GST AutoLeather proposes bid procedures for sale of company assets

By Caroline Salls

Pittsburgh, Oct. 19 – GST AutoLeather, Inc. requested court approval of the bid procedures for the proposed sale of substantially all of its assets, according to a motion filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

GST said the bid procedures propose that a buyer for the assets will be identified at a later date, either at auction or through an agreement with a stalking horse bidder.

In addition, the company said it is in continuing discussions in parallel with its senior secured lenders regarding a potential restructuring transaction. Although not yet finalized, GST said it expects to reach definitive documentation soon.

According to the motion, this transaction will likely involve either the senior secured lenders agreeing to serve as the stalking horse bidder in the sale process or agreeing to backstop the sale process through a debt-for-equity exchange under a plan of reorganization.

Under the proposed bid procedures, non-binding indications of interest must be submitted by 5 p.m. ET on Nov. 10. Final bids are due by 5 p.m. ET on Dec. 5.

Except to the extent that a bid includes a credit bid of all debtor-in-possession claims, GST said bids must equal or exceed a cash amount sufficient to pay all allowed DIP financing claims in full in cash on the plan effective date, plus an amount of cash sufficient to fund payment of all administrative and priority claims through the effective date, plus $1 million.

Any overbid following the baseline bid must exceed the previous bid by at least $500,000.

If a stalking horse bid is selected, the company said it would pay that bidder a break-up fee and expense reimbursement of no more than a total of 3% if it is not ultimately the high bidder for the assets.

An auction will be held on Dec. 11, if necessary. GST is asking the court to schedule the sale hearing for Dec. 13.

GST, a Southfield, Mich.-based automotive leather manufacturer, filed bankruptcy on Oct. 3. The Chapter 11 case number is 17-12100.

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