A Forbearance Default includes, among other things, (i) the failure of any Obligor to comply in any material respect with any covenant or agreement set forth in the Forbearance Agreement, (ii) the occurrence of any Event of Default (other than the Specified Defaults described above), (iii) the Company or any Subsidiary engaging in any transaction (including the incurrence of Indebtedness), making any dividend, investment, payment or transfer, or taking any other action (or forbearing from taking any action), in each case, outside the ordinary course of business (taking into consideration the current circumstances of the Company and its Subsidiaries), (iv) the commencement of any action, suit, litigation, investigation or other proceeding against the Company or any of its subsidiaries by (x) the holders of any of the 2.50% Convertible Senior Notes due 2026 (the “2026 Notes”) issued by the Company pursuant to the indenture, dated as of August 17, 2021, between the Company and U.S. Bank National Association, as trustee (the “2026 Notes Trustee”), (y) the 2026 Notes Trustee or (z) any other person on behalf of the holders of the 2026 Notes, seeking enforcement of, redemption of, acceleration of or other similar remedies with respect to, the 2026 Notes or the obligations of the Company thereunder, (v) the voluntary commencement by the Company or any Subsidiary (or the involuntary commencement against the Company or any Subsidiary) of, among other things, any proceedings under the Bankruptcy Code or any other similar debtor relief laws of the United States or other applicable jurisdictions, as described further in the Forbearance Agreement, (vi) the failure of the Company to provide, by April 26, 2024, written responses, certified by a responsible officer, to specified information requests and (vii) if the Company revokes or modifies in any material respect the delegation of authority of the CRO (as defined below).
In addition, in connection with entry into the Forbearance Agreement, the Company agreed to, among other things:
| | • | | provide the Investor with a 13-week budget and cash flow forecast for the Company and its Subsidiaries in a form and substance acceptable to the Investor (the “Approved Budget”), and, except for the payment of fees and expenses of professional advisors, agreed to not use, transfer or expend any funds or monies for any purpose other than as set forth in the Approved Budget (or as expressly agreed to in writing by the Investor), subject to Permitted Variance (as defined in the Forbearance Agreement); |
| | • | | establish a committee of the Board of Directors (the “Board”) of the Company (the “Transaction Committee”) and, along with its US subsidiaries, appoint a chief restructuring officer (“CRO”), who shall report directly to the Transaction Committee, who shall have sole authority with respect to, among other things, (i) decision-making regarding the sale process of the business and/or assets of the Company and its Subsidiaries (whether (or not) as a going-concern or as part of a liquidation), (ii) approval of and compliance with the Approved Budget, (iii) interacting with and directing the Company’s professionals, (iv) oversight of cash management of the Company and its US Subsidiaries and (v) interacting with and repatriation of cash, if possible, from non-US Subsidiaries; and |
| | • | | provide responses to diligence and other information requests made by the Investor and/or its advisors, as described further in the Forbearance Agreement. |
The foregoing description of the Forbearance Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Forbearance Agreement, a copy of which is filed herewith as Exhibit 10.1 and incorporated herein by reference.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
On April 16, 2024, Mark E. Hickson resigned from the Board and the Audit Committee of the Board. Mr. Hickson’s resignation was not a result of any disagreement with the Company.
On April 21, 2024, the Board appointed Michael Healy as Chief Restructuring Officer of the Company. Mr. Healy is a Senior Managing Director of FTI Consulting, Inc. (“FTI”), a management advisory and consulting firm. Mr. Healy specializes in restructuring and reorganizations. Mr. Healy has served as Chief Restructuring Officer, President, Chief Executive Officer and Chief Financial Officer to distressed companies previously. Mr. Healy has extensive experience which includes advising companies, creditors, shareholders and other interested parties on restructuring transactions both in Chapter 11 and in non-bankruptcy driven resolutions.
Effective March 30, 2024, the Company and FTI entered into an interim management engagement letter in the event Mr. Healy were to be appointed as the Company’s Chief Restructuring Officer. FTI’s fees for such services will be billed based on time worked, plus reimbursable expenses at costs.
Pursuant to the terms of the Forbearance Agreement, if the Investor has not accepted an offer for the purchase of its Notes by 12:01am (Prevailing Eastern Time) on April 25, 2024, Mr. Healy will be immediately and automatically replaced with John D. DiDonato as Chief Restructuring Officer.
