UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT
TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 23, 2015
ALLIED NEVADA GOLD CORP.
(Exact name of Registrant as Specified in Its Charter)
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Delaware |
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1-33119 |
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20-5597115 |
(State or Other
Jurisdiction of Incorporation) |
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(Commission
File Number) |
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(IRS Employer
Identification No.) |
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9790 Gateway Drive, Suite 200
Reno, Nevada |
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89521 |
(Address of principal executive offices) |
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(Zip Code) |
(775) 358-4455
(Registrants Telephone Number, Including Area Code)
n/a
(Former Name or
Former Address, if Changed Since Last Report)
Check the appropriate box below
if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01. Entry into a Material Definitive Agreement.
As previously disclosed, on March 10, 2015, Allied Nevada Gold Corp. (the Company or Allied Nevada), a Delaware
corporation, and certain of its domestic direct and indirect subsidiaries (together with the Company, the Debtors) filed voluntary petitions for relief (the Bankruptcy Filing) under chapter 11 of the United States Bankruptcy
Code (the Bankruptcy Code) with the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court). During the pendency of the Bankruptcy Filing, the Debtors are operating their businesses as
debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code.
On July 23, 2015, the Debtors entered into an amended and restated restructuring support agreement (the Amended and Restated
Restructuring Support Agreement) with (i) certain holders (the Initial Consenting Noteholders) of the Companys CDN $400 million 8.75% senior unsecured notes due 2019 (the Notes), issued by Allied Nevada
pursuant to that certain indenture dated as of May 25, 2012 by and between Allied Nevada and Computershare Trust Company of Canada and (ii) the Companys secured bank lenders (the Initial Secured Lenders).
The Amended and Restated Restructuring Support Agreement amends and restates that certain restructuring support agreement dated as of March
10, 2015 and sets forth, subject to certain conditions, the commitments to and obligations of, on the one hand, the Debtors, and on the other hand, the Initial Consenting Noteholders (and any successors or permitted assigns that become party
thereto, the Consenting Noteholders) and the Initial Secured Lenders (and any successors or permitted assigns that become party thereto, the Secured Lenders and together with the Consenting Noteholders, the Creditor
Parties ) in connection with a restructuring of the Debtors debt and equity (the Restructuring Transaction) pursuant to an amended plan of reorganization (the Amended Plan) filed in the Debtors chapter 11
cases pending before the Bankruptcy Court on July 23, 2015.
Pursuant to the Amended and Restated Restructuring Support Agreement, the
Debtors have agreed to, among other things and subject to certain limitations (including Bankruptcy Court approval of the Amended and Restated Restructuring Support Agreement), (a) support and take all reasonable actions necessary to facilitate
the implementation and consummation of the Restructuring Transaction (including, but not limited to, the Bankruptcy Courts approval of the Amended Plan) and (b) not take any action that is inconsistent with, or that would reasonably be
expected to prevent, interfere with, delay or impede the implementation or consummation of the Restructuring Transaction. The Creditor Parties have agreed to, among other things and subject to certain limitations (including Bankruptcy Court approval
of the Amended Disclosure Statement (as defined below)), (a) vote to accept the Amended Plan and (b) vote against any restructuring transaction other than the Restructuring Transaction.
The Amended and Restated Restructuring Support Agreement may be terminated upon the occurrence of certain events, including the failure to
meet certain milestones related to confirmation and consummation of the Amended Plan, among other items, and certain breaches by the parties under the Amended and Restated Restructuring Support Agreement.
On July 23, 2015, the Debtors filed a motion with the Bankruptcy Court seeking authorization to assume the Amended and Restated Restructuring
Support Agreement.
The foregoing description of the Amended and Restated Restructuring Support Agreement is qualified in its entirety by
reference to the Amended and Restated Restructuring Support Agreement attached hereto as Exhibit 10.1 and incorporated herein by reference.
On July 23, 2015, the Debtors obtained an exit facility commitment letter (the Exit Facility Commitment Letter) from certain
affiliates or related funds of Aristeia Capital LLC, Highbridge Capital Management, LLC, Mudrick Capital Management, LP, USAA Asset Management Company, Whitebox Advisors LLC and Wolverine Asset Management LP (collectively, the Exit Facility
Lenders) to secure the financing necessary for the consummation of the Restructuring Transaction contemplated under the Amended and Restated Restructuring Support Agreement and the Amended Plan. Pursuant to the Exit Facility Commitment Letter,
and subject to the terms and conditions thereof, the Exit Facility Lenders have agreed to the purchase of new second lien convertible debt in the reorganized Company in an amount such that the initial aggregate principal amount of the new second
lien convertible debt will not exceed $80 million.
The Exit Facility Commitment Letter may be terminated upon the occurrence of certain
events and certain breaches by the parties under the Exit Facility Commitment Letter.
On July 23, 2015, the Debtors filed a motion with
the Bankruptcy Court seeking authorization to enter into and perform under the Exit Facility Commitment Letter.
The foregoing description
of the Exit Facility Commitment Letter is qualified in its entirety by reference to the Exit Facility Commitment Letter attached hereto as Exhibit 10.2 and incorporated herein by reference. For more information on the Amended Plan, see Item 7.01 of
this Report on Form 8-K.
Item 7.01. Regulation FD Disclosure.
On April 24, 2015, the Debtors filed with the Bankruptcy Court a proposed joint chapter 11 plan of reorganization and related disclosure
statement.
On July 23, 2015, the Debtors filed with the Bankruptcy Court a proposed Amended Joint Chapter 11 Plan of Reorganization
(the Amended Plan) and related amended disclosure statement (the Amended Disclosure Statement). The Amended Plan is subject to acceptance by the Debtors creditors (as and to the extent required under the Bankruptcy
Code) and confirmation by the Bankruptcy Court. Information contained in the Amended Plan and the Amended Disclosure Statement is subject to change, whether as a result of further amendments to the Amended Plan, third-party actions, or otherwise.
Copies of the Amended Plan and Amended Disclosure Statement, as filed, are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively.
This Current Report on Form 8-K is not intended to be, nor should it be construed as, a
solicitation for a vote on the Amended Plan.
The Amended Plan and the Amended Disclosure Statement shall not be deemed filed
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, are not otherwise subject to the liabilities of that section, and are not deemed incorporated by reference in any filing under the Securities Act of 1933, as
amended, except as shall be expressly set forth by specific reference in such a filing
Item 9.01. Financial Statements and Exhibits
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Exhibit No. |
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Exhibit |
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Exhibit 10.1 |
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Amended and Restated Restructuring Support Agreement dated as of July 23, 2015 |
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Exhibit 10.2 |
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Exit Facility Commitment Letter dated July 23, 2015 |
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Exhibit 99.1 |
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Amended Debtors Joint Chapter 11 Plan of Reorganization |
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Exhibit 99.2 |
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Amended Disclosure Statement for Debtors Joint Chapter 11 Plan of Reorganization |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
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Dated: July 29, 2015 |
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Allied Nevada Gold Corp. |
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By: |
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/s/ Stephen M. Jones |
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Stephen M. Jones |
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Executive Vice President and Chief Financial Officer |
Exhibit Index
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Exhibit No. |
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Exhibit |
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Exhibit 10.1 |
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Amended and Restated Restructuring Support Agreement dated as of July 23, 2015 |
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Exhibit 10.2 |
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Exit Facility Commitment Letter dated July 23, 2015 |
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Exhibit 99.1 |
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Amended Debtors Joint Chapter 11 Plan of Reorganization |
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Exhibit 99.2 |
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Amended Disclosure Statement for Debtors Joint Chapter 11 Plan of Reorganization |
Exhibit 10.1
EXECUTION VERSION
AMENDED AND RESTATED RESTRUCTURING SUPPORT AGREEMENT
This AMENDED AND RESTATED RESTRUCTURING SUPPORT AGREEMENT (together with all exhibits, schedules and attachments hereto, as amended,
supplemented or otherwise modified from time to time in accordance with the terms hereof, this Agreement), dated as of July 23, 2015, which amends and restates in its entirety that certain Restructuring Support Agreement,
dated as of March 10, 2015 (as amended, supplemented or otherwise modified prior to the Restructuring Support Effective Date (as defined below), the Original Restructuring Support Agreement), is entered into by and among
(a) Allied Nevada Gold Corp., a Delaware corporation (ANV), and its undersigned direct and indirect subsidiaries (together with ANV, the Debtors), (b)(i) each of the beneficial owners (or investment
managers or advisors for the beneficial owners) of the Notes (as defined below) identified on the signature pages hereto (such Persons (as defined below) described in this clause (b)(i), together with any of their respective successors and permitted
assigns under this Agreement that are affiliates or related funds of such Persons, each, an Initial Consenting Noteholder and, collectively, the Initial Consenting Noteholders) and (ii) each of the other
beneficial owners (or investment managers or advisors for the beneficial owners) of the Notes that becomes a party to this Agreement after the Restructuring Support Effective Date in accordance with the terms hereof by executing and delivering a
Joinder Agreement (as defined below) (such Persons described in this clause (b)(ii), together with any of their respective successors and permitted assigns under this Agreement, each, an Additional Consenting Noteholder and
collectively, the Additional Consenting Noteholders and, together with the Initial Consenting Noteholders, the Consenting Noteholders), and (c)(i) The Bank of Nova Scotia (Scotia) and Wells
Fargo Bank, National Association (Wells Fargo and, together with Scotia, the Initial Secured Lenders) and (ii) each of the successor lenders by Transfer (as defined below) under the Credit Agreement or the
Swap (each as defined below) that becomes a party to this Agreement after the Restructuring Support Effective Date in accordance with the terms hereof by executing and delivering a Joinder Agreement (such Persons described in this clause (c)(ii),
together with any of their respective successors and permitted assigns under this Agreement, each, a Successor Secured Lender and collectively, the Successor Secured Lenders and, together with the Initial
Secured Lenders, the Secured Lenders). The Debtors, each of the Consenting Noteholders and each of the Secured Lenders are referred to herein as the Parties and individually as a Party. The
Secured Lenders and the Consenting Noteholders are referred to herein as the Creditor Parties and individually as a Creditor Party. Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Modified Plan or the Restructuring Term Sheet, as applicable. Notwithstanding anything to the contrary contained in this Agreement, Scotia shall not constitute a Consenting Noteholder for purposes of this Agreement, unless
approved in writing by the Debtors, Scotia, and the Requisite Consenting Noteholders (exclusive of Scotia).
PRELIMINARY STATEMENTS
WHEREAS, pursuant to the Original Restructuring Support Agreement, the Parties agreed to undertake a financial restructuring
and recapitalization (the Original Restructuring Transaction) of the Debtors, commencing with the filing of the voluntary, pre-arranged jointly administered chapter 11 cases (the Chapter 11 Cases) captioned
In re Allied Nevada Gold Corp., Case No. 15-10503 (MFW) in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court), on terms materially consistent with the terms and conditions
set forth in the term sheet attached thereto as Exhibit A (the Original Restructuring Term Sheet), which terms and conditions were subsequently set forth in the
Debtors Joint Chapter 11 Plan of Reorganization [Docket No. 251] (the Original Plan) filed with the Bankruptcy Court;
WHEREAS, on March 10, 2015, the Debtors commenced the Chapter 11 Cases to effectuate the Original Restructuring Transaction in
accordance with the Original Restructuring Support Agreement and Original Restructuring Term Sheet and thereafter filed the Original Plan and a disclosure statement for the Original Plan [Docket No. 252];
WHEREAS, on March 12, 2015, the Debtors, the DIP Agent (as defined below) and each of the DIP Lenders (as defined below) entered
into the DIP Credit Agreement (as defined below) as authorized under the DIP Facility Order (as defined below);
WHEREAS, as a
result of changed circumstances, the Parties have agreed to modify the Original Restructuring Transaction and amend and restate the Original Restructuring Support Agreement, as set forth herein;
WHEREAS, as of the date hereof, the Initial Consenting Noteholders collectively own or control, in the aggregate, in excess of 76.24%
of the aggregate outstanding principal amount of the 8.75% senior unsecured notes due 2019 (as amended, supplemented or otherwise modified from time to time, the Notes), issued by ANV pursuant to that certain Indenture, dated as
of May 25, 2012 (as amended, supplemented or otherwise modified from time to time, the Indenture), by and between ANV and Computershare Trust Company of Canada, as trustee (in such capacity, together with any successor
trustee, the Indenture Trustee);
WHEREAS, as of the date hereof, (i) the Initial Secured Lenders
collectively own or control all amounts outstanding under that certain Third Amended and Restated Credit Agreement, dated as of May 8, 2014 (as may be amended, supplemented or otherwise modified, from time to time, the Credit
Agreement), among ANV, as borrower, Scotia, as administrative agent, the Initial Secured Lenders, as co-collateral agents, and the lenders party thereto (other than the Swap), and (ii) Scotia owns or controls all amounts outstanding
under the Swap;
WHEREAS, pursuant to the terms of Section 9 of the Original Restructuring Support Agreement, the Original
Restructuring Support Agreement can be amended in a writing signed by the Debtors, the Requisite Consenting Noteholders (as defined in the Original Restructuring Support Agreement) and (except as provided in the Original Restructuring
Support Agreement) the Requisite Secured Lenders (as defined in the Original Restructuring Support Agreement), subject to certain exceptions that are not implicated by this Agreement;
WHEREAS, (x) the Initial Consenting Noteholders constitute the Requisite Consenting Noteholders under the Original
Restructuring Support Agreement and (y) the Initial Secured Lenders constitute the Requisite Secured Lenders under the Original Restructuring Support Agreement;
WHEREAS, the Debtors, the Initial Consenting Noteholders and the Initial Secured Lenders have agreed to modify the Original
Restructuring Transaction in accordance with, and
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subject to the terms and conditions set forth in, this Agreement and in (i) the chapter 11 plan of reorganization attached hereto as Exhibit A (including any schedules, annexes and
exhibits attached thereto, each as may be modified in accordance with the terms hereof, the Modified Plan) and (ii) the restructuring term sheet attached hereto as Exhibit B (the Restructuring Term
Sheet) (such restructuring transaction, the Restructuring Transaction);
WHEREAS, each of the
Restructuring Term Sheet and the Modified Plan, each of which is expressly incorporated herein by reference and made part of this Agreement as if fully set forth herein, is the product of arms-length, good faith negotiations among the Debtors,
the Initial Consenting Noteholders, the Initial Secured Lenders, and their respective professionals and sets forth the material terms and conditions of the Restructuring Transaction, as supplemented by the terms and conditions of this Agreement;
WHEREAS, the Modified Plan will contemplate, among other things, Reorganized ANV issuing the New Second Lien Convertible Notes in
connection with the Exit Facility (as defined below);
WHEREAS, contemporaneously with the execution of this Agreement, the Debtors
and the Exit Facility Lenders will enter into the Exit Facility Commitment Letter (as defined below) with respect to the funding of the Exit Facility, subject to entry of the Exit Facility Commitment Order (as defined below);
WHEREAS, contemporaneously with the execution of this Agreement, the Majority Lenders (as defined in the DIP Credit Agreement) have
waived certain existing and anticipated Events of Default (as defined in the DIP Credit Agreement), as set forth in the DIP Waiver attached hereto as Exhibit D; and
WHEREAS, the Parties desire to express to each other their mutual support and commitment in respect of the matters discussed herein.
NOW, THEREFORE, in consideration of the promises and the mutual covenants and agreements set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:
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Modified Plan and Restructuring Term Sheet. |
Each of the Modified Plan and the
Restructuring Term Sheet is expressly incorporated herein by reference and made part of this Agreement as if fully set forth herein. The Modified Plan and the Restructuring Term Sheet set forth the terms and conditions of the Restructuring
Transaction.
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Certain Definitions; Rules of Construction. |
As used in this Agreement, the
following terms have the following meanings:
(a) ABL Claims means any and all claims arising under the Credit
Agreement and the other Credit Documents (as defined in the Credit Agreement).
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(b) Alternative Transaction means any dissolution, winding up, liquidation,
reorganization, assignment for the benefit of creditors, merger, transaction, consolidation, business combination, joint venture, partnership, sale of assets, financing (debt or equity) or restructuring of the Debtors, other than the Restructuring
Transaction.
(c) Claims and Interests means, as applicable, ABL Claims, Swap Claims, Note Claims, Other Claims and
Equity Interests.
(d) Confirmation Order means an order of the Bankruptcy Court confirming the Modified Plan pursuant
to section 1129 of the Bankruptcy Code, including all exhibits, appendices, supplements and related documents, which order shall be materially consistent with this Agreement and otherwise in form and substance reasonably acceptable to the Debtors,
the Requisite Consenting Noteholders and the Requisite Secured Lenders; provided, however, that any documents or provisions of such documents that are, or that relate to, the Excluded Matters shall not be required to be reasonably
acceptable to the Requisite Secured Lenders.
(e) Consenting Noteholders Advisors means
(i) Stroock & Stroock & Lavan LLP (Stroock), as lead counsel for the Consenting Noteholders, (ii) Young Conaway Stargatt & Taylor LLP, as Delaware local counsel for the Consenting Noteholders,
(iii) Goodmans LLP, as Canadian local counsel for the Consenting Noteholders, (iv) one Nevada local counsel for the Consenting Noteholders (if applicable), and (v) Houlihan Lokey, Inc., as financial advisor to the Consenting
Noteholders.
(f) Creditor Group means each of (i) the Consenting Noteholders and (ii) the Secured Lenders.
(g) DIP Agent means Wilmington Savings Fund Society, FSB, in its capacity as administrative agent and collateral agent
under the DIP Facility.
(h) DIP Credit Agreement means that certain Secured Multiple Draw Debtor-in-Possession Credit
Agreement, dated as of March 12, 2015, among the Debtors, the DIP Agent, and the DIP Lenders and any and all other loan documents evidencing obligations of the Debtors arising thereunder, including any and all guaranty, security and collateral
documents, in each case as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.
(i)
DIP Facility means the $78,000,000.00 debtor in possession credit facility established pursuant to the DIP Credit Agreement and approved by the Bankruptcy Court pursuant to the DIP Facility Order.
(j) DIP Facility Order means, as applicable, the Interim Order: (I) Pursuant to 11 U.S.C. §§ 105,
361, 362, 363 and 364 Authorizing the Debtors to (A) Obtain Postpetition Financing, (B) Grant Liens and Superpriority Administrative Expense Status, (C) Use Cash Collateral of Prepetition Secured Parties, and (D) Grant Adequate
Protection to Prepetition Secured Parties; (II) Scheduling a Final Hearing Pursuant to Bankruptcy Rules 4001(b) and 4001(c); and (III) Granting Related Relief [Docket No. 70] and the Final Order: (I) Pursuant to 11 U.S.C.
§§ 105, 361, 362, 363 and 364 Authorizing the Debtors to (A) Obtain Postpetition
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Financing, (B) Grant Liens and Superpriority Administrative Expense Status, (C) Use Cash Collateral of Prepetition Secured Parties, and (D) Grant Adequate Protection to
Prepetition Secured Parties; and (II) Granting Related Relief [Docket No. 218].
(k) DIP Lenders means the
lenders and financial institutions from time to time party to the DIP Facility and defined as Lenders thereunder.
(l)
DIP Waiver means the waivers, dated as of the date hereof, and delivered by the Majority Lenders to the Debtors, in the form attached hereto as Exhibit D.
(m) Disclosure Statement means the disclosure statement for the Modified Plan that is prepared and distributed in
accordance with, among other things, sections 1125, 1126(b), and 1145 of the Bankruptcy Code, Rule 3018 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules) and other applicable law, and all exhibits, schedules,
supplements, modifications and amendments thereto, all of which shall be materially consistent with this Agreement and otherwise in form and substance reasonably acceptable to the Debtors, the Requisite Consenting Noteholders and the Requisite
Secured Lenders; provided, however, that any provisions therein that are, or that relate to, (i) the Debtors organizational matters (including any certificates of formation, articles of incorporation, bylaws, limited
liability company agreements, partnership agreements, stockholders agreements, registration rights agreements, investor rights agreements, other organizational documents, and any other comparable documents or agreements), (ii) the
Debtors corporate governance matters (including matters related to board of director and comparable governing bodies and appointment rights, indemnification and fiduciary duties, and procedural matters with respect thereto), (iii) the New
Common Stock, or any other equity or rights convertible into equity of the Debtors, (iv) the list of assumed contracts, leases, and other executory contracts, (v) employment agreements, employee benefit plans, compensation arrangements,
severance arrangements and any other agreement, plan, arrangement, program, policy or other arrangement relating to employment-related matters, or (vi) any other matters, agreements, or documents governing rights and obligations solely as
between the Debtors, the equity holders and holders of General Unsecured Claims (as defined in the Modified Plan) (each, in their capacity as such), in each case, unless (A) materially adverse to the Secured Lenders or (B) related to the
Secured Lenders, the Credit Agreement, the Swap, the matters addressed in the Restructuring Term Sheet, the treatment of the ABL Claims or the Swap Claims, the documents listed in clause (viii) of the definition of Restructuring
Documents or any other documentation relating to the use of cash collateral or any exit financing (such matters, agreements and documents referred to in clauses (i)-(vi) above (unless excluded by the foregoing clauses (A) and (B)),
collectively, the Excluded Matters), shall not be required to be reasonably acceptable to the Requisite Secured Lenders.
(n) Disclosure Statement Order means an order of the Bankruptcy Court approving the Disclosure Statement and the
Solicitation (as defined below), which order shall be materially consistent with this Agreement and otherwise in form and substance reasonably acceptable to the Debtors, the Requisite Consenting Noteholders and the Requisite Secured Lenders;
provided, however, that any provisions therein that are, or that relate to, the Excluded Matters shall not be required to be reasonably acceptable to the Requisite Secured Lenders.
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(o) Effective Date means the date upon which all conditions precedent to the
effectiveness of the Modified Plan have been satisfied or are expressly waived in accordance with the terms thereof, as the case may be, and on which the transactions to occur on the Effective Date pursuant to the Modified Plan become effective or
are consummated.
(p) Equity Interests means any capital stock, limited liability company interests, partnership
interests or other equity, ownership or profits interests in ANV, and any options, warrants, conversion privileges or rights of any kind to acquire any capital stock, limited liability company interests, partnership interests or other equity,
ownership or profits interests in ANV.
(q) Exit Facility means the post-Effective Date exit financing for Reorganized
ANV in the form of New Second Lien Convertible Notes issued pursuant to the New Second Lien Convertible Notes Definitive Agreement.
(r)
Exit Facility Commitment means the several (and not joint nor joint and several) commitments from the Exit Facility Lenders set forth in, and subject to the terms and conditions of, the Exit Facility Commitment Letter and the
Restructuring Term Sheet to purchase the New Second Lien Convertible Notes in an original aggregate principal amount equal to the greater of (i) an amount sufficient for Reorganized ANV to have at least $8.0 million of Cash on the Effective
Date after giving pro forma effect to, without duplication, (I) all Cash payments to be made under (A) the Modified Plan or (B) an order of the Bankruptcy Court, in each case whether paid on or in connection with the Effective Date
(excluding, for the avoidance of doubt, New First Lien Term Loan Excess Cash Flow Payments (as defined in the Restructuring Term Sheet)), (II) the payment of all Fees (as defined in the Restructuring Term Sheet) accrued through and including the
Effective Date and (III) the payment of any Compensation Plan Payments and (ii) an amount such that the aggregate amount of (x) the Cash proceeds of the DIP Facility received by the Debtors prior to the Effective Date plus (y) the
Cash proceeds of the Exit Facility not used to pay the DIP Facility Consideration equals $65.0 million; provided, however, that in no event shall the Exit Facility Lenders be obligated to fund amounts under clause (i) above which
would cause the aggregate principal amount of the New Second Lien Convertible Notes issued pursuant to the Exit Facility on the Effective Date to exceed $80.0 million.
(s) Exit Facility Commitment Letter means the letter agreement, dated as of July 23, 2015, by and between the Debtors
and the Exit Facility Lenders, as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and the Exit Facility Commitment Order.
(t) Exit Facility Commitment Letter Motion means the motion and proposed form of order to be filed by the Debtors with the
Bankruptcy Court (which may be part of the RSA Assumption Motion or motion to approve the Disclosure Statement) seeking the approval of the Exit Facility Commitment Letter and granting related relief, which motion and proposed form of order shall be
materially consistent with this Agreement and the Exit Facility Commitment Letter and otherwise in form and substance reasonably acceptable to the Debtors and the Requisite Exit Facility Lenders.
(u) Exit Facility Commitment Order means a Final Order of the Bankruptcy Court approving the terms of the Exit Facility
Commitment Letter, which order shall be in form and substance acceptable to the Debtors and the Requisite Exit Facility Lenders and may be the RSA Order, the Disclosure Statement Order or the Confirmation Order.
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(v) Exit Facility Lenders means affiliates of and/or related funds or other
vehicles of Aristeia Capital LLC, Highbridge Capital Management, LLC, Mudrick Capital Management, LP, Whitebox Advisors LLC, Wolverine Asset Management LP and USAA Asset Management.
(w) Final Order means an order or judgment of the Bankruptcy Court (or any other court of competent jurisdiction) entered
by the Clerk of the Bankruptcy Court (or such other court) on the docket in the Chapter 11 Cases (or the docket of such other court), which has not been modified, amended, reversed, vacated or stayed and as to which (i) the time to appeal,
petition for certiorari, or move for a new trial, stay, reargument or rehearing has expired and as to which no appeal, petition for certiorari or motion for new trial, stay, reargument or rehearing shall then be pending or (ii) if an appeal,
writ of certiorari, new trial, stay, reargument or rehearing thereof has been sought, such order or judgment of the Bankruptcy Court (or other court of competent jurisdiction) shall have been affirmed by the highest court to which such order was
appealed, or certiorari shall have been denied, or a new trial, stay, reargument or rehearing shall have been denied or resulted in no modification of such order, and the time to take any further appeal, petition for certiorari or move for a new
trial, stay, reargument or rehearing shall have expired, as a result of which such order shall have become final in accordance with Bankruptcy Rule 8002; provided, however, that the possibility that a motion under Rule 60 of the
Federal Rules of Civil Procedure, or any analogous Bankruptcy Rule, may be filed relating to such order, shall not cause an order not to be a Final Order.
(x) Material Adverse Effect means any event, change, effect, occurrence, development, circumstance or change of fact
occurring after the date hereof that has had, or would reasonably be expected to have, a material adverse effect on the business, results of operations, condition (financial or otherwise), assets or liabilities of the Debtors, taken as a whole;
provided, however, that Material Adverse Effect shall not include any event, change, effect, occurrence, development, circumstance or change of fact arising out of, resulting from or relating to the commencement or
existence of the Chapter 11 Cases, the announcement of the Modified Plan and the Restructuring Transaction, the pendency of the Restructuring Transaction, or compliance by any Party with the covenants and agreements contained herein, in the Modified
Plan or in the Restructuring Documents.
(y) Note Claims means any and all claims arising under the Indenture or in
respect of the Notes.
(z) Other Claims means any claims against the Debtors other than any Note Claims, ABL Claims or
Swap Claims.
(aa) Person means an individual, a partnership, a joint venture, a limited liability company, a
corporation, a trust, an unincorporated organization, a group, a governmental or regulatory authority, or any legal entity or association.
(bb) Plan Supplement means the supplement or supplements to the Modified Plan containing certain schedules, documents
and/or forms of documents relevant to the
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implementation of the Modified Plan, to be filed with the Bankruptcy Court prior to the hearing held by the Bankruptcy Court to consider confirmation of the Modified Plan, each of which shall
contain terms and conditions materially consistent with this Agreement and shall otherwise be in form and substance reasonably acceptable to the Debtors, the Requisite Consenting Noteholders and the Requisite Secured Lenders; provided,
however, that any documents or provisions of such documents that are, or that relate to, the Excluded Matters shall not be required to be reasonably acceptable to the Requisite Secured Lenders.
(cc) Requisite Consenting Noteholders means, as of any date of determination, the Consenting Noteholders who own or control
as of such date at least 50.01% in principal amount of the Notes owned or controlled by all of the Consenting Noteholders as of such date.
(dd) Requisite Exit Facility Lenders means, as of any date of determination, the Exit Facility Lenders who own or control
as of such date at least 75% of the Exit Facility Commitment as of such date.
(ee) Requisite Secured Lenders means, as
of any date of determination, the Secured Lenders who own or control as of such date at least 50.01% in principal amount of the ABL Claims and Swap Claims owned or controlled by all of the Secured Lenders, as of such date.
(ff) Restructuring Documents means all agreements, instruments, pleadings, orders or other documents (including all
exhibits, schedules, supplements, appendices, annexes and attachments thereto) that are utilized to implement or effectuate, or that otherwise relate to this Agreement, the Modified Plan and/or the Restructuring Transaction, including, but not
limited to, (i) the Plan Supplement, (ii) the Disclosure Statement and any motion seeking the approval thereof, (iii) the Disclosure Statement Order, (iv) the Confirmation Order, (v) the RSA Assumption Motion and the RSA
Order, (vi) any first day motions (the First Day Motions), (vii) the ballots, the motion to approve the form of the ballots and the Solicitation, and the order of the Bankruptcy Court approving the form of
the ballots and the Solicitation, (viii) any documentation relating to the DIP Facility, the New First Lien Term Loan Credit Facility, the New Intercreditor Agreement, the New Second Lien Convertible Notes Definitive Agreement, the Exit
Facility and the Exit Facility Commitment Letter, and (ix) any documentation relating to the use of cash collateral, distributions provided to the holders of any Claims and Interests, any exit financing, organizational documents,
shareholder-related agreements or other related documents, each of which shall contain terms and conditions materially consistent with this Agreement, the Restructuring Term Sheet and the Modified Plan and shall otherwise be in form and substance
acceptable to the Debtors, the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders and, as and to the extent required pursuant to this Agreement, the Requisite Secured Lenders.
(gg) Restructuring Support Effective Date means, as to each Party, the date upon which this Agreement becomes effective and
binding (or is deemed to become effective and binding) on such Party in accordance with the provisions of Section 11 hereof.
