Item 1.01 Entry into a Material Definitive Agreement
The information regarding the DIP Credit Agreement (as defined below) set forth
in Item 1.03 of this Current Report on Form 8-K is incorporated into this Item
1.01 by reference.
Item 1.03 Bankruptcy or Receivership
Chapter 11 Filing
On October 14, 2021, Teligent, Inc. (the "Company") and certain of its
affiliates (collectively, the "Debtors") filed a voluntary petition (the
"Chapter 11 case") in the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court") seeking relief under Chapter 11 of the United
States Code (the "Bankruptcy Code") in order to pursue a sale process that is
intended to maximize the value of the Company. The Chapter 11 case is being
jointly administered under Case No. 21-11332. The Debtors continue to operate
their business 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. The
Debtors have filed various "first day" motions with the Bankruptcy Court
requesting customary relief that will enable the Company to transition into
Chapter 11 protection without material disruption to their ordinary course
operations.
The DIP Credit Agreement
In connection with the Chapter 11 case, the Company and its subsidiaries entered
into a Senior Secured Priming and Superpriority Debtor-in-Possession First Lien
Credit Agreement, dated as of October 15, 2021 (the "DIP Credit Agreement"),
with ACF Finco I LP, as administrative agent, ACF Finco I LP and Ares Capital
Corporation, as DIP agents, and the lenders from time to time party thereto
(collectively, the "DIP Lenders").
The DIP Lenders will provide new financing commitments to the Company under (i)
a revolving credit facility in an aggregate amount up to $6.0 million (with $3.0
million available on an interim basis) (the "DIP Revolving Credit Facility"),
and (ii) a delayed draw term loan facility in an aggregate amount up to $6.0
million (with $3.0 million available on an interim basis) (the "DIP Delayed Draw
Term Loan Facility"). Availability of such commitments will be in accordance
with an agreed upon budget and other conditions, including, in the case of
availability of commitments under the DIP Revolving Credit Facility, a borrowing
base. The DIP Credit Agreement also provides for the roll-up of:
· all outstanding obligations under the First Lien Revolving Credit Agreement,
dated as of December 13, 2018 and amended on October 31, 2019, April 6, 2020,
July 20, 2020 and January 27, 2021, by and among the Company and Teligent
Canada, Inc., as borrowers, certain of Company's subsidiaries, as guarantors,
the lenders from time to time party thereto, and ACF Finco I LP, as
administrative agent (such obligations under the First Lien Revolving Credit
Agreement, the "Rolled-Up First Lien Obligations"); and
· subject to the entry of a final order by the Bankruptcy Court approving the DIP
Credit Agreement, $18.0 million of obligations under the Second Lien Credit
Agreement, dated as of December 13, 2018 and amended on February 8, 2019, June
29, 2019, October 31, 2019, April 6, 2020, July 20, 2020, and January 27, 2021
(as amended, the "Second Lien Credit Agreement"), by and among the Company, as
the borrower, certain of its subsidiaries, as guarantors, the lenders from time
to time party thereto, and Ares Capital Corporation, as administrative agent
(such obligations under the Second Lien Credit Agreement, the "Rolled-Up Second
Lien Obligations").
Borrowings under the DIP Credit Agreement will bear interest at rates based on
LIBOR or the prime rate plus an applicable margin ranging from 5.5% to 8.5%, are
payable in cash with respect to the DIP Revolving Credit Facility and the
Rolled-Up First Lien Obligations, and are payable in kind with respect to the
DIP Delayed Draw Term Loan Facility and the Rolled-Up Second Lien Obligations.
The DIP Credit Agreement includes representations and warranties, covenants
applicable to the Company and its subsidiaries, and events of default. The DIP
Credit Agreement also requires the Company to consummate a sale of substantially
all of the Company's assets pursuant to Section 363 of the Bankruptcy Code no
. . .
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
The information regarding the DIP Credit Agreement (as defined above) set forth
in Item 1.03 of this Current Report on Form 8-K is incorporated into this Item
2.03 by reference.
Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial
Obligation of an Obligation under an Off-Balance Sheet Arrangement
The filing of the Chapter 11 case constitutes an event of default that
accelerated the Company' obligations under the Indenture, dated as of September
22, 2020 (the "Indenture"), by and among, the Company and Wilmington Savings
Fund Society, FSB, as trustee, relating to the Company's Zero Coupon Convertible
Senior Notes due 2023 (the "Series D Notes"). The Company currently owes
approximately $.3 million with respect to the Series D Notes. Approximately
$71.8 million of obligations under the Second Lien Credit Agreement remain
outstanding (after giving effect to the roll-ups of $18.0 million in obligations
described in Item 1.03 above) and the filing of the Chapter 11 case constitutes
an event of default under such Second Lien Credit Agreement.
