Item 1.01 Entry into a Material Definitive Agreement.
Twelfth Amendment to Credit Agreement
On July 20, 2020, Global Eagle Entertainment Inc. (the "Company" or "we")
entered into a Twelfth Amendment to Credit Agreement (the "Twelfth Amendment")
among the Company, the guarantors party thereto (the "Guarantors"), the lenders
party thereto and Citibank, N.A., as administrative agent (in such capacity, the
"Administrative Agent"), which Twelfth Amendment amends the terms of that
certain Credit Agreement, dated as of January 6, 2017 (as amended, supplemented
or otherwise modified from time to time, including pursuant to the Twelfth
Amendment, the "Credit Agreement"), by and among the Company, the Guarantors
identified on the signature pages thereto, each lender from time to time party
thereto and the Administrative Agent.
Pursuant to the Twelfth Amendment, the lenders have agreed to waive compliance
with the Minimum Liquidity Covenant (as defined therein) for the period
commencing July 20, 2020 until August 1, 2020.
The Twelfth Amendment was conditioned upon the Company's payment of advisor
costs and expenses.
Restructuring Support Agreement
The information set forth below in Item 1.03 in this Current Report on Form 8-K
under the caption "Restructuring Support Agreement" is hereby incorporated by
reference in this item 1.01.
Debtor-In-Possession Credit Agreement
The information set forth below in Item 8.01 in this Current Report on Form 8-K
under the caption "Debtor-In-Possession Credit Agreement" is hereby incorporated
by reference in this item 1.01.
Item 1.03 Bankruptcy or Receivership.
Voluntary Petitions for Bankruptcy
On July 22, 2020 (the "Petition Date"), the Company and those subsidiaries of
the Company listed on Exhibits 99.1 (together with the Company, the "Debtors")
commenced voluntary Chapter 11 proceedings under Chapter 11 of the United
States, (the "Bankruptcy Code") in the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court"). The Debtors have requested that
the Chapter 11 proceedings be jointly administered under the caption In re
Global Eagle Entertainment Inc., et al. (the "Chapter 11 Cases"). The Debtors
continue to operate their business as "debtors-in-possession" under the
jurisdiction of the Bankruptcy Court and in accordance with the applicable
provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The
Debtors are seeking approval of various "first day" motions containing customary
relief intended to assure the Debtors' ability to continue their ordinary course
operations.
Additional information about the Chapter 11 Cases, including access to
Bankruptcy Court documents, is available online at
https://cases.primeclerk.com/GEE, a website administered by Prime Clerk, a third
party bankruptcy claims and noticing agent. The information on this website is
not incorporated by reference onto, and does not constitute part of, this
Current Report on Form 8-K.
Restructuring Support Agreement
On July 21, 2020, the Debtors entered into a Restructuring Support Agreement
(together with all exhibits and schedules thereto, the "RSA") with creditors
holding, in the aggregate, approximately 78.8% of the aggregate outstanding
principal amount of the First Lien Loans (the "Consenting First Lien Lenders" or
the "Investor Group"). Capitalized terms used but not otherwise defined in this
"Restructuring Support Agreement" section of this Form 8-K have the meanings
given to them in the RSA.
As contemplated in the RSA, the Company will pursue a going concern sale of the
business of the Debtors pursuant to Section 363 of the Bankruptcy Code (either
through a sale to the stalking horse bidder or to the highest or otherwise best
sale offer, if not the stalking horse bidder, pursuant to this sale process, the
"Sale Transaction"), which is based on a stalking horse bid from an entity
formed by or at the direction of the Investor Group, ("the Purchaser") and/or
other co-investors and/or their respective designees on terms and in accordance
with a purchase agreement, which has been agreed by the Company and the
Consenting First Lien Lenders (the "Stalking Horse Bid"). Any such Sale
Transaction would be executed through an auction process supervised by the
Bankruptcy Court at which higher or better bids may be presented.
The RSA also contemplates debtor-in-possession financing pursuant to a DIP
Credit Agreement (as defined and described below), to be provided by certain of
the Consenting First Lien Lenders, which will provide the Debtors with at least
$80 million in liquidity during the Chapter 11 Cases. The RSA further
contemplates certain exit facilities that will be extended to the Purchaser as
of the consummation of the Sale Transaction with the Purchaser as further
described below.
--------------------------------------------------------------------------------
Pursuant to the RSA, each of the Debtors and the Consenting First Lien Lenders
has made customary commitments to each other. The Debtors have agreed to, among
other things, seek to implement the Sale Transaction and other matters
contemplated by the RSA and to satisfy certain other covenants. The Consenting
First Lien Lenders have also committed to support and to use commercially
reasonable efforts to take, or refrain from taking, certain actions in
furtherance of the Sale Transaction and other matters contemplated in the RSA.
