October 19, 2018 – The Court hearing the Premier Exhibitions case approved [Docket No. 1232] the (i) asset purchase agreement (“the APA”) between the Debtors and Premier Acquisition Holdings (the ‘Stalking Horse Purchaser’), a Delaware limited liability company formed by affiliates of members of the Ad Hoc Group, the Secured Lenders, and PacBridge Capital Partners (HK) (‘PacBridge’ ) for a purchase price of $19,500,000, (ii) authorizing the sale of the the debtors' transferred assets and (iii) approving a settlement with the Pacbridge parties.
October 19, 2018 – Open Road Films requested Court approval of a settlement agreement with Showtime Networks and IM Global (the "Settlement Agreement") [Docket No. 193]. The motion explains, “The following is a summary of the material terms of the Settlement Agreement: a) The Settlement Agreement shall not become effective unless and until both of the following conditions are satisfied: (i) the Saban Agreement is executed and becomes effective and (ii) the Proposed Order granting the Motion has been entered and become final, is unstayed, and is no longer subject to appeal or other challenge (the date on which both conditions have occurred, the ‘Agreement Effective Date’). The Settlement Agreement shall become null and void unless the Agreement Effective Date occurs on or before January 1, 2019. b) Effective upon the Agreement Effective Date, SNI, on behalf of itself and the OR/IMG Released Parties releases Open Road, IM Global, and their respective predecessors, successors, parent companies, subsidiaries and companies with which they share common ownership (including but not limited to all the Debtors), and their respective officers, directors, managers, and attorneys (collectively, the ‘SNI Released Parties’) from any and all claims, causes of action, debts, damages and other liability in connection with, relating to, or arising out of the Saban Assignment (‘Released Claims’).”
October 19, 2018 – Open Road Films requested Court authority to implement a key employee retention program (the “KERP”) [Docket No. 191]. The KERP motion explains, “The participants in the KERP (collectively, the “KERP Participants”) are 14 valuable non-insider members of the Debtors’ workforce. The KERP Participants include individuals that perform all or substantial portions of their work for the Debtors, but are formally employed by an affiliated non-debtor entity. Under the KERP, if earned, KERP Payments range from approximately 6% to 17% of the respective KERP Participant’s annual base salary. The average base salary for the KERP Participants (allocated across all of the Debtors and their non-debtor affiliates) is approximately $130,000, and the average KERP Payment, if earned, is approximately $15,000. The aggregate amount of the potential KERP Payments is approximately $206,000, and the total potential cost of the KERP to the Debtors’ estates, including the anticipated payroll taxes related to the KERP Payments, is estimated at roughly $222,000.”
The Debtors also filed with the Court a motion to redact and file under seal certain information contained in the KERP motion [Docket No. 192], which notes, “The Confidential Information that the Debtors are requesting authority to redact and file under seal includes the names, departments, and titles of the KERP Participants, as well as their potential KERP Payments. Disclosure of the Confidential Information could be a serious detriment to workforce morale or cause harm or distress to the KERP Participants. These potential negative effects are the very harm that the KERP is designed to avoid, as the goal of the KERP is, among other things, to bolster workforce morale, and to motivate certain valuable non-insider members of the Debtors’ workforce to continue working diligently throughout the Sale process, for the benefit of the Debtors’ estates, creditors and other stakeholders. The retention of the KERP Participants throughout the marketing and Sale process, and for an appropriate period of time after closing of the Sale, is critical to maximizing value, successfully prosecuting these Cases, and effectively and efficiently winding down the Debtors’ estates. Thus, the protection of the Confidential Information will provide a tangible benefit to all stakeholders, while its disclosure would potentially work significant, unnecessary harm.”
October 19, 2018 – American Tire Distributors filed an amended Disclosure Statement in respect of its Joint Plan of Reorganization [Docket No. 191] and a blacklined version of that Disclosure Statement [Docket No. 190] reflecting changes from the version of October 15, 2018 [Docket No. 153]. In addition to the attachment of significant exhibits (listed below), the amended Disclosure Statement reflects the following significant developments:
- Support for the Plan amongst the Debtors' "Consenting Term Loan Lenders" has risen to 78% from 67%,
- Estimated Recovery for holders of the Debtors' Senior Subordinated Notes is expected to be 54.6%,
- Holders of the Debtors' outstanding 838,551,089 shares are expected to recover $0.036 per share (splitting a $30 million pool),
- A committee of unsecure creditors has been appointed [Docket No. ], and
- Pursuant to the Valuation Analysis, the Reorganized Debtors will have an implied equity value at emergence of approximately $604
million at the midpoint,
The following exhibits were filed with the Disclosure Statement:
- Exhibit E – Liquidation Analysis.
- Exhibit F – Valuation Analysis.
- Exhibit G – Financial Projections.
