HI-CRUSH INC. Item 1.03. Bankruptcy or Receivership.
As previously disclosed, on
Plan of Reorganization
The following is a summary of the material terms of the Plan. This summary highlights only certain substantive provisions of the Plan and is not intended to be a complete description of the Plan. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan. This summary is qualified in its entirety by reference to the full text of the Plan, which is attached hereto as Exhibit 2.1 and incorporated herein by reference.
Pursuant to the Plan:
• On the effective date of the Plan (the "Effective Date"), the
reorganized Debtors will enter into a new credit agreement providing
for a new senior secured asset-based revolving loan facility in the
aggregate principal commitment amount of $25 million and a $25 million
letter of credit sub-limit (the "Exit ABL Facility"), which will
refinance and replace the Debtors' $25 million debtor-in-possession
superpriority secured asset-based revolving loan financing facility
(the "DIP ABL Facility"), and the letters of credit outstanding under
the DIP ABL Facility will be deemed outstanding under the Exit ABL
Facility;
• The Debtors will conduct a $43.3 million rights offering (the "Rights
Offering") to eligible holders of allowed claims arising under and in
connection with the Company's prepetition 9.50% senior notes due 2026
(the "Senior Notes" and such claims, the "Senior Notes Claims") and
eligible holders of allowed general unsecured claims (the "General
Unsecured Claims"), pursuant to which such holders will be granted
rights to purchase new secured convertible notes (the "New Secured
Convertible Notes");
• The Rights Offering will be backstopped by certain holders of the
Senior Notes or their respective affiliates pursuant to a backstop
commitment agreement;
• The claims arising under the Debtors' $40 million debtor-in-possession
superpriority secured delayed-draw term loan financing facility will
be paid in full in cash from the proceeds of the Rights Offering;
• Under the Plan, certain classes of claims and equity interests will
receive the following treatment:
• Administrative expense claims, priority tax claims, other priority
claims, and other secured claims will be paid in full (or receive
such other treatment rendering such claims unimpaired);
• Holders of Senior Notes Claims will receive (a) rights to
participate in the Rights Offering (which shall be attached to
each allowed Senior Notes Claim and transferable with such allowed
Senior Notes Claim as set forth in the procedures governing the
Rights Offering, but the rights may only be exercised to the
extent the holder is an "Accredited Investor," as such term is
defined in Rule 501 of the Securities Act of 1933, as amended (the
"Securities Act")) and (b) 100% of the new common stock to be
issued by the reorganized Debtors (the "New Common Stock") shared
pro rata with the holders of allowed General Unsecured Claims
(subject to dilution on account of (i) the New Common Stock issued
upon conversion of the New Secured Convertible Notes, and (ii) the
New Common Stock issued to management of the reorganized Debtors
under a management equity incentive plan (the "MIP Equity"));
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• Holders of General Unsecured Claims will receive (a) rights to
participate in the Rights Offering (which will be attached to each
allowed General Unsecured Claim and transferable with such allowed
General Unsecured Claim as set forth in the procedures governing
the Rights Offering, but the rights may only be exercised to the
extent the holder is an Accredited Investor) and (b) 100% of the
New Common Stock shared pro rata with the holders of allowed
Senior Notes Claims (subject to dilution on account of (i) the New
Common Stock issued upon conversion of the New Secured Convertible
Notes, and (ii) the MIP Equity); and
• Existing equity interests in Hi-Crush Inc. will be cancelled and
holders of such equity interests will receive no distribution or
recovery on account of such equity interests;
• The composition of the new board of directors of the reorganized
Company (the "New Board") will consist of five (5) directors in total,
which will include the Chief Executive Officer of reorganized Company
and other directors designated by certain holders of Senior Notes
prior to the Effective Date;
• After the Effective Date, the New Board will adopt a management equity
incentive plan for the benefit of the management of the reorganized
Debtors (the "MIP"). The MIP Equity issued pursuant to such MIP shall
dilute all New Common Stock equally, including the New Common Stock
issued upon conversion of the New Secured Convertible Notes after the
Effective Date; and
• The Plan will contain customary releases, exculpations, and
injunctions concerning certain parties in interest, as outlined in the
Plan.
The foregoing description of the Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the Plan, a copy of which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Although the Debtors intend to pursue the transactions (collectively, the "Transaction") contemplated in the Plan in accordance with the terms set forth therein, there can be no assurance that the Debtors will be successful in completing the Transaction, whether on the same or different terms.
Any new securities to be issued pursuant to the Plan have not been registered
under the Securities Act or any state securities laws. Therefore, the new
securities may not be offered or sold in
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements give our current expectations, and contain projections of results of operations or of financial condition, or forecasts of future events. Words such as "will," "may," "should," "assume," "forecast," "position," "predict," "strategy," "expect," "intend," "hope," "plan," "estimate," "anticipate," "could," "believe," "project," "budget," "potential," "likely," or "continue," and similar expressions are used to identify forward-looking statements. They can be affected by assumptions used or by known or unknown risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering
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these forward-looking statements, you should keep in mind the risk factors and
other cautionary statements in the Company's reports filed with the
Item 9.01 Financial Statements and Exhibits
(d) Exhibits Exhibit Number Exhibit Description 2.1 Joint Plan of Reorganization forHi-Crush Inc. and its Affiliate Debtors Under Chapter 11 of the Bankruptcy Code. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). 4
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