TPO Hess wins approval for DIP, bid procedures; schedules confirmation

By Jim Witters

Wilmington, Del., June 17 - TPO Hess Holdings, Inc. received final approval for debtor-in-possession financing and for bid procedures for the sale of substantially all of the company's assets and scheduled a combined sale hearing and Chapter 11 plan confirmation hearing.

Judge Kevin J. Carey granted access to the full $750,000 DIP facility over the objections of the official committee of unsecured creditors during a June 17 hearing in the U.S. Bankruptcy Court for the District of Delaware.

The court granted interim approval for access to $500,000 in DIP financing at a May 23 hearing.

Cathy Hershcopf, representing the creditors committee, said certain waivers and releases contained the DIP agreement were "premature." She said the waivers should not be granted until the committee has a chance to ensure that the debtor's budget is sufficient to fund the estate through confirmation of a Chapter 11 plan.

Hershcopf requested a second interim DIP order.

TPO Hess chief restructuring office Mathew Pascucci testified that the debtor's revised cash forecast provided for all anticipated expenses through the Chapter 11 plan confirmation.

Pauline K. Morgan, representing the debtor, said the budget is a "tight squeeze," but should provide adequate.

In overruling the creditors committee objection, Carey said the budget projections were "reasonably developed and asserted."

Judge Carey also noted that approval of a DIP facility that contains milestones and other provisions does not bind the court to approve the resulting plan. He said he takes objections as they arise.

Bidding procedures

The bid procedures approved at the hearing provide for:

• A July 10 bid deadline. Competing bids must provide for a cash purchase price at least equal to the stalking horse bid, the amount of the breakup fee and a $500,000 overbid;

• A July 17 auction. Bids at auction must be made in minimum increments of $250,000; and

• A July 24 sale hearing.

As previously reported, Bang Printing of Ohio, Inc. submitted a stalking horse bid of $19.26 million for substantially all of the debtor's assets.

If Bang Printing is not the high bidder for the assets, TPO Hess will pay Bang a $600,000 breakup fee.

DIP facility

The company obtained a commitment for $20 million in DIP financing. General Electric Capital Corp. is the administrative agent.

Of that amount, $750,000 will be available to the company. The remainder is a roll-up of $13.5 million in first-lien obligations.

The DIP facility will mature 90 days from the bankruptcy filing date.

Interest will be Base rate plus 200 basis points for Base rate loans and Libor plus 300 bps for Libor loans, plus 2% additional interest deferred to the termination date on Base rate and Libor loans.

Creditor treatment

Treatment of creditors under TPO Hess' pre-packaged plan of liquidation will include:

• Administrative expense claims, DIP financing claims, first-lien facility claims, priority tax claims and priority claims will be paid in full in cash;

• Holders of other secured claims will either be paid in full in cash or receive the collateral securing the claims;

• Holders of second-lien note claims will receive a share of $1.5 million and any cash remaining after payment of all other claims and reserves;

• Holders of general unsecured claims will receive a share of any cash remaining after payment of other claims; and

• Holders of interests and intercompany claims will receive no distribution.

A combined plan confirmation and disclosure statement approval hearing is scheduled for July 24.

TPO Hess, a Kent, Ohio-based printer, filed for bankruptcy on May 22. Its Chapter 11 case number is 13-11327.

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