(hh)
Restructuring Support Period means, with reference to any Party, the period commencing on the Restructuring Support Effective Date applicable to such Party and ending on the earlier of (i) the Effective Date and (ii) the
date on which this Agreement is terminated with respect to such Party in accordance with Section 5 hereof.
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(ii) RSA Assumption Motion means the motion and proposed form of order to be
filed by the Debtors with the Bankruptcy Court seeking the approval of this Agreement, authorizing the payment of certain fees, expenses and other amounts hereunder, and granting related relief, which motion and proposed form of order shall be
materially consistent with this Agreement and otherwise in form and substance reasonably acceptable to the Debtors, the Requisite Consenting Noteholders and the Requisite Secured Lenders.
(jj) RSA Order means an order of the Bankruptcy Court approving the RSA Assumption Motion, which order shall be materially
consistent with this Agreement and otherwise in form and substance reasonably acceptable to the Debtors, the Requisite Consenting Noteholders and the Requisite Secured Lenders.
(kk) Secured Lenders Advisors means (i) Wachtell, Lipton, Rosen & Katz (Wachtell),
as counsel to Scotia as administrative agent under the Credit Agreement; (ii) Morris, Nichols, Arsht & Tunnell LLP, as Delaware local counsel for the Secured Lenders; (iii) Fennemore Craig, P.C.; (iv) RPA Advisors, LLC, as
financial advisor to the Secured Lenders; (v) JDS Energy & Mining USA LLC (JDS), as technical advisor to the Secured Lenders; (vi) McMillan LLP; and (vii) Fasken Martineau.
(ll) Solicitation means the solicitation of votes in connection with the Modified Plan pursuant to sections 1125 and 1126
of the Bankruptcy Code.
(mm) Swap Claims means any and all claims arising under the ISDA 2002 Master Agreement, dated
as of May 15, 2012, between ANV and Scotia, as amended, supplemented or otherwise modified from time to time, together with all trade confirmations, schedules, exhibits, appendices and annexes thereto (the Swap).
(nn) Transaction Expenses means all reasonable and documented fees, costs and expenses of the Consenting Noteholders
Advisors and Secured Lenders Advisors, in each case, (i) in connection with the negotiation, formulation, preparation, execution, delivery, implementation, consummation and enforcement of this Agreement, the Modified Plan, the Disclosure
Statement and any of the other Restructuring Documents, and the transactions contemplated thereby, or any amendments, waivers, consents, supplements or other modifications to any of the foregoing and (ii)(A) consistent with any engagement letters
entered into between the Debtors and the applicable Consenting Noteholders Advisors or Secured Lenders Advisors (as supplemented and/or modified by this Agreement), as applicable, or (B) as provided in the DIP Facility Order, or
(C) in the case of JDS, consistent with the engagement letter dated as of June 22, 2015 (it being understood that any amounts owed to JDS under such engagement letter shall be repaid promptly after the date of entry of the RSA Order).
Unless otherwise specified, references in this Agreement to any Section or clause refer to such Section or clause as contained in this
Agreement. The words herein, hereof and hereunder and other words of similar import in this Agreement refer to this Agreement as a whole, and not to any particular Section or clause contained in this Agreement.
Wherever from
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the context it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender
shall include the masculine, feminine and neuter genders. The words including, includes and include shall be deemed to be followed by the words without limitation.
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3. |
Agreements of the Creditor Parties. |
(a) Support of Restructuring
Transaction. Each of the Creditor Parties agrees that, for the duration of the Restructuring Support Period, unless otherwise consented to in writing by the Debtors, the Requisite Consenting Noteholders and the Requisite Secured Lenders or
unless required (or prohibited) by applicable law, such Creditor Party shall:
(i) support, and take all reasonable actions necessary to
facilitate the implementation and consummation of the Restructuring Transaction (including, but not limited to, the Bankruptcy Courts approval of the Restructuring Documents, the Solicitation, confirmation of the Modified Plan and the
consummation of the Restructuring Transaction pursuant to the Modified Plan);
(ii) (A) subject to the receipt by the Creditor
Parties of the Disclosure Statement approved by the Disclosure Statement Order, timely vote, or cause to be voted, its Claims and Interests to accept the Modified Plan by delivering its duly executed and completed ballot accepting the Modified Plan
on a timely basis following commencement of the Solicitation, pursuant to the terms of the Disclosure Statement Order, and (B) not change, withdraw or revoke such vote (or cause or direct such vote to be changed, withdrawn or revoked);
provided, however, that such vote may be revoked (and, upon such revocation, deemed void ab initio) by such Creditor Party at any time following the expiration of the Restructuring Support Period (it being understood by the
Parties that any modification of the Modified Plan that results in a termination of this Agreement pursuant to Section 5 hereof shall entitle such Creditor Party the opportunity to change its vote in accordance with section 1127(d) of the
Bankruptcy Code, and the Solicitation materials with respect to the Modified Plan shall be consistent with this proviso);
(iii) not
(A) directly or indirectly propose, support, assist, solicit, or vote for, any Alternative Transaction, (B) support or encourage the termination or modification of the Debtors exclusive period for the filing of a plan of
reorganization or the Debtors exclusive period to solicit a plan of reorganization, (C) take any other action, including but not limited to initiating any legal proceedings or enforcing rights as a holder of Claims and Interests that is
inconsistent with this Agreement or the Restructuring Documents, or that would reasonably be expected to prevent, interfere with, delay or impede the implementation or consummation of the Restructuring Transaction (including, but not limited to, the
Bankruptcy Courts approval of the Restructuring Documents, the Solicitation and confirmation of the Modified Plan and the consummation of the Restructuring Transaction pursuant to the Modified Plan); and (D) oppose or object to, or
support any other Persons efforts to oppose or object to, the approval of the First Day Motions and any other motions filed by the Debtors in furtherance of the Restructuring Transaction that are consistent with this Agreement;
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(iv) timely vote or cause to be voted its Claims and Interests against any Alternative
Transaction;
(v) if holders of the Notes have requested the Indenture Trustee to exercise rights or remedies under the Indenture or if
the Indenture Trustee shall have publicly announced that it intends to exercise rights or remedies under the Indenture, direct the Indenture Trustee not to exercise any rights (including rights of acceleration or payment) or remedies or assert or
bring any claims under or with respect to the Indenture; and
(vi) support any recognition or similar proceedings filed in Canada by the
Debtors to address any class action proceedings against the Debtors pending in the Canadian courts;
provided, however, that nothing in this
Section 3(a) shall require any Creditor Party to incur any material expenses, liabilities or other obligations, or agree to any commitments, undertakings, concessions, indemnities or other arrangements that could result in material expenses,
liabilities or other obligations to any Creditor Party.
Notwithstanding the foregoing, nothing in this Agreement shall limit any of the rights or
remedies of (1) the DIP Agent under the DIP Facility or the DIP Facility Order or any of the DIP Lenders under or with respect to the DIP Facility or the DIP Facility Order (except as expressly provided by this Agreement and the Modified Plan
with respect to the standstill of 30 days with respect to the exercise of remedies against collateral in favor of the holders of the ABL Claims and the Swap Claims, the junior status of the DIP Facility with regard to the ABL Claims and the Swap
Claims, and the limitations on repayment of the DIP Facility in certain circumstances prior to payment of the ABL Claims and the Swap Claims or as otherwise provided by the DIP Facility Order), or (2) either of the Initial Secured Lenders under
the DIP Facility Order.
(b) Rights of Creditor Parties Unaffected. Nothing contained herein shall limit (i) the rights of a
Creditor Party under any applicable bankruptcy, insolvency, foreclosure or similar proceeding, including, without limitation, appearing as a party in interest in any matter to be adjudicated in order to be heard concerning any matter arising in the
Chapter 11 Cases, in each case, so long as the exercise of any such right is not inconsistent with such Creditor Partys obligations hereunder; (ii) the ability of a Creditor Party to purchase, sell or enter into any transactions in
connection with the Notes or the Claims and Interests, subject to the terms hereof; (iii) any right of any Creditor Party under (x) the Indenture, the Credit Agreement or the Swap (including the right of any Creditor Party to terminate the
Swap or any provision thereof in accordance with the terms thereof), or constitutes a waiver or amendment of any provision of the Indenture, the Credit Agreement or the Swap, as applicable, and (y) any other applicable agreement, instrument or
document that gives rise to a Creditor Partys Claims and Interests, or constitutes a waiver or amendment of any provision of any such agreement, instrument or document, subject to the terms of Section 3(a) hereof; (iv) the ability of
a Creditor Party to consult with other Creditor Parties or the Debtors; or (v) the ability of a Creditor Party to enforce any right, remedy, condition, consent or approval requirement under this Agreement or any of the Restructuring Documents.
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(c) Transfers. Each Creditor Party agrees that, for the duration of the Restructuring
Support Period, such Creditor Party shall not sell, transfer, loan, issue, pledge, hypothecate, assign, grant, or otherwise dispose of (including by participation), directly or indirectly, in whole or in part, any of its Claims and Interests, or any
option thereon or any right or interest therein (including granting any proxies, depositing any Claims and Interests into a voting trust or entering into a voting agreement with respect to any Claims and Interests) (collectively,
Transfer), unless the transferee of such Claims and Interests (the Transferee) either (i) is a Consenting Noteholder (in the case of any transfer of Notes Claims) or a Secured Lender (in the case of any
transfer of ABL Claims or Swap Claims) or (ii) prior to the effectiveness of such Transfer, agrees in writing, for the benefit of the Parties, to become a Creditor Party and to be bound by all of the terms of this Agreement applicable to a
Creditor Party (including with respect to any and all claims or interests it already may own or control against or in the Debtors prior to such Transfer) by executing a joinder agreement, substantially in the form attached hereto as Exhibit C
(the Joinder Agreement), and by delivering an executed copy thereof to Akin Gump Strauss Hauer & Feld LLP, Stroock, Wachtell and, solely so long as Wells Fargo holds any ABL Claims, Paul Hastings (in each case, at the
address for such law firms set forth in Section 21 hereof and prior to the effectiveness of such Transfer), in which event (x) the Transferee shall be deemed to be a Consenting Noteholder or Secured Lender, as applicable, hereunder to the
extent of such transferred Claims and Interests (and all claims or interests it already may own or control against or in the Debtors prior to such Transfer) and (y) the transferor Creditor Party shall be deemed to relinquish its rights, and be
released from its obligations, under this Agreement to the extent of such transferred Claims and Interests. Notwithstanding the foregoing, the restrictions on Transfer set forth in this Section 3(c) shall not apply to the grant of any liens or
encumbrances on any Claims and Interests in favor of a bank or broker-dealer holding custody of such Claims and Interests in the ordinary course of business and which lien or encumbrance is released upon the Transfer of such Claims and Interests.
Each Creditor Party agrees that any Transfer of any Claims and Interests that does not comply with the terms and procedures set forth herein shall be deemed void ab initio, and the Debtors and each other Creditor Party shall have the right to
enforce the voiding of such Transfer.
(d) Qualified Market Maker. Notwithstanding anything herein to the contrary, (i) any
Creditor Party may Transfer any of its Claims and Interests to an entity that is acting in its capacity as a Qualified Marketmaker (as defined below) without the requirement that the Qualified Marketmaker be or become a Creditor Party;
provided, however, that the Qualified Marketmaker subsequently Transfers all right, title and interest in such Claims and Interests to a Transferee that is or becomes a Creditor Party as provided above, and the Transfer documentation
between the transferring Creditor Party and such Qualified Marketmaker shall contain a requirement that provides as such (the transferring Creditor Party shall use commercially reasonable efforts to allow the Debtors to be explicit third party
beneficiaries of such requirement); and (ii) to the extent any Creditor Party is acting in its capacity as a Qualified Marketmaker, it may Transfer any Claims and Interests that it acquires from a holder of such Claims and Interests that is not
a Creditor Party without the requirement that the Transferee be or become a Creditor Party. Notwithstanding the foregoing, if, at the time of the proposed Transfer of such Claims and Interests to the Qualified Marketmaker, such Claims and Interests
(x) may be voted on the Modified Plan or any Alternative Transaction, the proposed transferor Creditor Party must first vote such Claims and Interests in accordance with the requirements of Section 3(a),
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or (y) have not yet been and may not yet be voted on the Modified Plan or any Alternative Transaction and such Qualified Marketmaker does not Transfer such Claims and Interests to a
subsequent Transferee prior to the fifth (5th) business day prior to the expiration of the voting deadline (such date, the Qualified Marketmaker Joinder Date), such Qualified Marketmaker shall be required to (and the Transfer
documentation to the Qualified Marketmaker shall have provided that it shall), on the first business day immediately following the Qualified Marketmaker Joinder Date, become a Creditor Party with respect to such Claims and Interests in accordance
with the terms hereof (provided that the Qualified Marketmaker shall automatically, and without further notice or action, no longer be a Creditor Party with respect to such Claims and Interests at such time that the Transferee of such Claims
and Interests becomes a Creditor Party with respect to such Claims and Interests). For these purposes, Qualified Marketmaker means an entity that (X) holds itself out to the market as standing ready in the ordinary course of
business to purchase from and sell to customers Claims and Interests, or enter with customers into long and/or short positions in Claims and Interests, in its capacity as a dealer or market maker in such Claims and Interests; and (Y) is in fact
regularly in the business of making a market in claims, interests and/or securities of issuers or borrowers.
(e) Additional
Claims. To the extent any Creditor Party (i) acquires additional Claims and Interests or (ii) holds or acquires any other claims against or interests in the Debtors, such Creditor Party agrees that any of the foregoing shall
automatically and immediately be deemed subject to this Agreement, including the obligations with respect to Claims and Interests set forth in Section 3(a) hereof.
(f) Wells Fargo Assignment. Wells Fargo and Mudrick Distressed Opportunity Fund Global, LP and Blackwell Partners, LLC (collectively,
Mudrick) have executed and delivered those certain LSTA Distressed Trade Confirmations dated as of July 20, 2015 (the Trade Confirmations). Wells Fargo and Mudrick represent that, pursuant to and to the
extent set forth in the terms of the Trade Confirmations, Wells Fargo has agreed to sell to Mudrick, and Mudrick has agreed to purchase from Wells Fargo, substantially all of Wells Fargos rights and obligations as a Lender under the Credit
Agreement; provided, however, nothing herein shall be deemed a waiver or purchase of any right of Wells Fargo to adequate protection payments (including, without limitation, any payments in respect of unpaid interest and expenses) that
have accrued or have been incurred prior to the occurrence of the settlement date under each of the Trade Confirmations (the Settlement Date). In furtherance of the foregoing, ANV hereby acknowledges and agrees that Wells Fargo
shall continue to be entitled to the adequate protection payments contemplated by paragraph 11 of the DIP Facility Order on account of the period ending on the date when the sale of all of the ABL Claims held by Wells Fargo has been consummated,
Wells Fargo has received the purchase price therefor and Wells Fargo is no longer the record owner of such ABL Claims.
Mudrick consents to the execution
of this Agreement by Wells Fargo. Accordingly, Mudrick has directed Wells Fargo to execute and deliver this Agreement on Mudricks behalf. In consideration of the execution of the Trade Confirmations, Wells Fargo has agreed to execute this
Agreement on behalf of Mudrick. Upon the Settlement Date, Mudrick shall execute a Joinder Agreement on its own behalf, in its capacity as the holder of the claims transferred to it by Wells Fargo and otherwise in accordance with this Agreement and
Section 3(c) above, and Wells Fargo shall no longer be a party hereto and shall be released of all of its obligations hereunder.
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Each of the Parties to this Agreement hereby acknowledges and agrees that from and after the date when Mudrick
states that it will not consummate the purchase of the Loans held by Wells Fargo as is contemplated by the Trade Confirmation in accordance with the terms thereof (or as otherwise agreed to by Mudrick and Wells Fargo), or otherwise fails to comply
with its obligations to do so in accordance with the terms thereof (a Trade Confirmation Trigger Event), Wells Fargo shall no longer be bound by the provisions of this Agreement, nor will it receive any benefits provided under
this Agreement, and Wells Fargos signature hereto shall be void and of no force or effect from and after such date. If a Trade Confirmation Trigger Event occurs and as a result Wells Fargo is no longer bound by the provisions of this
Agreement, this Agreement shall not be terminated and shall remain in full force and effect as to all other Parties to the Agreement.
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4. |
Agreements of the Debtors. |
(a) Affirmative Covenants. The Debtors,
jointly and severally, agree that, for the duration of the Restructuring Support Period, unless otherwise consented to in writing by the Requisite Consenting Noteholders and (except as set forth below) the Requisite Secured Lenders, the Debtors
shall:
(i) to the extent not already completed or provided by the date hereof, (A) complete the preparation, as soon as
reasonably practicable after the Restructuring Support Effective Date, of each of the Restructuring Documents (including, without limitation, all motions, applications, orders, agreements and other documents, each of which, for the avoidance of
doubt, shall contain terms and conditions materially consistent with this Agreement and shall otherwise be in form and substance reasonably acceptable to the Debtors, the Requisite Consenting Noteholders, and the Requisite Secured Lenders to the
extent set forth herein), (B) provide the Restructuring Documents to, and afford reasonable opportunity for comment and review of such documents by, the Consenting Noteholders Advisors and the Secured Lenders Advisors no less than
three (3) business days in advance of any filing, execution, distribution or use (as applicable) thereof, except in the case of any Restructuring Document other than the Plan, the Disclosure Statement, the DIP Facility Motion, the motion to
approve the Disclosure Statement and Solicitation, the Plan Supplement, the RSA Assumption Motion and any other material Restructuring Document if the applicable Restructuring Document cannot be so provided to the Consenting Noteholders
Advisors and the Secured Lenders Advisors due to exigent circumstances, and (C) consult in good faith with the Consenting Noteholders Advisors and the Secured Lenders Advisors regarding the form and substance of any of such
documents in advance of the filing, execution, distribution or use (as applicable) thereof;
(ii) unless otherwise required by the
Bankruptcy Court, cause the amount of the Claims and Interests held by the Consenting Noteholders and the Secured Lenders on the signature pages attached to this Agreement or to any Joinder Agreement to be redacted to the extent this Agreement is
filed on the docket maintained in the Chapter 11 Cases or otherwise made publicly available;
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(iii) (A) support and take all reasonable actions necessary to facilitate the implementation
and consummation of the Restructuring Transaction (including, but not limited to, the Bankruptcy Courts approval of the Restructuring Documents, the Solicitation, confirmation of the Modified Plan and the consummation of the Restructuring
Transaction pursuant to the Modified Plan) and (B) not take any action that is inconsistent with, or that would reasonably be expected to prevent, interfere with, delay or impede the implementation or consummation of the Restructuring
Transaction;
(iv) comply with each of the following:
(A) file the Modified Plan, the Disclosure Statement, the motion for approval of the Disclosure Statement and associated Solicitation
procedures, the Exit Facility Commitment Letter Motion and the RSA Assumption Motion with the Bankruptcy Court no later than 1 calendar day after the date of this Agreement;
(B) obtain entry of the RSA Order by the Bankruptcy Court as soon as practicable after the execution of this Agreement, but in no event later
than 45 calendar days after the date of this Agreement (which order, for the avoidance of doubt, shall be materially consistent with this Agreement and otherwise in form and substance reasonably acceptable to the Debtors, the Requisite Consenting
Noteholders and the Requisite Secured Lenders);
(C) obtain entry of the Exit Facility Commitment Order by the Bankruptcy Court as soon
as practicable after the execution of this Agreement, but in no event later than 45 calendar days after the date of this Agreement (which order, for the avoidance of doubt, shall be materially consistent with this Agreement and otherwise in form and
substance reasonably acceptable to the Debtors, the Requisite Consenting Noteholders and the Requisite Secured Lenders);
(D) obtain
entry of the Disclosure Statement Order by the Bankruptcy Court no later than 45 calendar days after the date of this Agreement (which order, for the avoidance of doubt, shall be materially consistent with this Agreement and otherwise in form and
substance (i) reasonably acceptable to the Debtors and the Requisite Consenting Noteholders and (ii) solely with respect to such provisions that relate to the Secured Lenders, the Credit Agreement, the Swap or the treatment of the ABL
Claims or the Swap Claims, reasonably acceptable to the Requisite Secured Lenders);
(E) commence the Solicitation no later than 50
calendar days after the date of this Agreement;
(F) obtain entry of the Confirmation Order by the Bankruptcy Court no later than 95
calendar days after the execution of this Agreement (which order, for the avoidance of doubt, shall be materially consistent with this Agreement and otherwise in form and substance reasonably acceptable to the Debtors, the Requisite Consenting
Noteholders and the Requisite Secured Lenders; provided, however, that any provisions therein that are, or that relate to, the Excluded Matters shall not be required to be reasonably acceptable to the Requisite Secured Lenders);
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(G) cause the Effective Date to occur no later than November 30, 2015;
(H) cause the results of the demonstration plant described in clause (xiii) below to have been received no later than November 30,
2015, which results shall be shared with the Secured Lenders;
(I) cause the Holders of the Secured ABL Claims and Secured Swap Claims to
receive (on a pro rata basis) (i) upon the date hereof, cash in an amount equal to the full amount of the net Cash proceeds from the sale of the Debtors exploration properties to Clover Nevada LLC, minus $2.5 million and
(ii) promptly upon receipt of $2.5 million of DIP Facility loans (upon receipt of which the amount of outstanding loans under the DIP Facility is not less than $60.0 million) (and in any event within six (6) business days of the date
hereof), cash in an amount equal to $2.5 million; and
(J) cause cash in an amount equal to 100% of the net Cash proceeds from any sale
of (i) assets currently identified as Held for Sale on Balance Sheet and (ii) other asset sales and dispositions (other than sales of gold and silver inventory in the ordinary course of business) (in each case of clauses (i) and (ii),
the Secured ABL/Swap Claims Asset Sales) to be used to promptly (and in any event, within two business days of receipt of such net cash proceeds) repay Secured ABL Claims and Secured Swap Claims on a pro rata basis;
(v) conduct their business in a manner that is materially consistent with the Mining Suspension Plan (B) as set forth in the
Allied Nevada Project Aztec: Projection Update dated June 2015;
(vi) timely file a formal objection to any motion filed with
the Bankruptcy Court by any Person seeking the entry of an order (A) directing the appointment of an examiner with expanded powers or a trustee, (B) converting the Chapter 11 Cases to cases under chapter 7 of the Bankruptcy Code,
(C) dismissing the Chapter 11 Cases or (D) for relief that (x) is inconsistent with this Agreement in any material respect or (y) would, or would reasonably be expected to, frustrate the purposes of this Agreement, including by
preventing the consummation of the Restructuring Transaction;
(vii) timely file a formal objection to any motion filed with the
Bankruptcy Court by any Person seeking the entry of an order modifying or terminating the Debtors exclusive right to file and/or solicit acceptances of a plan of reorganization;
(viii) timely file a formal written response in opposition to any objection filed with the Bankruptcy Court by any Person with respect to the
DIP Facility (or motion filed by such Person that seeks to interfere with the DIP Facility) or with respect to any of the adequate protection granted to the Secured Lenders pursuant to the DIP Facility Order or otherwise;
(ix) provide to the Consenting Noteholders Advisors and the Secured Lenders Advisors, and direct their employees, officers,
advisors and other representatives to provide the Consenting Noteholders Advisors and the Secured Lenders Advisors, (A) reasonable access (without any material disruption to the conduct of the Debtors businesses) during normal
business hours to the Debtors books, records and facilities, (B) reasonable access
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to the management and advisors of the Debtors for the purposes of evaluating the Debtors assets, liabilities, operations, businesses, finances, strategies, prospects and affairs,
(C) timely and reasonable responses to all reasonable diligence requests, and (D) information with respect to all material executory contracts and unexpired leases of the Debtors;
(x) promptly notify the Consenting Noteholders and the Requisite Secured Lenders of any governmental or third party complaints, litigations,
investigations or hearings (or communications indicating that the same may be contemplated or threatened);
(xi) comply in all material
respects with the covenants and other obligations of the Debtors contained in the DIP Facility (subject to any amendments and/or waivers to such covenants and other obligations that may be provided by the requisite DIP Lenders);
(xii) assume or reject each of the Debtors executory contracts and unexpired leases as agreed between the Debtors and the Requisite
Consenting Noteholders (provided, that the Secured Lenders shall not be entitled to the benefits of this clause (xii), or be entitled to consent to any amendment, supplement or waiver thereof, if such contracts or leases are, or relate to,
the Excluded Matters);
(xiii) comply with and honor all obligations under any and all existing agreements with third party service
providers assisting the Debtors with establishing a demonstration plant that will (A) have a processing capacity of 5-10 tons per day, (B) include a primary ball mill, flotation cells, a regrind mill and alkaline oxidation cyanide
leaching, and (C) be in operation for at least three (3) months or until the concept, operating costs and reagent consumption is fully demonstrated (the plant is to be located at the Debtors Hycroft Mine and be available for
potential purchasers of the Debtors to view onsite); and
(xiv) use commercially reasonable efforts to obtain any and all required
governmental, regulatory and/or third party approvals necessary or required for the implementation or consummation of the Restructuring Transaction or the approval by the Bankruptcy Court of the Restructuring Documents.
(b) Negative Covenants. The Debtors, jointly and severally, agrees that, for the duration of the Restructuring Support Period, unless
otherwise consented to in writing by the Requisite Consenting Noteholders and (except as set forth below) the Requisite Secured Lenders, the Debtors shall not, directly or indirectly, do or permit to occur any of the following:
(i) seek, solicit, propose or support an Alternative Transaction; provided, however, that the Debtors, directly or indirectly
through any of its representatives or advisors, may participate in negotiations or discussions with any third party that has made (and not withdrawn) a bona fide, unsolicited proposal that the Debtors determine in good faith could be an
Alternative Transaction, and furnish such third party non-public information relating to the Debtors pursuant to an executed confidentiality agreement; provided, that the Debtors shall, subject to such confidentiality restrictions as
reasonably required by the Debtors (it being understood that the Debtors will not require any confidentiality restrictions that are in addition to the confidentiality restrictions set forth in any non-disclosure agreement between the Debtors and any
of the Consenting Noteholders that is in effect on the date hereof), within 24 hours of the
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receipt of such proposal, notify the Consenting Noteholders Advisors and the Secured Lenders Advisors of the receipt of such proposal, with such notice to include the material terms
thereof, including the identity of the Person or group of Persons involved, and shall thereafter promptly inform the Consenting Noteholders Advisors and the Secured Lenders Advisors of any negotiations or discussions related to, any
amendments, modifications or other changes to, or any further developments of, such proposal; provided, further, that nothing contained in this Agreement shall prohibit the Debtors from seeking or soliciting proposals for a credit
facility that would be an alternative to the Exit Facility prior to the entry of the Exit Facility Commitment Order so long as the Debtors otherwise comply with the terms set forth in this Section 4(b)(i) (it being understood that Scotia, Wells
Fargo (so long as Wells Fargo holds any ABL Claims), the Secured Lenders, Consenting Noteholders and any other party hereto each reserves all rights to object to any such alternative facility and to any terms thereof).
(ii) (A) amend, supplement, modify or waive any term, condition or provision under the Modified Plan or any of the other Restructuring
Documents, in whole or in part (provided, that the Secured Lenders shall not be entitled to the benefits of this clause (A), or be entitled to consent to any amendment, supplement or waiver thereof, if such term, condition or provision is, or
relates to, an Excluded Matter); (B) publicly announce its intention not to pursue the Restructuring Transaction; (C) suspend or revoke the Restructuring Transaction; or (D) execute, file or agree to file any Restructuring Documents
(including any modifications or amendments thereof) that, in whole or in part, are not materially consistent in any respect with this Agreement, or are not otherwise reasonably acceptable to the Requisite Consenting Noteholders and the Requisite
Secured Lenders;
(iii) move for an order from the Bankruptcy Court authorizing or directing the assumption or rejection of an executory
contract (including, without limitation, any employment agreement or employee benefit plan) or unexpired lease, other than in accordance with this Agreement or the Modified Plan (provided, that the Secured Lenders shall not be entitled to the
benefits of this clause (iii), or be entitled to consent to any amendment, supplement or waiver thereof, if such contract or lease is, or relates to, an Excluded Matter);
(iv) commence an avoidance action or other legal proceeding that challenges the validity, enforceability or priority of the Indenture or the
Notes, any Note Claims, any ABL Claims, or any Swap Claims;
(v) enter into any commitment or agreement with respect to
debtor-in-possession financing, cash collateral, exit financing and/or other financing arrangements, other than the DIP Facility, the New First Lien Term Loan Credit Facility or the Exit Facility; or
(vi) take any action or file any motion, pleading or other Restructuring Document with the Bankruptcy Court (including any modifications or
amendments thereof) that is inconsistent in any material respect with this Agreement or the Modified Plan (provided, that the Secured Lenders shall not be entitled to the benefits of this clause (vi), or be entitled to consent to any
amendment, supplement or waiver thereof, if such motion, pleading or other Restructuring Document is, or relates to, an Excluded Matter).
