Item 1.01 Entry into a Material Definitive Agreement.
On June 21, 2022, the Bankruptcy Court entered the Final Order (I) Authorizing
the Debtors to Obtain Postpetition Senior Secured, Priming and Superpriority
Financing (II) Authorizing Use of Cash Collateral, (III) Granting Adequate
Protection to Prepetition Secured Parties, and (IV) Granting Related Relief
[Docket No. 0130] (the "Final DIP Order").
Among other things, the Final DIP Order approved, on a final basis, the Debtors
obtaining postpetition financing pursuant to the Superpriority Senior Secured
Debtor-in-Possession Credit Agreement (the "DIP Credit Agreement"), dated as of
May 19, 2022, with a senior secured lender of the Company, Circles MVNE Pte.
LTD. ("Circles"), which provides for (i) a new money term loan facility with an
aggregate principal amount of up to $6.0 million (the "New Money DIP Loans") and
(ii) roll-up loans equal in an amount equal to the Debtors' outstanding
prepetition senior obligations held by Circles or an affiliate (the "Roll-Up DIP
Loans" and, together with the New Money DIP Loans, the "DIP Financing"). The
Final DIP Order permits the Company to access the remaining $3.0 million in New
Money DIP Loans available in accordance with the DIP Credit Agreement.
The DIP Financing has an interest rate of 9.0% per annum payable in kind, which
may be increased by 2.0% per annum following the occurrence and declaration of
an Event of Default (as defined in the DIP Credit Agreement). Accrued interest
is payable on the first day of each calendar quarter by adding the then amount
of such accrued interest to the outstanding principal amount of such loan. In
the event of any repayment or prepayment of the DIP Financing, accrued interest
on the principal amount repaid or prepaid shall be payable in cash on the date
of such repayment or prepayment. The maturity date of the DIP Financing shall be
the earliest of (i) 210 days after the closing date of the DIP Credit Agreement,
(ii) the close of the sale of the business and assets of the Debtors pursuant to
an order of the Bankruptcy Court and (iii) the acceleration of the maturity of
the DIP Financing following an Event of Default. The outstanding principal and
accrued interest of the DIP Financing is due and payable in full on the maturity
date.
The above description of the DIP Credit Agreement is not complete and is
qualified in its entirety by reference to the DIP Credit Agreement, which is
filed as Exhibit 10.1 to the Current Report filed by the Company on May 19, 2022
and incorporated by reference in this Item 1.01. The above description of the
Final DIP Order does not purport to be complete and is qualified in its entirety
by reference to the full text of the Final DIP Order which is available on the
docket of the Chapter 11 Cases, which can be accessed via PACER at
https://www.pacer.gov. Additional information about the Chapter 11 Cases,
including the DIP Credit Agreement, the Final DIP Order and other motions,
orders and other court filings relating to the Chapter 11 are available for free
on the website maintained by the Debtors' claims agent, Kurtzman Carson
Consultants LLC, at https://kccllc.net/Pareteum.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth or incorporated in Item 1.03 is also incorporated by
reference in this Item 2.03.
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