Rotech Healthcare has obtained commitments for $357.5 million of exit financing to fund its exit from Chapter 11, according to a July 19 motion from the company seeking court approval of the commitment letters and the payment of certain fees in connection with the financing.
The commitment is comprised of a first-lien facility consisting of a $25 million revolver, a $100 million tranche A term loan, and a $75 million tranche B term loan, from lenders Wells Fargo, Capital Research and Management, and SPF CDO I; and a second-lien commitment of $157.5 million backstopped by the three members of the ad hoc second-lien committee in the case, namely, SPCP Group, Capital Research and Management, and Venor Capital.
Wells Fargo is serving as the administrative agent, arranger and bookrunner for the first-lien portion, and the collateral agent for the second-lien loan. Silver Point Finance is the administrative agent for the second-lien facility.
With respect to the first-lien facility, the revolver and the TLA each have a term of five years, while the TLB matures in six years, court documents show. The revolver and the TLA are priced at L+425, with a 1.25% LIBOR floor, while the TLB is priced at L+875, also with a 1.25% LIBOR floor.
The second-lien facility, meanwhile, will be at L+1,100, with a 2% LIBOR floor.
The company said it would use the proceeds of the exit facilities to fund distributions under its proposed reorganization plan, pay the fees and expenses associated with the exit facilities, and fund the company’s post-reorganization working-capital needs. Among other payments, the company’s plan would pay some $267.4 million in pre-petition first-lien claims in cash.
The company said that it was not seeking, at this time, actual approval from the bankruptcy court for the facility (which it would do in connection with plan confirmation), but rather was seeking court approval for those actions the company is required to take prior to its emergence from Chapter 11, including the payment of certain upfront fees in connection with the TLA in an amount equal to 1.5% of the TLA commitment, and payment of a put option premium of $7.5 million in connection with the backstop for the second-lien portion of the facility.
The company said additional fees would be payable at closing, including commitment, letter of credit, and administrative agent fees. The company asked the bankruptcy court to keep the fee letters under seal.
A hearing on approval of the financing commitment is set for July 29, according to the court docket.
As reported, a confirmation hearing is scheduled for Aug. 20, but pending before the bankruptcy court is a motion from the equity committee in the case seeking to delay that hearing to early to mid-September. A hearing on that motion is set for Wednesday. – Alan Zimmerman