Item 1.01. Entry into a Material Definitive Agreement.
Restructuring Support Agreement
On June 29, 2020, Covia Holdings Corporation (the "Company") and certain of its
direct and indirect subsidiaries (collectively, the "Company Parties") entered
into a Restructuring Support Agreement (the "Restructuring Support Agreement")
with certain creditors (the "Consenting Stakeholders") under its Credit and
Guaranty Agreement, dated as of June 1, 2018 (as amended, restated, amended and
restated, supplemented or otherwise modified from time to time, the "Term Loan
Agreement"), by and among the Company, as borrower, certain subsidiaries of the
Company, as guarantors, Barclays Bank plc, as administrative agent, and the
lenders party thereto from time to time (the "Term Loan Lenders"). The
Restructuring Support Agreement contemplates agreed-upon terms for a prearranged
plan of reorganization (the "Plan").
The Consenting Stakeholders as of the Agreement Effective Date (as defined in
the Restructuring Support Agreement) represent at least a majority of the
aggregate principal amount of the lenders under the Term Loan Agreement. Any
holder of term loans under the Term Loan Agreement may become a Consenting
Stakeholder by executing a joinder to the Restructuring Support Agreement after
the Agreement Effective Date.
Under the Restructuring Support Agreement, the Consenting Stakeholders have
agreed, subject to certain terms and conditions, to support a financial
restructuring (the "Restructuring") of the existing debt of, existing equity
interests in, and certain other obligations of the Company Parties, pursuant to
the Plan to be filed in cases commenced under chapter 11 (the "Chapter 11
Cases") of title 11 of the United States Code (the "Bankruptcy Code").
The Plan will be implemented in accordance with the restructuring term sheet
attached to, and incorporated into, the Restructuring Support Agreement (the
"Term Sheet") (such transactions described in, and in accordance with the
Restructuring Support Agreement and the Term Sheet, the "Restructuring
Transactions") which, among other things, contemplates:
• the Restructuring Transactions will be implemented through prearranged
Chapter 11 Cases by the Company Parties to pursue confirmation of the Plan,
on which votes will be solicited from (i) the Term Loan Lenders and holders
of claims under certain interest rate swap agreements to which the Company
is a party (such claims, "Swap Agreement Claims") and (ii) certain holders
of general unsecured claims;
• the Receivables Facility (as defined below) will be terminated and replaced
with a letter of credit facility (the "L/C Facility") pursuant to an interim
order authorizing, among other things, (i) the Company's funding of a new
letter of credit collateral account held at Covia Financing LLC, a special
purpose entity and wholly owned subsidiary of the Company ("Covia
Financing"), (ii) entry into the Payoff and Reassignment Agreement (the
"Payoff Agreement"), among the Company, Covia Financing, the sub-originators
party thereto (the "Sub-Originators"), PNC Bank, National Association
("PNC"), and PNC Capital Markets LLC ("PNC Capital"), (iii) the Company's
and the Sub-Originators' entry into, and performance of, their respective
obligations under the Payoff Agreement and, as applicable, the Reimbursement
Agreement for Cash-Collateralized Standby Letters of Credit, among PNC,
Covia Financing, and the Company (the "Reimbursement Agreement" and,
together with the Payoff Agreement, the "Letter of Credit Agreements"), and
(iv) execution of the transactions contemplated by the Letter of Credit
• on the effective date of the Plan, the reorganized Company Parties will
enter into a $825 million senior secured term loan (the "New Term Loan")
with an interest rate of LIBOR + 400 bps (100 bps floor), payable in cash
unless the Company elects a PIK and cash option, a minimum liquidity
covenant of $50 million to be tested quarterly, and on other terms
reasonably acceptable to the Company and the Consenting Stakeholders as set
forth in a supplement to the Plan;
• on the effective date of the Plan, the reorganized Company Parties may enter
into at least a $100 million senior secured revolving credit facility (the
"Exit Facility") on terms reasonably acceptable to the Company and the
Consenting Stakeholders, with the terms of the Exit Facility being set forth
in a supplement to the Plan and sufficient to replace the Company Parties'
existing letters of credit and fund their ongoing liquidity;
• the Term Loan Lenders and holders of Swap Agreement Claims will receive, in
exchange for their claims under the Term Loan Agreement (the "Term Loan
Claims") and Swap Agreement Claims, respectively, their pro rata share of
(i) all excess cash on the Company's balance sheet pro forma for all
remaining professional fees expected to be paid through the date upon which
the Company emerges from bankruptcy (the "Emergence Date") as of the date of
the last available month-end balance sheet as of ten business days prior to
the Emergence Date as of the effective date of the Plan, subject to minimum
liquidity and cash requirements and working capital adjustments, net of any
proceeds associated with receipt of the CARES Act Tax Refund;
(ii) $825 million in take-back debt pursuant to the New Term Loan; and
(iii) 100% of the equity in the reorganized Company, subject to adjustment
. . .
Item 1.03 Bankruptcy or Receivership.
To implement the Plan, on June 29, 2020 (the "Petition Date"), the Company
Parties filed the Chapter 11 Cases under the Bankruptcy Code in the U.S.
Bankruptcy Court for the Southern District of Texas (the "Bankruptcy Court").
The Chapter 11 Cases are being jointly administered under the caption In re:
Covia Holdings Corporation, et al. The Company's international subsidiaries,
including those operating in Canada, Mexico and Denmark were not included in the
Chapter 11 filing and are operating in the ordinary course.