The RSA also provides that certain of the Consenting First Lien Lenders will
also be providing debtor-in-possession financing pursuant to the DIP Credit
Agreement.
The RSA and other transaction documents contain milestones for the progress of
the Chapter 11 Cases (the "Milestones"), which include the dates by which the
Debtors are required to, among other things, obtain certain orders of the
Bankruptcy Court and consummate the Sale Transaction. Among other dates set
forth in the RSA, the agreement contemplates: (i) the Debtors will have filed a
motion to approve the Sale Transaction and associated bidding procedures,
(ii) the Bankruptcy Court will have entered the interim order approving the DIP
Credit Agreement (the "Interim DIP Order") and associated credit facility no
later than five days after the Petition Date, and the final order approving the
DIP Credit Agreement and associated credit facility (the "Final DIP Order") no
later than 40 days after the Petition Date and the Sale Order no later than 85
days after the Petition Date, and that the satisfaction of all Closing Date
conditions (other than regulatory consents and approvals) shall have occurred by
no later than 100 days after the Petition Date, subject in each case to an
extension or waiver of such dates by the requisite Consenting First Lien Lenders
under the terms of the RSA.
Each of the parties to the RSA may terminate the agreement under certain limited
circumstances. Any Debtor may terminate the RSA upon, among other circumstances:
• its board of directors, after consultation with counsel, determining (i) that
performance under the RSA would be inconsistent with its fiduciary duties or
. . .
Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement.
The filing of the Chapter 11 Cases constitutes an event of default that
accelerated obligations under the following debt instruments and agreements (the
"Debt Instruments"):
• the Credit Agreement, dated as of January 6, 2017, as amended, by and among
the Company, the guarantors party thereto, the lenders and letter of credit
issuers party thereto and Citibank, N.A., as administrative agent;
• the Securities Purchase Agreement, dated as of March 8, 2018, as amended, by
and among the Company, the guarantors party thereto, and each purchaser party
thereto, relating to the Company's second lien notes; and
• the Indenture, date as of February 18, 2015, with respect to the Company's
2.75% Convertible Senior Notes due 2035, between the Company and U.S. Bank
National Association, as trustee.
The Debt Instruments provide that, as a result of the Chapter 11 Cases, the
principal and interest due thereunder shall be immediately due and payable. Any
efforts to enforce such payment obligations under the Debt Instruments are
automatically stayed as a result of the Chapter 11 Cases, and the creditors'
rights of enforcement in respect of the Debt Instruments are subject to the
applicable provisions of the Bankruptcy Code.
Item 7.01 Regulation FD Disclosure.
On July 22, 2020, the Company issued a press release announcing the filing of
the Chapter 11 Cases. A copy of the press release is attached as Exhibit 99.2
hereto and incorporated herein by reference.
Prior to July 22, 2020, the Company engaged in confidential negotiations (the
"Negotiations") with certain of its creditors and other third parties regarding
a possible transaction in respect of the Company's indebtedness. In connection
with the Negotiations, the Company provided certain such creditors and third
parties certain confidential and proprietary information regarding the Company.
--------------------------------------------------------------------------------
In connection with the Negotiations, the Company agreed with certain such
creditors to provide certain information publicly, including the proposed terms
of the Sale Transaction, and is making the disclosures in this Item 7.01 and
attached as Exhibit 99.3 to this report in accordance with such agreements. Such
disclosures have not been updated since their delivery to such creditors and
third parties, may not reflect the Company's current situation, expectations or
evaluations, and include numerous forward-looking statements (see discussion
below).
The information contained in this Item 7.01, including in Exhibit 99.2 and
Exhibit 99.3, shall not be deemed to be "filed" for purposes of Section 18 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
otherwise subject to the liabilities of that section, and shall not be deemed to
be incorporated by reference into any of the Company's filings under the
Securities Act of 1933, as amended, or the Exchange Act, whether made before or
after the date hereof and regardless of any general incorporation language in
such filings, except to the extent expressly set forth by specific reference in
such a filing.
Item 8.01 Other Events.
Debtor-in-Possession Credit Agreement
The RSA also contemplates that, subject to the approval of the Bankruptcy Court
following the entry of the Interim DIP Order, the Company and the wholly-owned
domestic subsidiaries of the Company, as guarantors, will enter into: (i) a
Senior Secured Super-Priority Term Loan Debtor-In-Possession Credit Agreement
(the "DIP Credit Agreement") with Citi Bank, N.A., as DIP agent and escrow
agent, and the lenders party thereto (collectively, the "DIP Lenders"),
substantially in the form attached to the RSA as Exhibit D.
