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December 7, 2020 – The Debtors requested Court authority to (i) access $15.6mn of debtor-in-possession (“DIP”) financing to be provided by prepetition senior secured lender NHTV ULM Holdings (the “Lender,” also serving as a credit bidding stalking horse) and (ii) use cash collateral [Docket No. 20]. The proposed DIP financing includes a $1.3mn roll-up of the Debtors' prepetition secured debt with that roll-up to occur upon issuance of an interim DIP order that will otherwise unlock $5.4mn (inclusive of the $1.3mn roll-up) of new money financing.
The Debtors' requesting motion notes, “In the face of insufficient cash-on-hand, the Debtors and 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
- 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):
- On the Petition Date, (A) the Debtors shall file a motion with the Bankruptcy Court seeking approval of the DIP Facility and (B) the Debtors shall have entered into the Staling Horse APA.
- On or before the date that is one (1) Calendar day after the Petition Date, the Debtors shall have filed the Bidding Procedures Motion in the Bankruptcy Court.
- On or before the date that is two (2) calendar days after the Petition Date, the Bankruptcy Court shall have entered the Interim Order.
- On or before the date that is ten (10) calendar days after the Petition Date, the Debtors shall have filed, in a form acceptable to the Lender, (i) the Acceptable Chapter 11 Plan; and (ii) the Disclosure Statement.
- On or before the date that is no later than fourteen (14) calendar days after the Petition Date, each of the Debtors shall have filed schedules an statements of financial affairs pursuant to rule 1007 of the Federal Rule of Bankruptcy Procedure.
- On or before the date that is twenty-five (25) calendar days after the Petition Date, the Bankruptcy Court shall have entered the Bidding Procedures Order and the Final Order.
- On or before the date that is forty-two (42) calendar days after the Petition Date, the Debtors shall have commenced the Auction, if necessary.
- On or before the date that is forty-four (44) calendar days after the petition Date, the Debtors shall have commenced the Auction, if necessary.
- On or before the date that is forty-five (45) calendar days after the petition Date, a hearing shall have occurred in the Bankruptcy Court to consider approval of the (A) Stalking Horse APA and the Stalking Horse Transaction, or another alternative transaction pursuant to the Bidding Procedures and (B) the Disclosure Statement.
- On or before the date that is forty-five (45) calendar days after the Petition Date, the Bankruptcy Court shall have entered the Sale Order.
- On or before the date that is sixty (60) calendar days after the Petition Date, the Stalking Horse Transaction or another the sale transaction approved in the Sale Order shall be consummated and closed.
- On or before the date that is Eighty-five (85) calendar days after the Petition Date, the Bankruptcy Court shall have entered the Confirmation Order
- On or before the date that is ninety (90) calendar days after the Petition Date, the Consummation of the Acceptable Chapter 11 Plan, including all transactions contemplated thereunder, shall have occurred.
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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