The Company Parties continue to operate their businesses and manage their
properties as "debtors-in-possession" under the jurisdiction of the Bankruptcy
Court and in accordance with the applicable provisions of the Bankruptcy Code
and orders of the Bankruptcy Court. To ensure the Company Parties' ability to
continue operating in the ordinary course of business and minimize the effect of
the Restructuring on the Company Parties' customers and employees, the Company
Parties filed with the Bankruptcy Court motions seeking
a variety of "first-day" relief, including authority to pay employee wages and
benefits, and pay vendors and suppliers for goods and services provided both
before and after the filing date.
Item 2.04 Triggering Events that Accelerate or Increase a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement.
The commencement of the Chapter 11 Cases constitutes an event of default under,
and resulted in the acceleration of, certain of the Company Parties'
obligations, including under the following debt instruments (the "Debt
• $1.56 billion in aggregate principal amount under the Term Loan Agreement;
• $37.0 million in principal amount, including reimbursement obligations in
respect of letters of credit, plus accrued and unpaid interest (at the
non-default rate), fees, and other expenses arising and payable under that
certain Receivables Financing Agreement, dated as of March 31, 2020 (as
amended, modified, or otherwise supplemented from time to time), by and among
the Company, as initial servicer, Covia Financing LLC, as borrower, PNC Bank,
National Association, as administrative agent, the lenders party thereto from
time to time and PNC Capital, as structuring agent (the "Receivables
• Approximately $35.8 million in obligations under five separate interest rate
swap transactions that were entered into pursuant to either (i) that certain
2002 ISDA Master Agreement, dated as of May 30, 2018, by and between BNP
Paribas and the Company, as successor in interest to Unimin Corporation, or
(ii) that certain 1992 ISDA Master Agreement, dated as of June 28, 2018, by
and between Barclays Bank PLC and the Company; and
• Approximately $10.0 million in aggregate principal amount of an industrial
The Debt Instruments provide that as a result of the Chapter 11 Cases, the
principal and interest due thereunder shall be immediately due and payable. The
Debtors believe that any efforts to enforce the financial obligations under the
Debt Instruments are stayed as a result of the filing of the Chapter 11 Cases in
the Bankruptcy Court.
Item 8.01 Other Items.
Additional Information on the Chapter 11 Cases
Court filings and information about the Chapter 11 Cases can be found at a
website maintained by the Company's claims agent Prime Clerk LLC at
http://cases.primeclerk.com/Covia, by calling 1-877-606-3610 (toll-free), or by
sending an email to CoviaInfo@PrimeClerk.com. The documents and other
information available via website or elsewhere are not part of this Current
Report and shall not be deemed incorporated herein.
Cautionary Note Regarding the Company's Common Stock
The Company cautions that trading in the Company's common stock during the
pendency of the Chapter 11 Cases is highly speculative and poses substantial
risks. Trading prices for the Company's common stock may bear little or no
relationship to the actual recovery, if any, by holders of the Company's common
stock in the Chapter 11 Cases. The Company expects that holders of the Company's
common stock could experience a significant or complete loss on their
investment, depending on the outcome of the Chapter 11 Cases.
Cautionary Statement Concerning Forward-Looking Statements
This current report contains "forward-looking statements" related to future
events. Forward-looking statements contain words such as "expect," "anticipate,"
"could," "should," "intend," "plan," "believe," "seek," "see," "may," "will,"
"would," or "target." Forward-looking statements are based on management's
current expectations, beliefs, assumptions and estimates and may include, for
example, statements regarding the Chapter 11 Cases, the Company's ability to
complete the Restructuring and its ability to continue operating in the ordinary
course while the Chapter 11 Cases are pending. These statements are subject to
significant risks, uncertainties, and assumptions that are difficult to predict
and could cause actual results to differ materially and adversely from those
expressed or implied in the forward-looking statements, including risks and
uncertainties regarding the Company's ability to successfully complete a
restructuring under Chapter 11, including: consummation of the Restructuring;
potential adverse effects of the Chapter 11 Cases on the Company's liquidity and
results of operations; the Company's ability to obtain timely approval by the
Bankruptcy Court with respect to the motions filed in the Chapter 11 Cases;
objections to the Company's recapitalization process or other pleadings filed
protract the Chapter 11 Cases; employee attrition and the Company's ability to
retain senior management and other key personnel due to the distractions and
uncertainties, posed in part by the Chapter 11 Cases; the Company's ability to
comply with financing arrangements; the Company's ability to maintain
relationships with suppliers, customers, employees and other third parties and
regulatory authorities as a result of the Chapter 11 Cases; the effects of the
Chapter 11 Cases on the Company and on the interests of various constituents,
including holders of the Company's common stock; the Bankruptcy Court's rulings
in the Chapter 11 Cases, including the approvals of the terms and conditions of
the Restructuring and the outcome of the Chapter 11 Cases generally; the length
of time that the Company will operate under Chapter 11 protection and the
continued availability of operating capital during the pendency of the Chapter
11 Cases; risks associated with third party motions in the Chapter 11 Cases,
which may interfere with the Company's ability to consummate the Restructuring
or an alternative restructuring; increased administrative and legal costs
related to the Chapter 11 process; potential delays in the Chapter 11 process
due to the effects of the COVID-19 virus; and other litigation and inherent
risks involved in a bankruptcy process.
Forward-looking statements are also subject to the risk factors and cautionary
language described from time to time in the reports the Company files with the
U.S. Securities and Exchange Commission, including those in the Company's most
recent Annual Report on Form 10-K and any updates thereto in the Company's
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. These risks and
uncertainties may cause actual future results to be materially different than
those expressed in such forward-looking statements. The Company has no
obligation to update or revise these forward-looking statements and does not
undertake to do so.
Item 9.01 Financial Statements and Exhibits.
Exhibit No. Description
10.1 Restructuring Support Agreement, dated as of June 29, 2020,
by and among the Company Parties and the Consenting
104 Cover Page Interactive Data File - the cover page XBRL tags
are embedded within the Inline XBRL document.
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