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|
5. |
Termination of Agreement. |
(a) Creditor Party Termination Events. Upon
written notice (the Creditor Party Termination Notice) from the Requisite Consenting Noteholders or the Requisite Secured Lenders (as applicable) delivered in accordance with Section 21 hereof, at any time after the
occurrence of, and during the continuation of, any of the following events, in each case, unless waived in writing by both the Requisite Consenting Noteholders and the Requisite Secured Lenders (each, a Creditor Party Termination
Event), (x) the Requisite Consenting Noteholders may terminate this Agreement with respect to all Parties and (y) the Requisite Secured Lenders may terminate this Agreement only with respect to all Secured Lenders:
(i) the breach in any material respect (without giving effect to any materiality qualifiers set forth therein) by the Debtors of
any of their covenants, obligations, representations or warranties contained in this Agreement (other than covenants set forth in Section 4(a)(iv)), and, to the extent such breach is curable, such breach remains uncured for a period of five
(5) business days from the date the Debtors receive a Creditor Party Termination Notice; provided, however, that if the applicable covenant, obligation, representation or warranty is for the benefit of only one Creditor Group,
then only such Creditor Group shall be entitled to exercise a Creditor Party Termination Event with respect to such breach pursuant to this clause (i);
(ii) the failure of the Debtors to satisfy any of the covenants set forth in Section 4(a)(iv) hereof; provided, however,
that if such failure is primarily the result of a material breach by any of the Creditor Parties of its obligations under this Agreement, then the Creditor Group of which such breaching Creditor Party is a member shall not be entitled to exercise a
Creditor Party Termination Event with respect to such failure pursuant to this clause (ii);
(iii) the occurrence of (A) an
Event of Default under the DIP Facility (that is not otherwise subject to forbearance, cured or waived in accordance with the terms thereof) or (B) an acceleration of the obligations or termination of commitments under the DIP
Facility; provided, however, that if such occurrence is primarily the result of a material breach by any of the Creditor Parties of its obligations under this Agreement, then the Creditor Group of which such breaching Creditor Party is
a member shall not be entitled to exercise a Creditor Party Termination Event with respect to such occurrence pursuant to this clause (iii);
(iv) the issuance by any governmental authority, including any regulatory authority or court of competent jurisdiction, of any ruling,
judgment or order enjoining the consummation of a material portion of the Restructuring Transaction and such ruling, judgment or order has not been stayed, reversed or vacated within three (3) business days after the date of such issuance;
provided, however, that if such issuance has been made at the request of any of the Creditor Parties, then the Creditor Group of which such requesting Creditor Party is a member shall not be entitled to exercise a Creditor Party
Termination Event with respect to such issuance pursuant to this clause (iv);
(v) the occurrence of a Material Adverse Effect;
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(vi) the Bankruptcy Court grants relief terminating, annulling, or modifying the automatic stay
(as set forth in section 362 of the Bankruptcy Code) with regard to any assets of the Debtors having an aggregate fair market value in excess of $300,000;
(vii) the Bankruptcy Court grants relief that (A) is inconsistent with this Agreement in any material respect or (B) would, or would
reasonably be expected to, frustrate the purposes of this Agreement, including by preventing the consummation of the Restructuring Transaction;
(viii) the Bankruptcy Court enters an order terminating the Debtors exclusive right to file and/or solicit acceptances of a plan of
reorganization;
(ix) the Bankruptcy Court enters an order authorizing or directing the assumption, assumption and assignment, or
rejection of an executory contract (including any employment agreement, severance agreement or other employee benefit plan) or unexpired lease other than in accordance with this Agreement or the Modified Plan;
(x) other than as set forth in Section 4(b)(i) of this Agreement, the Debtors seek, solicit, propose or support an Alternative
Transaction;
(xi) the Debtors (A) withdraw the Modified Plan or publicly announce their intention to withdraw the Modified Plan or
to pursue an Alternative Transaction, (B) move to voluntarily dismiss any of the Chapter 11 Cases, (C) move for conversion of any of the Chapter 11 Cases to chapter 7 under the Bankruptcy Code, or (D) move for the appointment of an
examiner with expanded powers or a chapter 11 trustee;
(xii) the waiver, amendment or modification of the Modified Plan or any of the
other Restructuring Documents, or the filing by the Debtors of a pleading seeking to waive, amend or modify any term or condition of the Modified Plan or any of the other Restructuring Documents, which waiver, amendment, modification or filing is
materially inconsistent with this Agreement or the Modified Plan; provided, however, that the Requisite Secured Lenders shall not be entitled to exercise a Creditor Party Termination Event described in this clause (xii) if such
waiver, amendment or modification is, or relates to, an Excluded Matter;
(xiii) the Bankruptcy Court enters an order invalidating,
disallowing, subordinating, recharacterizing, or limiting, as applicable, the Note Claims, the ABL Claims, or the Swap Claims; provided, however, that (A) only the Requisite Consenting Noteholders shall be entitled to exercise a
Creditor Party Termination Event with respect to or as a result of an order invalidating, disallowing, subordinating, recharacterizing, or limiting, as applicable, the Note Claims, (B) only the holders of a majority in aggregate principal
amount of the ABL Claims shall be entitled to exercise a Creditor Party Termination Event with respect to or as a result of an order invalidating, disallowing, subordinating, recharacterizing, or limiting, as applicable, the ABL Claims, and
(C) only holders of a majority in aggregate notional amount of the Swap Claims shall be entitled to exercise a Creditor Party Termination Event with respect to or as a result of an order invalidating, disallowing, subordinating,
recharacterizing, or limiting, as applicable, the Swap Claims, in each case, pursuant to this clause (xiii);
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(xiv) the loans under the DIP Facility are repaid, or are required to be repaid, prior to the
scheduled maturity date under the DIP Credit Agreement (including by voluntary prepayment, mandatory prepayment, upon acceleration or otherwise);
(xv) the failure to satisfy any of the conditions to effectiveness set forth in the Modified Plan by the deadlines set forth in the Modified
Plan;
(xvi) the Bankruptcy Court enters an order (A) directing the appointment of an examiner with expanded powers or a chapter 11
trustee, (B) converting the Chapter 11 Cases to cases under chapter 7 of the Bankruptcy Code, or (C) dismissing the Chapter 11 Cases;
(xvii) with respect to the Secured Lenders, (A) the adequate protection provided to the Secured Lenders under the DIP Facility Order is
modified, amended, terminated or revised in a manner that is adverse to the Secured Lenders without the consent of the Requisite Secured Lenders, (B) the Holders of the Secured ABL Claims and Secured Swap Claims do not receive (on a pro rata
basis) (i) upon the date hereof, cash in an amount equal to the full amount of the net Cash proceeds from the sale of the Debtors exploration properties to Clover Nevada LLC, minus $2.5 million and (ii) promptly upon receipt
of $2.5 million of DIP Facility loans (upon receipt of which the amount of outstanding loans under the DIP Facility is not less than $60.0 million) (and in any event within six (6) business days of the date hereof), cash in an amount equal to
$2.5 million, (C) cash in an amount equal to 100% of the net Cash proceeds from any sale of (i) assets currently identified as Held for Sale on Balance Sheet and (ii) other asset sales and dispositions (other than sales of gold and
silver inventory in the ordinary course of business) is not used to promptly (and in any event, within two business days of receipt of such net cash proceeds) repay Secured ABL Claims and Secured Swap Claims on a pro rata basis, (D) the DIP
Facility Order is modified, amended, terminated or revised without the consent of the Requisite Secured Lenders in a manner materially adverse to the Secured Lenders, (E) (i) the Debtors have not received, as of the date of this Agreement,
at least $7.5 million of additional DIP Facility loans, such that the amount of outstanding loans under the DIP Facility as of the date hereof is not less than $57.5 million, or (ii) within five (5) business days of the date of this
Agreement, the Debtors have not received at least $2.5 million of additional DIP Facility loans, such that the amount of outstanding loans under the DIP Facility as of such date is not less than $60.0 million, (F) the Consenting Noteholders
terminate this Agreement with respect to the Consenting Noteholders pursuant to this Section 5, (G) the breach, in any material respect, by any of the Exit Facility Lenders of any of their obligations to fund their respective Exit Facility
Commitments contained in the Exit Facility Commitment Letter, which breach remains uncured (such cure may be made by either the breaching Exit Facility Lender or any other Exit Facility Lender by funding the amount that was not so funded by the
breaching Exit Facility Lender) for a period of five (5) business days from the date such Exit Facility Lender(s) receive(s) the Debtor Termination Notice, (H) the aggregate net Cash proceeds to be received as of the Effective Date by
Reorganized ANV under the Exit Facility are less than the greater of (a) an amount sufficient for Reorganized ANV to have at least $8.0 million of Cash on the Effective Date after giving pro forma effect to, without duplication, (x) all
Cash payments to be made under (A) the Modified Plan or (B) an order of the Bankruptcy Court, in each case whether paid on or in connection with the Effective Date (excluding, for the avoidance of doubt, New First Lien Term Loan Excess
Cash Flow Payments), (y) the payment of all Fees accrued through and including the Effective
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Date and (z) the payment of any Compensation Plan Payments and (b) an amount such that the aggregate amount of (x) the Cash proceeds of the DIP Facility received by the Debtors
prior to the Effective Date plus (y) the Cash proceeds of the Exit Facility not used to pay the DIP Facility Consideration equals $65.0 million; provided, however, that in no event shall the Exit Facility Lenders be obligated to
fund amounts under clause (a) above which would cause the aggregate principal amount of the New Second Lien Convertible Notes issued pursuant to the Exit Facility on the Effective Date to exceed $80.0 million, (I) any default under the DIP
Facility occurs and remains continuing for five (5) Business Days, or the DIP Facility is amended or modified in a manner that reduces the availability thereunder, (J) the Bankruptcy Court determines that the DIP Waiver provided by the
Majority Lenders (as defined in the Credit Agreement) and attached hereto as Exhibit D was not effective, or (K) the Exit Facility Commitment Letter is (x) terminated or (y) modified, amended, terminated or revised without the
consent of the Requisite Secured Lenders (1) to decrease the amount of the Exit Facility Commitment, (2) to change the provisions contained therein relating to intercreditor terms, (3) to shorten the maturity date of the New Second
Lien Convertible Notes, (4) to provide for any covenants not included in the New First Lien Term Loan Credit Facility, other than covenants customary for convertible debt securities which relate to the convertible nature thereof, (5) to
add new (or adversely modify any existing) conditions to the funding of the Exit Facility, (6) in a manner that directly and adversely affects the ability of the Debtors to enforce their rights against the other parties to the Exit Facility
Commitment Letter, or (7) in a manner that would otherwise reasonably be expected to prevent or materially delay the funding of the Exit Facility or the Effective Date;
(xviii) with respect to the Consenting Noteholders, the Secured Lenders terminate this Agreement with respect to the Secured Lenders pursuant
to this Section 5; or
(xix) the termination of the Exit Facility Commitment Letter in accordance with its terms.
(b) Debtors Termination Events. The Debtors may terminate this Agreement as to all Parties (unless otherwise provided below in this
Section 5(b)), upon written notice (the Debtor Termination Notice and, together with a Creditor Party Termination Notice, a Termination Notice) delivered in accordance with Section 21 hereof, upon the
occurrence of any of the following events (each, a Debtor Termination Event and, together with the Creditor Party Termination Events, the Termination Events) unless waived in writing by the Debtors:
(i) the breach in any material respect (without giving effect to any materiality qualifiers set forth therein) by one or more of
the Consenting Noteholders of any of their covenants, obligations, representations or warranties contained in this Agreement such that the non-breaching Consenting Noteholders own or control less than 66-2/3% in principal amount of the Notes, which
breach remains uncured for a period of five (5) business days from the date such Consenting Noteholders(s) receive(s) the Debtor Termination Notice;
(ii) the breach in any material respect (without giving effect to any materiality qualifiers set forth therein) by one or more of
the Secured Lenders of any of their covenants, obligations, representations or warranties contained in this Agreement such that the non-breaching Secured Lenders own or control less than 66-2/3% in the aggregate amount of the ABL Claims and Swap
Claims (taken together), which breach remains uncured for a period of
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five (5) business days from the date such Creditor Party(ies) receive(s) the Debtor Termination Notice; provided, however, that the exercise by the Debtors of a Debtor
Termination Event described in this clause (ii) shall only terminate this Agreement between the Debtors and the Secured Lenders;
(iii) the breach, in any material respect (without giving effect to any materiality qualifiers set forth therein), by any of the
Exit Facility Lenders of any of their covenants, obligations, representations or warranties contained in the Exit Facility Commitment Letter, which breach remains uncured for a period of five (5) business days from the date such Exit Facility
Lender(s) receive(s) the Debtor Termination Notice;
(iv) the issuance by any governmental authority, including any regulatory authority
or court of competent jurisdiction, of any ruling, judgment or order enjoining the consummation of a material portion of the Restructuring Transaction, unless, in each case, such ruling, judgment or order has been issued at the request of the
Debtors, or, in all other circumstances, such ruling, judgment or order has not been stayed, reversed or vacated within three (3) business days after such issuance;
(v) the board of directors of ANV, after consultation with outside counsel, reasonably determines in good faith that continued performance
under this Agreement would be inconsistent with the exercise of its fiduciary duties under applicable law;
(vi) the Bankruptcy Court
enters an order (A) directing the appointment of an examiner with expanded powers or a chapter 11 trustee, (B) converting the Chapter 11 Cases to cases under chapter 7 of the Bankruptcy Code, or (C) dismissing the Chapter 11 Cases;
(vii) the Requisite Secured Lenders terminate this Agreement with respect to the Secured Lenders pursuant to Section 5(a);
provided, however, that the Debtors shall not be entitled to terminate this Agreement pursuant to this clause (vii) if the Debtors are then in material breach of this Agreement;
(viii) the termination of the Exit Facility Commitment Letter in accordance with its terms; or
(ix) (A) the Debtors have not received, as of the date of this Agreement, at least $7.5 million of additional DIP Facility loans, such
that the amount of outstanding loans under the DIP Facility as of the date hereof is not less than $57.5 million, or (B) within five (5) business days of the date of this Agreement, the Debtors have not received at least $2.5 million of
additional DIP Facility loans, such that the amount of outstanding loans under the DIP Facility as of such date is not less than $60.0 million.
(c) Mutual Termination. This Agreement may be terminated by mutual written agreement among the Debtors, the Requisite Consenting
Noteholders, and the Requisite Secured Lenders.
(d) Effect of Termination. Upon the termination of this Agreement in accordance
with this Section 5 and except as provided in Section 15 herein, this Agreement shall forthwith
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become void and of no further force or effect and each Party shall, except as otherwise expressly provided in this Agreement, be immediately released from its liabilities, obligations,
commitments, undertakings and agreements under or related to this Agreement and shall have all the rights and remedies that it would have had and shall be entitled to take all actions, whether with respect to the Restructuring Transaction or
otherwise, that it would have been entitled to take had it not entered into this Agreement, including all rights and remedies available to it under applicable law, the Indenture and any ancillary documents or agreements thereto; provided,
however, that (x) in no event shall any such termination relieve a Party hereto from (i) liability for its breach or non-performance of its obligations hereunder prior to the date of such termination and (ii) obligations under
this Agreement which by their terms expressly survive termination of this Agreement and (y) the termination of this Agreement by the Requisite Secured Lenders pursuant to Section 5(a) shall only terminate this Agreement, and the
liabilities, obligations, commitments, undertakings and agreements under or related to this Agreement, between the Debtors and the Consenting Noteholders, on the one hand, and the Secured Lenders, on the other, and this Agreement (and the
liabilities, obligations, commitments, undertakings and agreements under or related to this Agreement) shall continue as between the Debtors and the Consenting Noteholders (unless this Agreement was previously, or is concurrently or subsequently,
terminated by such Parties pursuant to the terms of this Section 5). Notwithstanding anything to the contrary herein, any of the Termination Events may be waived in accordance with the procedures established by Section 9 hereof, in which
case the Termination Event so waived shall be deemed not to have occurred, this Agreement shall be deemed to continue in full force and effect, and the rights and obligations of the Parties hereto shall be restored, subject to any modification set
forth in such waiver. If this Agreement has been terminated in accordance with this Agreement at a time when permission of the Bankruptcy Court shall be required for a Creditor Party to change or withdraw (or cause to change or withdraw) its vote to
accept the Modified Plan, the Debtors shall not oppose any attempt by such Creditor Party to change or withdraw (or cause to change or withdraw) such vote at such time.
(e) Automatic Stay. The Debtors acknowledge and agree, and shall not dispute, that the giving of a Termination Notice by any of the
Creditor Parties pursuant to this Agreement shall not be a violation of the automatic stay of section 362 of the Bankruptcy Code (and the Debtors hereby waive, to the greatest extent possible, the applicability of the automatic stay to the giving of
such notice), and no cure period contained in this Agreement shall be extended pursuant to sections 108 or 365 of the Bankruptcy Code or any other applicable law without the prior written consent of the Requisite Consenting Noteholders and the
Requisite Secured Lenders.
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6. |
Good Faith Cooperation; Further Assurances; Acknowledgement. |
The Parties shall
cooperate with each other in good faith and shall coordinate their activities with each other (to the extent practicable and subject to the terms hereof) in respect of (a) all matters concerning the implementation of the Restructuring
Transaction, and (b) the pursuit and support of the Restructuring Transaction (including confirmation of the Modified Plan). Furthermore, subject to the terms hereof, each of the Parties shall take such action as may be reasonably necessary to
carry out the purposes and intent of this Agreement and the Restructuring Transaction, including making and filing any required governmental or regulatory
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filings and voting any claims against or securities of the Debtors in favor of the Modified Plan (provided that none of the Creditor Parties shall be required to incur any material
expenses, liabilities or other obligations in connection therewith), and shall refrain from taking any action that would frustrate the purposes and intent of this Agreement. This Agreement is not, and shall not be deemed, a solicitation of votes for
the acceptance of a chapter 11 plan of reorganization or a solicitation to tender or exchange any securities. The acceptance of the Modified Plan by the Creditor Parties will not be solicited until the Creditor Parties have received the Disclosure
Statement and related ballots, as approved by the Bankruptcy Court.
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7. |
Restructuring Documents. |
Each Party hereby covenants and agrees to:
(i) negotiate in good faith each of the Restructuring Documents (all of which shall, for the avoidance of doubt, contain terms and conditions materially consistent with this Agreement and the Restructuring Term Sheet and shall otherwise be in
form and substance reasonably acceptable to the Debtors, the Requisite Consenting Noteholders and, as and to the extent set forth herein, the Requisite Secured Lenders); and (ii) execute (to the extent such Party is a party thereto) and
otherwise support the Restructuring Documents, as applicable.
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8. |
Representations and Warranties. |
(a) Each Party, severally (and not jointly),
represents and warrants to the other Parties that the following statements are true and correct as of the date hereof (or as of the date a Creditor Party becomes a party hereto):
(i) such Party is validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, and has all
requisite corporate, partnership, limited liability company or similar authority to enter into this Agreement and carry out the transactions contemplated under this Agreement and perform its obligations contemplated under this Agreement, and the
execution and delivery of this Agreement by such Party and the performance of such Partys obligations under this Agreement have been duly authorized by all necessary corporate, limited liability company, partnership or other similar action on
its part;
(ii) the execution, delivery and performance by such Party of this Agreement does not and will not (A) violate any
provision of law, rule or regulation applicable to it or any of its subsidiaries or its charter or bylaws (or other similar governing documents) or those of any of its subsidiaries, or (B) conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any material contractual obligation to which it or any of its subsidiaries is a party;
(iii) the execution, delivery and performance by such Party of this Agreement does not and will not require any registration or filing with,
consent or approval of, or notice to, or other action of, with or by, any federal, state or governmental authority, regulatory body or commission, except such filings as may be necessary or required under the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended or any rule or regulation promulgated thereunder (the Exchange Act), blue sky laws or the Bankruptcy Code; and
(iv) subject to the provisions of sections 1125 and 1126 of the Bankruptcy Code, this Agreement is the legally valid and binding obligation of
such Party, enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or limiting creditors rights generally or by equitable
principles relating to enforceability or a ruling of the Bankruptcy Court.
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(b) Each Creditor Party severally (and not jointly) represents and warrants to the Debtors that,
as of the date hereof (or as of the date such Creditor Party becomes a party hereto), such Creditor Party (i) is the beneficial owner of the principal or notional (as applicable) amount (which amount shall be denominated in the applicable
currency) or number of Claims and Interests, as applicable, set forth below its name on the signature page hereof (or below its name on the signature page of a Joinder Agreement for any Creditor Party that becomes a party hereto after the date
hereof), and/or (ii) has, with respect to the beneficial owners of such Claims and Interests, (A) full power and authority to vote on and consent to matters concerning such Claims and Interests, or to exchange, assign and Transfer such
Claims and Interests, or (B) full power and authority to bind or act on the behalf of, such beneficial owners with respect to such Claims and Interests.
(c) Each Creditor Party severally (and not jointly) represents and warrants to the Debtors that such Creditor Party has made no prior
assignment, sale, participation, grant, conveyance or other Transfer of, and has not entered into any other agreement to assign, sell, participate, grant, convey or otherwise Transfer, in whole or in part, any portion of its right, title, or
interests in any Claims and Interests that is inconsistent with the representations and warranties of such Creditor Party herein or would render such Creditor Party otherwise unable to comply with this Agreement and perform its obligations
hereunder.
(d) Each Creditor Party severally (and not jointly) represents and warrants to the Debtors that the Claims and Interests owned
by such Creditor Party are free and clear of any option, proxy, voting restriction, right of first refusal or other limitation on disposition of any kind, that would reasonably be expected to adversely affect in any way the performance by such
Creditor Party of its obligations contained in this Agreement at the time such obligations are required to be performed.
(e) Each
Creditor Party severally (and not jointly) represents and warrants to the Debtors that it (i) has such knowledge and experience in financial and business matters of this type that it is capable of evaluating the merits and risks of entering
into this Agreement and of making an informed investment decision, and has conducted an independent review and analysis of the business and affairs of the Debtors that it considers sufficient and reasonable for purposes of entering into this
Agreement and (ii) is an accredited investor (as defined by Rule 501 of the Securities Act of 1933, as amended).
(f) The
Debtors represent and warrant to the Creditor Parties that (i) there are no pending agreements (oral or written), understandings, negotiations or discussions with respect to any Alternative Transaction and (ii) true, correct and complete
copies of all contracts, agreements and other arrangements requiring the Debtors to indemnify, hold harmless, or advance or reimburse expenses of, any officers, directors, employees or agents of the Debtors (x) have been disclosed as exhibits
to the Debtors public filings with the Securities and Exchange
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Commission or otherwise disclosed or made available to the Consenting Noteholders Advisors and the Secured Lenders Advisors (including by placement in an online data room) or
(y) are otherwise substantially similar to, and do not impose obligations on the Debtors that are materially greater or more burdensome than, those that have been so disclosed or made available.
It is understood and agreed that the representations and warranties made by a Creditor Party that is an investment manager of a beneficial owner of Claims and
Interests are made with respect to, and on behalf of, such beneficial owner and not such investment manager, and, if applicable, are made severally (and not jointly) with respect to the investment funds, accounts and other investment vehicles
managed by such investment manager.
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9. |
Amendments and Waivers. |
This Agreement, including any exhibits or schedules
hereto, may not be modified, amended or supplemented except in a writing signed by the Debtors, the Requisite Consenting Noteholders and (except as otherwise provided in this Agreement) the Requisite Secured Lenders; provided, however,
that (a) any modification of, or amendment or supplement to, this Section 9 or the definition of Requisite Consenting Noteholders or Requisite Secured Lenders shall require the written consent of all of the Parties, (b) if any such
amendment, modification, waiver or supplement would adversely affect any of the rights or obligations (as applicable) of any Consenting Noteholder (in its capacity as a holder of Note Claims) set forth in this Agreement in a manner that is different
or disproportionate in any material respect from the effect on the rights or obligations (as applicable) of any of the other Consenting Noteholders (in their capacity as holders of Note Claims) set forth in this Agreement (other than in proportion
to the amount of such Note Claims), such amendment, modification, waiver or supplement shall also require the written consent of such affected Consenting Noteholder (it being understood that determining whether consent of any Consenting Noteholder
is required pursuant to this clause (b), no personal circumstances of such Consenting Noteholder shall be considered), (c) if any such amendment, modification, waiver or supplement would adversely affect any of the rights or obligations (as
applicable) of any Secured Lender (in its capacity as a holder of ABL Claims) set forth in this Agreement in a manner that is different or disproportionate in any material respect from the effect on the rights or obligations (as applicable) of any
of the other Secured Lenders (in their capacity as holders of ABL Claims) set forth in this Agreement (other than in proportion to the amount of such ABL Claims), such amendment, modification, waiver or supplement shall also require the written
consent of such affected Secured Lender (it being understood that determining whether consent of any Secured Lender is required pursuant to this clause (c), no personal circumstances of such Secured Lender shall be considered), and (d) if any
such amendment, modification, waiver or supplement would adversely affect any of the rights or obligations (as applicable) of any Secured Lender (in its capacity as a holder of Swap Claims) set forth in this Agreement in a manner that is different
or disproportionate in any material respect from the effect on the rights or obligations (as applicable) of any of the other Secured Lenders (in their capacity as holders of Swap Claims) set forth in this Agreement (other than in proportion to the
amount of such Swap Claims), such amendment, modification, waiver or supplement shall also require the written consent of such affected Secured Lender (it being understood that determining whether consent of any Secured Lender is required pursuant
to this clause (d), no personal circumstances of such Secured Lender shall be considered). In
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determining whether any consent or approval has been given or obtained by the Requisite Consenting Noteholders, any then-existing Consenting Noteholder that is in material breach of its
covenants, obligations or representations under this Agreement (and the respective Notes held by such Creditor Party) shall be excluded from such determination and the Notes held by such Consenting Noteholder shall be treated as if they were not
outstanding. A Creditor Party Termination Event may not be waived except in a writing signed by the Requisite Consenting Noteholders and the Requisite Secured Lenders unless such Creditor Party Termination Event allows only one Creditor Party to
terminate this Agreement pursuant to Section 5, in which case, the Requisite Consenting Noteholders or the Requisite Secured Lenders (as applicable) can waive such Creditor Party Termination Event.
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10. |
Transaction Expenses. |
Whether or not the transactions contemplated by this
Agreement are consummated and, in each case, subject to the terms of the applicable engagement letter and the DIP Facility Order, the Debtors hereby agree to pay in Cash the Transaction Expenses as follows: (i) all accrued and unpaid
Transaction Expenses incurred up to (and including) the Restructuring Support Effective Date shall be paid in full on the Restructuring Support Effective Date, (ii) all accrued and unpaid Transaction Expenses shall, subject to the RSA Order, be
paid by the Debtors on a regular and continuing basis promptly (but in any event within fifteen (15) days) against receipt of reasonably detailed invoices, (iii) upon termination of this Agreement, all accrued and unpaid Transaction
Expenses incurred up to (and including) the date of such termination shall, subject to the RSA Order, be paid promptly (but in any event within fifteen (15) days) against receipt of reasonably detailed invoices, and (iv) on the Effective
Date, all accrued and unpaid Transaction Expenses incurred up to (and including) the Effective Date shall, subject to the RSA Order, be paid on the Effective Date against receipt of reasonably detailed invoices, without any requirement for
Bankruptcy Court review or further Bankruptcy Court order.
The terms set forth in this Section 10 shall survive termination of this
Agreement and shall remain in full force and effect regardless of whether the transactions contemplated by this Agreement are consummated. The Debtors hereby acknowledge and agree that the Creditor Parties have expended, and will continue to expend,
considerable time, effort and expense in connection with this Agreement and the negotiation of the Restructuring Transaction, and that this Agreement provides substantial value to, is beneficial to, and is necessary to preserve, the Debtors, and
that the Creditor Parties have made a substantial contribution to the Debtors. If and to the extent not previously reimbursed or paid in connection with the foregoing, subject to the approval of the Bankruptcy Court, the Debtors shall reimburse or
pay (as the case may be) all reasonable and documented Transaction Expenses pursuant to section 1129(a)(4) of the Bankruptcy Code or otherwise. The Debtors hereby acknowledge and agree that the Transaction Expenses are of the type that should be
entitled to treatment as, and the Debtors shall seek treatment of such Transaction Expenses as, administrative expense claims pursuant to sections 503(b) and 507(a)(2) of the Bankruptcy Code.
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This Agreement shall become effective and binding upon:
(a) the Creditor Parties on the date when counterpart signature pages to this Agreement have been executed and delivered by the Debtors and
each of the Initial Consenting Noteholders and the Initial Secured Lenders; provided, however, that signature pages executed by the Creditor Parties shall be delivered to (i) other Creditor Parties in a redacted form that removes
the Creditor Parties holdings of Claims and Interests, and (ii) the Debtors in an unredacted form; and
(b) the Debtors on the
later of the date upon which the Bankruptcy Court enters the Disclosure Statement Order and the RSA Order; provided, however, that the Debtors shall execute and deliver to the Creditor Parties this Agreement concurrently with the
execution by the Creditor Parties.
With respect to any Creditor Party that becomes a party to this Agreement by executing and delivering
a Joinder Agreement after the Restructuring Support Effective Date, this Agreement shall become effective and binding as to such Creditor Party at the time such Joinder Agreement is delivered to the Debtors.
In the event of any conflict among the terms and provisions of
(i) the Modified Plan or the Restructuring Term Sheet and (ii) this Agreement, the terms and provisions of the Modified Plan or the Restructuring Term Sheet, as applicable, shall control. In the event of any conflict among the terms and
provisions of the Modified Plan and the Restructuring Term Sheet, the terms and provisions of the Modified Plan shall control. In the event of any conflict among the terms and provisions of the Confirmation Order, the Modified Plan, the
Restructuring Term Sheet and/or this Agreement, the terms of the Confirmation Order shall control. Notwithstanding the foregoing, nothing contained in this Section 12 shall affect, in any way, the requirements set forth herein for the amendment
of this Agreement.
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13. |
GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL. |
THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAW PROVISIONS WHICH WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION. BY ITS EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ANY LEGAL ACTION, SUIT, DISPUTE OR PROCEEDING ARISING UNDER, OUT OF OR IN CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT IN THE FEDERAL OR STATE COURTS LOCATED
IN THE STATE OF NEW YORK, COUNTY OF NEW YORK, AND THE PARTIES HERETO IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH COURTS AND WAIVE ANY OBJECTIONS AS TO VENUE OR INCONVENIENT FORUM. NOTWITHSTANDING THE FOREGOING CONSENT TO JURISDICTION, SO
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LONG AS THE BANKRUPTCY COURT HAS JURISDICTION OVER THE DEBTORS, EACH OF THE PARTIES AGREES THAT THE BANKRUPTCY COURT SHALL HAVE EXCLUSIVE JURISDICTION WITH RESPECT TO ANY MATTER UNDER OR ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT, AND HEREBY SUBMITS TO THE JURISDICTION OF THE BANKRUPTCY COURT. EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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14. |
Specific Performance/Remedies. |
It is understood and agreed by the Parties that
money damages would not be a sufficient remedy for any breach of this Agreement by any Party and each non-breaching Party shall be entitled to specific performance and injunctive or other equitable relief (including attorneys fees and costs)
as a remedy of any such breach, in addition to any other remedy to which such non-breaching Party may be entitled, at law or in equity, without the necessity of proving the inadequacy of money damages as a remedy, including an order of the
Bankruptcy Court requiring any Party to comply promptly with any of its obligations hereunder. Each Party agrees to waive any requirement for the securing or posting of a bond in connection with such remedy.
