Vertellus wins approval of bid procedures, $110 million DIP facility

By Caroline Salls

Pittsburgh, June 28 – Vertellus Specialties Inc. received court approval of the bid procedures for the proposed sale of its assets and final court approval to obtain $110 million of debtor-in-possession financing, according to orders filed Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, Vertellus filed bankruptcy to implement an agreement under which the company’s existing term loan lenders would purchase substantially all of its U.S. and international assets for $453.8 million.

The agreement provides for a credit bid by the Vertellus term loan lenders for substantially all of the debtors’ assets, assumption of specified liabilities and funding for payment of administrative expenses claims and wind-down expenses.

If the lenders are not the high bidders for the assets, the company will pay a 3% break-up fee and reimburse the lenders’ sale-related expenses.

Competing bids are due by 4 p.m. ET on Aug. 29 and must at least equal the amount of the stalking horse bid, plus the break-up fee, expense reimbursement and a $500,000 minimum initial overbid amount. An auction will be held on Sept. 1, if necessary. The minimum bidding increment at the auction will be $500,000.

The sale hearing is scheduled for Sept. 7.

The company said the DIP financing would ensure continuity through the sale process.

Wilmington Trust, NA is the administrative and collateral agent for the DIP financing.

Interest on Base rate loans will be the adjusted Base rate plus 800 basis points, and interest on Eurodollar loans will be Eurodollar plus 900 bps.

The facility will mature in 180 days, subject to an 18-month extension.

Vertellus is an Indianapolis-based provider of specialty chemicals for the agriculture, nutrition, pharmaceutical and medical, personal care, plastics, coatings and industrial markets. The company filed bankruptcy on May 31 under Chapter 11 case number 16-11290.

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