OCZ Technology bid procedures, final DIP approved; orders pending

By Jim Witters

Wilmington, Del., Dec. 19 - OCZ Technology Group, Inc. received approval for amended bid procedures and final access to $25 million in debtor-in-possession financing during a Dec. 19 hearing in the U.S. Bankruptcy Court for the District of Delaware.

The orders are pending, while the parties sort through final language for changes agreed to just an hour before the hearing, debtors attorney Michael Nestor told the court.

The attorneys are to submit the orders Dec. 20 or Dec. 23 for judge Peter J. Walsh's signature.

Jason Adams, representing the official committee of unsecured creditors, said the goal is to ensure the debtors' estates are administratively solvent after the asset sale.

The sale procedures and DIP financing terms should result in about $300,000 remaining with the debtors after the process is complete, he said.

DIP terms

Under the terms of the DIP facility from Toshiba Corp., OCZ will have access to $25 million. The original DIP agreement granted access to $23.5 million, with a provision allowing OCZ to seek an additional $1.5 million.

The change was requested by the official committee of unsecured creditors.

The maturity date for the facility is Jan. 31.

Interest is 9%.

The parties also agreed to a waterfall mechanism for debt paydowns "to buy us time to get through the sale process," debtors attorney Matthew Lunn told the court.

Bid procedures

Stalking horse bidder Toshiba has agreed to pay $35 million for substantially all of the debtors' assets, minus the buyer advance amount.

Under the amended procedures, competing bids are due by 5 p.m. ET on Jan. 13. The deadline previously was Jan. 9.

If more than one qualified bid is received, an auction will be arranged.

The initial overbid and bids at auction will be $100,000. The original proposal called for $250,000 increments.

If Toshiba is not the successful bidder at auction, the winning bidder must pay Toshiba's DIP loan at the earlier of a sale closing or Jan. 31. The original proposal called for payment to Toshiba the day after the sale hearing.

In addition, the breakup fee was reduced to $700,000 from $1.02 million, and the expense reimbursement was reduced from $750,000 to $500,000.

A sale hearing is scheduled for Jan. 16.

OCZ, a Sunnyvale, Calif.-based producer of computer memory and components, filed for bankruptcy on Dec. 2. The Chapter 11 case number is 13-13126.

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