Notwithstanding the termination of this Agreement pursuant to
Section 5 hereof, the agreements and obligations of the Parties in this Section 15 and Sections 5(d), 5(e), 9, 10, 13, 14, 16, 17, 18, 19, 21, 22, 23, 24, 25, 26 and 27 hereof (and any defined terms used in any such Sections), the last
paragraph of Section 2, and the last paragraph of Section 3(a), shall survive such termination and shall continue in full force and effect in accordance with the terms hereof.
The headings of the sections, paragraphs and subsections of this
Agreement are inserted for convenience only and shall not affect the interpretation hereof or, for any purpose, be deemed a part of this Agreement.
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17. |
Successors and Assigns; Severability; Several Obligations. |
This Agreement is
intended to bind and inure to the benefit of the Parties and their respective successors, assigns, heirs, executors, administrators and representatives; provided, however, that nothing contained in this Section 17 shall be deemed
to permit sales, assignments or other Transfers of the Claims and Interests or other claims against or interests in the Debtors other than in accordance with Sections 3(c) and 3(d) of this Agreement. If any provision of this Agreement, or the
application of any such provision to any Person or circumstance, shall be held invalid or unenforceable in whole or in part, such invalidity or unenforceability shall attach only to such provision or part thereof and the remaining part of such
provision hereof and this Agreement shall continue in full force and effect; provided, however, that nothing in this Section 17 shall be deemed to amend, supplement or otherwise modify, or constitute a waiver of, any Termination
Event.
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18. |
No Third-Party Beneficiaries. |
Unless expressly stated herein, this Agreement
shall be solely for the benefit of the Parties and no other Person shall be a third-party beneficiary hereof.
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19. |
Prior Negotiations; Entire Agreement. |
This Agreement, including the exhibits and
schedules hereto, constitutes the entire agreement of the Parties, and supersedes all other prior negotiations, with respect to the subject matter hereof, except that the Parties acknowledge that any confidentiality agreements (if any) heretofore
executed between the Debtors and each Creditor Party shall continue in full force and effect. Without limiting the foregoing, this Agreement amends, restates and supersedes in its entirety the Original Restructuring Support Agreement, which shall be
of no further force or effect.
This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original, and all of which together shall be deemed to be one and the same agreement. Execution copies of this Agreement may be delivered by facsimile, e-mail or otherwise, which
shall be deemed to be an original for the purposes of this Section 20.
All notices, requests, demands, document deliveries
and other communications under this Agreement shall be in writing and shall be deemed to have been duly given, provided or made (a) when delivered personally, (b) when sent by electronic mail
(e-mail) or facsimile, (c) one (1) business day after deposit with an overnight courier service or (d) three (3) business days after mailed by certified or registered
mail, return receipt requested, with postage prepaid to the Parties at the following addresses, facsimile numbers or e-mail addresses (or at such other addresses, facsimile numbers or e-mail addresses for a Party as shall be specified by like
notice):
If to the Debtors:
Allied Nevada Gold Corp.
9790
Gateway Drive, Suite 200
Reno, NV 89521
Facsimile: (775) 358-4458
Email: Steve.Jones@AlliedNevada.com
Attention: Stephen Jones
with a copy to (which shall not constitute notice):
Akin Gump Strauss Hauer & Feld LLP
One Bryant Park
New York, New
York 10036-6745
Facsimile: (212) 872-1002
Attention: Ira Dizengoff, Esq. (idizengoff@akingump.com) and
Philip C. Dublin, Esq. (pdublin@akingump.com)
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If to the Consenting Noteholders:
To each Consenting Noteholder at the addresses, facsimile numbers or e-mail addresses set forth below the Consenting Noteholders
signature page to this Agreement (or to the signature page to a Joiner Agreement in the case of any Consenting Noteholder that becomes a party hereto after the Restructuring Support Effective Date)
with a copy to (which shall not constitute notice):
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY
10038
Facsimile: (212) 806-6006
Attention: Kristopher Hansen (khansen@stroock.com), Brett Lawrence (blawrence@stroock.com) and Jayme Goldstein (jgoldstein@stroock.com)
If to the Secured Lenders:
To each Secured Lender at the addresses, facsimile numbers or e-mail addresses set forth below the Secured Lenders signature page to this
Agreement (or to the signature page to a Joiner Agreement in the case of any Secured Lender that becomes a party hereto after the Restructuring Support Effective Date)
with copies to (which shall not constitute notice):
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY
10019
Facsimile: (212) 403-2000
Attention: Richard Mason (RGMason@wlrk.com)
John R. Sobolewski
(JRSobolewski@wlrk.com)
and, solely so long as Wells Fargo holds any ABL Claims,
Paul Hastings LLP
75 East 55th
Street
New York, NY 10022
Facsimile: (212) 230-7699
Attention: Andrew V. Tenzer (andrewtenzer@paulhastings.com)
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|
22. |
Reservation of Rights; No Admission. |
Except as expressly provided in this
Agreement and in any amendment among the Parties, nothing herein is intended to, or does, in any manner waive, limit, impair or restrict the ability of each of the Parties to protect and preserve its rights, remedies and interests, including without
limitation, its claims against any of the other Parties (or their respective affiliates or subsidiaries) or its full participation in the Chapter 11 Cases. Without limiting the foregoing sentence in any way, if the Restructuring Transaction is not
consummated, or if this Agreement is terminated for any reason, nothing shall be construed herein as a waiver by any Party of any or all of such Partys rights, remedies, claims and defenses and the Parties expressly reserve any and all of
their respective rights, remedies, claims and defenses. This Agreement is part of a proposed settlement of matters that could otherwise be the subject of litigation among the Parties. Pursuant to Rule 408 of the Federal Rules of Evidence, any
applicable state rules of evidence and any other applicable law, foreign or domestic, this Agreement and all negotiations relating thereto shall not be admissible into evidence in any proceeding other than a proceeding to enforce its terms. This
Agreement shall in no event be construed as or be deemed to be evidence of an admission or concession on the part of any Party of any claim or fault or liability or damages whatsoever. Each of the Parties denies any and all wrongdoing or liability
of any kind and does not concede any infirmity in the claims or defenses which it has asserted or could assert.
If any Party brings an action or proceeding against any other
Party based upon a breach by such Party of its obligations hereunder, the prevailing Party shall be entitled to the reimbursement of all reasonable fees and expenses incurred, including reasonable attorneys, accountants and financial
advisors fees in connection with such action or proceeding, from the non-prevailing Party.
Notwithstanding anything to the contrary herein,
(i) nothing in this Agreement shall require the Debtors or any directors or officers of the Debtors to take any action, or to refrain from taking any action, that would breach, or be inconsistent with, its or their fiduciary obligations under
applicable law, and (ii) to the extent that such fiduciary obligations require the Debtors or any directors or officers of the Debtors to take any such action, or refrain from taking any such action, they may do so without incurring any
liability to any Party under this Agreement; provided, however, that nothing in this Section 24 shall be deemed to amend, supplement or otherwise modify, or constitute a waiver of, any Termination Event that may arise as a result
of any such action or omission.
Notwithstanding anything to the contrary herein, nothing in this Agreement shall create any additional
fiduciary obligations on the part of the Debtors or any directors or officers of the Debtors that did not exist prior to the execution of this Agreement.
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25. |
Representation by Counsel. |
Each Party acknowledges that it has been represented
by, or provided a reasonable period of time to obtain access to and advice by, counsel with respect to this Agreement and the Restructuring Transaction contemplated herein. Accordingly, any rule of law or any legal decision that would provide any
Party with a defense to the enforcement of the terms of this Agreement against such Party based upon lack of legal counsel shall have no application and is expressly waived.
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26. |
Relationship Among Parties. |
Notwithstanding anything herein to the contrary, the
duties and obligations of the Creditor Parties under this Agreement shall be several, not joint. It is understood and agreed that no Creditor Party has any duty of trust or confidence in any kind or form with any other Creditor Party or the Debtors,
and, except as expressly provided in this Agreement, there are no commitments among or between them. In this regard, it is understood and agreed that any Creditor Party may trade in the claims or other debt or equity securities of the Debtors
without the consent of the Debtors or any other Creditor Party, subject to applicable securities laws and the terms of this Agreement; provided, however, that no Creditor Party shall have any responsibility for any such trading to any
other entity by virtue of this Agreement. No prior history, pattern or practice of sharing confidences among or between the Creditor Parties or the Debtors shall in any way affect or negate this understanding and agreement.
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27. |
Disclosure; Publicity. |
The Debtors shall submit drafts to the Consenting
Noteholders and the Initial Secured Lenders of any press releases and public documents that constitute disclosure of the existence or terms of this Agreement or any amendment to the terms of this Agreement at least three (3) business days prior
to making any such disclosure, and shall afford them a reasonable opportunity under the circumstances to comment on such documents and disclosures and shall incorporate any such reasonable comments in good faith. Except as required by law or court
order, no Party or its advisors shall (a) use the name of any Creditor Party in any public manner (including in any press release) with respect to this Agreement, the Restructuring Transaction or any of the Restructuring Documents or
(b) disclose to any Person (including, for the avoidance of doubt, any other Creditor Party), other than advisors to the Debtors, the principal amount or percentage of any Claims held by any Creditor Party, in each case, without such Creditor
Partys prior written consent; provided, however, that (i) if such disclosure is required by law, subpoena, or other legal process or regulation, the disclosing Party shall afford the relevant Creditor Party a reasonable
opportunity to review and comment in advance of such disclosure and shall take all reasonable measures to limit such disclosure and (ii) the foregoing shall not prohibit the disclosure of the aggregate percentage or aggregate principal amount
of Claims held by any Creditor Group, collectively. Notwithstanding the provisions in this Section 27, (x) any Party hereto may disclose the identities of the Parties hereto in any action to enforce this Agreement or in any action for
damages as a result of any breaches hereof, (y) any Party hereto may disclose, to the extent expressly consented to in writing by a Creditor Party, such Creditor Partys identity and individual holdings, and (z) the Debtors may
disclose the put option payments payable or paid in connection with the Restructuring Transaction as described in the Modified Plan.
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28. |
Provisions Applicable to Owners of Specified Holdings. |
The provisions of this
Section 28 (the Specified Holdings Provisions) shall apply to any Secured Lender to the extent that such Secured Lender and/or any Affiliate(s) thereof (the Specified Holders), collectively, own,
beneficially or of record, directly or indirectly, any Specified Holdings (as defined below) (other than any Specified Holdings held by Scotia or Wells Fargo as custodian for, or otherwise on behalf of, any other Person who is not an Affiliate
thereof, or otherwise in connection with broker-dealer or market-making activities thereof). Notwithstanding anything herein to the contrary, the Specified Holdings Provisions shall cease to apply at any time to a Secured Lender at any time that
such Secured Lender and its Affiliates, collectively, do not own, beneficially or of record, directly or indirectly, any Specified Holdings. Notwithstanding the foregoing, if the Specified Holdings Provisions cease to apply due to the foregoing
sentence, then the Specified Holdings Provisions shall automatically be reinstated at any time during which, and only for so long as, such Secured Lender and any Affiliate(s) thereof, collectively, hold Specified Holdings.
Specified Holdings means (a) at any time on or prior to the Effective Date, (i) any of ANVs 8.75% senior
unsecured notes due 2019 or (ii) any other general unsecured claims of ANV or the Debtors (other than any general unsecured claims of ANV or the Debtors which may be owned by Wells Fargo or Scotia (or any Affiliate thereof) as of the date
hereof) or (b) at any time, when taken together with any Person(s) (as defined in ANVs prepetition Credit Agreement as in effect on March 10, 2015 (the Credit Agreement) who would be deemed to be part of a
group (within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934 as in effect on the date hereof) with the Specified Holder or any Affiliate(s) thereof, equity, or instruments convertible or exchangeable into equity (which,
for purposes of this clause (b), shall be assumed to have been converted or exchanged into the maximum amount of equity which may be received therefor at the time of determination in accordance with this clause (b), regardless of whether the
conditions or other requirements to such conversion or exchange have been met as of such time), representing more than 5% of the voting or economic power of all equity of ANV (or its successor).
The Specified Holders hereby agree as follows:
(1) with respect to any (i) consent (or decision not to consent) to any amendment, modification, waiver, consent or other action under
the Credit Agreement or any other Credit Document (as defined in the Credit Agreement), (ii) other action on any matter related to any Credit Document or the approval of any plan of reorganization (including the Modified Plan) or
(iii) direction to the Administrative Agent, any other agent or any Secured Lender to undertake any action (or refrain from taking any action) with respect to any Credit Document (each of clauses (i), (ii) and (iii), a Lender
Consent Matter), that the Loans and other Secured Obligations (each as defined in the Credit Agreement) held by the Specified Holders shall be automatically and without further action voted or directed in the same percentage as the votes
or directions by all other Secured Lenders under the Credit Agreement (e.g., (i) if other Secured Lenders under the Credit Agreement voted or directed 60% in favor and 40% against an action, the Specified Holders shall be deemed to have voted
60% in favor and 40% against such action and (ii) if there is only one other Secured Lender under the Credit Agreement, the Specified
-35-
Holders shall be deemed to vote in the same manner as such other Lender). Notwithstanding the foregoing, the Specified Holders shall have the right to consent (or decide not to consent) to any
Lender Consent Matter that (a) requires, pursuant to Section 14.14(b) of the Credit Agreement, the consent or approval of each Lender (as defined in the Credit Agreement) or (b) affects the applicable Specified Holder, solely in its
capacity as a Secured Lender, in a disproportionately adverse manner as compared to other Secured Lenders in their capacities as such; provided, that, at any time during which, and only for so long as, the Specified Holders are a party to
this Agreement, the Specified Holders shall be deemed to consent to any Lender Consent Matter in respect of which it has a consent right under the foregoing clause (a) or (b) solely to the extent such consent is necessary to consummate the
Restructuring Transaction on the terms expressly set forth in this Agreement, as in effect on July 23, 2015 without giving effect to any amendments, waivers, consents, supplements or other modifications thereto (including the Modified Plan
attached hereto as Exhibit A as of July 23, 2015 without giving effect to any amendments, waivers, consents, supplements or other modifications thereto and the Restructuring Term Sheet attached hereto as Exhibit B as of July 23, 2015
without giving effect to any amendments, waivers, consents, supplements or other modifications thereto (it being understood and agreed that any modification, amendment or supplement to this Agreement (including, for the avoidance of doubt, the
Modified Plan and/or the Restructuring Term Sheet) shall be governed by Section 9 hereof and shall not be governed by this Section 28;
(2) they shall not have any right to participate in any meetings, presentations, calls, e-mail updates or other communications among the
Administrative Agent, any other agent(s) and/or any Secured Lender(s) or other holders of Secured Obligations, except to the extent that they are invited to attend such by the Administrative Agent (which decision shall be in the Administrative
Agents sole and absolute discretion);
(3) they shall not be provided and shall not seek to access any legal, financial or other
information prepared by, prepared at the request of or provided to the Administrative Agent or the other agents, Secured Lenders or holders of Secured Obligations (including, without limitation, such information prepared by legal and financial
advisors to the Administrative Agent or the other Lenders, including Wachtell, Lipton, Rosen & Katz; Morris, Nichols, Arsht & Tunnell LLP; Fennemore Craig, P.C.; RPA Advisors, LLC; JDS Energy & Mining USA LLC; McMillan
LLP; and Fasken Martineau), except to the extent the Administrative Agent agrees to provide such legal, financial or other information (which shall be in the Administrative Agents sole and absolute discretion);
(4) The Bank of Nova Scotia shall be the sole administrative agent and collateral agent under the Credit Agreement and there shall be no other
administrative agents or collateral agents under the Credit Agreement);
(5) in connection with (a) the Chapter 11 Cases or
(b) any other bankruptcy or insolvency proceeding relating to ANV and its subsidiaries, the Proposed Assignees, solely in their capacity as a Secured Lender, (x) hereby agree to support and not object to, solely in their capacity as a
Secured Lender, to (1) any use of cash collateral (including any and all terms of any cash collateral order, a Use of Cash Collateral) and/or any debtor-in-possession financing (including any and all terms of any financing
agreement, related documents and financing order, a DIP Financing)) that is supported by or consented to by the Administrative Agent, (2) any
-36-
sale of any assets, whether under section 363 of the Bankruptcy Code or otherwise, that is supported by or consented to by the Administrative Agent (including the terms and conditions of any
bidding procedures orders, sale orders and any and all purchase and sale agreements and related documents, a 363 Sale) or (3) any other action taken by the Administrative Agent in connection with any Lender Consent Matter
(unless, in the case of this sub-clause (3), the applicable Specified Holder has the right to consent (or decide not to consent) to such matter pursuant to the terms of sub-section (1) of this Section 28); provided that any such Use
of Cash Collateral, DIP Financing or 363 Sale would not affect the applicable Specified Holder, solely in its capacity as a Secured Lender, in a disproportionately adverse manner as compared to other Secured Lenders in their capacities as such and
(y) hereby, solely to effectuate or consummate a Use of Cash Collateral, DIP Financing, 363 Sale or matter described in the foregoing clause (3), in accordance with, and subject to the limitations set forth in, the preceding clause (x),
irrevocably authorizes and empowers the Administrative Agent to vote the Loans and Secured Obligations of the Specified Holder on behalf of such Specified Holder with respect to the Loans and Secured Obligations held thereby in any manner in the
Administrative Agents sole discretion, unless the Administrative Agent instructs such Specified Holder to vote, in which case such Proposed Assignee shall vote its Loans and Secured Obligations as the Administrative Agent directs; and
(6) solely to give effect to the foregoing paragraph 5, each of the Specified Holders hereby constitute and appoint the Administrative
Agent and any officer or agent of the Administrative Agent, with full power of substitution, as its true and lawful attorney-in-fact with full power and authority in the place of such Specified Holder with respect to such Specified Holders
Loans and Secured Obligations, to take any and all appropriate action and to execute any and all documents and instruments as, in the opinion of such attorney, may be necessary or desirable solely to accomplish the purposes of paragraph 5, which
appointment as attorney shall be irrevocable and coupled with an interest.
[Signature pages follow]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed and delivered by
their respective duly authorized officers, solely in their respective capacity as officers of the undersigned and not in any other capacity, as of the date first set forth above.
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Allied Nevada Gold Corp. |
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By: |
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/s/ Stephen M. Jones |
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Name: |
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Stephen M. Jones |
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Title: |
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Executive Vice President & CEO |
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Allied Nevada Gold Holdings LLC |
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By: |
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/s/ Stephen M. Jones |
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Name: |
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Stephen M. Jones |
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Title: |
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Chief Financial Officer |
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Allied VGH Inc. |
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By: |
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/s/ Stephen M. Jones |
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Name: |
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Stephen M. Jones |
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Title: |
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Chief Financial Officer |
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Allied VNC Inc. |
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By: |
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/s/ Stephen M. Jones |
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Name: |
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Stephen M. Jones |
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Title: |
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Chief Financial Officer |
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ANG Central LLC |
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By: |
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/s/ Stephen M. Jones |
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Name: |
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Stephen M. Jones |
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Title: |
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Chief Financial Officer |
[Signature Page to
Amended and Restated Restructuring Support Agreement]
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ANG Cortez LLC |
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By: |
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/s/ Stephen M. Jones |
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Name: |
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Stephen M. Jones |
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Title: |
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Chief Financial Officer |
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ANG Eureka LLC |
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By: |
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/s/ Stephen M. Jones |
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Name: |
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Stephen M. Jones |
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Title: |
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Chief Financial Officer |
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ANG North LLC |
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By: |
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/s/ Stephen M. Jones |
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Name: |
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Stephen M. Jones |
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Title: |
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Chief Financial Officer |
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ANG Northeast LLC |
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By: |
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/s/ Stephen M. Jones |
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Name: |
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Stephen M. Jones |
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Title: |
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Chief Financial Officer |
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ANG Pony LLC |
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By: |
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/s/ Stephen M. Jones |
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Name: |
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Stephen M. Jones |
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Title: |
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Chief Financial Officer |
[Signature Page to
Amended and Restated Restructuring Support Agreement]
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Hasbrouck Production Company LLC |
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By: |
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/s/ Stephen M. Jones |
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Name: |
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Stephen M. Jones |
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Title: |
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Chief Financial Officer |
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Hycroft Resources & Development, Inc. |
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By: |
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/s/ Stephen M. Jones |
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Name: |
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Stephen M. Jones |
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Title: |
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Chief Financial Officer |
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Victory Exploration Inc. |
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By: |
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/s/ Stephen M. Jones |
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Name: |
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Stephen M. Jones |
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Title: |
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Chief Financial Officer |
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Victory Gold Inc. |
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By: |
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/s/ Stephen M. Jones |
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Name: |
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Stephen M. Jones |
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Title: |
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Chief Financial Officer |
[Signature Page to
Amended and Restated Restructuring Support Agreement]
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CONSENTING NOTEHOLDER |
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By: |
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Name: |
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Title: |
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Notice Address: |
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Facsimile: |
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Attention: |
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Principal Amount of Note Claims: |
$ |
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Principal Amount of Other Claims: |
$ |
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[Restructuring Support Agreement Signature Pages]
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SECURED LENDER |
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By: |
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Name: |
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Title: |
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Notice Address: |
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Facsimile: |
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Attention: |
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Principal Amount of ABL Claims: |
$ |
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Notional Amount of Swap Claims: |
$ |
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EXHIBIT B
RESTRUCTURING TERM SHEET
RESTRUCTURING TERM SHEET
Capitalized terms used and not otherwise defined herein shall have the meanings ascribed thereto in the Amended and Restated Restructuring Support Agreement
(the RSA) to which this term sheet is attached or the Modified Plan (as defined in the RSA). The term Company shall refer to ANV and its subsidiaries, taken as a whole.
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New First Lien Term Loan Credit Facility |
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On the Effective Date, Reorganized ANV will enter into a new first lien term loan credit facility (the New First Lien
Term Loan Credit Facility) pursuant to which Reorganized ANV will issue new first lien term loans (the New First Lien Term Loans) in an original aggregate principal amount equal to the total amount of the ABL Claims and
Swap Claims. The New First Lien Term Loans shall be distributed to the holders of the ABL Claims and Swap Claims on a pro rata basis in accordance with their respective claim amounts.
Agent. Scotia shall be the sole administrative agent and collateral agent under the
New First Lien Term Loan Credit Facility, and there will be no other agents under the New First Lien Term Loan Credit Facility.
Guarantees and Security. All of the direct and indirect domestic subsidiaries of Reorganized ANV shall guarantee the payment of the New First Lien Term
Loans. The New First Lien Term Loan Credit Facility will be secured by liens on substantially all assets of ANV and its subsidiaries, subject to exclusions consistent with the Documentation Standard (as defined below).
Documentation. Except as set forth herein, the documentation for the New First Lien
Term Loan Credit Facility shall be based on the documentation of the prepetition Credit Agreement as in effect on March 10, 2015 (the Documentation Standard), as reasonably negotiated by the Company, the Requisite Consenting
Noteholders and the Requisite Secured Lenders. The credit agreement for the New First Lien Term Loan Credit Facility (the New First Lien Term Loan Credit Agreement) will contain the affiliated lender provisions set forth on Annex
I hereto. Certain covenants.
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The terms of the New First Lien Term Loan Credit Facility will prohibit the incurrence of any other first lien debt, subject to customary exceptions for existing capital leases and refinancings thereof,
existing |
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purchase money debt and permitted refinancings thereof and commodity hedging arrangements, subject to limitations to be reasonably agreed
upon, provided that in no case will there be a general first lien debt basket, ratio first lien debt basket, or incremental first lien debt basket.
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The terms of the New First Lien Term Loan Credit Facility will prohibit the repayment (whether in cash or otherwise (other than repayments in
the form of qualified capital stock (to be defined in a customary manner to be reasonably agreed) of ANV)) of debt that is contractually subordinated in right of payment, except for permitted refinancings thereof on customary terms (e.g., weighted
average life to maturity and stated maturity no earlier than the refinanced debt, subordinated on terms at least as favorable to the New First Lien Term Loan Credit Facility as the refinanced debt, must PIK on terms at least as favorable to the New
First Lien Term Loan Credit Facility as refinanced debt, etc.). |
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The terms of the New First Lien Term Loan Credit Facility will prohibit the repayment (whether in cash or otherwise (other than repayments in the form of qualified capital stock of ANV)) of any junior priority lien debt (including
the New Second Lien Convertible Term Loan Credit Facility but excluding obligations owed to Jacobs Field Services (as defined below) under the Jacobs Agreements) or unsecured debt, except for permitted refinancings thereof on customary terms (e.g.,
weighted average life to maturity and stated maturity no earlier than the refinanced debt, must PIK on terms at least as favorable to the New First Lien Term Loan Credit Facility as refinanced debt, etc.). The terms of the New First Lien Term Loan
Credit Facility (x) will permit the repayment of amounts required to be paid to Jacobs Field Services North America Inc. (Jacobs Field Services) pursuant to (i) Section 1 of that certain Release and Settlement Agreement, dated
October 15, 2014, between Jacobs Field Services and Hycroft Resources & Development, Inc. (Hycroft), (ii) Section 1 of that certain Promissory Note, dated as of October 15, 2014 made by Hycroft in favor of Jacobs
Field Services and/or (iii) that certain Guarantee, dated as of October 15, 2014 (the |
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agreements referred to in clauses (i), (ii) and (ii), collectively, the Jacobs Agreements), made by ANV for the benefit of Hycroft and Jacobs Field Services and (y) will prohibit the repayment of amounts owed to
Jacobs Field Services pursuant to the Jacobs Agreements prior to the dates set forth therein as the Jacobs Agreements are in effect as of the date hereof. |
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The terms of the New First Lien Term Loan Credit Facility will prohibit the Company from conducting operations other than in a manner reasonably consistent with the mining suspension plan. |
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Borrowing Base. The outstanding balance of the New
First Lien Term Loan Credit Facility shall be subject to a cap amount equal to the borrowing base under the New First Lien Term Loan Credit Facility less $15.0 million (the Cap Amount). The borrowing base under the New First Lien
Term Loan Credit Facility shall be calculated in a manner consistent with the Borrowing Base in the prepetition Credit Agreement. To the extent that Reorganized ANV is out of compliance with a monthly revaluation of the Cap Amount, the New First
Lien Term Loan Credit Facility shall be subject to a prompt (and in any event, within two business days of such monthly revaluation) Cash paydown to reduce the principal amount of New First Lien Term Loans to less than the Cap Amount. |
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Maturity. The New First Lien Term Loan Credit
Facility shall mature on March 31, 2017. |
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Pilot Plant covenant. The New First Lien Term Loan
Credit Facility shall contain a covenant requiring the Company to have received the results from the pilot plant no later than November 30, 2015, and to share such results with the lenders under the New First Lien Term Loan Credit Facility.
Interest. The New First Lien Term Loan Credit Facility shall bear interest at one
month LIBOR + 550bps, payable monthly. |
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Asset Sales. On and after the Effective Date, cash in
an amount equal to 100% of the net cash proceeds from any sale of (i) assets currently identified as Held for Sale on the balance sheet of the Company (the Balance Sheet) and (ii) other asset sales and dispositions (other than
sales of gold and |
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silver inventory in the ordinary course of business) (clauses (i) and (ii), together with the Secured ABL/Swap Claims Asset
Sales, the Specified Asset Sales) shall be used to repay promptly (and in any event, within two business days of the receipt of such net cash proceeds) the New First Lien Term Loan Credit Facility.
