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Paper maker Appvion Files Chapter 11 with $85MM DIP Commitment

October 02, 2017, 07:17 AM
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Paper maker Appvion, Inc.  announced that it and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware to facilitate a balance sheet restructuring and better position the business for long-term growth and success.

According to First Day Motions the company expects to continue operations as usual and has obtained a commitment for $85 million in new debtor-in-possession ("DIP") financing from a group of its first lien lenders, with Wilmington Trust listed as Administrative Agent.  Subject to Bankruptcy Court approval, this DIP financing, combined with cash generated by the Company, is expected to provide more than adequate liquidity to support ongoing operations during the process. 

The DIP Facility comprises a term loan in an aggregate principal amount of up to $325.2 million consisting of: (i) new money commitments in the aggregate principal amount of $85 million (the “New Money Commitments”; the loans made thereunder, the “New Money Loans”)and (ii) a roll-up of existing loans under the Prepetition First Lien Facility in the aggregate principal amount of $240.2 million (the “Roll-Up Loans”). The New Money Loans may be drawn in multiple installments, with up to $65 million of the New Money Loans available upon entry of the Interim Order, subject to a budget agreed upon by the Loan Parties and the Required Lenders and minimum funding requirements consistent with the Prepetition First Lien Facility.

"We thoroughly explored various alternatives to address our debt and have been engaged in constructive discussions with our lenders regarding sponsorship of a plan to delever the Company and enhance our liquidity," said Kevin Gilligan, Chief Executive Officer of Appvion. "While those discussions are active and continuing, we determined that pursuing a restructuring through Chapter 11 is the best path forward for Appvion and our stakeholders. We believe this process will result in a sustainable capital structure for our business."

Gilligan continued, "The Chapter 11 process itself will have little impact on how we do business. We will continue to implement profit improvement and growth initiatives to optimize our operations and maximize the efficiency of our supply chain. As we work toward restructuring and emergence, we will remain focused on combining our market insight, extensive manufacturing capabilities, and unique coating technologies to serve our customers' needs. Our goal is to emerge a stronger company – well positioned to compete long-term in the evolving coated paper market and further invest in the innovation that has made Appvion a market leader."

The Company will work closely with its customers and vendors to ensure that ongoing obligations are met and that production and delivery are uninterrupted.

Appvion has filed with the Bankruptcy Court a series of customary motions seeking to maintain business-as-usual operations during the process. These "first day" motions include requests to continue payment of employee wages and benefits and honor customer programs as well as other motions to ensure a smooth transition into Chapter 11 without business interruption.

DLA Piper is serving as legal counsel to Appvion, Guggenheim is serving as the Company's investment banker, and Alan Holtz of AlixPartners is serving as the Company's Chief Restructuring Officer.

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