According to the valuation analysis, “Based upon and subject to the review and analysis described herein, and subject to the assumptions, limitations and qualifications described herein, Moelis’ view, as of October 16, 2018, was that the estimated going concern enterprise value of the Reorganized Debtors, as of an assumed Effective Date for purposes of Moelis’ valuation analysis of December 31, 2018 (the “Assumed Effective Date”), would be in a range between $1,875 million and $2,125 million. The midpoint of our enterprise valuation range is $2,000 million. Based upon our range of estimated going concern enterprise value of the Reorganized Debtors of between $1,875 million and $2,125 million and assumed net debt of $1,396 million (assuming a debt balance of $1,431 million and a pro forma cash balance of $35 million as of December 31, 2018) as provided by the Debtors, the imputed estimate of the range of equity value for the Reorganized Debtors, as of the Assumed Effective Date, is between approximately $479 million and $729 million, with a midpoint estimate of $604 million.
According to the financial projections, “ATD has projected a reduction of PLT unit sales from 35.7 million in 2018 to 34.2 million in 2019 in accounting for the trends noted above. These are partially offset by new business contribution of approximately 2.5 million units in 2019 growing to approximately 4.5 million units in 2020. The Financial Projections also include a 1% to 2% steady-state organic volume growth in its base unit sales which is consistent with historical patterns, and 2% to 3% average selling price inflation. Within its major channels, ATD has estimated growth from 2020 through 2023 at 0.5% to 1% for its core independent tire retailers, 1% to 2% for car dealers, 7% for e-commerce sales, and an increase of 30% in corporate accounts in 2020 from new business contributions, stabilizing at 2.5% from 2021 through 2023….The Financial Projections reflect the improvement of ATD’s year-end-days payable from 50 days at end of 2018 to 55 days by the end of 2019. Year-end-days payable remains constant at 55 days from end of 2019 through end of 2023. Prepetition accounts payable is assumed to be paid as part of ATD’s court-approved first day orders or upon emergence as part of the Plan….The Financial Projections assume capital spending of $60 million in 2019, increasing to $65 million in 2020 and remaining at this level through the end of the forecast period.”
The following is an updated summary of classes, claims, voting rights and projected recoveries:
- Class 1 ("Other Secured Claims") is unimpaired, deemed to accept the Plan and not entitled to vote. Estimated allowed claims are $500,000 and estimated recovery is 100%.
- Class 2 ("Other Priority Claims") is unimpaired, deemed to accept the Plan and not entitled to vote.of $500,000. Estimated allowed claims are $500,000 and estimated recovery is 100%.
- Class 3 ("ABL Claims") is unimpaired, deemed to accept the Plan and not entitled to vote. Estimated allowed claims are $0 and estimated recovery is 100%.
- Class 4 ("Term Loan Claims") is impaired and entitled to vote. Estimated allowed claims are $1,050,000,000 (in principal amount) and estimated recovery is 54.6%.
- Class 5 ("Senior Subordinated Notes Claims") is impaired and entitled to vote. Estimated allowed claims are $695,000,000 (in principal amount) and estimated recovery is 100%.
- Class 6 ("General Unsecured Claims") is unimpaired, deemed to accept the Plan and not entitled to vote. Estimated allowed claims are $616,144,244 and estimated recovery is 100%.
- Class 7 ("Intercompany Claims") is unimpaired/Impaired deemed to accept/reject the Plan and not entitled to vote.
- Class 8 ("Section 510(b) Claims") is impaired, deemed to reject the Plan and not entitled to vote. Estimated allowed claims are $0 and estimated recovery is 0%.
- Class 9 ("Intercompany Interests") is unimpaired/Impaired, deemed to accept/reject the Plan and not entitled to vote.
- Class 10 ("Interests") is impaired and entitled to vote. Estimated recovery is approximately $30 million in aggregate or $0.036 per share.
October 19, 2018 – Bluestar Alliance announced that it had completed its acquisition of the Brookstone brand. In a press release
announcing the closing, Bluestar stated that its partner in the acquisition, Apex Digital Inc., would operate the Brookstone website and airport stores.
Commenting on the acquisition, Bluestar Alliance CEO Joseph Gabbay stated, "We are excited to begin renewing Brookstone's innovation and its flow of new products to the market....London Luxury is the brand's first new licensee, known for its expertise in the bedding, home textile and memory foam categories. We are thrilled to have London Luxury as our licensee partner as they exemplify the standard consumers will expect from the Brookstone brand. We are also seeing strong interest from a myriad of prospective licensees as well as enthusiastic retail partners. Contracts with best-in-class manufacturers in key categories including massage products, home environment, audio and travel products are already expected to close this week."
"Apex Digital is a great partner to run the Brookstone website and airport stores," said Ralph Gindi, COO of Bluestar Alliance LLC. "Apex is a major player in the consumer electronics market, developing advanced products and distributing them to the largest U.S. retailers, including Microsoft retail, Costco and Staples. They will operate the Brookstone.com website and e-commerce business, as well as the airport stores. Their great experience in e-commerce will bring tremendous synergies to the partnership and dramatically improve the performance and productivity of Brookstone's e-commerce business to state-of-the-art. Apex is the perfect partner to build on and extend Brookstone's heritage of innovation into the next decade."