New First Lien Term Loan Excess Cash Flow Payments. Within 21 days after the end of
the last day of each fiscal month ended after the Secured ABL/Swap Claims Excess Cash Flow Period (each such fiscal month, a New First Lien Term Loan Excess Cash Flow Period) until the maturity of the New First Lien Term Loan
Credit Facility, the Company shall prepay (a New First Lien Term Loan Excess Cash Flow Payment) the New First Lien Term Loans on a pro rata basis in an amount equal to the New First Lien Term Loan Excess Cash Flow Payment Amount
for such New First Lien Term Loan Excess Cash Flow Period; provided, however, that, if (i) on the last day of the applicable New First Lien Term Loan Excess Cash Flow Period, the Company would have had less than $7.5 million of Cash on
hand on a pro forma basis after giving effect to such New First Lien Term Loan Excess Cash Flow Payment had such payment been made on such date, the amount of such New First Lien Term Loan Excess Cash Flow Payment shall be reduced to the maximum
amount that would have resulted in the Company having at least $7.5 million of Cash on hand on such date had such New First Lien Term Loan Excess Cash Flow Payment been made on such date (such reduction, the New First Lien Term Loan Excess
Cash Flow Period-End Reduction) or (ii) on the date of such New First Lien Term Loan Excess Cash Flow Payment, the Company will have less than $4.0 million of Cash on hand on such date after giving effect to such New First Lien Term Loan
Excess Cash Flow Payment, the amount of such New First Lien Term Loan Excess Cash Flow Payment shall be reduced to the maximum amount that will result in the Company having at least $4.0 million of Cash on hand on such date (such reduction, the
New First Lien Term Loan Excess Cash Flow Payment Date Reduction) (it being understood and agreed, for the avoidance of doubt, that if both the New First Lien Term Loan Excess Cash Flow Period-End Reduction and the New First Lien
Term Loan Excess Cash Flow Payment Date Reduction are applicable, then the amount the Company shall have to pay in respect of the New First Lien Term Loan Excess Cash Flow Payment Amount shall be equal to the lesser of (x) the amount calculated
after taking into account the New First Lien Term |
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Loan Excess Cash Flow Period-End Reduction and (y) the amount calculated after taking into account the New First Lien Term Loan
Excess Cash Flow Payment Date Reduction); provided, further, that the amount of any such reduction pursuant to the foregoing proviso shall be automatically due and payable on the first day after the date of the applicable New First
Lien Term Loan Excess Cash Flow Payment on which the Reorganized Debtors have greater than $7.5 million of Cash on hand (such that any Cash on hand in excess of $7.5 million shall be used to repay New First Lien Term Loans on such day in an amount
not to exceed the applicable reduction). Excess Cash Flow shall
mean, for any period and without duplication: (a) the Companys net Cash provided
by operating activities during such period (as determined in accordance with GAAP); minus
(b) solely to the extent clause (a) is not reduced thereby for such period, Cash capital expenditures during such period (as determined in accordance with
GAAP) which are consistent with the Companys suspension plan (other than capital expenditures related to the development of the sulfide demonstration plant) in an amount not to exceed $100,000 in the aggregate in any fiscal month;
minus (c) solely to the extent clause (a) is not reduced thereby for such
period, the repayment of obligations owed under the Jacobs Agreements (as defined below) during such period to the extent such payments are not prohibited by the New First Lien Term Loan Credit Facility; provided that such payments shall not
exceed $4 million in April 2016 and $1,189,706 in October 2016; minus (d)
solely to the extent that any Specified Asset Sale made during such period increases clause (a) for such period, an amount equal to the net proceeds of such Specified Asset Sale which so increased clause (a) and which are used to make mandatory
prepayments of ABL Claims and Swap Claims (together, Secured Claims) and/or New First Lien Term Loans during such period; minus
(e) solely to the extent clause (a) is not reduced thereby for such period, (i) required or scheduled payments in respect of capital lease obligations and/or
equipment financings paid |
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during such period not to exceed $400,000 in the aggregate for such period, (ii) any scheduled cash fees (other than Fees) or
cash interest paid in respect of the Secured Claims and any New First Lien Term Loans during such period and (iii) any fees or expenses paid by the Company to advisors, consultants, attorneys or other professionals (whether of the Company or any
stakeholder or otherwise) (collectively, Fees) during such period; provided that any such fees or expenses, when taken together with all fees and expenses paid to such persons on or after August 1, 2015, do not exceed
$15.0 million in the aggregate; plus (f) solely to the extent clause (a) is
reduced thereby for such period, (i) payments in respect of capital lease obligations and/or equipment financings paid during such period to the extent such payments (x) exceed $400,000 in the aggregate for such period or (y) are voluntary or
otherwise paid prior to the date due and payable under the terms thereof as of the date hereof, (ii) any cash fees or cash interest paid in respect of indebtedness during such period (other than indebtedness consisting of the Secured Claims and/or
any New First Lien Term Loans) and (iii) any Fees paid during such period, which, when taken together with all Fees paid on or after August 1, 2015, exceed $15.0 million in the aggregate.
New First Lien Term Loan Excess Cash Flow Payment Amount shall mean,
for any New First Lien Term Loan Excess Cash Flow Period, (x) 50% of Excess Cash Flow for such New First Lien Term Loan Excess Cash Flow Period less (y) the amount of voluntary prepayments of the New First Lien Term Loans made during such New
First Lien Term Loan Excess Cash Flow Period (it being understood that the New First Lien Term Loans shall be incurred on the Effective Date and, accordingly, no such voluntary prepayments of New First Lien Term Loans can occur prior to the
Effective Date). |
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JDS report |
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ANV will cooperate with JDS in producing, and will pay the fees and expenses of JDS in connection with producing, an engineering report as promptly as practicable and as contemplated in the JDS engagement letter dated
June 25, 2015 and reviewed by ANV. |
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Intercreditor Agreement |
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The agent under the New Second Lien Convertible Notes and the agent under the New First Lien Term Loan Credit Facility shall enter into an intercreditor agreement (the New Intercreditor Agreement), in
form and substance reasonably |
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satisfactory to the Debtors, the Requisite Secured Lenders and the Requisite Exit Facility Lenders, establishing that the New Second Lien Convertible Notes are subordinated indebtedness (only (x) in right of payment with
respect to principal and interest and (y) as to priority of liens) relative to the New First Lien Term Loan Credit Facility. Without limitation, the New Intercreditor Agreement will (i) provide that all liens securing the New Second Lien Convertible
Notes are junior in priority to the liens securing the New First Lien Term Loan Credit Facility, (ii) prohibit the New Second Lien Convertible Notes from being guaranteed by any persons, or secured by any assets, that do not respectively guarantee
or secure the New First Lien Term Loan Credit Facility, (iii) provide for a customary standstill on the holders of the New Second Lien Convertible Notes of 180 days with respect to the exercise of remedies against common collateral, and
(iv) restrict the rights of the holders of the New Second Lien Convertible Notes to object to (A) any DIP financing provided by the holders of the New First Lien Term Loan Credit Facility, or which is (I) consented to by the requisite New First Lien
Term Loan Credit Facility lenders and (II) secured by liens senior to or pari passu with the New First Lien Term Loan Credit Facility (and, in either case, the liens securing the New Second Lien Convertible Notes will be subordinate to the
liens securing such DIP Financing); provided, that, in either case, the aggregate principal amount of such DIP financing and the New First Lien Term Loans shall not exceed an amount equal to the aggregate principal amount of the New First
Lien Term Loans as of the applicable petition date plus $50 million, and (B) the seeking of adequate protection by the holders of the New First Lien Term Loan Credit Facility, or the sale of common collateral or other assets of the
Reorganized Debtors (or Reorganized ANV as a whole) under Section 363 of the Bankruptcy Code if such sale is consented to by the holders of the New First Lien Term Loan Credit Facility, in each case, subject to certain customary exceptions to be
agreed. The New Intercreditor Agreement will also include a customary par purchase right for the benefit of certain Exit Facility Lenders with respect to a purchase of the New First Lien Term Loans and other obligations under the New First Lien Term
Loan Credit Facility. |
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FTI |
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The addendum to FTI Consulting Inc.s (FTI) engagement letter regarding FTIs role with respect to operations is attached as Annex II hereto. The Company shall provide reasonable access to
FTI to the holders of Secured Claims and New First Lien Term Loans. |
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Annex I
Affiliated Lender Provisions
The
following provisions (the Affiliated Lender Provisions) shall be contained in the New First Lien Term Loan Credit Agreement and shall be applicable to any Person (to be defined consistent with the Documentation Standard) that is
an Affiliated Lender (as defined below).
As used herein, Affiliated Lender means any Person (to be defined consistent with the
Documentation Standard) that, when taken together with any Affiliate(s) (to be defined consistent with the Documentation Standard) thereof and any Person(s) who would be deemed to be part of a group (within the meaning of Rule 13d-5 of
the Securities Exchange Act of 1934 as in effect on the date of the New First Lien Term Loan Credit Agreement) with such Person or any Affiliate(s) thereof, owns, beneficially or of record, directly or indirectly, equity, or instruments convertible
or exchangeable into equity (which, for purposes of this definition, shall be assumed to have been converted or exchanged into the maximum amount of equity which may be received therefor at the time of determination in accordance with this
definition, regardless of whether the conditions or other requirements to such conversion or exchange have been met as of such time), representing more than 5% of the voting or economic power of all equity of ANV (or its successor), provided
that any such interests held by Scotia or Wells Fargo as custodian for, or otherwise on behalf of, any other Person who is not an Affiliate thereof, or otherwise in connection with broker-dealer or market-making activities thereof, shall not be
considered to be owned by Scotia or Wells Fargo, as applicable, for purposes of this provision.
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With respect to any (i) consent (or decision not to consent) to any amendment, modification, waiver, consent or other action under the New First Lien Term Loan Credit Agreement or any other related definitive
credit documentation (collectively, the Credit Documents), (ii) other action on any matter related to any Credit Document or the approval of any plan of reorganization or (iii) direction to the administrative agent of
the New First Lien term Loan Credit Agreement (the Administrative Agent), any other agent or any lender (each, a Lender and, collectively, the Lenders) to undertake any action (or refrain from
taking any action) with respect to any Credit Document (each of clauses (i), (ii) and (iii), a Lender Consent Matter), that the New First Lien Term Loans and other Secured Obligations (to be defined consistent with the
Documentation Standard) held by the Affiliated Lenders would be automatically and without further action voted or directed in the same percentage as the votes or directions by all other Lenders under the New First Lien Term Loan Credit Agreement
(e.g., (i) if other Lenders under the New First Lien Term Loan Credit Agreement voted or directed 60% in favor and 40% against an action, the Affiliated Lenders would be deemed to have voted 60% in favor and 40% against such action and
(ii) if there is only one other Lender under the New First Lien Term Loan Credit Agreement, the Affiliated Lenders would be deemed to vote in the same manner as such other Lender). Notwithstanding the foregoing, the Affiliated Lenders shall
have the right to consent (or decide not to consent) to any Lender Consent Matter that (a) requires the consent or approval of each Lender (which shall be consistent with Section 14.14(b) of ANVs prepetition Credit Agreement as in
effect on March 10, 2015) or (b) affects the applicable Affiliated Lender, solely in its capacity as a Lender, in a disproportionately adverse manner as compared to other Lenders in their capacities as such; |
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The Affiliated Lenders will not have any right to participate in any meetings, presentations, calls, e-mail updates or other communications among the Administrative Agent, any other agent(s) and/or any Lender(s) or
other holders of Secured Obligations, except to the extent that they are invited to attend such by the Administrative Agent (which decision shall be in the Administrative Agents sole and absolute discretion); |
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The Affiliated Lenders shall not be provided and shall not seek to access any legal, financial or other information prepared by, prepared at the request of or provided to the Administrative Agent or the other agents,
Lenders or holders of Secured Obligations (including, without limitation, such information prepared by legal and financial advisors to the Administrative Agent or the other Lenders, including Wachtell, Lipton, Rosen & Katz; Morris, Nichols,
Arsht & Tunnell LLP; Fennemore Craig, P.C.; RPA Advisors, LLC; JDS Energy & Mining USA LLC; McMillan LLP; and Fasken Martineau), except to the extent the Administrative Agent agrees to provide such legal, financial or other
information (which shall be in the Administrative Agents sole and absolute discretion); |
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In connection with any bankruptcy or insolvency proceeding relating to ANV and its subsidiaries, the Affiliated Lenders, solely in their capacity as a Lender, (x) will not support and not object to, solely in their
capacity as a Lender, (1) any use of cash collateral (including any and all terms of any cash collateral order, a Use of Cash Collateral) and/or any debtor-in-possession financing (including any and all terms of any financing
agreement, related documents and financing order, a DIP Financing)) that is supported by or consented to by the Administrative Agent, (2) any sale of any assets, whether under section 363 of the Bankruptcy Code or otherwise,
that is supported by or consented to by the Administrative Agent (including the terms and conditions of any bidding procedures orders, sale orders and any and all purchase and sale agreements and related documents, a 363 Sale) or
(3) any other action taken by the Administrative Agent in connection with any Lender Consent Matter (unless, in the case of this clause (3), the applicable Affiliated Lender has the right to consent (or decide not to consent) to such matter
pursuant to the terms of paragraph 1 above); provided that any such Use of Cash Collateral, DIP Financing or 363 Sale would not affect the applicable Affiliated Lender, solely in its capacity as a Lender, in a disproportionately adverse
manner as compared to other Lenders in their capacities as such and (y) would, solely to effectuate or consummate a Use of Cash Collateral, DIP Financing, 363 Sale or matter described in the foregoing clause (3), in accordance with, and subject
to the limitations set forth in, the preceding clause (x), irrevocably authorize and empower the Administrative Agent to vote the Loans and Secured Obligations of the Affiliated Lenders on behalf of such Affiliated Lenders with respect to the Loans
and Secured Obligations held thereby in any manner in the Administrative Agents sole discretion, unless the Administrative Agent instructs such Affiliated Lender to vote, in which case such Affiliated Lender shall vote its Loans and Secured
Obligations as the Administrative Agent directs; |
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Solely to give effect to the foregoing paragraph 4, each of the Affiliated Lenders will constitute and appoint the Administrative Agent and any officer or agent of the Administrative Agent, with full power of
substitution, as its true and lawful attorney-in-fact with full power and authority in the place of such Affiliated Lender with respect to such Affiliated Lenders Loans and Secured Obligations, to take any and all appropriate action and to
execute any and all documents and instruments as, in the opinion of such attorney, may be necessary or desirable solely to accomplish the purposes of paragraph 4, which appointment as attorney shall be irrevocable and coupled with an interest; and
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In connection with the entry into any facility which refinances, amends, replaces or otherwise modifies the New First Lien Term Loan Credit Agreement, the Affiliated Lenders will consent to the inclusion of restrictions
thereon consistent with the foregoing Affiliated Lender Provisions. |
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Annex II
FTI Engagement Letter Addendum
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Steven D. Simms
Senior Managing Director
FTI Consulting, Inc. 3
Times Square New York, NY 10036
Office - 212-841-9369
steven.simms@fticonsulting.com |
PRIVATE & CONFIDENTIAL
As of July 6, 2015
Allied Nevada Gold Corp.
Mr. Stephen Jones
Executive Vice President and Chief
Financial Officer
9790 Gateway Drive, Suite 200
Reno, NV
89521
Re: Second Addendum to Allied Nevada Gold Corp. Engagement Contract
Dear Mr. Jones:
Reference is hereby made to (1) that certain engagement contract,
dated March 2, 2015 (the Engagement Contract), between Allied Nevada Gold Corp. (the Company) and FTI Consulting, Inc. (FTI) and (2) an addendum to the Engagement Contract dated April 27, 2015 (the
First Addendum). Capitalized terms used (but not defined) herein shall have the meanings ascribed to such terms in the Engagement Contract. In addition to the Services set forth in the Engagement Contract and the First Addendum, the
Company has requested that FTI provide certain supplemental services (the Supplemental Services) to the Company. Therefore, in consideration of the terms of the Engagement Contract and the terms of this second addendum (the Second
Addendum), the Company and FTI agree to supplement the Engagement Contract as described herein.
In addition to the Services described in the Engagement Contract
and the First Addendum, FTI will also provide the following Supplemental Services:
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Meet with site management to discuss operations, plans and capital requirements; |
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Assist in the development of a detailed operating plan; |
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As necessary: (i) provide an independent, third party review of the Companys transition plans, (ii) help the Company to manage the transition to the new operating program, and (iii) assist to
stabilize the Companys post transition operations; |
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Review the Companys approach to optimizing costs in a reduced operating level environment; |
Allied Nevada Gold Corp.
As of July 6, 2015
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Assess inventory levels given the new operating plans; |
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Provide feedback on potential efficiency improvements that may improve the Companys overall operations; |
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Assist management ot address and resolve vendor issues during the planned operational transition; |
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Assist the Company, if requested, to comply with reporting requirements imposed by the court, the lenders, regulatory agencies and/or other key constituencies; and |
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Assist the Company, if requested, in compiling information and/or completing analyses required to the finalization of the Companys plan of reorganization. |
The terms of the Engagement Contract, including the Standard Terms
and Conditions, and as further modified or supplemented by the order of the United States Bankruptcy Court for the District of Delaware dated April 15, 2015 authorizing the employment and retention of FTI by the Company and the First Addendum,
set forth the duties of each party with respect to FTIs services to the Company and are hereby incorporated by reference into this Second Addendum, and such terms are an integral part of this Second Addendum. Further, this Second Addendum, the
First Addendum, the Engagement Contract, and the Standard Terms and Conditions comprise the entire agreement for the provision of the services by FTI, including the Supplemental Services, to the exclusion of any other express or implied terms,
whether expressed orally or in writing, including any conditions, warranties and representations, and shall supersede all previous proposals, letters of engagement, undertakings, agreements, understandings, correspondence and other communications,
whether written or oral, regarding FTIs services.
4. |
Acknowledgement and Acceptance |
Please acknowledge your acceptance of the terms of this
Second Addendum by signing both the confirmation below and returning a copy of each to us at the above address.
If you have any questions regarding this
Second Addendum, please do not hesitate to contact Steven D. Simms at 212-841-9369.
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Yours faithfully, |
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FTI CONSULTING, INC. |
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By: |
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/s/ Steven D. Simms |
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Steven D. Simms |
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Senior Managing Director |
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Allied Nevada Gold Corp.
As of July 6, 2015
Confirmation of Terms of Second Addendum to Engagement Contract
We agree to engage FTI Consulting, Inc. upon the supplemental terms set forth herein.
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Allied Nevada Gold Corp. |
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By: |
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/s/ Stephen Jones |
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Stephen Jones |
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Executive Vice President, Secretary and Chief Financial Officer |
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Date: |
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July 6, 2015 |
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EXHIBIT C
JOINDER AGREEMENT
[ ], 2015
The undersigned (Transferee) hereby acknowledges that it has read and understands the Amended and Restated Restructuring
Support Agreement, dated as of July 23, 2015 (as amended, supplemented or otherwise modified from time to time, the Agreement), by and among Allied Nevada Gold Corp., a Delaware corporation (ANV), and its
direct and indirect subsidiaries parties thereto (together with ANV, the Debtors), and the entities and persons named therein as Creditor Parties thereunder. Capitalized terms used and not otherwise defined herein
shall have the meanings set forth in the Agreement.
1. Agreement to be Bound. The Transferee hereby agrees to be bound by all of
the terms of the Agreement, a copy of which is attached hereto as Annex I (as the same has been or may hereafter be amended, restated or otherwise modified from time to time in accordance with the provisions hereof). The Transferee shall
hereafter be deemed to be a [Consenting Noteholder / Secured Lender] and a Party for all purposes under the Agreement and with respect to all claims against and interests in the Debtors held such Transferee.
2. Representations and Warranties. The Transferee hereby makes the representations and warranties of the Creditor Parties set forth in
Section 8 of the Agreement to each other Party or only the Debtors (as applicable).
3. Governing Law. This joinder agreement
(the Joinder Agreement) to the Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to any conflicts of law provisions which would require the application of
the law of any other jurisdiction.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Transferee has caused this Joinder Agreement to be executed as of the
date first written above.
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Name of Transferor: |
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Name of Transferee: |
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Notice Address: |
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Facsimile: |
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Attention: |
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with a copy to: |
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Facsimile: |
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Attention: |
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Principal Amount of ABL Claims: |
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$ |
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Notional Amount of Swap Claims: |
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$ |
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Principal Amount of Note Claims: |
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$ |
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Principal Amount of Other Claims: |
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$ |
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Equity Interests: |
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[Joinder Agreement to
Amended and Restated Restructuring Support Agreement Signature Page]
EXHIBIT D
DIP WAIVER
Current Default
DIP Waiver
Effective as of July 23, 2015, the Majority Lenders agree to waive any Default or Event of Default and any anticipated Default or
Event of Default arising solely out of (a) non-compliance with Section 2.1 of the DIP Credit Agreement, solely to the extent the Lenders have funded any Additional Loans, (b) Sections 13.1(j) and (k)(ii) of the DIP Credit Agreement,
solely with respect to any non-payment of Capital Lease obligations of the Obligors, (c) Section 13.1(t) of the DIP Credit Agreement, solely to the extent that the suspension of the operation of the Hycroft Mine constitutes a Material
Adverse Change, and (d) the failure by the Obligors to comply with (1) Section 11.1(ee) of the DIP Credit Agreement, so long as the Obligors are complying with the milestones set forth in Section 4(a)(iv) of the Restructuring
Support Agreement (subject to an extension of 30 calendar days for each of such milestones), (2) Sections 11.1(k), (w)(i) and (x) of the DIP Credit Agreement, strictly based on the suspension of the operation of the Hycroft Mine, as
suspended on the date hereof, (3) Section 11.2(q)(ii) of the DIP Credit Agreement solely with respect to the four week periods ended May 24, 2015, May 31, 2015, June 7, 2015, June 14,
2015, June 21, 2015, June 28, 2015, July 5, 2015, July 12, 2015, July 19, 2015, July 26, 2015, August 2, 2015, August 9, 2015 and August 16, 2015
(4) Section 11.2(q)(iii) of the DIP Credit Agreement solely with respect to the four week periods ended May 24, 2015, May 31, 2015, June 7, 2015, June 14, 2015, June 21, 2015, June 28,
2015, July 5, 2015, July 12, 2015, July 19, 2015, July 26, 2015, August 2, 2015, August 9, 2015 and August 16, 2015 (5) Section 11.2(q)(iv) of the DIP Credit Agreement solely
with respect to the monthly period ended May 31, 2015, June 30, 2015 and July 31, 2015 (6) Section 11.1(ff)(i) of the DIP Credit Agreement solely with respect to delivery of an update to the Approved Budget solely for
the delivery dates of May 21, 2015 and June 18, 2015, (7) Sections 11.1(hh) and (ii) of the DIP Credit Agreement, solely to the extent such failure to comply is as a result of non-payment of Capital Lease obligations of the
Obligors and (8) Paragraph 21 of the Final Order, only with respect to the requirement that the Obligors use cash in an amount equal to 100% of any net cash proceeds of the sale of the Obligors exploration properties to Clover Nevada LLC
consummated on June 29, 2015 to immediately satisfy any outstanding ABL Secured Obligations, solely to the extent such proceeds (less an amount equal to $2,500,000) shall have been applied to satisfy the ABL Secured Obligations on the date
hereof. Except as expressly set forth herein, the waiver set forth herein shall not operate as a waiver of any right, power or remedy of the Agent or Lenders, nor constitute a waiver of any provision of the DIP Credit Agreement or the other Credit
Documents or be deemed or construed to constitute a course of dealing or any other basis for altering the Secured Obligations of any Obligor.
Prospective DIP Waiver
Subject to the terms and
conditions set forth herein, effective as of July 23, 2015 until the date upon which the Majority Lenders (or their representative) provide written notice to the Obligors
(which may be through electronic mail or otherwise) that this Waiver (as defined below) has been terminated, retracted and/or withdrawn (the Waiver Period), the Majority
Lenders agree to waive any anticipated Default or Event of Default arising solely out of (a) non-compliance after the date hereof with Section 2.1 of the DIP Credit Agreement, solely to the extent the Lenders have funded any Additional
Loans and (b) the failure by the Obligors to comply after the date hereof with (1) Section 11.1(ff)(i) of the DIP Credit Agreement solely with respect to any update to the Approved Budget that is required to be delivered after the
date hereof, solely to the extent such failure to comply is due to the delayed approval by the Majority Lenders of such update to the Approved Budget, (2) Section 11.2(q)(i) of the DIP Credit Agreement solely with respect to any weekly
testing period ended after the date hereof, (3) Section 11.2(q)(ii) of the DIP Credit Agreement solely with respect to any four-week testing period ended after August 16, 2015, (4) Section 11.2(q)(iii) of the DIP Credit
Agreement solely with respect to any four-week testing period ended after August 16, 2015 and (5) Section 11.2(q)(iv) of the DIP Credit Agreement solely with respect to any monthly testing period ended after July 31, 2015 (the
Defaults and Events of Default in this clause (ii), the Specified Defaults). Except as expressly set forth herein, the waivers set forth herein (collectively, this Waiver) shall not operate as a waiver of any
right, power or remedy of the Agent or Lenders, nor constitute a waiver of any provision of the DIP Credit Agreement or the other Credit Documents or be deemed or construed to constitute a course of dealing or any other basis for altering the
Secured Obligations of any Obligor. This Waiver is strictly limited to (x) any anticipated Default and/or Event of Default occurring after the date hereof and (y) with respect to the Specified Defaults, the Waiver Period. It is expressly
understood and agreed by the Obligors that upon a termination of the Waiver Period all Specified Defaults that have occurred through and including such date of termination shall be deemed to be in existence, unremedied and continuing for an intents
and purposes under the Credit Documents and subject to the remedies set forth in Section 13.2 of the DIP Credit Agreement and the other Credit Documents.
Exhibit 10.2
EXECUTION VERSION
THIS
COMMITMENT LETTER IS NOT AN OFFER WITH RESPECT TO ANY
SECURITIES OR A SOLICITATION OF ACCEPTANCES OF A CHAPTER 11 PLAN
WITHIN THE MEANING OF SECTION 1125 OF THE BANKRUPTCY CODE. ANY
SUCH OFFER OR SOLICITATION WILL COMPLY WITH ALL APPLICABLE
SECURITIES LAWS AND/OR PROVISIONS OF THE BANKRUPTCY CODE
July 23, 2015
Allied Nevada Gold Corp. and
the other Debtors (as defined below)
9790 Gateway Drive, Suite 200
Reno, NV 89521
Attention: Mr. Stephen Jones
|
Re: |
Exit Facility Commitment Letter |
Sir:
Reference is hereby made to the Debtors Amended Joint Chapter 11 Plan of Reorganization attached as Exhibit A hereto (as the same
may be amended, supplemented or otherwise modified from time to time with the prior written consent of the Requisite Commitment Parties (as defined below), the Plan), which sets forth the terms of a proposed restructuring (the
Restructuring) for Allied Nevada Gold Corp., a Delaware corporation (as in existence on the date hereof, as a debtor-in-possession in the Chapter 11 Cases (as defined below) and as a reorganized debtor, as applicable, the
Company), and certain of the Companys subsidiaries (each as in existence on the date hereof, as a debtor-in-possession in the Chapter 11 Cases and as a reorganized debtor, as applicable, together with the Company, the
Debtors), filed by the Debtors in connection with voluntary filings (the Chapter 11 Cases) under chapter 11 of title 11 of the United States Code (as amended, the Bankruptcy Code) in the
United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court). Capitalized terms used in this letter agreement (as amended, supplemented or otherwise modified from time to time in accordance with the terms
hereof and including all of the exhibits attached hereto (such exhibits being incorporated herein by reference in their entirety), this Commitment Letter) and not otherwise defined herein shall have the meanings given to such
terms in the Plan (it being understood, for the avoidance of doubt, that for purposes of determining the meanings of such capitalized terms, reference shall only be made to the Plan in the form attached hereto as Exhibit A and any amendments,
supplements or modifications thereto shall be disregarded for purposes of determining such definitions unless approved in writing by the Requisite Commitment Parties).
Each of the undersigned (together with its successors and permitted assigns, a Commitment Party and, collectively, the
Commitment Parties) hereby commits, severally (and not jointly nor jointly and severally), to purchase from the Company on the Effective Date second lien convertible notes (as more fully described in Exhibit B, the
New Second Lien Convertible Notes) on the terms, and subject to the conditions, set forth in this Commitment Letter in an aggregate amount equal to its Commitment Percentage (as defined in Exhibit B) of the Purchase Price
(as defined in Exhibit B). The commitment of each Commitment Party to
purchase New Second Lien Convertible Notes set forth in, and subject to the terms and conditions of, this Commitment Letter shall be referred to herein as such Commitment Partys
Commitment, and all of the Commitment Parties Commitments shall be referred to herein as, collectively, the Commitments. Anything in this Commitment Letter to the contrary notwithstanding, any Commitment
Party, in its sole discretion, may designate that some or all of the New Second Lien Convertible Notes be issued in the name of, and delivered to, one or more of its Affiliates or Related Funds (as defined below).
Whether or not the transactions contemplated hereby or in the Plan are consummated or any of the other Contemplated Transactions (as defined
in Exhibit C) are consummated, the Debtors hereby agree that they shall bear, and be responsible for, all Reimbursed Fees and Expenses (as defined below) and, accordingly, reimburse or pay, as the case may be, the Reimbursed Fees and Expenses as
follows: (i) all accrued and unpaid Reimbursed Fees and Expenses incurred up to (and including) the date of entry by the Bankruptcy Court of the Exit Facility Commitment Order (the Exit Facility Commitment Order Entry Date)
shall be reimbursed or paid in full in cash on the Exit Facility Commitment Order Entry Date, (ii) after the Exit Facility Commitment Order Entry Date, all accrued and unpaid Reimbursed Fees and Expenses shall, subject to the Exit Facility
Commitment Order, be reimbursed or paid in full in cash on a regular and continuing basis promptly (but in any event within fifteen (15) calendar days) after invoices are presented to the Debtors without Bankruptcy Court review or further
Bankruptcy Court order, (iii) upon termination of this Commitment Letter, all accrued and unpaid Reimbursed Fees and Expenses incurred up to (and including) the date of such termination shall, subject to the Exit Facility Commitment Order, be
reimbursed or paid in full in cash promptly (but in any event within fifteen (15) calendar days) after invoices are presented to the Debtors without Bankruptcy Court review or further Bankruptcy Court order and (iv) on the Effective Date,
all accrued and unpaid Reimbursed Fees and Expenses incurred up to (and including) the Effective Date shall, subject to the Exit Facility Commitment Order, be paid in full in cash on the Effective Date against receipt of reasonably detailed
invoices, without any requirement for Bankruptcy Court review or further Bankruptcy Court order. All Reimbursed Fees and Expenses of a Commitment Party shall be paid to such Commitment Party (or its designee) by wire transfer of immediately
available funds to the account(s) specified by such Commitment Party. All Reimbursed Fees and Expenses shall constitute allowed super-priority administrative expenses against the Debtors estates under the Bankruptcy Code. The term
Reimbursed Fees and Expenses shall mean the reasonable and documented fees, costs and expenses of the Commitment Parties Advisors in connection with the diligence, negotiation, formulation, preparation, execution,
delivery, implementation, consummation and/or enforcement of the Plan, the Commitments, this Commitment Letter, any of the other Transaction Documents (as defined in Exhibit C) and/or any of the Contemplated Transactions, or any amendments,
waivers, consents, supplements or other modifications to any of the foregoing. The term Commitment Parties Advisors shall mean (a) Stroock & Stroock & Lavan LLP, as lead counsel, (b) Young Conaway
Stargatt &Taylor LLP, as Delaware local counsel for the Commitment Parties, (c) Goodmans LLP, as Canadian local counsel for the Commitment Parties, (d) one Nevada local counsel for the Commitment Parties (if applicable), and
(e) Houlihan Lokey, Inc., as financial advisor to the Commitment Parties; provided, however, that Houlihan Lokey, Inc. shall not be entitled to any additional compensation not
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authorized pursuant to the Interim Order: (I) Pursuant to 11 U.S.C. §§ 105, 361, 362, 363 and 364 Authorizing the Debtors to (A) Obtain Postpetition Financing, (B) Grant
Liens and Superpriority Administrative Expense Status, (C) Use Cash Collateral of Prepetition Secured Parties, and (D) Grant Adequate Protection to Prepetition Secured Parties; (II) Scheduling a Final Hearing Pursuant to Bankruptcy Rules
4001(b) and 4001(c); and (III) Granting Related Relief [Docket No. 70]; and the Final Order: (I) Pursuant to 11 U.S.C. §§ 105, 361, 362, 363 and 364 Authorizing the Debtors to (A) Obtain Postpetition Financing,
(B) Grant Liens and Superpriority Administrative Expense Status, (C) Use Cash Collateral of Prepetition Secured Parties, and (D) Grant Adequate Protection to Prepetition Secured Parties; and (II) Granting Related Relief [Docket No.
