| | | | |
CUSIP Nos. 11040B 302 and 11040B 807 | | SCHEDULE 13D | | Page 7 of 11 |
| Item 4. | Purpose of Transaction. |
The disclosure in Item 3 and Item 6 of this Schedule 13D is incorporated herein by reference.
On May 11, 2019, the Issuer and certain of its debtor affiliates (collectively, the “Debtors”) filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of Texas (the “Chapter 11 Cases,” and such court, the “Bankruptcy Court”). On October 4, 2019, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Debtors’ Amended Joint Chapter 11 Plan of Reorganization, as modified by the Confirmation Order (the “Plan”). On the Effective Date, the Plan became effective in accordance with its terms and the Debtors emerged from the Chapter 11 Cases. The descriptions of the Plan and the Confirmation Order included in this Schedule 13D do not purport to be complete and are qualified in their entirety by reference to the full text of the Plan and the Confirmation Order, which are incorporated by reference and filed as Exhibits A and B hereto, respectively.
On July 24, 2019, certain affiliates of the Reporting Persons entered into a backstop commitment agreement (“BCA”) with the Issuer and certain of the other holders (the “Unsecured Noteholders”) of the Issuer’s (i) 6.25% Senior Unsecured Notes due 2022 and (ii) 4.50% Convertible Notes due 2023 (collectively, the “Unsecured Notes”) as well as holders (the “Secured Noteholders” and together with the Unsecured Noteholders, the “Backstop Parties”) of the Issuer’s 8.75% Senior Secured Notes due 2023 (the “Secured Notes” and together with the Unsecured Notes, the “Old Notes”), pursuant to which the Backstop Parties agreed to backstop the rights offering for shares of Common Stock and Preferred Stock to be conducted in reliance upon the exemptions from registration provided by Section 1145 of the Bankruptcy Code and Section 4(a)(2) of the Act and/or Regulation D promulgated thereunder, as applicable (the “Rights Offering”). Pursuant to the BCA, the Backstop Parties committed to (i) exercise their respective rights to purchase their pro rata share of shares of Common Stock and Preferred Stock available to be purchased in the Rights Offering (the “Rights Offering Shares”) and (ii) backstop the aggregate Rights Offering and purchase the shares of Common Stock and/or Preferred Stock available in the Rights Offering to the extent unsubscribed (the “Backstop Commitment”). In consideration of each Backstop Party’s Backstop Commitment, each Backstop Party was entitled to receive on the Effective Date (i) the total number of Rights Offering Shares for which such Backstop Party properly subscribed, (ii) their pro rata portion of any unsubscribed portion of the Rights Offering Shares and (iii) 10% of such Backstop Party’s Backstop Commitment (in the form of shares of either Common Stock or Preferred Stock, or both, at the election of such Backstop Party) (the “Backstop Commitment Premium”).
The description of the BCA included in this Schedule 13D does not purport to be complete and is qualified in its entirety by reference to the full text of the BCA, which is incorporated by reference as Exhibit C hereto.
Additionally, pursuant to the Plan, on the Effective Date, holders of an Allowed Unsecured Notes Claim, including certain affiliates of the Reporting Persons, received (a) if such holder was a 4(a)(2) Eligible Holder (as defined in the Plan), its pro rata share of (x) an unsecured equity pool and (y) rights to participate in the Rights Offering or (b) if such holder was not a 4(a)(2) Eligible Holder, either (x) its pro rata share of an unsecured equity pool and rights to participate in the Rights Offering or (y) its pro rata share of the GUC Cash Distribution Amount (as defined in the Plan).
