Item 1.03. Bankruptcy or Receivership.
As previously disclosed, on
Plan of Reorganization
The following is a summary of the material terms of the Plan. This summary highlights only certain substantive provisions of the Plan and is not intended to be a complete description of the Plan. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan. This summary is qualified in its entirety by reference to the full text of the Plan, which is attached hereto as Exhibit 2.1 and incorporated herein by reference.
Pursuant to the Plan:
• On the effective date of the Plan (the "Effective Date"), the reorganized Debtors will enter into a new credit agreement providing for a new senior secured asset-based revolving loan facility in the aggregate principal commitment amount of$25 million and a$25 million letter of credit sub-limit (the "Exit ABL Facility"), which will refinance and replace the Debtors'$25 million debtor-in-possession superpriority secured asset-based revolving loan financing facility (the "DIP ABL Facility"), and the letters of credit outstanding under the DIP ABL Facility will be deemed outstanding under the Exit ABL Facility; • The Debtors will conduct a$43.3 million rights offering (the "Rights Offering") to eligible holders of allowed claims arising under and in connection with the Company's prepetition 9.50% senior notes due 2026 (the "Senior Notes" and such claims, the "Senior Notes Claims") and eligible holders of allowed general unsecured claims (the "General Unsecured Claims"), pursuant to which such holders will be granted rights to purchase new secured convertible notes (the "New Secured Convertible Notes"); • The Rights Offering will be backstopped by certain holders of the Senior Notes or their respective affiliates pursuant to a backstop commitment agreement; • The claims arising under the Debtors'$40 million debtor-in-possession superpriority secured delayed-draw term loan financing facility will be paid in full in cash from the proceeds of the Rights Offering; • Under the Plan, certain classes of claims and equity interests will receive the following treatment: • Administrative expense claims, priority tax claims, other priority claims, and other secured claims will be paid in full (or receive such other treatment rendering such claims unimpaired); • Holders of Senior Notes Claims will receive (a) rights to participate in the Rights Offering (which shall be attached to each allowed Senior Notes Claim and transferable with such allowed Senior Notes Claim as set forth in the procedures governing the Rights Offering, but the rights may only be exercised to the extent the holder is an "Accredited Investor," as such term is defined in Rule 501 of the Securities Act of 1933, as amended (the "Securities Act")) and (b) 100% of the new common stock to be issued by the reorganized Debtors (the "New Common Stock") shared pro rata with the holders of allowed General Unsecured Claims (subject to dilution on account of (i) the New Common Stock issued upon conversion of the New Secured Convertible Notes, and (ii) the New Common Stock issued to management of the reorganized Debtors under a management equity incentive plan (the "MIP Equity")); 2
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• Holders of General Unsecured Claims will receive (a) rights to participate in the Rights Offering (which will be attached to each allowed General Unsecured Claim and transferable with such allowed General Unsecured Claim as set forth in the procedures governing the Rights Offering, but the rights may only be exercised to the extent the holder is an Accredited Investor) and (b) 100% of the New Common Stock shared pro rata with the holders of allowed Senior Notes Claims (subject to dilution on account of (i) the New Common Stock issued upon conversion of the New Secured Convertible Notes, and (ii) the MIP Equity); and • Existing equity interests inHi-Crush Inc. will be cancelled and holders of such equity interests will receive no distribution or recovery on account of such equity interests; • The composition of the new board of directors of the reorganized Company (the "New Board") will consist of five (5) directors in total, which will include the Chief Executive Officer of reorganized Company and other directors designated by certain holders of Senior Notes prior to the Effective Date; • After the Effective Date, the New Board will adopt a management equity incentive plan for the benefit of the management of the reorganized Debtors (the "MIP"). The MIP Equity issued pursuant to such MIP shall dilute all New Common Stock equally, including the New Common Stock issued upon conversion of the New Secured Convertible Notes after the Effective Date; and • The Plan will contain customary releases, exculpations, and injunctions concerning certain parties in interest, as outlined in the Plan.
The foregoing description of the Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the Plan, a copy of which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Although the Debtors intend to pursue the transactions (collectively, the "Transaction") contemplated in the Plan in accordance with the terms set forth therein, there can be no assurance that the Debtors will be successful in completing the Transaction, whether on the same or different terms.
Any new securities to be issued pursuant to the Plan have not been registered
under the Securities Act or any state securities laws. Therefore, the new
securities may not be offered or sold in
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements give our current expectations, and contain projections of results of operations or of financial condition, or forecasts of future events. Words such as "will," "may," "should," "assume," "forecast," "position," "predict," "strategy," "expect," "intend," "hope," "plan," "estimate," "anticipate," "could," "believe," "project," "budget," "potential," "likely," or "continue," and similar expressions are used to identify forward-looking statements. They can be affected by assumptions used or by known or unknown risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering
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these forward-looking statements, you should keep in mind the risk factors and
other cautionary statements in the Company's reports filed with the
Item 9.01 Financial Statements and Exhibits
(d) Exhibits Exhibit Number Exhibit Description 2.1 Joint Plan of Reorganization forHi-Crush Inc. and its Affiliate Debtors Under Chapter 11 of the Bankruptcy Code. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). 4
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