218], each as entered by the Bankruptcy Court. The terms set forth in this paragraph shall survive termination of this Commitment Letter and shall remain in full force and effect regardless of whether the transactions contemplated hereby are
consummated.
Whether or not the transactions contemplated hereby or in the Plan are consummated or any of the other Contemplated
Transactions are consummated, the Debtors hereby agree to indemnify and hold harmless each of the Commitment Parties and each of their respective Affiliates, Related Funds, stockholders, equity holders, members, partners, managers, officers,
directors, employees, attorneys, accountants, financial advisors, consultants, agents, advisors and controlling persons (each, an Indemnified Party) from and against any and all losses, claims, damages, liabilities and expenses,
joint or several, imposed on, sustained, incurred or suffered by, or asserted against, any Indemnified Party as a result of or arising out of or in any way related to, directly or indirectly, this Commitment Letter or any of the other Transaction
Documents, the Commitments and/or any of the Contemplated Transactions, or any breach by the Debtors of their obligations under this Commitment Letter or any other Transaction Document or any claim, litigation, investigation or proceeding relating
to any of the foregoing, regardless of whether any such Indemnified Party is a party thereto and whether or not any such claim, litigation, investigation or proceeding is brought by the Debtors or any of their respective Affiliates or other related
parties, and to reimburse each such Indemnified Party for the reasonable and documented legal or other out-of-pocket costs and expenses as they are incurred in connection with investigating, responding to or defending any of the foregoing;
provided, that the foregoing indemnification will not, as to any Indemnified Party, apply to losses, claims, damages, liabilities or expenses to the extent they are (a) determined by a final, non-appealable decision by a court of
competent jurisdiction to have resulted from (i) any act by such Indemnified Party that constitutes fraud, gross negligence or willful misconduct or (ii) the material breach by such Indemnified Party of its obligations under this
Commitment Letter or any other Transaction Document; or (b) incurred in connection with any dispute solely among the Indemnified Parties other than as a result of, or arising from, any act or omission by any of the Debtors or their respective
Affiliates. If for any reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient to hold it harmless, then the Debtors shall contribute to the amount paid or payable by such Indemnified Party as a result of such
loss, claim, damage, liability or expense in such proportion as is appropriate to reflect not only the relative benefits received by the Debtors, on the one hand, and such Indemnified Party, on the other hand, but also the relative fault of the
Debtors, on the one hand, and such Indemnified Party, on the other hand, as well as any relevant equitable considerations. It is hereby agreed that the relative benefits to the Debtors, on the one hand, and all Indemnified Parties, on the other
3
hand, shall be deemed to be in the same proportion as (x) the total value received or proposed to be received by the Debtors pursuant to the sale of the New Second Lien Convertible Notes to
the Commitment Parties bears to (y) the Put Option Payment (as defined in Exhibit B) paid or proposed to be paid to the Commitment Parties in connection with such sales. The Debtors also agree that no Indemnified Party shall have
liability based on its exclusive or contributory negligence or otherwise to the Debtors, any Person asserting claims on behalf of or in right of the Debtors, or any other Person in connection with or as a result of this Commitment Letter, any other
Transaction Document, the Plan or any Contemplated Transaction, except as to any Indemnified Party to the extent that any losses, claims, damages, liabilities or expenses incurred by the Debtors solely resulted from the fraud or willful misconduct
of such Indemnified Party, as determined by a final, non-appealable decision by a court of competent jurisdiction. All amounts to be paid or contributed by the Debtors pursuant to this paragraph shall constitute allowed super-priority administrative
expenses against the Debtors estates under the Bankruptcy Code. The terms set forth in this paragraph shall survive termination of this Commitment Letter and shall remain in full force and effect regardless of whether the transactions
contemplated hereby are consummated.
The obligation of each Commitment Party to purchase New Second Lien Convertible Notes on the
Effective Date pursuant to its Commitment shall be subject to the satisfaction of the conditions precedent set forth in Exhibit C, each of which may be waived in writing by the Requisite Commitment Parties.
Unless earlier terminated in accordance with this Commitment Letter, this Commitment Letter and the Commitments contemplated hereby shall
terminate automatically and immediately, without a need for any further action on the part of (or notice provided to) any Person, upon the earlier to occur of (a) November 30, 2015 (the Termination Date) and (b) the
date of termination of the Amended and Restated Restructuring Support Agreement. In addition, the Commitment Parties shall have the right to terminate this Commitment Letter and the Commitments contemplated hereby upon the giving by the Requisite
Commitment Parties of three (3) Business Days written notice (a Termination Notice) of termination to the Company (i) if the Debtors do not file the Exit Facility Commitment Order Motion (as defined below) (which shall
include an executed copy of this Commitment Letter (with redactions reasonably requested by the Requisite Commitment Parties)) with the Bankruptcy Court within one (1) calendar day of the date of this Commitment Letter, (ii) if the
Bankruptcy Court does not enter the Exit Facility Commitment Order (consistent with this Commitment Letter and otherwise in form and substance reasonably acceptable to the Requisite Commitment Parties and the Debtors) on or prior to the date that is
forty-five (45) calendar days after the date of this Commitment Letter, (iii) if any of the Debtors shall have breached or failed to perform any of their respective covenants or other obligations contained in this Commitment Letter and any
such breach or failure to perform is not curable or able to be performed by the Termination Date, or, if curable or able to be performed by the Termination Date, is not cured or performed within seven (7) calendar days after written notice of
such breach or failure is given to the Debtors by the Requisite Commitment Parties, (iv) if any of the conditions precedent set forth in Exhibit C become incapable of fulfillment, (v) if any of the Debtors makes a public
announcement, enters into an agreement, or files any pleading or document with the Bankruptcy Court evidencing its
4
intention to support, or otherwise supports, any Alternative Transaction or (vi) if a Creditor Party Termination Event (as defined in the Amended and Restated Restructuring Support Agreement
(as in effect on the date of this Commitment Letter)) occurs without giving effect to any waivers of a Creditor Party Termination Event provided under the Amended and Restated Restructuring Support Agreement (all such Creditor Party Termination
Events being incorporated herein by reference with full force and effect as if fully set forth herein by applying the provisions thereof mutatis mutandis (such that all changes and modifications to the defined terms and other terminology used
in the Creditor Party Termination Events shall be made so that the Creditor Party Termination Events can be applied in a logical manner in this Commitment Letter (it being understood that, for purposes of such application, the Requisite Commitment
Parties shall have the same termination rights with respect to the occurrence of a Creditor Party Termination Event as the Requisite Consenting Noteholders (as defined in the Amended and Restated Restructuring Support Agreement (as in effect on the
date of this Commitment Letter)) have with respect to the occurrence of a Creditor Party Termination Event pursuant to Section 5(a) of the Amended and Restated Restructuring Support Agreement (as in effect on the date of this Commitment
Letter), and the delivery by the Requisite Commitment Parties of a Termination Notice pursuant to this Commitment Letter upon the occurrence of a Creditor Party Termination Event (subject to any applicable cure periods) shall result in the valid
termination of this Commitment Letter regardless of any action or inaction taken by the Requisite Consenting Noteholders under the Amended and Restated Restructuring Support Agreement. This Commitment Letter and the Commitments contemplated hereby
may be terminated by the written consent of the Debtors and the Requisite Commitment Parties. The Debtors acknowledge and agree and shall not dispute that the giving of a Termination Notice by the Requisite Commitment Parties pursuant to this
Commitment Letter shall not be a violation of the automatic stay of section 362 of the Bankruptcy Code (and the Debtors hereby waive, to the greatest extent possible, the applicability of the automatic stay to the giving of such Termination Notice).
As used herein, Requisite Commitment Parties means, as of any date of determination, the Commitment Parties whose aggregate Commitment Percentages constitute more than 75% of the aggregate Commitment Percentages of all Commitment
Parties as of such date.
The Debtors hereby acknowledge and agree that the Commitment Parties have expended, and will continue to expend,
considerable time and expense in connection with this Commitment Letter and the negotiation hereof, and that this Commitment Letter provides substantial value to, is beneficial to, and is necessary to preserve, the Debtors estates, and that
the Commitment Parties have made a substantial contribution to the Debtors and their estates. If (a) any Debtor enters into an agreement (including, without limitation, any agreement in principle, letter of intent, memorandum of understanding
or definitive agreement) with respect to any Alternative Transaction, (b) the Bankruptcy Court approves or authorizes any Alternative Transaction with respect to any of the Debtors or (c) any Debtor consummates any Alternative Transaction
(any of the events described in clause (a), clause (b) or clause (c) of this paragraph, a Triggering Event), in any such case described in clause (a), clause (b) or clause
(c) of this paragraph, at any time (x) prior to the termination of this Commitment Letter in accordance with the terms hereof or (y) within twelve (12) months following the termination of this Commitment Letter and the
Commitments (including a termination on account of the occurrence of the Termination Date), then the Debtors will pay to the Commitment Parties liquidated damages in cash in the aggregate
5
amount of $3,000,000 (the Termination Payment). The Termination Payment (i) shall constitute an allowed super-priority administrative expense claim against each of the
Debtors, shall be deemed earned in full on the date of the Triggering Event and shall be paid to the Commitment Parties upon the earlier of the consummation or the effectiveness of an Alternative Transaction (including, without limitation, the
effective date of a chapter 11 plan) and the Bankruptcy Courts approval or authorization of an Alternative Transaction, (ii) shall be paid to the Commitment Parties on a pro rata basis (based on their respective Commitment
Percentages) by wire transfer of immediately available funds to the accounts designated by the Commitment Parties, (iii) shall be paid without setoff or recoupment and shall not be subject to defense or offset on account of any claim, defense
or counterclaim, and (iv) shall be paid free and clear of and without deduction for any and all present or future applicable taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto (with appropriate
gross-up for withholding taxes, if any, such that the relevant Commitment Party receives the amount it would have received if no withholding had been made). The terms set forth in this paragraph shall survive termination of this Commitment Letter
and shall remain in full force and effect regardless of whether the transactions contemplated hereby are consummated. The parties acknowledge that the agreements contained in this paragraph are an integral part of the transactions contemplated by
this Commitment Letter, are actually necessary to preserve the value of the Debtors estates and constitute liquidated damages and not a penalty, and that, without these agreements, the Commitment Parties would not have entered into this
Commitment Letter.
Prior to or concurrently with the filing by the Debtors of a motion seeking entry of the Disclosure Statement Order
(the Disclosure Statement Motion), the Debtors shall file a motion and supporting papers (the Exit Facility Commitment Order Motion) seeking the entry of the Exit Facility Commitment Order, pursuant to which the
Bankruptcy Court shall approve, among other things, the payment by the Debtors of the Put Option Payment (as defined in Exhibit B), the Termination Payment and the Reimbursed Fees and Expenses on the terms set forth herein, and the
indemnification and contribution provisions in favor of the Indemnified Parties set forth herein; provided, that the exhibits to any copy of this Commitment Letter that is filed with the Bankruptcy Court shall, subject to Bankruptcy Court
approval, be subject to redaction as the Requisite Commitment Parties and the Debtors determine to be reasonably necessary and appropriate (it being understood the Commitment and the Commitment Percentage of each Commitment Party (but not the
aggregate Commitments) and the amount of the Put Option Payment that will be paid to each Commitment Party shall be redacted). The Debtors shall (i) use their commercially reasonable efforts to obtain a waiver of Bankruptcy Rule 6004(h) and
request that the Exit Facility Commitment Order be effective immediately upon its entry by the Bankruptcy Court, which Exit Facility Commitment Order shall not be revised, modified or amended by the Confirmation Order (as defined in Exhibit
C) or any other further order of the Bankruptcy Court without the consent of the Requisite Commitment Parties, and (ii) fully support the Exit Facility Commitment Order Motion and any application seeking Bankruptcy Court approval and
authorization to pay the expenses and other amounts under this Commitment Letter, including the Reimbursed Fees and Expenses, the Put Option Payment and the Termination Payment, as a super-priority administrative expense of the Debtors
estates. The Debtors may, and shall be permitted to, (x) file the Exit Facility Commitment Order Motion as
6
part of, and include the Exit Facility Commitment Order Motion directly in, the Disclosure Statement Motion or a motion to approve the Amended and Restated Restructuring Support Agreement, which
motion shall be in form and substance reasonably satisfactory to the Commitment Parties (the RSA Motion), and (y) seek to have the Exit Facility Commitment Order be part of, and be included directly in, the Disclosure
Statement Order or the RSA Order, and, in any such case of clause (x) or clause (y), all provisions of this Commitment Letter that apply to the Exit Facility Commitment Order Motion or the Exit Facility Commitment Order shall be
deemed to apply to the Disclosure Statement Motion, the RSA Motion, the Disclosure Statement Order or the RSA Order, as applicable.
Promptly following the date of this Commitment Letter, the Debtors shall, and shall use their commercially reasonable efforts to cause their
employees, officers, directors, accountants, attorneys and other advisors (collectively, Representatives) to, provide each of the Commitment Parties and their respective Representatives with reasonable access, upon reasonable
prior notice, during normal business hours, and without any material disruption to the conduct of the Debtors business, to management and Representatives of the Debtors and to assets, properties, contracts, books, records and any other
information concerning the business, operations and other affairs of the Debtors as any of the Commitment Parties or any of their respective Representatives may reasonably request.
Each of the covenants and agreements set forth in Sections 4(a) and 4(b) of the Amended and Restated Restructuring Support Agreement, in each
case as in effect on the date of this Commitment Letter (collectively, the Restructuring Support Agreement Covenants), is hereby incorporated herein by reference with full force and effect as if fully set forth herein by applying
the provisions thereof mutatis mutandis (such that all changes and modifications to the defined terms and other terminology used in the Restructuring Support Agreement Covenants shall be made so that the Restructuring Support Agreement
Covenants can be applied in a logical manner in this Commitment Letter (it being understood that, for purposes of such application, the Restructuring Support Agreement Covenants shall apply until this Commitment Letter has been terminated in
accordance with its terms, the Requisite Commitment Parties shall have the same consent and approval rights with respect to the Restructuring Support Agreement Covenants (including approval and consent rights included in the defined terms used in
the Restructuring Support Covenants) as the Requisite Consenting Noteholders have with respect to the Restructuring Support Agreement Covenants (and no consent or approval provided by the Requisite Consenting Noteholders with respect to any of the
Restructuring Support Agreement Covenants shall have any effect on the Restructuring Support Agreement Covenants for purposes of this Commitment Letter), and the obligations of the Debtors with respect to the Consenting Noteholders Advisors
(as defined in the Amended and Restated Restructuring Support Agreement (as in effect on the date of this Commitment Letter)) set forth in the Restructuring Support Agreement Covenants shall apply in the same manner to the Commitment Parties
Advisors), and the Debtors shall perform, abide by and observe, for the benefit of the Commitment Parties, all of the Restructuring Support Agreement Covenants as incorporated herein and modified hereby and without giving effect to any amendment,
modification, supplement, forbearance or termination of or to any such Restructuring Support Agreement Covenants that are made or provided under the terms of the Amended and Restated Restructuring Support Agreement.
7
Promptly following the Exit Facility Commitment Order Entry Date, the Debtors and the Commitment
Parties shall negotiate, execute and deliver the Note Purchase Agreement (as defined in Exhibit B).
Each of the terms set forth in
this Commitment Letter that follow this paragraph shall survive termination of this Commitment Letter and shall remain in full force and effect regardless of whether the transactions contemplated hereby are consummated.
This Commitment Letter shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted
assigns. Neither this Commitment Letter nor any of the rights, interests or obligations under this Commitment Letter shall be assigned by any of the parties (whether by operation of law or otherwise) without the prior written consent of the other
parties. Notwithstanding the immediately preceding sentence, any Commitment Partys rights, obligations or interests hereunder may be freely assigned, delegated or transferred, in whole or in part, by such Commitment Party to (a) any
Commitment Party, (b) any Affiliate of a Commitment Party or (c) any Related Fund of a Commitment Party; provided, that any such assignee, delegate or transferee agrees in writing prior to such assignment, delegation or transfer to
be bound by the terms hereof in the same manner as the assigning, delegating or transferring Commitment Party with respect to the rights, obligations and/or interests so assigned, delegated or transferred. Notwithstanding the foregoing or any other
provision herein, no such assignment, delegation or transfer will relieve the assigning, delegating or transferring Commitment Party of its obligations hereunder if any such assignee, delegate or transferee fails to perform such obligations. The
term Related Fund means, with respect to any Commitment Party, any fund, account or investment vehicle that is controlled or managed by (i) such Commitment Party, (ii) an Affiliate of such Commitment Party or
(iii) the same investment manager or advisor as such Commitment Party or an Affiliate of such investment manager or advisor.
Notwithstanding anything that may be expressed or implied in this Commitment Letter, and notwithstanding the fact that certain of the
Commitment Parties may be partnerships or limited liability companies, the Debtors and the Commitment Parties covenant, agree and acknowledge that no recourse under this Commitment Letter shall be had against any former, current or future directors,
officers, agents, attorneys, Affiliates, general or limited partners, members, managers, employees, stockholders or equity holders of any Commitment Party, or any former, current or future directors, officers, agents, attorneys, Affiliates,
employees, general or limited partners, members, managers, employees, stockholders or equity holders of any of the foregoing, as such (any such Person, a No Recourse Party), whether by the enforcement of any assessment or by any
legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, or any other theory that seeks to pierce the corporate veil or impose liability of an entity against its owners or Affiliates or otherwise,
it being expressly agreed and acknowledged that no liability whatsoever shall attach to, be imposed on or otherwise be incurred by any No Recourse Party for any obligation of any Commitment Party under this Commitment Letter or any other Transaction
Document for any claim based on, in respect of or by reason of such obligations or their creation.
8
This Commitment Letter is intended to be solely for the benefit of the parties hereto and is not
intended to confer any benefits upon, or create any rights in favor of, any Person other than the parties hereto and other than the Indemnified Parties and the No Recourse Parties with respect to the provisions hereof that are applicable to such
Persons.
The Debtors and each of the Commitment Parties hereby acknowledge that each Commitment Party and its Affiliates and Related
Funds are in the business of making investments in and otherwise engaging in businesses which may or may not be in competition with the Debtors and/or the other Commitment Parties, and that this Commitment Letter and the Commitment made by such
Commitment Party hereunder in no way limits or restricts the ability of such Commitment Party or any of its Affiliates or Related Funds, now or at any time in the future, with regard to making such investments or engaging in such businesses.
The Commitment Parties and their respective Affiliates and Related Funds may have economic interests that conflict with those of the Debtors.
The Debtors hereby agree that the Commitment Parties will act under this Commitment Letter as independent contractors and that nothing in this Commitment Letter will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or
other implied duty among the Commitment Parties and the Debtors and their respective Affiliates.
Nothing herein shall be deemed an
admission of any kind. Pursuant to Federal Rule of Evidence 408 and any applicable state rules of evidence, this Commitment Letter and all negotiations relating hereto shall not be admissible into evidence in any proceeding other than a proceeding
to enforce the terms of this Commitment Letter.
Unless otherwise required by applicable law, regulation or legal process, the Debtors
will not, without the Requisite Commitment Parties prior written consent, disclose to any Person any terms, conditions or other facts with respect to this Commitment Letter or the Commitments or the transactions contemplated hereunder, other
than to the Debtors Representatives in connection with the transactions contemplated hereby and subject to their agreement to be bound by the confidentiality provisions hereof; provided, however, that each Commitment Party agrees
to permit disclosure in the Disclosure Statement and any filings by the Debtors with the Bankruptcy Court regarding the contents of this Commitment Letter, including, but not limited to, the aggregate Commitments; provided, that the Debtors
shall not disclose in the Disclosure Statement or any such filing the Commitment or the Commitment Percentage of any Commitment Party or the amount of the Put Option Payment that will be paid to a Commitment Party, except as otherwise required by
applicable law or with the prior written consent of such Commitment Party. The Debtors agree to use their commercially reasonable efforts (including by filing all necessary applications and other filings under the Securities Act, the Securities
Exchange Act and/or any of the rules or regulations promulgated thereunder) to cause any copy of this Commitment Letter that may be filed with the Securities Exchange Commission to be accorded confidential treatment such that the Commitment and the
Commitment Percentage of each Commitment Party and the amount of the Put Option Payment that will be paid to each Commitment Party shall be redacted.
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Notwithstanding anything contained herein, each Commitment Party acknowledges that its decision
to enter into this Commitment Letter has been made by such Commitment Party independently of any other Commitment Party. The covenants and obligations of the Commitment Parties under this Commitment Letter are, in all respects, several (and not
joint nor joint and several), such that no Commitment Party shall be liable or otherwise responsible for any covenants or other obligations of any other Commitment Party, or any breach or violation thereof.
Except as otherwise provided herein, all notices, requests, demands, document deliveries and other communications hereunder shall be in
writing and shall be deemed to have been duly given, provided or made (a) when delivered personally, (b) when sent by electronic mail (e-mail) or facsimile, (c) one (1) Business Day after deposit with an
overnight courier service or (d) three (3) Business Days after mailed by certified or registered mail, return receipt requested, with postage prepaid to the parties at their respective addresses, facsimile numbers or e-mail addresses set
forth under their signature pages to this Commitment Letter (or at such other address, facsimile number or e-mail address for a party as shall be specified by like notice).
THIS COMMITMENT LETTER SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES HERETO SHALL BE GOVERNED BY, THE LAWS
OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF EXCEPT SECTIONS 5- 1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK. Each party hereto hereby (a) consents to submit itself to the
personal jurisdiction of the federal court of the Southern District of New York or any state court located in New York County, State of New York in the event any dispute arises out of or relates to this Commitment Letter or any of the transactions
contemplated by this Commitment Letter, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, including, without limitation, a motion to dismiss on the grounds
of forum non conveniens, and (c) agrees that it will not bring any action arising out of or relating to this Commitment Letter or any of the transactions contemplated by this Commitment Letter in any court other than the federal court of the
Southern District of New York or any state court located in New York County, State of New York; provided, however, that during the pendency of the Chapter 11 Cases, all such actions shall be brought in the Bankruptcy Court;
provided further that if the Bankruptcy Court lacks jurisdiction, the parties consent and agree that such actions or disputes shall be brought in a court referenced in clause (a) of this paragraph.
EACH PARTY HERETO HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS COMMITMENT LETTER, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OR EXERCISE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Debtors hereby waive any right which they may have to claim or recover in any action or
claim referred to in the immediately preceding sentence any special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual damages. Each of the Debtors (a) certifies that none of the Commitment
Parties nor any Representative of any of the Commitment Parties has represented, expressly or
10
otherwise, that the Commitment Parties would not, in the event of litigation, seek to enforce the foregoing waivers and (b) acknowledges that, in entering into this Commitment Letter, the
Commitment Parties are relying upon, among other things, the waivers and certifications contained in this paragraph.
This Commitment
Letter may not be amended, supplemented, modified or waived except in writing signed by the Debtors and the Requisite Commitment Parties; provided that any modification of, or amendment or supplement to, this Commitment Letter that would have
the effect of changing the Commitment Percentage of any Commitment Party shall require the prior written consent of such Commitment Party. This Commitment Letter may be executed in any number of counterparts, each of which will be an original, and
all of which, when taken together, will constitute one agreement. Delivery of an executed counterpart of this Commitment Letter by facsimile or e-mail (i.e., portable document format) will be effective as delivery of a manually executed counterpart
of this Commitment Letter. This Commitment Letter constitutes the entire understanding among the parties hereto with respect to the subject matter hereof and replaces and supersedes all prior agreements and understandings, both written and oral,
among the parties hereto with respect to the subject matter hereof.
If the Amended and Restated Restructuring Support Agreement shall at
any time terminate or otherwise become unenforceable, any terms defined herein by reference to the Amended and Restated Restructuring Support Agreement (as in effect on the date of this Commitment Letter), or provisions incorporated into this
Commitment Letter from the Amended and Restated Restructuring Support Agreement (as in effect on the date of this Commitment Letter), such terms and provisions shall continue to be effective for purposes of this Commitment Letter notwithstanding any
such termination or unenforceability.
This Commitment Letter shall not become effective or be legally binding on the Commitment
Parties unless and until it is duly executed by the Commitment Parties and duly executed and delivered by the Debtors to the Commitment Parties.
[Remainder of Page Intentionally Left Blank]
11
If the foregoing is in accordance with your understanding of our agreement, please sign this
Commitment Letter in the space indicated below and return it to us.
