Briggs & Stratton Corporation and its affiliates received provisional approval from the U.S. Bankruptcy Court for the Eastern District of Missouri to employ Houlihan Lokey Capital, Inc. as their investment banker.
The firm will render the following services:
(a) Assist Debtors in the development and distribution of selected information, documents and other materials in an effort to create an interest in and to consummate any transaction;
(b) Solicit and assist Debtors in evaluating indications of interest and proposals regarding any transaction from current or potential lenders and other counterparties;
(c) Assist Debtors in the development, structuring, negotiation and implementation of any transaction;
(d) Provide expert advice and testimony regarding financial matters related to any transaction, if necessary;
(e) Attend meetings with Debtors’ Board of Directors, creditor groups, official constituencies and other interested parties;
(f) Review Debtors’ financial condition, liquidity, operations, competitive environment, prospects and related matters;
(g) Analyze Debtors’ current operational strategy and capital structure; and
(h) Provide strategic advice with regard to various alternatives being considered by Debtors.
Houlihan Lokey will compensated as follows:
(a) Initial Fee. Debtors have paid a nonrefundable cash fee of $200,000.
(b) Monthly Fees. Debtors shall pay Houlihan Lokey in advance, without notice or invoice, a nonrefundable cash fee of $200,000.
(c) Transaction Fee. Debtors shall pay Houlihan Lokey the following transaction fees.
(i) Restructuring Transaction Fee. Upon the earlier to occur of: (A) in the case of an out-of-court restructuring transaction, the closing of such restructuring transaction; and (B) in the case of an in court restructuring transaction, the date of confirmation of a plan of reorganization under Chapter 11 of the Bankruptcy Code pursuant to an order of the applicable bankruptcy court, Houlihan Lokey shall earn, and Debtors, solely, shall promptly pay to Houlihan Lokey, a cash fee equal to 1.05% of the total principal amount of Debtors’ outstanding indebtedness for borrowed money that is, without duplication, exchanged, tendered, materially amended, retired, repaid or extinguished in such restructuring transaction.
(ii) Financing Transaction Fee. Upon the closing of each financing transaction, Houlihan Lokey shall earn, and Debtors, solely, shall thereupon pay immediately and directly from the gross proceeds, if any, of such financing transaction, as a cost of such financing transaction, a cash fee equal to the sum of: (A) 1.0% of the aggregate principal amount of any indebtedness for borrowed money raised, placed or committed and available at close that is senior to other indebtedness of Debtors, secured by a first priority lien and unsubordinated, with respect to both lien priority and payment, to any other indebtedness for borrowed money of Debtors (other than with respect to debtor-in-possession financing); (B) 3.0% of the aggregate principal amount of any indebtedness for borrowed money raised, placed or committed and available at close that is secured by a lien (other than a first lien), is unsecured or is contractually subordinated. The financing transaction fee payable under the Engagement Agreement shall be subject to a $1,500,000 minimum financing transaction fee payable upon the first closing of a financing transaction.
(iii) Amendment Transaction Fee. Upon the closing of any amendment transaction, Houlihan Lokey shall earn, and Debtors, solely, shall promptly pay to Houlihan Lokey, a cash fee of $250,000. In the event more than one amendment transaction closes contemporaneously (or substantially contemporaneously) with Debtors’ lenders or note holders, then the total amendment transaction fees in respect of such amendment transactions shall be no greater than $350,000. If one or more amendment transaction fees are earned and payable, 50% of each amendment transaction fee shall be credited against any restructuring transaction fee or sale transaction fee to which Houlihan Lokey becomes entitled under the engagement agreement.
(iv) Sale Transaction Fee. Upon the closing of a sale transaction, Houlihan Lokey shall earn, and Debtors shall thereupon pay immediately and directly from the gross proceeds of such sale transaction, as a cost of such sale transaction, a cash fee based upon Aggregate Gross Consideration (AGC), calculated in the manner set forth in (A) and (B) below; subject, however, to a minimum sale transaction fee of $4,000,000:
A. For AGC up to $550 million: 1.25% of AGC, plus
B. For AGC in excess of $550 million: 3.00% of such incremental AGC.
If more than one sale transaction is consummated, Houlihan Lokey shall be compensated based on the AGC from all sale transactions, calculated in the manner set forth in (A) and (B) below; subject, however, to a minimum sale transaction fee of (x) the greater of $1,000,000 or 4% of AGC for each sale transaction with AGC of less than $40 million, and (y) $1,750,000 for each other sale transaction:
A. For AGC up to $550 million: 1.50% of AGC, plus
B. For AGC in excess of $550 million: 3.00% of such incremental AGC.
During the 90 days immediately preceding the petition date, Debtors paid Houlihan Lokey $950,000 in fees and $12,541.10 in expense reimbursements, which includes $10,000 paid on account of anticipated expenses. Other than as set forth herein, Houlihan Lokey did not receive any payments from Debtors during the 90 days immediately preceding the Petition Date. As of the petition date, Debtors did not owe Houlihan Lokey for any fees or expenses incurred prior to the petition date.
Reid Snellenbarger, a managing director at Houlihan Lokey, disclosed in court filings that the firm is a “disinterested person” within the meaning of Bankruptcy Code Section 101(14).
The firm can be reached through:
Houlihan Lokey Capital, Inc.
111 South Wacker Dr., 37th Fl.
Chicago, IL 60606
Telephone: (312) 456-4700
Facsimile: (312) 346-0951
About Briggs & Stratton
Briggs & Stratton Corporation is a producer of gasoline engines for outdoor power equipment and a designer, manufacturer and marketer of power generation, pressure washer, lawn and garden, turf care, and job site products. Its products are marketed and serviced in more than 100 countries on six continents through 40,000 authorized dealers and service organizations. Visit https://www.basco.com for more information.
Briggs & Stratton Corporation and four affiliates concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Mo. Lead Case No. 20-43597) on July 20, 2020. The petitions were signed by Mark A. Schwertfeger, senior vice president and chief financial officer. Briggs & Stratton disclosed total assets of $1,589,398,000 and total liabilities of $1,350,058,000 as of March 29, 2020.
Hon. Barry S. Schermer oversees the cases.
Debtors have tapped Weil, Gotshal & Manges LLP as bankruptcy counsel; Carmody MacDonald P.C. as local counsel; Foley & Lardner LLP as corporate counsel; Houlihan Lokey Inc. as investment banker; Ernst & Young, LLP as restructuring and tax advisor; Deloitte LLP as auditor and tax consultant; and Kurtzman Carson Consultants, LLC as claims and noticing agent.