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December 4, 2018 – Citing an “extended stay in Chapter 11,” the Debtors requested Court approval to amend their debtor-in-possession (“DIP”) facility to (i) allow for an additional $22 million of DIP financing and (ii) extend the maturity date of the facility through March 31, 2019, [Docket No. 923]. The motion states, “The Debtors filed an amended plan [Docket No. 749] on October 17 and accompanying disclosure statement [Docket No. 750], which were subsequently modified and are now out for solicitation [Docket Nos. 867, 868]. After the filing of this October 17 plan and disclosure statement, the Debtors and the UCC negotiated a confirmation timeline that, assuming confirmation of the plan, would permit the Debtors to emerge from bankruptcy protection by early-to-mid February, with confirmation starting on January 9. This schedule was agreed to due to the concerns raised by the Debtors about the Debtors’ need for additional cash to pay professional fees and build working capital during the January to March purchasing season due to the substantial costs of these chapter 11 cases…. At a status hearing on October 30, certain plan objectors formally objected to the proposed confirmation start date. Based on feedback from the Court, the Debtors and the plan objectors reached agreement to commence confirmation on January 28 for a confirmation trial that is currently expected to conclude by February 15, 2019, with the possibility that closing arguments may be the week of February 25.
Given this confirmation timeline, the Debtors anticipate that they will not exit chapter 11 before March 2019 absent more global consensus regarding the terms of the Debtors’ plan. It became clear that the Debtors would need additional cash to fund their extended stay in chapter 11…Due to this extended timeline, the Debtors will require an additional $22 million to ensure the Debtors can fund their chapter 11 cases and operate their business on that timeline. This amount is reflected in the Debtors’ 13-week cash flow and projected borrowing base availability during the coming months.”
Terms of the additional DIP financing include:
- Borrower: Nine West Holdings, Inc.
- Lenders: Existing lenders under the Term DIP Facility
- Term DIP Facility Size: Term DIP facility amount plus $22 million supplemental term DIP financing.
- Interest Rate: 10.00% per annum payable monthly in cash
- Expenses and Fees: Upfront Fee: 3.00% on new money (payable at closing)
- Exit Fee: 1.00% on new money
- Maturity Date: March 31, 2019;1.90% Supplemental Extension Fee on Term DIP Facility (payable at closing)
- Reporting Covenants: Rolling 13-week cash flow forecasts to be provided every four weeks with weekly variance analysis and monthly, quarterly, and annual reporting
- Milestones: (i) DIP amendment order: December 19, 2018, (ii) exit financing milestone: January 25, 2019, (iii) confirmation order: March 12, 2019 and (iv) emergence: March 31, 2019
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