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COMMITMENT PARTIES: |
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Blackwell Partners LLC |
Mudrick Distressed Opportunity Fund Global, LP |
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By: Mudrick Capital Management, LP, its
investment manager |
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By: |
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/s/ Jason Mudrick |
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Name: |
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Jason Mudrick |
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Title: |
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President |
[Signature Page to Exit
Facility Commitment Letter]
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COMMITMENT PARTIES: |
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Whitebox Advisors LLC, as Investment
Manager for Various Owners of Note Claims |
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By: |
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/s/ Mark Strefling |
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Name: |
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Mark Strefling |
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Title: |
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General Counsel & Chief Operating
Officer |
[Signature Page to Exit
Facility Commitment Letter]
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COMMITMENT PARTIES: |
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Highbridge Tactical Credit & Convertibles Master Fund, L.P. |
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By: Highbridge Capital Management, LLC, as Trading Manager |
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By: |
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/s/ Jonathan Segal |
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Name: |
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Jonathan Segal |
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Title: |
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Managing Director |
[Signature Page to Exit
Facility Commitment Letter]
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COMMITMENT PARTIES: |
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Highbridge International LLC |
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By: Highbridge Capital Management, LLC, as Trading Manager |
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By: |
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/s/ Jonathan Segal |
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Name: |
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Jonathan Segal |
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Title: |
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Managing Director |
[Signature Page to Exit
Facility Commitment Letter]
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COMMITMENT PARTIES: |
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Aristeia Capital, LLC |
(as investment advisor for certain funds who are the owners of Notes) |
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By: |
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/s/ William R. Techar |
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Name: |
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William R. Techar |
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Title: |
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Manager Aristeia Capital, L.L.C. |
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By: |
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/s/ Robert H. Lynch, Jr. |
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Name: |
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Robert H. Lynch, Jr. |
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Title: |
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Manager Aristeia Capital,
L.L.C. |
[Signature Page to Exit
Facility Commitment Letter]
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COMMITMENT PARTIES: |
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Wolverine Flagship Fund Trading Limited |
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By: |
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Wolverine Asset Management, LLC, its investment manager |
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By: |
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/s/ Ken Nadel |
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Name: |
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Ken Nadel |
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Title: |
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Chief Operating Officer |
[Signature Page to Exit
Facility Commitment Letter]
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COMMITMENT PARTIES: |
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USAA Asset Management |
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By: |
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/s/ R. Matthew Freund |
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Name: |
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R. Matthew Freund |
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Title: |
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[Signature Page to Exit
Facility Commitment Letter]
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ACCEPTED AND AGREED AS OF July 23,
2015: |
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Allied Nevada Gold Corp. |
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By: |
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/s/ Stephen M. Jones |
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Name: |
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Stephen M. Jones |
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Title: |
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Executive Vice President and CFO |
EXHIBIT A
PLAN OF REORGANIZATION
[Attached
as Exhibit 99.1 to this Form 8-K]
EXHIBIT B1
TERM SHEET
New Second Lien
Convertible Notes
Summary of Principal Terms
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Issuer: |
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Allied Nevada Gold Corp. (the Company or the Issuer). |
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Purchase Price: |
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The aggregate consideration to be paid by the Commitment Parties for the New Second Lien Convertible Notes shall be an amount (the Purchase Price) equal to the sum of (a) the DIP Facility Consideration, (b)
certain other Cash payments that may be required to be made by the Debtors under the Plan, as reasonably agreed to by the Debtors and the Requisite Commitment Parties, and (c) the post-Effective Date incremental Cash needs of the Reorganized Debtors
as reasonably agreed to by the Debtors and the Requisite Commitment Parties; provided, however, that the aggregate net Cash proceeds received by the Reorganized Debtors from the Purchase Price shall be equal to the greater of (i) an
amount sufficient for Reorganized ANV to have at least $8.0 million of Cash on the Effective Date after giving pro forma effect to, without duplication, (I) all Cash payments to be made under (A) the Plan or (B) an order of the Bankruptcy Court, in
each case whether paid on or in connection with the Effective Date (excluding, for the avoidance of doubt, New First Lien Term Loan Excess Cash Flow Payments), (II) the payment of all Fees (as defined below) accrued through and including the
Effective Date and (III) the payment of any Compensation Plan Payments (as defined in the Plan) and (ii) an amount such that the aggregate amount of (x) the Cash proceeds of the DIP Facility received by the Company prior to the Effective Date plus
(y) the Cash proceeds of the New Second Lien Convertible Notes not used to pay the DIP Facility Consideration equals $65.0 million; provided, however, that notwithstanding anything contained herein to the contrary, in no event shall
the Commitment Parties be obligated to fund amounts under clause (i) above which would cause the aggregate principal amount of the New Second Lien Convertible Notes issued on the Effective Date to exceed $80.0 million. |
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The original aggregate principal amount of New Second Lien Convertible Notes to be issued by the Company to the Commitment Parties on the Effective Date shall be equal to the sum of (i) the Purchase Price and (ii) the Put Option
Payment. |
1 |
Terms defined in the Commitment Letter to which this Term Sheet is attached as Exhibit B shall have the same meanings when used herein unless otherwise defined herein. |
Exhibit B-1
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Put Option Payment: |
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In consideration for the Companys right to call the Commitments of the Commitment Parties to purchase the New Second Lien Convertible Notes, the Company shall be required to make a non-refundable put option payment to the
Commitment Parties (or their designees) equal to $5,000,000 (the Put Option Payment). The Affiliates and Related Funds of USAA Asset Management Company that become Commitment Parties shall receive $165,212 of the Put Option
Payment. The remaining amount of the Put Option Payment shall be allocated as follows: (i) 50% to the Affiliates and Related Funds of Mudrick Capital Management, LP that become Commitment Parties and (ii) 50% to the Affiliates and Related Funds of
each of Aristeia Capital LLC, Highbridge Capital Management, LLC, Whitebox Advisors LLC and Wolverine Asset Management LP that become Commitment Parties on a pro rata basis (based upon their respective Commitment Percentages relative to each
other). |
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The Debtors hereby acknowledge and agree that (a) the Put Option Payment shall be fully earned as of the date of the Commitment Letter and payable upon, and subject to the occurrence of, the Effective Date, (b) the Debtors shall
satisfy their obligation to pay the Put Option Payment on the Effective Date through the issuance of New Second Lien Convertible Notes to each Commitment Party in an aggregate principal amount equal to the portion of the Put Option Payment that is
owed to such Commitment Party, (c) the Put Option Payment shall not be refundable under any circumstance or creditable against any other amount paid or to be paid in connection with the Commitment Letter, the New Second Lien Convertible Notes
Definitive Agreement (as defined in this Exhibit B) or any of the Contemplated Transactions or otherwise, (d) shall be paid without setoff or recoupment and shall not be subject to defense or offset on account of any claim, defense or
counterclaim, (e) shall be paid free and clear of and without deduction for any and all present or future applicable taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto (with appropriate gross-up for
withholding taxes, if any, such that the relevant Commitment Party receives the amount it would have received if no withholding had been made) and (f) at the election of the Requisite Commitment Parties, the Put Option Payment may take the form of
original issue discount that shall be reasonably acceptable to the Company and the Requisite Commitment Parties. |
Exhibit B-2
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Maturity: |
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The New Second Lien Convertible Notes will mature on the date that is five (5) years after the Effective Date (the Maturity Date). |
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Interest Rate: |
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15% per annum (the Interest Rate), payable in kind on a quarterly basis. All interest shall be computed on the basis of a 360-day year consisting of twelve (12) 30-day months. |
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Default Rate: |
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Upon the occurrence and during the continuance of an event of default under the New Second Lien Convertible Notes Definitive Agreement, all principal, interest, premium, fees and other amounts shall bear interest at the Interest
Rate plus 2.0% per annum, which shall be payable on demand, in kind. |
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Guarantees: |
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The New Second Lien Convertible Notes and all obligations under the New Second Lien Convertible Notes Definitive Agreement will be unconditionally guaranteed on a joint and several basis by each direct and indirect domestic
subsidiary of the Issuer (collectively, the Guarantors), which guarantees shall be guarantees of payment and performance and not of collection. |
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Collateral: |
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The New Second Lien Convertible Notes, the guarantees by the Guarantors in respect thereof and all obligations under the New Second Lien Convertible Notes and such guarantees shall be secured by liens on substantially all assets of
the Issuer and the Guarantors, subject to exceptions that are acceptable to the Requisite Commitment Parties and the Debtors. |
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Ranking: |
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The New Second Lien Convertible Notes and the guarantees by the Guarantors in respect thereof shall be: |
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general senior obligations of the Company and the Guarantors and will rank pari
passu in right of payment with all senior indebtedness of the Company and the Guarantors, except to the extent set forth below under Intercreditor Agreement; |
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senior in right of payment to all subordinated indebtedness of the Company and the
Guarantors; and |
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secured on a senior basis by liens on the collateral, which liens shall be subordinated
to the liens securing the New First Lien Term Loan Credit Facility as set forth below under Intercreditor Agreement. |
Exhibit B-3
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Intercreditor Agreement: |
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The agent under the New Second Lien Convertible Notes and the agent under the New First Lien Term Loan Credit Facility shall enter into an intercreditor agreement (the New Intercreditor Agreement), in form and
substance reasonably satisfactory to the Debtors, Requisite Secured Lenders and the Requisite Commitment Parties, establishing that the New Second Lien Convertible Notes are subordinated indebtedness (only (x) in right of payment with respect to
principal and interest and (y) as to priority of liens) relative to the New First Lien Term Loan Credit Facility. Without limitation, the New Intercreditor Agreement will (i) provide that all liens securing the New Second Lien Convertible Notes are
junior in priority to the liens securing the New First Lien Term Loan Credit Facility, (ii) prohibit the New Second Lien Convertible Notes from being guaranteed by any persons, or secured by any assets, that do not respectively guarantee or secure
the New First Lien Term Loan Credit Facility, (iii) provide for a customary standstill on the holders of the New Second Lien Convertible Notes of 180 days with respect to the exercise of remedies against common collateral, and (iv)
restrict the rights of the holders of the New Second Lien Convertible Notes to object to (A) any DIP financing provided by the holders of the New First Lien Term Loan Credit Facility, or which is (I) consented to by the requisite New First Lien Term
Loan Credit Facility lenders and (II) secured by liens senior to or pari passu with the New First Lien Term Loan Credit Facility (and, in either case, the liens securing the New Second Lien Convertible Notes will be subordinate to the liens
securing such DIP Financing); provided that, in either case, the aggregate principal amount of such DIP financing and the New First Lien Term Loans shall not exceed an amount equal to the aggregate principal amount of the New First Lien Term
Loans as of the petition date plus $50 million, and (B) the seeking of adequate protection by the holders of the New First Lien Term Loan Credit Facility, or the sale of common collateral or other assets of the Reorganized Debtors (or
Reorganized ANV as a whole) under Section 363 of the Bankruptcy Code if such sale is consented to by the holders of the New First Lien Term Loan Credit Facility, in each case, subject to certain customary exceptions to be agreed. The New
Intercreditor Agreement will also include a customary par purchase right for the benefit of certain Exit Facility Lenders with respect to a purchase of the New First Lien Term Loans and other obligations under the New First Lien Term Loan Credit
Facility. |
Exhibit B-4
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Conversion Price: |
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The New Second Lien Convertible Notes (including all principal (including all interest that has been added to the principal of the New Second Lien Convertible Notes) and all accrued and unpaid interest) shall be convertible at an
initial conversion price that is equal to the equity value of a share of New Common Stock as of the Effective Date, as determined by the Company and the Requisite Commitment Parties, subject to adjustment as described below under Anti-Dilution
Protection (as adjusted, the Conversion Price). |
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Conversion Rights: |
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At any time and from time to time, each holder of New Second Lien Convertible Notes shall have the right to convert all or any portion of the New Second Lien Convertible Notes (including all principal (including all interest that
has been added to the principal of the New Second Lien Convertible Notes) and all accrued and unpaid interest) at such holders option into a number of shares of New Common Stock equal to the amount of New Second Lien Convertible Notes being
converted by such holder (including all principal (including all interest that has been added to the principal of the New Second Lien Convertible Notes) and all accrued and unpaid interest being converted), divided by the Conversion Price then in
effect. |
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Anti-Dilution Protection: |
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The New Second Lien Convertible Notes will have anti-dilution protection provisions that are acceptable to the Requisite Commitment Parties and the Issuer. |
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Fundamental Change Put Right: |
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Each holder of the New Second Lien Convertible Notes shall have the right to cause the Issuer to repurchase New Second Lien Convertible Notes at par plus a customary make-whole premium upon the occurrence of a fundamental
change (to be defined) on terms acceptable to the Requisite Commitment Parties and the Issuer. |
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Optional Redemption: |
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The Issuer shall have no ability to optionally redeem any or all New Second Lien Convertible Notes prior to maturity. |
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Covenants: |
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The New Second Lien Convertible Notes Definitive Agreement shall contain affirmative and negative covenants consistent with the affirmative and negative covenants set forth in the New First Lien Term Loan Credit Facility and shall
contain additional affirmative and negative covenants customary for convertible debt securities which relate to the convertible nature thereof that are acceptable to the Requisite Commitment Parties and the
Issuer. |
Exhibit B-5
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Events of Default: |
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The New Second Lien Convertible Notes Definitive Agreement shall contain events of default consistent with the events of default set forth in the New First Lien Term Loan Credit Facility and other events of default customary for
convertible debt securities which relate to the convertible nature thereof that are acceptable to the Requisite Commitment Parties and the Issuer. |
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Defeasance and Discharge
Provisions: |
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Customary defeasance and discharge provisions for convertible debt securities that are acceptable to the Requisite Commitment Parties and the Issuer. |
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Modification: |
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Customary modification provisions for convertible debt securities that are acceptable to the Requisite Commitment Parties and the Issuer. |
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Form: |
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Each of the Debtors shall execute and deliver (i) a note purchase agreement with the Commitment Parties providing for, among other things, the purchase by the Commitment Parties from the Company, and the issuance and sale by the
Company to the Commitment Parties, of the New Second Lien Convertible Notes contemplated by the Commitment Letter, which shall be consistent with the terms set forth in the Commitment Letter and otherwise in form and substance (including with
respect to closing conditions, representations and warranties of the Debtors and affirmative and negative covenants and events of default applicable to the Debtors) acceptable to the Requisite Commitment Parties and the Debtors (the Note
Purchase Agreement) and (ii) definitive notes to each Commitment Party in respect of its New Second Lien Convertible Notes; provided that, in addition to the execution and delivery of the Note Purchase Agreement (which shall govern,
among other things, closing conditions and representations and warranties), at the election of the Requisite Commitment Parties (the Indenture Election), the New Second Lien Convertible Notes shall instead be issued pursuant to,
and the terms therefor (including affirmative and negative covenants and events of default) shall be governed by, (x) a customary indenture, which shall be consistent with the terms set forth in the Commitment Letter and otherwise in form and
substance acceptable to the Requisite Commitment Parties and the Debtors (the New Second Lien Convertible Notes Indenture) and (y) one or more global notes eligible for deposit with the Depository Trust Company that is in form and
substance acceptable to the Requisite Commitment Parties and the Debtors. As used in the Commitment Letter, the term New Second Lien Convertible Notes Definitive Agreement shall mean (x) the Note Purchase Agreement and (y) if the
Indenture Election occurs, the New Second Lien Convertible Notes Indenture. |
Exhibit B-6
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Registration Rights: |
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At the election of the Requisite Commitment Parties, registration rights acceptable to the Requisite Commitment Parties shall be provided to the holders of the New Second Lien Convertible Notes with respect to the New Second Lien
Convertible Notes and the shares of New Common Stock or other Securities issuable upon conversion of the New Second Lien Convertible Notes. |
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Governing Law: |
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New York. |
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Trustee: |
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If applicable, to be selected by the Requisite Commitment Parties. |
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Collateral Agent: |
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To be selected by the Requisite Commitment Parties. |
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Commitment Percentages: |
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The Commitment Percentages for each of the Commitment Parties that are Affiliates and/or Related Funds of the entities set forth below are set forth opposite the names of the entities set forth
below: |
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(i) |
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Aristeia Capital LLC: |
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10.52% |
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(ii) |
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Highbridge Capital Management, LLC: |
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14.35% |
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(iii) |
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Mudrick Capital Management, LP: |
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39.93% |
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(iv) |
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Whitebox Advisors LLC: |
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25.17% |
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(v) |
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Wolverine Asset Management LP: |
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6.16% |
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(vi) |
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USAA Asset Management Company: |
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3.86% |
Exhibit B-7
EXHIBIT C1
CONDITIONS PRECEDENT LIST
(i) The
Amended and Restated Restructuring Support Agreement shall not have been terminated.
(ii) The Plan (including all schedules, documents and
forms of documents contained in, or constituting a part of, the Plan Supplement), as confirmed by the Bankruptcy Court, shall be in form and substance reasonably acceptable to the Requisite Commitment Parties and the Debtors (it being acknowledged
and agreed that the Plan attached hereto as Exhibit A is acceptable to each of the Commitment Parties and the Debtors).
(iii) The
Disclosure Statement shall be consistent in all material respects with the terms set forth in the Plan and otherwise in form and substance reasonably acceptable to the Requisite Commitment Parties and the Debtors.
(iv) Each of the Commitment Parties and the Debtors shall have executed and delivered the Note Purchase Agreement (which, for the avoidance of
doubt, shall be consistent with the terms set forth in the Commitment Letter and otherwise in form and substance (including with respect to representations and warranties of the Debtors) reasonably acceptable to the Requisite Commitment Parties and
the Debtors).
(v) The Debtors shall have executed and/or delivered, and all other parties thereto shall have executed and/or delivered,
(x) all other definitive documentation in respect of the New Second Lien Convertible Notes (including, without limitation, security agreements, pledge agreements, collateral assignments, mortgages and other collateral documents and, if
applicable, the New Second Lien Convertible Notes Indenture), (y) all documents and agreements to be entered into and/or delivered by the Debtors in connection with the New First Lien Term Loan Credit Facility and (z) all documents and
agreements to be entered into and/or delivered by the Debtors in connection with the Contemplated Transactions (the documents and agreements referred to in clauses (x), (y) and (z), together with the Commitment Letter and
the Note Purchase Agreement, collectively, the Transaction Documents), all such Transaction Documents to be consistent with the Plan and the Amended and Restated Restructuring Support Agreement (as in effect on the date of the
Commitment Letter) and, if applicable, the Commitment Letter and otherwise in form and substance reasonably acceptable to the Requisite Commitment Parties and the Debtors.
(vi) The Bankruptcy Court shall have entered an order confirming the Plan (which, for the avoidance of doubt, shall be the Debtors
Amended Joint Chapter 11 Plan of Reorganization attached as Exhibit A to the Commitment Letter (as the same may be amended, supplemented or otherwise modified from time to time with the prior written consent of the Requisite Commitment
Parties)) pursuant to section 1129 of the Bankruptcy Code (the Confirmation Order), the Confirmation Order shall be consistent with the Commitment Letter and otherwise in form and substance reasonably acceptable to the Requisite
Commitment Parties and the Debtors, and the Confirmation Order shall be a final, nonappealable order.
1 |
Terms defined in the Commitment Letter to which this Conditions Precedent List is attached as Exhibit C shall have the same meanings when used herein unless otherwise defined herein. |
Exhibit C-1
(vii) The Bankruptcy Court shall have entered an order approving the Disclosure Statement (the
Disclosure Statement Order) and the Disclosure Statement Order shall be in form and substance reasonably acceptable to the Requisite Commitment Parties and the Debtors.
(viii) The Bankruptcy Court shall have entered the Exit Facility Commitment Order, the Exit Facility Commitment Order shall be consistent with
the Commitment Letter and otherwise in form and substance reasonably acceptable to the Requisite Commitment Parties and the Debtors, and the Exit Facility Commitment Order shall be a final, nonappealable order.
(ix) The conditions to the Effective Date set forth in the Plan shall have been satisfied (or waived with the prior written consent of the
Requisite Commitment Parties) in accordance with the Plan, and the Effective Date shall have occurred or shall occur simultaneously with closing of the transactions contemplated by the Note Purchase Agreement.
(x) All liens on all of the collateral to secure the obligations under the New Second Lien Convertible Notes and the guarantees thereof shall
have been perfected in a manner that is acceptable to the Requisite Commitment Parties, and such liens shall be second-priority liens subject only to the priority of the liens that secure the First Lien Term Loan Credit Facility and certain
permitted liens under the First Lien Term Loan Credit Facility that are acceptable to the Requisite Commitment Parties and the Debtors.
(xi) No temporary restraining order, preliminary or permanent injunction, judgment or other order or ruling preventing the consummation of the
transactions contemplated by the Plan, the Commitment Letter or any of the other Transaction Documents (collectively, the Contemplated Transactions) shall have been entered, issued, rendered or made, nor shall any action,
investigation, litigation, suit or other proceeding seeking any of the foregoing be pending or threatened; nor shall there be any law, order, judgment or ruling promulgated, enacted, entered, enforced or deemed applicable to the Commitment Parties
or the Debtors which makes the consummation of the transactions contemplated by the Commitment Letter or any of the other Contemplated Transactions illegal, void or rescinded.
(xii) All governmental and third party notifications, filings, waivers, authorizations and consents necessary or required to be obtained by the
Debtors (other than any such notifications, filings, waivers, authorizations or consents which are not required due to the Bankruptcy Code or order of the Bankruptcy Court) for the consummation of any of the transactions contemplated by the
Commitment Letter or the New Second Lien Convertible Notes Definitive Agreement or any of the other Contemplated Transactions, if any, shall have been made or received and shall be in full force and effect.
(xiii) Each of the representations and warranties of the Debtors in the Note Purchase Agreement and the other Transaction Documents shall be
true and correct in all material respects as of the Effective Date (except that (x) any representation and warranty that is qualified as to materiality, Material Adverse Effect or Material Adverse Change
shall be
Exhibit C-2
true in correct in all respects as of the Effective Date and (y) any representation and warranty made as of
a specified date shall be true and correct in all material respects only as of such specified date (except that any such representation and warranty made as of a specified date that is qualified as to materiality, Material Adverse
Effect or Material Adverse Change shall be true in correct in all respects as of such specified date)).
(xiv) The
Debtors shall have complied in all material respects with all covenants in the Commitment Letter.
(xv) The Debtors shall have paid all
Reimbursed Fees and Expenses that have accrued and remain unpaid as of the Effective Date in accordance with the terms of the Commitment Letter, and no Reimbursed Fees and Expenses shall be required to be repaid or otherwise disgorged to the Debtors
or any other Person.
(xvi) Since the date of the Commitment Letter, there shall not have occurred any Material Adverse Effect (as defined
in the Amended and Restated Restructuring Support Agreement (as in effect on the date of the Commitment Letter)).
(xvii) The Debtors shall
have delivered to the Commitment Parties opinions of counsel to the Debtors, dated as of the Effective Date and addressed to the Commitment Parties, addressing such matters that the Requisite Commitment Parties reasonably request related to the New
Second Lien Convertible Notes, the liens securing the obligations thereunder and the transactions contemplated by the Commitment Letter and the other Transaction Documents, and such opinions shall be in form and substance reasonably acceptable to
the Requisite Commitment Parties.
(xviii) On the Effective Date, other than (x) the shares of New Common Stock issued to the holders
of Unsecured Claims in exchange for Unsecured Claims pursuant to Section 2.10(b) of the Plan and (y) the shares of New Common Stock reserved for issuance upon conversion of the New Second Lien Convertible Notes in accordance with the New Second
Lien Convertible Notes Definitive Agreement, no shares of New Common Stock or pre-emptive rights, rights of first refusal, subscription and similar rights to acquire equity securities of the Company will be outstanding or in effect.
Exhibit C-3
Exhibit 99.1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
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In re: |
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Chapter 11 |
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Allied Nevada Gold Corp., et al.,1 |
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Case No. 15-10503 (MFW) |
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Debtors. |
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Jointly Administered |
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DEBTORS AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION
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AKIN GUMP STRAUSS HAUER & FELD LLP
Ira S. Dizengoff (admitted pro hac vice) Philip C. Dublin
(admitted pro hac vice) Alexis Freeman (admitted pro hac vice)
Matthew C. Fagen (admitted pro hac vice) One Bryant
Park New York, New York 10036-6745 Telephone: (212)
872-1000 Facsimile: (212) 872-1002
Counsel to the Debtors and Debtors in Possession
Dated: July 23, 2015 |
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BLANK ROME LLP Stanley B. Tarr (No.
5535) Michael D. DeBaecke (No. 3186) Victoria A. Guilfoyle
(No. 5183) 1201 N. Market Street, Suite 800 Wilmington,
Delaware 19801 Telephone: (302) 425-6400 Facsimile: (302)
425-6464 |
1 |
The Debtors in these cases, along with the last four digits of each Debtors federal tax identification number, are: Allied Nevada Gold Corp. (7115); Allied Nevada Gold Holdings LLC (7115); Allied VGH Inc. (3601);
Allied VNC Inc. (3291); ANG Central LLC (7115); ANG Cortez LLC (7115); ANG Eureka LLC (7115); ANG North LLC (7115); ANG Northeast LLC (7115); ANG Pony LLC (7115); Hasbrouck Production Company LLC (3601); Hycroft Resources & Development,
Inc. (1989); Victory Exploration Inc. (8144); and Victory Gold Inc. (8139). The corporate headquarters for each of the above Debtors are located at, and the mailing address for each of the above Debtors, except Hycroft Resources &
Development, Inc., is 9790 Gateway Drive, Suite 200, Reno, NV 89521. The mailing address for Hycroft Resources & Development, Inc. is P.O. Box 3030, Winnemucca, NV 89446. |
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND RULES OF INTERPRETATION |
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A. |
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Rules of Interpretation and Governing Law |
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B. |
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Definitions |
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ARTICLE II CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS |
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A. |
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Unclassified Claims |
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2.1 |
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Administrative Expense Claims |
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2.2 |
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Professional Fee Claims |
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2.3 |
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Priority Claims |
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2.4 |
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DIP Facility Claims |
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B. |
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General Rules |
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2.5 |
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Substantive Consolidation of the Debtors for Plan Purposes Only |
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2.6 |
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Classification |
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C. |
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Summary of Classification for the Debtors |
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D. |
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Classified Claims and Interests Against the Debtors |
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2.7 |
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Class 1 Secured ABL Claims |
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2.8 |
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Class 2 Secured Swap Claims |
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2.9 |
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Class 3 Other Secured Claims |
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2.10 |
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Class 4 Unsecured Claims |
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2.11 |
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Class 5 Intercompany Claims |
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2.12 |
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Class 6 Subordinated Securities Claims |
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2.13 |
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Class 7 Intercompany Interests |
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2.14 |
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Class 8 Existing Equity Interests |
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E. |
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Additional Provisions Regarding Unimpaired Claims and Subordinated Claims |
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2.15 |
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Special Provision Regarding Unimpaired Claims |
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2.16 |
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Subordinated Claims |
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ARTICLE III ACCEPTANCE |
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3.1 |
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Presumed Acceptance of the Plan |
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3.2 |
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Presumed Rejection of the Plan |
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3.3 |
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Voting Classes |
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3.4 |
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Elimination of Vacant Classes |
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3.5 |
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Cramdown |
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ARTICLE IV MEANS FOR IMPLEMENTATION OF PLAN |
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4.1 |
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Restructuring Transactions |
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4.2 |
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Substantive Consolidation for Plan Purposes Only |
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4.3 |
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New Securities |
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4.4 |
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Plan Funding |
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4.5 |
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Corporate Governance, Managers, Officers and Corporate Action |
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4.6 |
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Management Incentive Plan/Post-Emergence Key Employee Retention Program |
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4.7 |
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Cancellation of Notes, Instruments, and Interests |
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4.8 |
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Cancellation of Liens |
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4.9 |
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Corporate Action |
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4.10 |
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New First Lien Term Loan Credit Facility and Exit Facility |
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4.11 |
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Effectuating Documents; Further Transactions |
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4.12 |
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Exemption from Certain Transfer Taxes and Recording Fees |
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4.13 |
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No Further Approvals |
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4.14 |
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Dissolution of Committees |
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4.15 |
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Pre-Effective Date Injunctions or Stays |
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4.16 |
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Dissolution of Certain Debtors |
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ARTICLE V EXECUTORY CONTRACTS AND UNEXPIRED LEASES |
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5.1 |
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Assumption and Rejection of Executory Contracts and Unexpired Leases |
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5.2 |
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Cure of Defaults for Assumed Executory Contracts and Unexpired Leases |
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5.3 |
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No Change in Control, Assignment or Violation |
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Modifications, Amendments, Supplements, Restatements, or Other Agreements |
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5.5 |
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Rejection and Repudiation of Executory Contracts and Unexpired Leases |
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5.6 |
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Claims Based on Rejection or Repudiation of Executory Contracts and Unexpired Leases |
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Limited Extension of Time to Assume or Reject |
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5.8 |
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Employee Compensation and Benefit Programs; Deferred Compensation Programs |
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5.9 |
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Survival of Certain Indemnification and Reimbursement Obligations |
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5.10 |
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Insurance Policies |
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ARTICLE VI PROCEDURES FOR RESOLVING AND TREATING CONTESTED CLAIMS |
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6.1 |
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Objections to Claims |
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6.2 |
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Amendment to Claims |
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6.3 |
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Disputed Claims |
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6.4 |
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Estimation of Claims |
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6.5 |
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Expenses Incurred on or After the Effective Date |
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ARTICLE VII DISTRIBUTIONS |
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7.1 |
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Manner of Payment and Distributions under the Plan |
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7.2 |
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Interest and Penalties on Claims |
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7.3 |
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Record Date for Distributions |
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7.4 |
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Withholding and Reporting Requirements |
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7.5 |
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Setoffs |
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7.6 |
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Allocation of Plan Distributions Between Principal and Interest |
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7.7 |
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Surrender of Cancelled Instruments or Securities |
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7.8 |
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Undeliverable or Returned Distributions |
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7.9 |
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Fractional Distributions |
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33 |
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7.10 |
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Distributions to Administrative Agent |
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7.11 |
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Distributions to Indenture Trustee |
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7.12 |
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Miscellaneous Distribution Provisions |
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ARTICLE VIII CONDITIONS PRECEDENT TO EFFECTIVENESS OF THE PLAN |
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8.1 |
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Conditions to the Effective Date |
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8.2 |
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Waiver of Condition |
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8.3 |
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Notice of Effective Date |
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8.4 |
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Order Denying Confirmation |
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ARTICLE IX EFFECT OF THE PLAN ON CLAIMS AND INTERESTS |
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35 |
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9.1 |
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Compromise and Settlement of Claims, Interests and Controversies |
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9.2 |
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Discharge of Claims and Termination of Interests |
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36 |
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9.3 |
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Injunction |
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36 |
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9.4 |
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Releases |
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9.5 |
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Exculpation |
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9.6 |
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Preservation of Insurance |
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9.7 |
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Retention and Enforcement of Causes of Action |
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ARTICLE X MISCELLANEOUS PROVISIONS |
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10.1 |
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Retention of Jurisdiction |
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10.2 |
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Terms Binding |
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10.3 |
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Severability |
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10.4 |
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Computation of Time |
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10.5 |
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Confirmation Order and Plan Control |
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10.6 |
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Incorporation by Reference |
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10.7 |
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Modifications to the Plan |
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10.8 |
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Revocation, Withdrawal or Non-Consummation |
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10.9 |
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Courts of Competent Jurisdiction |
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10.10 |
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Payment of Indenture Trustee Fees |
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10.11 |
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Payment of U.S. Trustee Quarterly Fees |
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41 |
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10.12 |
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Notice |
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10.13 |
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Reservation of Rights |
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10.14 |
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No Waiver |
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iii
INTRODUCTION
Allied Nevada Gold Corp. and certain of its direct and indirect subsidiaries, as debtors and debtors in possession in the above-captioned
cases, propose the following joint plan of reorganization for the resolution of the outstanding Claims against, and Interests in, the Debtors. Reference is made to the Disclosure Statement, distributed contemporaneously herewith, for a discussion of
(a) the Debtors history, business, properties and operations, and projections for those operations, (b) a summary and analysis of the Plan, (c) the debt instruments, securities and other entitlements to be issued under the Plan
and (d) certain matters related to the Confirmation and consummation of the Plan. Each of the Debtors is a proponent of the Plan within the meaning of Bankruptcy Code section 1129. Subject to certain restrictions and requirements set forth in
Bankruptcy Code section 1127 and Bankruptcy Rule 3019, the Debtors reserve the right to alter, amend, modify, revoke or withdraw the Plan, subject to the terms of the Amended and Restated Restructuring Support Agreement and the Exit Facility
Commitment Letter and the terms of the Plan.
ARTICLE I
DEFINITIONS AND RULES OF INTERPRETATION
A. Rules of Interpretation and Governing Law. For purposes of this document: (a) in the appropriate context, each term,
whether stated in the singular or the plural, shall include both the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, feminine and neuter gender; (b) any reference herein to a
contract, lease, instrument, release, indenture or other agreement or document being in a particular form or on particular terms and conditions means that the referenced document shall be substantially in that form or substantially on those terms
and conditions; (c) any reference herein to an existing document or exhibit having been filed or to be filed shall mean that document or exhibit, as it may thereafter be amended, modified or supplemented; (d) unless otherwise specified,
all references herein to Articles are references to Articles hereof or hereto; (e) unless otherwise stated, the words herein, hereof and hereto refer to the Plan in its
entirety rather than to a particular portion of the Plan; (f) captions and headings to Articles are inserted for convenience of reference only and are not intended to be a part of or to affect the interpretation hereof; (g) the rules of
construction set forth in Bankruptcy Code section 102 shall apply; and (h) any term used in capitalized form herein that is not otherwise defined, but that is used in the Bankruptcy Code or the Bankruptcy Rules, shall have the meaning assigned
to that term in the Bankruptcy Code or the Bankruptcy Rules, as the case may be.
Except to the extent that the Bankruptcy Code or
Bankruptcy Rules apply, and subject to the provisions of any contract, lease, instrument, release, indenture or other agreement or document entered into expressly in connection herewith, the rights and obligations arising hereunder shall be governed
by, and construed and enforced in accordance with, the laws of the state of Delaware, without giving effect to the principles of conflict of laws thereof.
B. Definitions. The following terms (which appear in the Plan as capitalized terms) shall have the meanings set forth below.
