PACE INDUSTRIES: Wins Interim OK on Up to $125M of DIP Facility

Judge Mary F. Walrath granted Pace Industries, LLC and debtor affiliates interim approval to borrow:

(i) up to $125 million in aggregate principal amount under a senior secured super-priority asset-based revolving credit facility from certain DIP revolver lenders and Bank of Montreal (BMO), as administrative agent, and

(ii) an aggregate principal amount not to exceed $21 million under a senior secured super-priority multi-draw term loan facility from certain DIP term lenders and TCW Asset Management Company LLC, as administrative agent and collateral agent.

The Debtors have sought approval to obtain up to $125 million under the DIP revolver facility (of which up to $150,000 will be available for the issuance of letters of credit), and up to $50 million under the DIP term loan facility.

Pursuant to the interim order, the Debtors may:

* borrow under the DIP facilities and use cash collateral through and including the earlier to occur of (x) the date of entry of the final order and (y) the occurrence of a DIP termination event.

* pay all interest, costs, fees, and other amounts and obligations accrued or accruing under the DIP loan agreements and other DIP loan documents, and

* complete the ABL refinancing.

The Debtors are authorized to borrow under the revolver DIP agreement the full amount necessary to fully and immediately pay off in full all pre-petition ABL obligations. All letters of credit and credit product obligations shall continue in place and all obligations thereunder shall be subject to the revolver DIP documents and shall constitute DIP revolver obligations.

The DIP agents (for the benefit of themselves and the DIP lenders) are granted:
(a) continuing, valid, binding, enforceable, non-avoidable, and automatically and properly perfected security interests in and liens in and upon all DIP collateral, subject to permitted liens, to secure performance and payment of the DIP Obligations.

(b) allowed super priority administrative expense claims pursuant to Section 364(c)(1) of the Bankruptcy Code, having priority in right of payment over any and all other obligations, liabilities, and indebtedness of the Debtors.

Prepetition Secured Obligations

Before the Petition Date, the Debtors were indebted to BMO (as administrative agent) under an amended and restated credit agreement, pursuant to which up to $125 million in the aggregate is available under an asset-based credit facility, secured by (a) first priority security interests in and liens on certain of the Debtors’ property,

As of the Petition Date, approximately $92.1 million in principal was outstanding under the prepetition ABL facility in the form of revolving loans, plus letters of credit in the approximate stated amount of $150,000, plus interest accrued and accruing.

The Debtors were also indebted pre-petition to TCW, as agent, under a senior note agreement, pursuant to which senior secured notes in the aggregate principal amount of $240 million were issued. As of the Petition Date, approximately $232 million under the pre-petition senior note agreement was outstanding. BMO, in its capacity as pre-petition ABL agent and TCW, in its capacity as pre-petition senior secured notes agent, were parties to an inter-creditor agreement dated as of June 30, 2015.

The DIP lenders’ willingness to make the DIP loans and the pre-petition secured parties’ willingness to consent to the use of cash collateral is predicated upon (a) the Debtors’ support for confirmation of the joint prepackaged Chapter 11 Plan for Pace Industries, LLC and affiliated debtors and (b) the continued agreement of the sponsor to the proposed settlement contemplated by the plan.

A copy of the interim order is available at from free of charge.

About Pace Industries

Pace Industries, LLC is a full-service aluminum, zinc and magnesium die casting company. Headquartered in Fayetteville, Ark., Pace Industries offers end-to-end, nonferrous, die cast supply chain solutions, and a wide array of capabilities and services, including advanced engineering, tool and die fabrication, prototyping, precision machining, assembly, finishing and painting.

Pace Industries and 10 affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 20-10927) on April 12, 2020. At the time of the filing, Debtors disclosed assets of between $100 million and $500 million and liabilities of the same range.

Judge Mary F. Walrath oversees the cases.

Debtors tapped Young Conaway Stargatt & Taylor, LLP and Willkie Farr & Gallagher, LLP as bankruptcy counsel; FTI Consulting, Inc., as financial advisor; Hughes Hubbard & Reed, LLP as special counsel; and Kurtzman Carson Consultants, LLC as claims, noticing and balloting agent.

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