Under the Stockholders Agreement entered into between the Issuer and certain stockholders of the Issuer named therein (the “Stockholders Agreement”), Solus is entitled to designate two members to the Issuer’s post-reorganization board of directors (the “Board”) for so long as Solus maintains beneficial ownership of at least 20% of the Issuer’s Fully Diluted Common Shares (as defined in the Stockholders Agreement) and one member for so long as Solus maintains beneficial ownership of at least 10% of the Issuer’s Fully Diluted Common Shares. In addition to the Board nomination rights granted to Solus and certain other stockholders, the Stockholders Agreement also provides for certain general rights, obligations and restrictions pertaining to the administration and management of the Issuer, including, but not limited to (i) restrictions on the authority of the Issuer to take certain actions without the written consent of a Major Holder (as defined in the Stockholders Agreement) who is a U.S. Citizen (as defined in the Stockholders Agreement) or in the case of multiple Major Holders, 50% of the Issuer’s Equity Interests (as defined in the Stockholders Agreement) owned by all of the Major Holders); (ii) restrictions on the authority of the Issuer to (a) authorize or adopt any certificate of designations relating to any class or series of preferred stock, amend the Certificate of Incorporation (as defined in the Stockholders Agreement) to increase the authorized shares of Common Stock or authorize any other class or series of equity securities, or authorize a stockholder rights plan or “poison pill”, (b) issue any equity securities of the Issuer representing more than 10% of the shares of Common Stock, excluding Common Stock and Common Stock equivalents of the Issuer representing in the aggregate not more than 10% of the outstanding shares of Common Stock issued pursuant to management incentive plans approved by the Board, (c) dissolve or liquidate the Issuer or any Significant Subsidiary (as defined in the Stockholders Agreement), (d) reincorporate or convert the Issuer into any entity other than a corporation or redomicile the Issuer into any jurisdiction other than Delaware, (e) make a material change to (1) accounting policies or procedures of the Issuer or any Significant Subsidiary unless required in accordance with GAAP (as defined in the Stockholders Agreement) or (2) tax elections of the Issuer or any of its Significant Subsidiaries, (f) enter into any transaction, arrangement, contract, agreement or other binding obligation with any Major Holder or any affiliate of any Major Holder, including any amendment or modification of any such existing transaction, arrangement, contract, agreement or other binding obligation, or (g) enter into any agreement or other binding obligation to do any of the foregoing, in each case without the affirmative vote of at least 67% of the Fully Diluted Common Shares; (iii) preemptive rights granted to stockholders with a Holder Ownership Percentage (as defined in the Stockholders Agreement) of at least 2% and Entitled Holders (as defined in the Stockholders Agreement), allowing those holders to purchase their pro rata share of any issuances or distributions of new securities by the Issuer; (iv) certain restrictions on the transfer of the Common Stock and the Preferred Stock; (v) certain informational and access rights; and (vi) drag-along andtag-along rights.
The description of the Stockholders Agreement included in this Schedule 13D does not purport to be complete and is qualified in its entirety by reference to the full text of the Stockholders Agreement, which is incorporated by reference and filed as Exhibit D hereto.
The Reporting Persons or affiliates thereof acquired the shares of Common Stock and Preferred Stock for investment purposes. The Reporting Persons or affiliates thereof will continuously evaluate the Issuer’s businesses and prospects, alternative investment opportunities, including merger or acquisitions, and all other factors deemed relevant in determining whether additional securities, including shares of Common Stock or Preferred Stock will be acquired by the Reporting Persons or affiliates thereof or whether the Reporting Persons or affiliates thereof will dispose of some or all of such Issuer securities. At any time, additional securities, including shares of Common Stock or Preferred Stock may be acquired or some or all of such Issuer securities beneficially owned by the Reporting Persons may be sold, in either case in the open market, in privately negotiated transactions or otherwise. Depending upon the foregoing factors and to the extent deemed advisable in light of their general investment policies, or other factors, the Reporting Persons or affiliates thereof may, at any time and from time to time, formulate other purposes, or formulate plans or proposals regarding the Issuer, the Common Stock or the Preferred Stock, or any other actions that could involve one or more of the types of transactions or have one or more of the results described in paragraphs (a) through (j) of Item 4 of Schedule 13D. The foregoing is subject to change at any time, and there can be no assurance that any of the Reporting Persons or affiliates thereof will take any of the actions set forth above.
