CalPlant I Holdco, LLC – Court Approves $18.3M in Additional DIP Financing, Now Expects (Not Started) Sale Process to Complete by Year End | Daily updates from bankrupt companies

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September 14, 2022 – The CalPlant I Holdco court has issued a second order that amends an existing Ultimate Debtor In Possession (“DIP”) order and allows debtors to access additional $18.3 million in DIP financing [Docket No. 403]. The additional funding, which except in amount has substantially the same terms as the prior DIP Loans, is provided by existing DIP bondholders (the “DIP Bondholders”) and is in the form of a second supplemental DIP bond (aka “CalPlant Senior Secured Bonds, Series 2022B”) issued pursuant to a third supplemental trust indenture (attached as Schedule 1 to the order).

The need for additional financing follows numerous operational and construction-related setbacks, which impact the current sellability of debtors’ assets (i.e., its MDF manufacturing plant); debtors (and their DIP lenders) preferring to “further delay their commercialization process until repairs are completed on their second refiner, additional operational improvements have been made and plant operations have stabilized” .

Debtors’ request [Docket No. 394] states in part: “The Debtors are seeking (and the DIP Obligation Holders have agreed to provide) additional financing in the amount of $18,300,000 (the “Second Additional DIP Obligation”) on substantially the same terms as the existing DIP obligations to fund these Chapter 11 cases through December 30, 2022, which is the date the debtors currently expect to have completed the sale of their business; provided that the second additional DIP obligation has a “maturity date of December 30, 2022 (subject to the terms and conditions of prior DIP orders and DIP facility documents).”

Case status

On October 5, 2021, CalPlant I Holdco, LLC and an affiliated debtor (“CalPlant” or the “Debtors”) filed for Chapter 11 protection, noting assets estimated to be between $100.0 million and $500 million. $0 million; and an estimated liability of between $100.0 million and $500.0 million. In filing, debtors, builders/owners of “a one-of-a-kind manufacturing plant that produces environmentally friendly medium-density fiberboard (‘MDF’) from rice straw” (the “factory”), noted that they had “encountered various difficulties in completing the construction of the plant and achieving their operational objectiveswith the result that they were far from reaching “factory acceptance” in July 2019, as expected when they lined up the bond financing in 2017.

From the outset, the debtors intended to use Chapter 11 for an asset sale, but that process was delayed as the debtors, with the support of the pre-petition and DIP bondholders, have elected to continue work on the plant before setting it up. sale.

At filing (i.e., October 5, 2021), Debtors filed a motion seeking court approval for $37.4 million in DIP financing (the “Original DIP Bonds”) to fund their files.
until March 2022, with the Court issuing a final DIP order in respect of this amount on October 27. On March 25, the Court gave the go-ahead for an additional $15.0 million bond (the “Additional DIP Bond”) to fund cases “through the end of September 2022.”

The debtors have not yet filed a petition on the tender procedures.

Pre-Request Indebtedness

Debtors have aggregate capital amount of $343,850,000 of unpaid funded debt, plus approximately $36,390,433.15 of accrued interest (calculated at the original coupon rate) plus additional default interest, out-of-pocket fees and expenses. The funded debt was incurred to finance the construction and operation of the plant and was issued by the California Pollution Control Financing Authority (the “CPFA”) in the form of tax-exempt “green” bonds. As of the date of the motion, the debtors also have outstanding trade payables of approximately $1.6 million.

  • 2017 senior bonds. Pursuant to a Trust Deed, dated June 1, 2017, entered into between CPCFA and BOKF, NA (as successor to UMB Bank, NA), in its capacity as Lead Trustee (the “Lead Trustee”) ( as amended and supplemented, the “Master Trust Indenture”), CPCFA has authorized and issued the Solid Waste Disposal Revenue Bonds (CalPlant I Project), 2017 Series (AMT) (Green Bonds) (collectively , the “2017 Senior Notes”), in the initial aggregate principal amount of $228,165,000. CPCFA has lent the proceeds of the 2017 Senior Notes to CalPlant pursuant to a Loan Agreement, dated June 1, 2017, between CPCFA and CalPlant (as amended and supplemented, the “Senior Loan Agreement”).
  • 2019 subordinated bonds. Pursuant to a trust indenture, dated August 1, 2019, between CPCFA and UMB Bank, NA (the “Subordinate Trustee”) (as amended and supplemented, the “Subordinate Trust Indenture”), CPCFA authorized and issued Solid Waste Disposal Revenue Bonds (CalPlant I Project), Series 2019 Subordinate Bonds (AMT) (Green Bonds) (collectively, the “2019 Subordinate Bonds”), in an aggregate principal amount of $73,685,000. CPCFA loaned the proceeds of the 2019 Subordinated Notes to CalPlant pursuant to a loan agreement, dated August 1, 2019, entered into by and between CPCFA and CalPlant (as amended and supplemented, “Subordinate Loan Agreement”).
  • 2020 senior bonds. Pursuant to the Master Trust Indenture, on October 13, 2020 CPCFA authorized and issued the Solid Waste Disposal Revenue Bonds (CalPlant I Project), 2020 Series (AMT) (Green Bonds) (collectively, the “2020 Senior Notes” and, together with the 2017 Senior Notes, the “Senior Notes”), with a total capital of $42,000,000. The CPCFA loaned the proceeds of the 2020 Senior Bonds to CalPlant pursuant to the Senior Loan Agreement. Pursuant to the Senior Trust Indenture, subject to certain exceptions, the CPCFA assigned its interest in the Senior Loan Agreement to the Senior Trustee as security for the Senior 2020 Bonds (on a pari passu basis with the Senior 2017 Bonds).
  • The guarantee agency agreement. The 2019 Senior Notes and Subordinated Notes (collectively, the “Notes”) are further guaranteed under the terms of the guarantor agency agreement, dated June 1, 2017, by and between CalPlant and BOKF, NA (in as successor to UMB Bank, NA), in its capacity as collateral agent (the “Collateral Agent” and, together with the Principal Trustee, the “Collateral Party”) (as amended and supplemented, the “Agreement guarantee agency”). Pursuant to the Guarantee Agency Agreement, the Debtors have granted to the Guarantee Agent, for the benefit of the Bondholders, a security interest and lien over substantially all of the assets of CalPlant, including the Site and the ‘Plant, and a Pledge of Ownership of Holding Members’ Interest in CalPlant.

Revised budget

About debtors

According to the debtors: “CalPlant and its predecessor company, CalAg, LLC, have spent many years researching, developing and patenting a process for manufacturing high-quality MDF using annually renewable rice straw as a raw material, whose disposal has been an environmental issue in California for decades. It has worked extensively with machine manufacturer Siempelkamp to develop a facility with production capabilities well suited to the MDF markets the plant will serve. CalPlant is the world’s leading manufacturer of MDF made from rice straw with no added formaldehyde.For more information, visit www.eurekamdf.com.

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