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February 20, 2019 – The Debtors requested Court authority (i) to access $60mn in debtor-in-possession ("DIP") financing ($15mn on interim basis) and (ii) for interim use of cash collateral [Docket No. 17]. The DIP financing is to be provided by a syndicate of lenders led by Wells Fargo Bank, N.A. and will finance Aceto’s working capital needs through the completion of the Debtors' section 363 sales transactions and support payments to vendors and suppliers for post-petition purchases in the ordinary course. Pursuant to the terms of the DIP credit agreement, interest will accrue on the principal balance of the DIP loans at a rate per annum equal to (a) LIBOR for such interest period plus 7.00% in respect of Eurodollar loans and (b) the alternate base rate plus 6.00% in respect of ABR borrowings.
The DIP motion states, “The Debtors require access to post-petition financing to continue to operate in the ordinary course, meet their chapter 11-related obligations, and conduct a post-petition sale process under which the Debtors will consummate a sale of substantially all of the assets of at least one of their business lines. The Debtors simply would not be able to meet these needs without the DIP Facility, as cash would run out this week without the immediate injection of funds from the DIP Facility. Accordingly, the DIP Facility is necessary to preserve the Debtors’ assets and the going concern value of the Debtors’ businesses…Without the additional funding provided for under the DIP Facility, the Debtors will likely run out of cash during the course of these Chapter 11 Cases, their assets and operations will dissipate, and they may be forced to shut down all of their operations and liquidate…The Debtors have an immediate need for cash due to the Prepetition Lenders and various other creditors, and a need to quickly instill confidence in the their employees, their trade vendors, and service providers, that the Debtors will have access to sufficient working capital and liquidity for their operations during these Chapter 11 Cases and sale process. These needs cannot be addressed by the Debtors without the $15,000,000 of which they seek approval within the first few days of these Chapter 11 Cases. Therefore, interim authority to enter into and draw on the DIP Facility will preserve and maintain the going-concern value of the Company.”
Key Terms of the DIP Facility:
- Borrowers: Aceto Corporation; Acci Realty Corp.; Aceto Agricultural Chemicals Corporation; Aceto Realty LLC; Acetris Health, LLC; Arsynco, Inc.; PACK Pharmaceuticals, LLC; Rising Pharmaceuticals, Inc.; Rising Health, LLC.
- DIP Lenders: Wells Fargo Bank, National Association, JPMorgan Chase Bank, N.A.; Citibank, N.A.; TD Bank, N.A.; Citizens Bank, National Association; Santander Bank, N.A.; Bank Leumi USA; BMO Harris Bank, N.A. [BankUnited, N.A.]; HSBC Bank USA, National Association [People’s United Bank, National Association].
- DIP Administrative Agent: Wells Fargo Bank, National Association
- DIP Facility / Borrowing Limits: The DIP Facility will be in the aggregate principal amount of up to $60mn, consisting of Revolving Commitment of $37mn and Roll-Up Commitment of $23mn, including a sub-limit for letters of credit not to exceed $1.75mn. $15mn of the DIP Facility is available on an interim basis. Approval of Roll-Up Commitment of $23mn at Interim Hearing.
- Term / Maturity Date: The Maturity Date is the earliest of the following: (a) June 7, 2019 as such date may be extended pursuant to Section 2.04; (b) 40 days after entry of the Interim Order if the Final Order has not been entered prior to the expiration of such 40 day period; (c) the close of the sale of the Chemical Assets; and (d) the acceleration of the maturity of the Loans and the termination of the Revolving Commitments pursuant to Article VII of the DIP Credit Agreement after the occurrence and during the continuance of an Event of Default hereunder.
- Interest Rates: Interest: (a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus 6.00%; (b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus 7.00%.
- Fees: (i) A fee equal to 2.00% of an amount equal to such Lender’s Revolving Commitment (excluding amounts attributable to the Refinanced Bridge Loans) minus such Lender’s LC Exposure on the Effective Date; (ii) An unused line fee calculated at 0.40% per annum on the average daily unused portion of the aggregate Revolving Commitments; (iii) A participation fee a fronting fee with respect to Letters of Credit; and (iv) An administrative agency fee and an arrangement fee set forth in certain fee letters in the respective amounts of $50k and $500k.
The Court scheduled a hearing to consider the DIP motion for February 21, 2019 [Docket No. 23].
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