The Company believes that any efforts to enforce the financial obligations under
the Indenture and the Second Lien Credit Agreement are stayed as a result of the
filing of the Chapter 11 case and the creditors' rights of enforcement with
respect to such obligations are subject to the applicable provisions of the
Bankruptcy Code.
Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule
or Standard; Transfer of Listing
On April 9, 2021, the Company received notification from The Nasdaq Stock Market
("Nasdaq") stating that the Company did not comply with the minimum $1.00 bid
price requirement for continued listing set forth in Listing Rule 5450(a)(1)
(the "Listing Rule"). In accordance with Nasdaq listing rules, the Company was
afforded 180 calendar days (until October 6, 2021) to regain compliance with the
Listing Rule.
On October 7, 2021, the Company received notification from the Listing
Qualifications Department of Nasdaq that it had not regained compliance with the
Listing Rule. The notification indicated that the Company's common stock will be
delisted from the Nasdaq Global Select Market unless the Company requests an
appeal of this determination. The Company does not intend to appeal Nasdaq's
determination, and the Company's common stock will be scheduled for delisting at
the opening of business on October 18, 2021, and it may thereafter trade in the
over-the-counter market.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangement of Certain
Officers
Departure of Officers
On October 8, 2021, Timothy B. Sawyer, Chief Executive Officer, and Philip K.
Yachmetz, Executive Vice President, Chief Legal Officer and Corporate Secretary,
resigned from their positions with the Company effective immediately.
In connection with such resignations, on October 8, 2021, the Company entered
into a Settlement Agreement and General Release with Mr. Sawyer that was
subsequently amended and restated on October 12, 2021. The Company also entered
into a Settlement Agreement and General Release with Mr. Yachmetz on October 8,
2021 (together the "Settlement Agreements").
The Settlement Agreements provide for lump sum payments ($350,000 to Mr. Sawyer
and $200,000 to Mr. Yachmetz) in full and final satisfaction of all amounts that
are or may be due and owing on account of either executive's employment with the
Company. The Settlement Agreements provide that Mr. Sawyer and Mr. Yachmetz will
each provide transition services to the Company for two months and include
customary releases and provisions related to confidentiality and other matters.
The foregoing description of the Settlement Agreements does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Settlement Agreements, which are filed as Exhibit 10.2 and 10.3, respectively,
to this Current Report on Form 8-K and are incorporated by reference herein.
Appointment of Director
On October 8, 2021, the Company's Board of Directors (the "Board") appointed Mr.
Bradley Scher as a new director of the Company effective immediately. There is
no arrangement or understanding between Mr. Scher and any other person pursuant
to which he was selected as an officer of the Company, and there are no family
relationships between Mr. Scher and any of Company's directors or executive
officers. There are no transactions to which the Company is a party and in which
Mr. Scher has a direct or indirect material interest that are required to be
disclosed pursuant to applicable rules and regulations of the U.S. Securities
and Exchange Commission.
Appointment of Chief Restructuring Officer
On October 8, 2021, the Company appointed Mr. Vladimir Kasparov, a Managing
Director at Portage Point Partners, LLC, a business advisory and interim
management firm ("Portage Point"), as the Company's Chief Restructuring Officer
effective immediately.
Mr. Kasparov, 40, has been associated with Portage Point since July 2021. Prior
to joining Portage Point, Mr. Kasparov spent nearly 12 years with Andrews
Advisory Group where he advised leading financial institutions, hedge funds, and
private equity funds during corporate restructurings and operational
turnarounds. Mr. Kasparov received his MBA from the University of Southern
Indiana, where he also received his bachelors degree, majoring in finance and
economics.
Mr. Kasparov's appointment as Chief Restructuring Officer is in accordance with
an interim management services agreement with Portage Point, effective September
23, 2021 (the "Agreement"), pursuant to which Portage Point is providing a range
of advisory and management services to the Company and is being paid fees based
on specified hourly rates. The Company paid Portage Point a retainer to be
applied against fees and expenses and has agreed to indemnify Portage Point and
Mr. Kasparov from and against specified claims, liabilities, losses, expenses
and damages. The Agreement has an indefinite term, but is subject to termination
upon either party's notice. There are no family relationships between Mr.