If the Debtors' entry into the DIP Credit Agreement is approved by the
Bankruptcy Court as proposed, the DIP Lenders would provide a senior secured
super-priority DIP term loan facility in an aggregate principal amount of
$80 million (the "DIP Term Loan Facility"), which term loan shall accumulate
interest based on an interest rate of LIBOR rate plus 10.00%, with a 1.25% LIBOR
floor. The DIP Lenders would be entitled to receive cash interest payments on
term Loans through the pendency of the Chapter 11 Cases. Payments under the DIP
Term Loan Facility include (i) a 5.00% backstop payment and (ii) a 3.00% upfront
payment, in each case, payable on the funding date of the term loans thereunder.
Principal under the DIP Term Loan Facility is due on the maturity date under the
DIP Credit Agreement. The scheduled maturity of the DIP Term Loan Facility would
be six months from the closing date thereof, subject to an extension of 30 days
to the extent necessary if the Sale Order has been entered and the parties are
awaiting Federal Communications Commission consents and approvals.
Borrowings under the DIP Term Loan Facility would be senior secured obligations
of the Company, secured by a super priority lien on the collateral securing the
Debtors' obligations under the Credit Agreement, as well as the unencumbered
assets of the Debtors. The DIP Credit Agreement includes various customary
covenants, including a covenant mandating compliance with a 13-week budget
(subject to permitted variances), weekly variance testing with respect to
disbursements and receipts forecast in the 13-week budget and reporting
requirements related to the Chapter 11 Cases, among others. The DIP Credit
Agreement also includes a covenant requiring the Company to maintain, from and
after the funding date under the DIP Credit Agreement, cash and cash equivalents
of the Company and its subsidiaries in an aggregate amount of not less than
$20,000,000.
The RSA also contemplates that, certain Consenting First Lien Lenders will fund
a new money credit facility, plus a letter of credit facility, at the option of
the Purchaser (the "Exit Facility"), to be incurred by the Purchaser on the
closing date of the Sale Transaction (the "Closing Date"). The Exit Facility
contemplates a four-year maturity with an initial interest rate of LIBOR plus
10.00% with a 1.25% LIBOR floor. The Exit Facility will be secured by a first-
priority lien on substantially all of the assets of the Purchaser and any
guarantors, subject to usual and customary exceptions for excluded assets.
Following the Closing Date, the Purchaser will have total debt of not more than
$400 million (plus letters of credit), between the Exit Facility, inclusive of
takeback debt of $275 million (the "Takeback Financing Facility" and, together
with the Exit Facility, the "Newco Facilities"). The Takeback Financing Facility
contemplates a five-year maturity with an initial interest rate of LIBOR plus
7.50% with a 1.25% LIBOR floor. At the Purchaser's option, if liquidity of the
Purchaser and its subsidiaries is less than $40 million on a pro forma basis, up
to 500 bps of interest may be paid-in-kind during the first 24 months after the
closing date of the Takeback Financing Facility. Borrowings under the Takeback
Financing Facility will be secured by a second priority lien on the collateral
under the Exit Facility.
The DIP Term Loan Facility is subject to approval by the Bankruptcy Court, which
has not been obtained at this time. The Debtors are seeking interim approval of
the DIP Term Loan Facility, and are seeking availability of a portion of the DIP
Term Loan Facility in the amount not less than $30 million at an interim hearing
in the Bankruptcy Court, contemplated to occur promptly after the Petition Date,
and are seeking final approval to access the remaining amounts available under
the DIP Term Loan Facility at a final hearing. The Debtors anticipate that the
DIP Credit Agreement will become effective promptly following interim approval
of the DIP Term Loan Facility by the Bankruptcy Court.
The foregoing descriptions of the DIP Credit Agreement and the Newco Facilities
do not purport to be complete and are qualified in their entirety by the full
text of the RSA and the DIP Credit Agreement and the exhibits thereto, copies of
which are attached as Exhibits 10.2 and 10.3, respectively, to this Current
Report on Form 8-K.
Letter of Credit Reimbursement Agreement
Subject to the approval of the Bankruptcy Court following the entry of the
Interim DIP Order, the Company also expects to enter into a Senior Secured
Super-Priority Letter of Credit Reimbursement Agreement (the "L/C Reimbursement
Agreement") with Citibank, N.A., as the issuing bank (the "Issuing Bank") on the
terms and conditions set forth in the Interim DIP Order.
