American Tire Distributors – Seeks Approval to Obtain DIP Postpetition Secured Financing; Related Seal on Fee Letters

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October 4, 2018 – American Tire Distributors requested Court authority to (i) obtain debtor-in-possession (“DIP”) post-petition secured financing and (ii) utilize cash collateral [Docket No. 15]. Bank of America, is the administrative agent and collateral agent for the ABL DIP Loan and DIP FILO Loan, for and on behalf of itself and the lenders party thereto from time to time (the “ABL DIP Lenders” or the “DIP FILO Lenders,” or “DIP Lenders,” as applicable, and together with the DIP Agent,the “DIP CreditParties”). 

The financing motion explains, “This Motion requests approval of a DIP Facility that will provide continued access to the Debtors’ prepetition asset-based revolver, plus approximately $200 million of incremental liquidity. This financing is critical to facilitate the Debtors’ ordinary course operations and ensure a smooth landing into these chapter 11 cases. The approximately $200 million of incremental liquidity will be provided by members of the ad hoc noteholder group as a component of the restructuring support agreement, under which they have agreed to convert over $1 billion of bonds to equity….Additionally, the noteholder group will provide a $250 million DIP FILO Loan, which is subordinate to, but shares the salve lien as, the ABL DIP Loans….The Debtors request that the Court authorize the Debtors to obtain senior secured post-petition financing on a super-priority priming lien basis and for each of the Debtors other than the Borrowers (the ‘Guarantors’) to guaranty the Borrowers’ obligations in connection with the DIP Facility, on a super-priority basis in the aggregate principal amount of up to $1,230,000,000, consisting of (i) a senior secured super-priority revolving credit facility, swing line loans, and letters of credit in the aggregate principal amount of up to $980,000,000 (the ‘ABL DIP Loan’), and (ii) a $250,000,000 senior secured super-priority first-in last-out term loan facility (the ‘DIP FILO Loan’), which shall be available in full upon entry of the Final Order to repay and discharge the Prepetition U.S. FILO Loans, pursuant to the terms and conditions of the Post-Petition Credit Agreement (the ‘DIP Loan Agreement’)….Revolving commitments (U.S. Tranche 1 Commitment” and “Canadian Tranche 2 Commitment” are $800,000,000 (not including an additional $180,000,000 of Canadian ABL Revolving Commitments).”

The Debtors also filed with the Court a motion [Docket No. 16] to file under seal the fee letters related to the DIP Facility (specifically, (a) the fee letter relating to the ABL DIP Loan and (b) the Put Option Premium Letter relating to the DIP FILO Loan) stating that, “they contain ‘commercial information’ – information which would result in an unfair advantage to competitors by providing them information as to the commercial operations of the debtor. A broad publication of the information in the Fee Letters would be inappropriate and materially harmful to the DIP Lenders’ businesses. The Fee Letters should be kept confidential so that their competitors may not use the information contained therein to gain a strategic advantage over the DIP Lenders in the marketplace.” 

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