UTEX reorganization plan confirmed; DIP loan approved on final basis

By Sarah Lizee

Olympia, Wash., Oct. 26 – UTEX Industries Inc.’s pre-packaged plan of reorganization was confirmed and its related disclosure statement was approved on Friday in the U.S. Bankruptcy Court Southern District of Texas, according to a minute entry.

As previously reported, the company entered into a restructuring support agreement with the majority of its lenders on the terms of a comprehensive pre-packaged restructuring.

UTEX said the restructuring transaction will reduce its funded debt by roughly $700 million and will provide up to $42.5 million in new financing.

Under the plan, holders of other priority claims will be paid in full in cash.

Holders of other secured claims will receive payment in full in cash or have their claims reinstated.

Holders of first-lien credit agreement claims will receive their pro rata share of (a) 96% of the new equity interests issued under the plan on the effective date, subject to dilution by the new equity interests issued under the management incentive plan and the new warrants, and (b) the exit second-out term loans.

Holders of second-lien credit agreement claims will receive their pro rata share of (a) 4% of the new equity interests issued under the plan on the effective date, subject to dilution by the new equity interests issued under the management incentive plan and the new warrants, and (b) the new warrants.

The debtors will continue to pay or dispute each general unsecured claim in the ordinary course of business as if the Chapter 11 cases had never been commenced.

Intercompany claims will be paid, adjusted, continued, settled, reinstated, discharged or eliminated.

Intercompany interests will be deemed to be in full force and effect.

Existing equity interests will be cancelled with no distribution.

Final order on DIP loan

The company also received final court approval to access a $25 million senior secured debtor-in-possession loan with Alter Domus as administrative and collateral agent.

Interest on the loan is Libor plus 900 basis points, subject to a 1.5% Libor floor.

The loan will mature four months from the petition date.

The company also received final court approval to access cash collateral.

UTEX is a Houston-based manufacturer of engineered sealing and other specialty products used in oil and gas drilling and production, power, mining, water treatment and other industrial sectors. The company filed for bankruptcy on Oct. 8, and the Chapter 11 case number is 20-34932.

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