--------------------------------------------------------------------------------
If the Company's entry into the L/C Reimbursement Agreement is approved by the
Bankruptcy Court as proposed, the Issuing Bank would provide a $10 million (the
"DIP L/C Facility Limit") super-priority letter of credit facility (the "DIP
Letter of Credit Facility") to provide additional letter of credit capacity in
an amount equal to the DIP L/C Facility Limit less the aggregate face amount of
then issued and outstanding letters of credit provided by Citibank, N.A. under
the Credit Agreement. Pricing of the DIP Letter of Credit Facility is
substantially consistent with the terms applicable to existing letters of credit
under the Credit Agreement. News letters of credit issued under the DIP Letter
of Credit Facility after the petition date will be fully cash collateralized.
The proceeds of the DIP Term Loan Facility will be available for use as cash
collateral in respect of post-petition letters of credit issued under the DIP
Letter of Credit Facility.
The foregoing description of the L/C Reimbursement Agreement does not purport to
be complete and is qualified in its entirety by the terms and conditions of the
L/C Reimbursement Agreement set forth in the Interim DIP Order.
Asset Purchase Agreement
As provided for in the RSA, the Company, the other Debtors and the Consenting
First Lien Lenders have agreed upon a form of the Asset Purchase Agreement (the
"Asset Purchase Agreement") by and between the Company and the Purchaser.
Pursuant to the terms of the Asset Purchase Agreement, the Debtors will agree to
sell substantially all of their assets (the "Assets," and such sale, the "Sale")
to the Purchaser and the Purchaser will agree to assume from the Debtors,
certain specified liabilities (the "Assumed Liabilities").
The purchase price under the Asset Purchase Agreement will be comprised of (a) a
credit bid pursuant to Section 363(k) of the Bankruptcy Code against (i) up to
100% of the obligations owed by Debtors under the First Lien Loans as of the
closing of the transactions contemplated by the Asset Purchase Agreement (the
"Closing") and (ii) to the extent necessary to acquire any DIP Collateral (as
defined in the DIP Credit Agreement), up to $5.0 million of the Obligations (as
defined in the DIP Credit Agreement), (b) the payment of an amount in cash equal
to (i) the amount of a budget to be agreed by the Debtors and Purchaser for the
wind-down of the Debtors' estates plus (ii) an amount equal to the Obligations
(as defined in the DIP Credit Agreement) outstanding as of the Closing, less the
amount described in foregoing clause (a)(ii), and (c) the assumption of certain
liabilities as more fully set forth therein (the "Purchase Price").
The Asset Purchase Agreement contains customary representations and warranties
and covenants by the Debtors and the Purchaser.
The Asset Purchase Agreement also contains customary conditions that must be
satisfied before the Debtors and the Purchaser are obligated to effect the
Closing, including the accuracy of representations and warranties, compliance
with covenants, the receipt of specified consents, the absence of any laws or
orders preventing the Closing,the expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act, the receipt of approvals required
by governmental agencies, including the Federal Communications Commission, and
the timely approval by the Court of the Bid Procedures Order (defined below) and
a Sale Order and the ability to deliver certain closing deliverables.
The Asset Purchase Agreement may be terminated upon the occurrence of certain
events, including if the Closing has not occurred prior to October 30, 2020
(subject to extension in certain cases to no later than December 29, 2020).
Upon entry, the Asset Purchase Agreement, which is subject to Court approval, is
intended to constitute a "stalking horse bid" for the Assets in accordance with
the form of bid procedures order (the "Bid Procedures Order") and the bid
. . .
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
10.1 Twelfth Amendment to Credit Agreement, dated as of July 20,
2020, by and among Global Eagle Entertainment Inc., the
guarantors party thereto, the lenders party thereto, and
Citibank, N.A., as administrative agent. (Incorporated by
reference to Exhibit 10.1 to the Company's Current Report on Form
8-K (File No. 001-35175, filed July 22, 2020.)
10.2 Restructuring Support Agreement, dated July 22, 2020
10.3 Senior Secured Super-Priority Term Loan Debtor-In-Possession
Credit Agreement, dated July 24, 2020
10.4 Form of Asset Purchase Agreement (Incorporated by reference to
Exhibit 10.2 to the Company's Current Report on Form 8-K (File
No. 001-35175, filed July 22, 2020.)
99.1 List of Filing Subsidiaries (Incorporated by reference to
Exhibit 99.1 to the Company's Current Report on Form 8-K (File
No. 001-35175, filed July 22, 2020.)
99.2 Press Release, dated July 22, 2020 (Incorporated by reference
to Exhibit 99.2 to the Company's Current Report on Form 8-K (File
No. 001-35175, filed July 22, 2020.)
99.3 Release of Private Information (Incorporated by reference to
Exhibit 99.3 to the Company's Current Report on Form 8-K (File
No. 001-35175, filed July 22, 2020.)
© Edgar Online, source Glimpses