness date: 90 calendar days after Petition date
The Debtors’ prepetition capital structure consists of (i) the Senior Secured Loan Agreement ($69.6mn outstanding); (ii) the Subordinated Notes ($82.3mn outstanding); (iii) a $1.6mn Paycheck Protection Loan; and (iv) other tax-related and general unsecured claims.
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