Cynergy Data files bankruptcy to complete $81 million asset sale

By Caroline Salls

Pittsburgh, Sept. 1 - Cynergy Data, LLC filed for Chapter 11 bankruptcy Tuesday in the U.S. Bankruptcy Court for the District of Delaware to complete a proposed $81 million sale of its assets.

Cynergy Holdings, LLC is the stalking horse bidder. Cynergy Holdings is an affiliate of private investment firm The ComVest Group, according to a news release.

"We expect to emerge from this process as a new company with a much stronger financial position focused on continuing to provide excellent, cost-effective solutions to our merchants and [independent sales organization] partners," Cynergy Data chief executive officer Marcelo Paladini said in the release.

If Cynergy Holdings is not the high bidder at auction, the company will pay it a $1.62 million break-up fee and reimburse up to $648,000 of its sale-related expenses.

Competing bids must exceed the proposed purchase price by at least $4.47 million, which includes the amount of the break-up fee and expense reimbursement, plus a $2.2 million initial overbid amount.

Cynergy said it expects to complete the sale process in about 90 days.

DIP loan terms

In connection with the bankruptcy filing, the company has obtained a commitment for a working capital debtor-in-possession facility and a $7.5 million interchange DIP facility from Comerica Bank, Wells Fargo Foothill LLC, Harris, NA and Moneris Solutions Inc.

The working capital facility will be in an amount equal to the lesser of $9 million, less the amount of the company's pre-bankruptcy senior lender forbearance debt, plus the total amount of payments or proceeds of collateral that are applied after the filing date to reduce the amount of pre-bankruptcy senior lender debt and $25 million.

The proceeds of both DIP facilities will be used for working capital and general corporate purposes and other budgeted financing needs.

The loans will mature on the earlier of Oct. 16 and upon completion of the sale of substantially all of the company's assets.

Interest will be Libor plus 1,000 basis points.

Debt details

According to court documents, Cynergy had $109.55 million of total assets and $186.18 million of total debt at June 30.

The company's largest unsecured creditors include:

• Process America of Chatsworth, Calif., with a $2.81 million trade debt claim;

• Paymentech of Dallas, with a $2.63 million trade debt claim;

• TSYS of Tempe, Ariz., with a $1.46 million trade debt claim;

• WWWMyGrantSiteNet of George, Utah, with a $1.38 million trade debt claim; and

• Second Source of New York, with a $1.06 million trade debt claim.

Cynergy Data is a New York-based credit card processing service. Its Chapter 11 case number is 09-13038.

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