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April 1, 2019 – The Debtors requested Court authority to access up to $255.0mn of debtor-in-possession (“DIP”) financing ($85.0 on an interim basis from certain pre-petition lenders. The DIP financing is to be comprised of (i) $72.5mn in new money term loans (the “DIP Term Loans”), (ii) $55.0mn in letter of credit term loans (the “DIP LC Loans”) and (iii) $127.5mn in roll-up term loans (the “DIP Roll-Up Loans” and, together with the DIP Term Loans and the DIP LC Loans, the “DIP Loans”) to refinance dollar-for-dollar prepetition term loans held by DIP lenders. The $85.0mn in interim DIP financing will be comprised of up to $30.0mn in DIP Term Loans and $55.0mn of DIP LC Loans [Docket No. 14].
The DIP motion states, “The Debtors do not have unencumbered assets of sufficient value to support enough collateralized financing to meet the Debtors’ cash needs during the Chapter 11 Cases. Consequently, the only practical alternative to post-petition financing provided by the Prepetition Secured Parties would have been financing that was either (a) partially unsecured or secured by liens junior to those securing the Prepetition Secured Debt or (b) secured by priming liens senior to those securing the Prepetition Secured Debt, which priming was certain to be contested. The Debtors reached out to a number of potential third-party lending institutions with experience in providing debtor-in-possession financing, however none of these parties expressed an interest in providing the Debtors with the financing required on an unsecured or junior secured basis. Moreover, the Debtors determined that seeking financing on a nonconsensual priming basis would almost certainly involve expensive and unpredictable litigation at the early stages of the Chapter 11 Cases that would be materially destabilizing to the Debtors’ business operations.”
Key Terms of the DIP Facility:
- Borrower: Southcross Energy Partners, L.P.
- Guarantors: Each of Borrower’s direct and indirect Debtor subsidiaries
- DIP Lenders: Certain Prepetition Term Lenders that are members of the Ad Hoc Group and any other Persons that have become party to the DIP Credit Agreement pursuant to an Assignment and Assumption
- DIP Agent: Wilmington Trust, National Association.
- Amount and Facilities: A senior secured superpriority debtor-in-possession financing, consisting of:
- the DIP Term Loans and DIP LC Loans with commitments in an aggregate principal amount of up to $127.5 million, including the DIP L/C Sub Facility in the aggregate principal amount of up to $52,597,087.38, and
- the DIP Roll-Up Loans, which shall be secured on a junior basis to the DIP Term Loans and DIP LC Loans, to refinance dollar-for-dollar Prepetition Term Loans in the aggregate amount of $127.5 million.
- Interest Rates: DIP Loans will bear interest at the following rates: (i) with respect to Eurodollar Loans, LIBO Rate (1.0% floor) plus 10.0% per annum and (ii) with respect to ABR Loans, the Alternative Base Rate plus 9.0% per annum; provided that DIP LC Loans may be borrowed only as ABR Loans. Roll-Up Loans will bear interest at the Alternative Base Rate plus 5.25%.
- Default Interest: 2.0% per annum
- Maturity: The date that is the earliest to occur of: (a) the date that is 6 months from the date of the Petition Date; provided that the Borrower will have the right to request one extension of up to ninety (90) says subject to the satisfication of certain conditions, including the consent of the Required Lenders and the payment of an extrension premium of 1.00% of the consenting Lender’s DIP Loans then outstanding; (b) the effective date of any confirmed Acceptable Plan or any other Chapter 11 Plan of the Loan Parties; (c) the date on which all or substantially all of the assets of the Loan Parties are sold in a sale under a chapter 11 plan or pursuant to Section 363 of the Bankruptcy Code and (d) the acceleration of the maturity of the Loans upon the occurrence of any Event of Default.
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