Kasparov and any of Company's directors or executive officers
Item 7.01 Regulation FD Disclosure
A copy of the press release dated October 14, 2021 issued by the Company is
attached hereto as Exhibit 99.1 and is incorporated by reference into this Item
7.01. Information regarding the Company's Chapter 11 case can be found at
https://dm.epiq11.com/Teligent or by calling (800) 781-1016 for U.S. calls or
(503) 597-5535 for international calls.
The information set forth in, or incorporated by reference into, Item 7.01 of
this Form 8-K is being furnished and shall not be deemed "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or otherwise subject to the liabilities of such section. The information
set forth in, or incorporated by reference into, Item 7.01 of this Form 8-K
shall not be incorporated by reference into any filing under the Securities Act
of 1933, as amended, or the Exchange Act, regardless of any incorporation by
reference language in any such filing.
*****
Cautionary Note Regarding Forward-Looking Statements
This current report on Form 8-K includes "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. All statements
other than statements of historical fact contained in this current report on
Form 8-K are "forward-looking" statements, as defined by (and subject to the
"safe harbor" protections under) the federal securities laws. These statements
are based on current expectations, estimates, forecasts and projections about
the Company's business and the industry in which the Company operates and the
beliefs and assumptions of the Company's management. Forward-looking statements
can be identified by the use of words such as "will," "may," "could," "should,"
"would," "believe," "depends," "expect," "goal," "anticipate," "forecast,"
"project," "future," "intend," "plan," "estimate," "target," "indicate,"
"outlook," and similar expressions of future intent or the negative of such
terms. These forward-looking statements are inherently subject to various risks
and uncertainties many of which are outside of the Company's control that may
cause the Company's actual results to be materially different from planned or
expected results. Those risks and uncertainties include, but are not limited to,
risks attendant to the bankruptcy process, including the Company's ability to
obtain approval from the Bankruptcy Court with respect to motions or other
requests made to the Bankruptcy Court throughout the Chapter 11 process; the
ability of the Company to negotiate, develop, confirm and consummate a plan of
reorganization; the effects of the Chapter 11 process, including increased legal
and other professional costs necessary to execute the Company's reorganization,
on the Company's liquidity (including the availability of operating capital
during the pendency of the Chapter 11 process), results of operations or
business prospects; the length of time that the Company will operate under
Chapter 11 protection; risks associated with third-party motions in the Chapter
11 process; conditions to which the DIP financing is subject and the risk that
these conditions may not be satisfied for various reasons, including for reasons
outside the Company's control; more stringent or costly payment terms and/or the
decision by a significant number of suppliers, vendors or customers not to do
business with the Company; the Company's ability to attract, motivate and retain
key executives and other personnel; the trading price and volatility of the
Company's common stock; the delisting of the Company's common stock from The
Nasdaq Stock Market; and those additional risks and uncertainties set forth
under the caption "Risk Factors" in the Company's most recent Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q and other periodic reports the Company
files with the Securities and Exchange Commission. Additionally, many of these
risks and uncertainties are currently amplified by and will continue to be
amplified by, or in the future may be amplified by, the COVID-19 outbreak and
the effects thereof on the Company's future performance and results of
operations. It is not possible to predict or identify all such risks. There may
be additional risks that the Company considers immaterial or which are unknown.
You should not rely upon forward-looking statements as predictions of future
events. The forward-looking statements included in this press release speak only
as of the date hereof and, subject to any continuing obligations under
applicable law or any relevant stock exchange rules, we expressly disclaim any
obligation to disseminate, after the date of this document, any updates or
revisions to any such forward-looking statements to reflect any change in
expectations or events, conditions or circumstances on which any such statements
are based.
Item 9.01 Financial Statements and Exhibits.
Exhibit
Number Description
10.1 Senior Secured Priming and Superpriority Debtor-in-Possession First
Lien Credit Agreement, dated as of October 15, 2021 (the "DIP Credit
Agreement"), by and among the Company, ACF Finco I LP, as
administrative agent, ACF Finco I LP and Ares Capital Corporation, as
DIP agents, and the lenders from time to time party thereto.
10.2 Amended and Restated Settlement Agreement, dated as of October 12,
2021, by and among Timothy B. Sawyer, the Company and the other
parties thereto.
10.3 Settlement Agreement, dated as of October 8, 2021, by and among
Philip B. Yachmetz, the Company and the other parties thereto.
99.1 Press release issued by the Company on October 14, 2021.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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