Roust Corporation filed with the U.S. Bankruptcy Court a motion for an order (i) authorizing the Debtors to assume s restructuring support agreement (RSA), (ii) authorizing the Debtors to (a) assume a backstop agreement, (b) pay the backstop commitment fee and (c) incur certain indemnification obligations and (iii) granting related relief.
The motion explains, “On November 9, 2016 the Debtors signed the RSA with holders of approximately 90% in aggregate principal amount of the existing Senior Secured Notes due 2018 (the ‘Consenting Senior Secured Noteholders’), holders of approximately two-thirds in aggregate principal amount of the existing Senior Convertible PIK Notes due 2018 (the ‘Consenting Convertible Noteholders,’ and together with the Consenting Senior Secured Noteholders, the ‘Consenting Noteholders’), and with Roust Trading Ltd., Russian Standard Bank and Roustam Tariko (collectively with non-Roust affiliates, the ‘Russian Standard Parties,’ and with the Consenting Noteholders, the ‘Plan Support Parties’)….It provides the framework and support for a joint prepackaged plan of reorganization (the ‘Plan’) which, once implemented, will strengthen the reorganized Debtors’ capitalization by over $500 million, deleverage their balance sheet by at least $462 million, and position them for future growth in the global alcohol market.”
The motion continues, “The Backstop Agreement is a critical part of the Debtors’ reorganization efforts and the transaction agreed to in the RSA. Certain noteholders (the ‘Backstop Parties’) have agreed to backstop the share placement (the ‘Share Placement’) contemplated by the RSA, which will provide the Debtors with assurance that $55 million of common stock (the ‘New Common Stock’) in Reorganized Roust will be purchased in connection with the Share Placement….In consideration for the Backstop Parties’ commitment to purchase the New Common Stock, the Backstop Parties will receive a backstop fee (payable in the form of New Common Stock) equal to 0.25%, in the aggregate, of the shares of the New Common Stock to be issued and outstanding on the Effective Date (the ‘Backstop Commitment Fee’).”
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