1.1 3.0% Backstop Put Option Payment means a Cash payment equal to $2,340,000, which shall be part of
the DIP Facility Consideration and payable only to the DIP Backstop Lenders pursuant to the terms of the DIP Facility Order.
1.2 4.0% PIK Put Option Payment means a Cash payment equal to $3,120,000 which shall be part of the DIP
Facility Consideration payable to all Holders of DIP Facility Claims pursuant to the terms of the DIP Facility Order.
1.3
Additional Consenting Noteholders means, if any, the beneficial owners (or investment managers or advisors for such beneficial owners) of the Notes that become parties to the Amended and Restated Restructuring Support Agreement
after the Restructuring Support Effective Date by executing a Joinder Agreement, together with their respective successors and permitted assigns.
1.4 Administrative Agent means Scotiabank, in its capacity as administrative agent under the Credit
Agreement.
1.5 Administrative Bar Date means the Business Day which is
thirty (30) days after the Effective Date, or such other date as approved by Final Order of the Bankruptcy Court.
1.6
Administrative Expense Claim means a Claim for costs and expenses of administration of the Chapter 11 Cases that is Allowed under Bankruptcy Code sections 503(b), 507(a), or 1114(e)(2) for the period from the Petition Date to
the Effective Date, including, without limitation, (a) any actual and necessary expenses of preserving the Estates; (b) any actual and necessary expenses of operating the Debtors business; (c) any actual indebtedness or
obligations incurred or assumed by the Debtors during the pendency of the Chapter 11 Cases in connection with the conduct of their business; (d) any actual expenses necessary or appropriate to facilitate or effectuate the Plan; (e) any
amount required to be paid under Bankruptcy Code section 365(b)(1) in connection with the assumption of executory contracts or unexpired leases; (f) all allowances of compensation or reimbursement of expenses to the extent Allowed by the
Bankruptcy Court under Bankruptcy Code sections 328, 330(a), 331 or 503(b)(2), (3), (4) or (5); (g) Claims arising under Bankruptcy Code section 503(b)(9); (h) all fees and charges payable pursuant to section 1930 of
title 28 of the United States Code; and (i) all claims for Transaction Expenses, without any requirement for the filing of retention applications or fee applications.
1.7 Allowed means, with reference to any Claim or Interest, or any portion thereof, in any Class or category
specified: (a) a Claim or Interest that has been listed by the applicable Debtor in the Schedules, as such Schedules may be amended by the Debtors from time to time in accordance with Bankruptcy Rule 1009, as liquidated in amount and not
disputed or contingent and for which no contrary Proof of Claim or Proof of Interest has been filed; (b) a Claim or Interest for which a Proof of Claim or a Proof of Interest has been timely filed in a liquidated amount and not contingent and
as to which no objection to allowance, to alter priority, or request for estimation has been timely interposed and not withdrawn within the applicable period of limitation fixed by the Plan or applicable law; (c) a Claim or Interest as to which
any objection has been settled, waived, withdrawn or denied by a Final Order to the extent such Final Order provides for the allowance of all or a portion of such Claim or Interest; or (d) a Claim or Interest that is expressly allowed
(i) pursuant to a Final Order, (ii) pursuant to an agreement between the Holder of such Claim or Interest and the Debtors or the Reorganized Debtors, as applicable or (iii) pursuant to the terms of the Plan. Unless otherwise specified
in the Plan or in an order of the Bankruptcy Court allowing such Claim or Interest, Allowed in reference to a Claim or Interest shall not include: (1) any interest on the amount of such Claim accruing from and after the Petition
Date; (2) any punitive or exemplary damages; or (3) any fine, penalty or forfeiture. Any Claim or Interest listed in the Schedules as disputed, contingent, or unliquidated, and for which no Proof of Claim or Proof of Interest has been
timely filed, is not considered Allowed and shall be expunged without further action and without any further notice to or action, order, or approval of the Bankruptcy Court.
1.8 Allowed Claim means a Claim or any portion thereof, without duplication, that has been Allowed.
1.9 Allowed Interest means an Interest or any portion thereof, without duplication, that has been Allowed.
1.10 Amended and Restated Restructuring Support Agreement means the Amended and Restated Restructuring
Support Agreement dated as of July 23, 2015 (including all exhibits, annexes and schedules attached thereto, including the Restructuring Term Sheet and the Plan), as it may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof, both as to substance and parties thereto, which amends and restates the Original Restructuring Support Agreement, among the Debtors, the Initial Consenting Noteholders and the Initial Secured Lenders, a copy of
which is attached as Exhibit B to the Disclosure Statement.
1.11 ANV means Allied Nevada Gold Corp., a
Delaware corporation.
1.12 Article means any article of the Plan.
1.13 Assets means all of the right, title and interest of the Debtors in and to property of whatever type or
nature (real, personal, mixed, intellectual, tangible or intangible).
2
1.14 Avoidance Actions means any and all actual or potential
claims and causes of action to avoid a transfer of property or an obligation incurred by the Debtors pursuant to any applicable Bankruptcy Code section, including Bankruptcy Code sections 502, 510, 542, 544, 545, 547 through 553, and 724(a) or under
similar or related state or federal statutes and common law, including fraudulent transfer laws.
1.15
Ballot means the form approved by the Bankruptcy Court pursuant to the Disclosure Statement Order and distributed to Holders of Impaired Claims and Interests entitled to vote on the Plan on which such Holders shall indicate the
acceptance or rejection of the Plan.
1.16 Bankruptcy Code means title 11 of the United States Code, as
now in effect or hereafter amended.
1.17 Bankruptcy Court means the United States Bankruptcy Court for
the District of Delaware having jurisdiction over the Chapter 11 Cases and, to the extent of any withdrawal of the reference made pursuant to section 157 of title 28 of the United States Code, the unit of such District Court pursuant to section 151
of title 28 of the United States Code.
1.18 Bankruptcy Rules means (a) the Federal Rules of
Bankruptcy Procedure promulgated under section 2075 of title 28 of the United States Code and (b) the general and local rules of the Bankruptcy Court, as now in effect or hereafter amended.
1.19 Bar Date means the deadline for filing Proofs of Claim in the Chapter 11 Cases against any Debtor, as
established by Final Order of the Bankruptcy Court or the Plan, including, without limitation, the Administrative Bar Date and the General Bar Date.
1.20 Bar Date Order means the Order Establishing Deadlines and Procedures for Filing Proofs of Claim and
Approving the Form and Manner of Notice Thereof [Docket No. 396].
1.21 Business Day means any day
other than a Saturday, Sunday, or legal holiday as such term is defined in Bankruptcy Rule 9006(a).
1.22
Capital Lease Deficiency Claims means the portion of any Claims arising from the Debtors rejection of Capital Leases that are not covered by the value of the collateral with respect to such Claims.
1.23 Capital Leases means capital leases entered into by the Debtors from time to time prior to the Petition
Date.
1.24 Cash means cash and cash equivalents, in legal tender of the United States of America.
1.25 Causes of Action means all actions, causes of action (including Avoidance Actions), liabilities,
obligations, rights, suits, debts, damages, judgments, remedies, demands, setoffs, defenses, recoupments, crossclaims, counterclaims, third-party claims, indemnity claims, contribution claims or any other claims whatsoever, in each case held by the
Debtors, whether disputed or undisputed, suspected or unsuspected, foreseen or unforeseen, direct or indirect, choate or inchoate, existing or hereafter arising, in law, equity or otherwise, based in whole or in part upon any act or omission or
other event occurring prior to the Petition Date or during the course of the Chapter 11 Cases, including through the Effective Date.
1.26 Chapter 11 Cases means (a) when used with reference to a particular Debtor, the chapter 11 case
filed for that Debtor under chapter 11 of the Bankruptcy Code in the Bankruptcy Court and (b) when used with reference to all Debtors, the jointly administered chapter 11 cases (under Case No. 15-10503 (MFW)) for all of the Debtors under
chapter 11 of the Bankruptcy Code in the Bankruptcy Court.
1.27 Claim means claim as
defined in Bankruptcy Code section 101(5), as supplemented by Bankruptcy Code section 102(2), against any of the Debtors, whether or not asserted.
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1.28 Claims and Noticing Agent means Prime Clerk LLC.
1.29 Class means each category of Holders of Claims or Interests established under Article II of the Plan
pursuant to Bankruptcy Code section 1122.
1.30 Compensation Plan Payments means any payments provided
for by the Debtors Motion for Entry of an Order (I) Authorizing and Approving Debtors (A) Key Employee Incentive Plan, (B) Non-Insider Key Employee Retention Plan and (C) Severance Plan and (II) Granting Related
Relief [Docket No. 672], as authorized by an order of the Bankruptcy Court.
1.31 Confirmation means
the entry, within the meaning of Bankruptcy Rules 5003 and 9021, of the Confirmation Order by the Bankruptcy Court.
1.32
Confirmation Date means the date upon which Confirmation occurs.
1.33 Confirmation
Hearing means the hearing held by the Bankruptcy Court pursuant to Bankruptcy Code section 1128 to consider Confirmation, as such hearing may be adjourned or continued from time to time.
1.34 Confirmation Order means the order of the Bankruptcy Court confirming the Plan pursuant to Bankruptcy
Code section 1129.
1.35 Consenting Noteholders means, collectively, the Initial Consenting Noteholders
and the Additional Consenting Noteholders.
1.36 Consenting Noteholders Advisors means
(i) Stroock & Stroock & Lavan LLP, as lead counsel for the Consenting Noteholders; (ii) Young Conaway Stargatt & Taylor LLP, as local counsel for the Consenting Noteholders; (iii) Goodmans LLP, as Canadian
local counsel for the Consenting Noteholders; (iv) one Nevada local counsel for the Consenting Noteholders (if applicable); and (v) Houlihan Lokey, Inc., as financial advisor to the Consenting Noteholders.
1.37 Credit Agreement means that certain Third Amended and Restated Credit Agreement, dated as of
May 8, 2014 (as may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof), among ANV, the Administrative Agent, the Initial Secured Lenders, as co-collateral agents, and the lenders party
thereto.
1.38 Creditors Committee means the official committee of unsecured creditors appointed by the
U.S. Trustee pursuant to Bankruptcy Code section 1102(a), as it may be reconstituted from time to time.
1.39
Cross Currency Swap Claims means all Allowed Claims arising under the Cross Currency Swaps.
1.40
Cross Currency Swaps means, collectively, (i) the Scotiabank Cross Currency Swap; (ii) the NBC Cross Currency Swap; and (iii) the SocGen Cross Currency Swap.
1.41 Debtors means, collectively, Allied Nevada Gold Corp., Allied Nevada Gold Holdings LLC, Allied VGH
Inc., Allied VNC Inc., ANG Central LLC, ANG Cortez LLC, ANG Eureka LLC, ANG North LLC, ANG Northeast LLC, ANG Pony LLC, Hasbrouck Production Company LLC, Hycroft Resources & Development, Inc., Victory Exploration Inc., and Victory Gold Inc.
1.42 Diesel Swap Claims means all Claims arising under the Diesel Swaps.
1.43 Diesel Swaps means all financial swaps between ANV and Scotiabank, other than the Scotiabank Cross
Currency Swap (in each case, as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof).
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1.44 DIP Agent means Wilmington Savings Fund Society, FSB, in
its capacity as administrative agent and collateral agent under the DIP Facility.
1.45 DIP Backstop
Lenders means affiliates of and/or related funds or other vehicles of Aristeia Capital LLC, CI Investments, Guardian Capital, Mudrick Capital Management, LP, Newport Global Advisors, Third Avenue Management LLC, Whitebox Advisors LLC and
Wolverine Asset Management, LLC.
1.46 DIP Credit Agreement means that certain Secured Multiple Draw
Debtor-in-Possession Credit Agreement, dated as of March 12, 2015, among the Debtors, the DIP Agent, and the DIP Lenders and any and all other loan documents evidencing obligations of the Debtors arising thereunder, including any and all
guaranty, security and collateral documents, in each case as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.
1.47 DIP Facility means the $78,000,000.00 debtor in possession credit facility established pursuant to the
DIP Credit Agreement and approved by the Bankruptcy Court pursuant to the DIP Facility Order.
1.48 DIP Facility
Claims means the Claims of the DIP Agent and the DIP Lenders arising under the DIP Credit Agreement and the DIP Facility Order (including all accrued and unpaid interest on the loans made under the DIP Facility).
1.49 DIP Facility Consideration means Cash equal to the aggregate amount of all loans and other monetary
obligations owed by the Debtors to the DIP Agent and/or the DIP Lenders under the DIP Credit Agreement and/or pursuant to the DIP Facility Order that are unpaid as of the Effective Date, including, without limitation, (a) the aggregate
outstanding principal amount of the outstanding loans under the DIP Facility at par (including any interest thereon that was previously paid-in-kind), (b) all accrued and unpaid interest on the loans under the DIP Facility, (c) the 4.0%
PIK Put Option Payment, and (d) the 3.0% Backstop Put Option Payment, provided that the DIP Facility Consideration shall be paid solely from the proceeds of the New Second Lien Convertible Notes.
1.50 DIP Facility Order means, as applicable, the Interim Order: (I) Pursuant to 11 U.S.C.
§§ 105, 361, 362, 363 and 364 Authorizing the Debtors to (A) Obtain Postpetition Financing, (B) Grant Liens and Superpriority Administrative Expense Status, (C) Use Cash Collateral of Prepetition Secured Parties, and
(D) Grant Adequate Protection to Prepetition Secured Parties; (II) Scheduling a Final Hearing Pursuant to Bankruptcy Rules 4001(b) and 4001(c); and (III) Granting Related Relief [Docket No. 70] and the Final Order: (I) Pursuant
to 11 U.S.C. §§ 105, 361, 362, 363 and 364 Authorizing the Debtors to (A) Obtain Postpetition Financing, (B) Grant Liens and Superpriority Administrative Expense Status, (C) Use Cash Collateral of Prepetition Secured
Parties, and (D) Grant Adequate Protection to Prepetition Secured Parties; and (II) Granting Related Relief [Docket No. 218].
1.51 DIP Lenders means the lenders and financial institutions from time to time party to the DIP Facility
and defined as Lenders thereunder.
1.52 Disclosure Statement means the disclosure statement
for the Plan (including, without limitation, all exhibits and schedules thereto), as amended, supplemented or modified from time to time, that was approved by the Bankruptcy Court pursuant to the Disclosure Statement Order and prepared and
distributed to those creditors entitled to vote on the Plan in accordance with Bankruptcy Code section 1126(b), Bankruptcy Rule 3018, and other applicable law.
1.53 Disclosure Statement Order means the order of the Bankruptcy Court approving the Disclosure Statement
and the Solicitation.
1.54 Disputed means, with respect to any Claim or Interest, any: (a) Claim
that is listed on the Schedules as unliquidated, disputed or contingent; (b) Claim or Interest as to which the Debtors or any other party in interest have interposed a timely objection or request for estimation in accordance with the Bankruptcy
Code, the Bankruptcy Rules and any orders of the Bankruptcy Court or which is otherwise disputed by the Debtors in
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accordance with applicable law, which objection, request for estimation or dispute has not been withdrawn or determined by a Final Order; (c) any Claim evidenced by a Proof of Claim which
amends a Claim scheduled by the Debtors as contingent, unliquidated, or disputed, with respect to which the Debtors or any other party in interest have interposed a timely objection or request for estimation in accordance with the Bankruptcy Code,
the Bankruptcy Rules and any orders of the Bankruptcy Court or which is otherwise disputed by the Debtors in accordance with applicable law, which objection, request for estimation or dispute has not been withdrawn or determined by a Final Order; or
(d) any Claim or Interest that is not an Allowed Claim or Allowed Interest.
1.55 Distribution
Agent means the Reorganized Debtors or a distribution agent selected by the Reorganized Debtors, as applicable, pursuant to Article 7.1 of the Plan.
1.56 Distribution Date means the date upon which the initial distributions will be made to Holders of
Allowed Claims and Allowed Interests pursuant to Article 7.1 of the Plan.
1.57 Distribution Record Date
means the Confirmation Date.
1.58 Effective Date means the date on which the Plan shall take effect,
which date shall be a Business Day on or after the Confirmation Date on which (a) no stay of the Confirmation Order is in effect and (b) the conditions to the effectiveness of the Plan specified in Article 8.1 of the Plan have been
satisfied, or if capable of being waived, waived in accordance with the terms of the Plan.
1.59 Equity
Committee means the official committee of equity security holders appointed by the U.S. Trustee pursuant to Bankruptcy Code section 1102(a), as it may be reconstituted from time to time.
1.60 Estate means, as to each Debtor, the estate created for that Debtor in its Chapter 11 Case pursuant to
Bankruptcy Code section 541.
1.61 Estimated Amount has the meaning set forth in Article 6.4 of the
Plan.
1.62 Excess Cash Flow means, for any period and without duplication, (a) the Debtors
or Reorganized Debtors, as applicable, net Cash provided by operating activities during such period (as determined in accordance with GAAP); minus (b) solely to the extent clause (a) is not reduced thereby for such period,
Cash capital expenditures during such period (as determined in accordance with GAAP) which are consistent with the Debtors suspension plan (other than capital expenditures related to the development of the sulfide demonstration
plant) in an amount not to exceed $100,000 in the aggregate in any fiscal month; minus (c) solely to the extent clause (a) is not reduced thereby for such period, the repayment of obligations owed under the Jacobs Agreements during
such period to the extent such payments are not prohibited by the New First Lien Term Loan Credit Facility, provided that such payments shall not exceed $4.0 million in April 2016 and $1,189,706 in October 2016; minus (d) solely
to the extent that any Specified Asset Sale made during such period increases clause (a) hereof for such period, an amount equal to the net proceeds of such Specified Asset Sale which so increases clause (a) hereof and which are used to
make mandatory prepayments of Secured ABL Claims, Secured Swap Claims and/or New First Lien Term Loans during such period; minus (e) solely to the extent clause (a) is not reduced thereby for such period, (i) required or
scheduled payments in respect of capital lease obligations and/or equipment financings paid during such period not to exceed $400,000 in the aggregate for such period, (ii) any scheduled Cash fees (other than Fees) or Cash interest paid in
respect of the Secured ABL Claims, Secured Swap Claims and any New First Lien Term Loans during such period and (iii) any Fees during such period; provided that any such Fees, when taken together with all Fees paid to such persons on or after
August 1, 2015, do not exceed $15.0 million in the aggregate; plus (f) solely to the extent clause (a) is reduced thereby for such period, (i) payments in respect of capital lease obligations and/or equipment financings
paid during such period to the extent such payments (x) exceed $400,000 in the aggregate for such period or (y) are voluntary or otherwise paid prior to the date due and payable under the terms thereof as of the date of execution of the
Amended and Restated Restructuring Support Agreement, (ii) any Cash fees or Cash interest paid in respect of indebtedness during such period (other than indebtedness consisting of the Secured ABL Claims, Secured Swap Claims and/or any New First
Lien Term Loans), and (iii) any Fees paid during such period which, when taken together with all Fees paid on or after August 1, 2015, exceed $15.0 million in the aggregate.
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1.63 Excluded Benefits means, with respect to any
Officers Employment Agreement, any (i) equity, incentive or other bonus that may be payable under such Officers Employment Agreement, (ii) payments or benefits that may be payable or provided following a change in
control, triggering event or phrase of a similar nature, or (iii) severance or other benefits that may be payable or provided following a termination of the applicable officers employment with any of the Debtors (other
than unpaid base salary, expense reimbursements, vacation days accrued prior to termination, long term disability and life insurance), including, without limitation, any continued payment of base salary or any multiple thereof, bonus for the year in
which such officer is terminated, premiums for continuation of health coverage and vesting of equity.
1.64
Excluded Matters means (i) the Reorganized Debtors organizational matters (including any certificates of formation, articles of incorporation, bylaws, limited liability company agreements, partnership agreements,
stockholders agreements, registration rights agreements, investor rights agreements, other organizational documents, and any other comparable documents or agreements), (ii) the Reorganized Debtors corporate governance matters
(including matters related to boards of directors and comparable governing bodies and appointment rights, indemnification and fiduciary duties, and procedural matters with respect thereto), (iii) the New Common Stock or any other equity or
rights convertible into equity of the Reorganized Debtors, (iv) the Schedule of Assumed Executory Contracts and Unexpired Leases, (v) employment agreements, employee benefit plans, compensation arrangements, severance arrangements and any
other agreement, plan, arrangement, program, policy or other arrangement relating to employment-related matters, and/or (vi) any other matters, agreements, or documents governing rights and obligations solely as between the Reorganized Debtors
and the holders of any Securities in any of the Reorganized Debtors (in their capacity as such), in each case, unless (A) materially adverse to the Secured Lenders or (B) related to (x) the Secured Lenders, the Credit Agreement, the
Swaps, the treatment of the Secured ABL Claims or the Secured Swap Claims; (y) any documentation relating to the DIP Facility, the New First Lien Term Loan Credit Facility, New Intercreditor Agreement, or the Exit Facility; or (z) any
other documentation relating to the use of cash collateral or any exit financing.
1.65 Exculpated
Parties means each of the following solely in their capacity as such: (a) the Debtors; (b) the Debtors officers, managers, directors, employees, financial advisors, attorneys, accountants, consultants, and other
Professionals; and (c) the Creditors Committees members, financial advisors, attorneys, accountants, consultants, and other Professionals, in each case in their capacity as such, and only if serving in such capacity, on or any time after
the Petition Date and through the Effective Date.
1.66 Exhibit means an exhibit annexed to the Plan, to
any Plan Supplement, or to the Disclosure Statement.
1.67 Existing Equity Interests means the existing
common stock of ANV.
1.68 Exit Facility means the post-Effective Date exit financing for Reorganized
ANV in the form of New Second Lien Convertible Notes issued pursuant to the New Second Lien Convertible Notes Definitive Agreement.
1.69 Exit Facility Commitment means the several (and not joint nor joint and several) commitments from the
Exit Facility Lenders set forth in, and subject to the terms and conditions of, the Exit Facility Commitment Letter and the Restructuring Term Sheet to purchase the New Second Lien Convertible Notes in an original aggregate principal amount equal to
the greater of (a) an amount sufficient for Reorganized ANV to have at least $8.0 million of Cash on the Effective Date after giving pro forma effect to, without duplication, (i) all Cash payments to be made under (A) the Plan or
(B) an order of the Bankruptcy Court, in each case whether paid on or in connection with the Effective Date (excluding, for the avoidance of doubt, New First Lien Term Loan Excess Cash Flow Payments), (ii) the payment of all Fees accrued
through and including the Effective Date and (iii) the payment of any Compensation Plan Payments and (b) an amount such that the aggregate amount of (i) the Cash proceeds of the DIP Facility received by the Debtors prior to the
Effective Date plus (ii) the Cash proceeds of the Exit Facility not used to pay the DIP Facility Consideration equals $65.0 million; provided, however, that in no event shall the Exit Facility Lenders be obligated to fund
amounts under clause (a) above which would cause the aggregate principal amount of the New Second Lien Convertible Notes issued pursuant to the Exit Facility on the Effective Date to exceed $80.0 million.
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1.70 Exit Facility Commitment Letter means the letter
agreement, dated as of July 23, 2015, by and between the Debtors and the Exit Facility Lenders, as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and the Exit Facility Commitment Order.
1.71 Exit Facility Commitment Order means a Final Order of the Bankruptcy Court approving the terms of the
Exit Facility Commitment Letter, which order shall be in form and substance acceptable to the Debtors and the Requisite Exit Facility Lenders and may be the RSA Order, the Disclosure Statement Order or the Confirmation Order.
1.72 Exit Facility Lenders means affiliates of and/or related funds or other vehicles of Aristeia Capital
LLC, Highbridge Capital Management, LLC, Mudrick Capital Management, LP, USAA Asset Management, Whitebox Advisors LLC and Wolverine Asset Management LP.
1.73 Exit Facility Lenders Advisors means (i) Stroock & Stroock & Lavan LLP, as
lead counsel for the Exit Facility Lenders; (ii) Young Conaway Stargatt & Taylor LLP, as local counsel for the Exit Facility Lenders; (iii) Goodmans LLP, as Canadian local counsel for the Exit Facility Lenders; (iv) one
Nevada local counsel for the Exit Facility Lenders (if applicable); and (v) Houlihan Lokey, Inc., as financial advisor to the Exit Facility Lenders.
1.74 Fees means all fees or expenses paid by the Debtors or Reorganized Debtors to advisors, consultants,
attorneys or other professionals (whether of the Debtors or Reorganized Debtors or any stakeholder or otherwise).
1.75
Final Order means (a) an order or judgment of the Bankruptcy Court or any other court or adjudicative body as to which the time to appeal, petition for certiorari, or move for reargument or rehearing has expired and as to
which no appeal, petition for certiorari, or other proceedings for reargument or rehearing shall then be pending, or (b) in the event that an appeal, writ of certiorari, reargument, or rehearing thereof has been taken or sought, such order of
the Bankruptcy Court or any other court or adjudicative body shall have been affirmed by the highest court to which such order was appealed, or certiorari has been denied, or from which reargument or rehearing was sought, and the time to take any
further appeal, petition for certiorari or move for reargument or rehearing shall have expired; provided, that no order shall fail to be a Final Order solely because of the possibility that a motion pursuant to Bankruptcy Code section 502(j),
Rule 59 or Rule 60 of the Federal Rules of Civil Procedure or Bankruptcy Rule 9024 may be filed with respect to such order.
1.76 GAAP means generally accepted accounting principles as in effect in the United States from time to
time.
1.77 General Bar Date means the deadline to file an original, written Proof of Claim against a
Debtor except as otherwise provided in the Bar Date Order, or June 24, 2015 at 4:00 p.m. prevailing Eastern Time.
1.78 General Unsecured Claim means any Claim that is not an Administrative Expense Claim, Professional Fee
Claim, Priority Claim, DIP Facility Claim, Prepetition Secured Debt Claim, Other Secured Claim, Swap Deficiency Claim, Notes Claim, Capital Lease Deficiency Claim, Intercompany Claim or Subordinated Securities Claim.
1.79 Holder means a holder of a Claim against or Interest in a Debtor.
1.80 Hycroft means Hycroft Resources & Development, Inc.
1.81 Impaired means impaired within the meaning of Bankruptcy Code section 1124.
1.82 Indemnity Obligations has the meaning set forth in Article 5.9 hereof.
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1.83 Indenture means that certain indenture, dated as of
May 25, 2012, between ANV and the Indenture Trustee, as may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.
1.84 Indenture Trustee means Computershare Trust Company of Canada as trustee under the Indenture.
1.85 Initial Consenting Noteholders means each of the beneficial owners (or investment managers or advisors
for such beneficial owners) of the Notes identified on the signature pages to the Original Restructuring Support Agreement as of the Original Restructuring Support Effective Date, together with any of their respective successors and permitted
assigns under the Original Restructuring Support Agreement or the Amended and Restated Restructuring Support Agreement that are affiliates or related funds of such Persons.
1.86 Initial Secured Lenders means Scotiabank and Wells Fargo.
1.87 Intercompany Claim means any Claim held by a Debtor or any Non-Debtor Affiliate against any Debtor.
1.88 Intercompany Interests means Interests in any Debtor held by another Debtor.
1.89 Interest means the common stock, limited partnership interests, limited liability company interests,
and any other equity, ownership, or profits interests issued by any Debtor and options, warrants, rights, or other securities or agreements to acquire the common stock, limited partnership interests, limited liability company interests, or other
equity, ownership, or profits interests issued by any Debtor (whether or not arising under or in connection with any employment agreement).
1.90 Jacobs Agreements means, collectively, (i) Section 1 of that certain Release and Settlement
Agreement, dated October 15, 2014, between Jacobs Field Services and Hycroft; (ii) Section 1 of that certain Promissory Note, dated as of October 15, 2014, made by Hycroft in favor of Jacobs Field Services; and (iii) that
certain Guarantee, dated as of October 15, 2014, made by ANV for the benefit of Hycroft and Jacobs Filed Services.
1.91 Jacobs Field Services means Jacobs Field Services North America Inc.
1.92 Joinder Agreement means a joinder agreement substantially in the form attached to the Amended and
Restated Restructuring Support Agreement as Exhibit B thereto, which may be executed after the Restructuring Support Effective Date.
1.93 Lien has the meaning set forth in Bankruptcy Code section 101(37).
1.94 Management Incentive Plan means the post-Effective Date Cash management incentive plan that the New
Board will be authorized to, and shall, implement on the terms set forth in the Plan Supplement and consistent with the presentation dated July 2, 2015 prepared by the Debtors compensation consultant and provided to the Consenting
Noteholders Advisors (unless otherwise agreed to by the Debtors, the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders).
1.95 National Securities Exchange means, if the Requisite Consenting Noteholders and the Requisite Exit
Facility Lenders elect to require Reorganized ANV to list the New Common Stock, any national securities exchange registered with the Securities Exchange Commission under Section 6(a) of the Securities Exchange Act that is selected by the
Requisite Consenting Noteholders and the Requisite Exit Facility Lenders, with the consent of the Debtors or Reorganized Debtors (not to be unreasonably withheld), as applicable.
1.96 NBC Cross Currency Swap means the cross currency swap transaction subject to the ISDA 2012 Master
Agreement, dated as of October 19, 2012, between ANV and National Bank of Canada, as amended, supplemented or otherwise modified from time to time, together with all schedules, exhibits and annexes thereto.
9
1.97 New Board means the board of directors of Reorganized
ANV.
1.98 New Board Member means a member of the New Board appointed as of the Effective Date.
1.99 New Common Stock means the class or classes of common stock issued by Reorganized ANV on the Effective
Date, which shall be deemed validly issued, fully paid and non-assessable.
1.100 New First Lien Term Loan Asset
Sales means, on and after the Effective Date, the sale of (i) assets currently identified as Held for Sale on the Balance Sheet (as defined in the Amended and Restated Restructuring Support Agreement) and (ii) other asset sales
and dispositions (other than sales of gold and silver inventory in the ordinary course of business).
1.101 New
First Lien Term Loan Credit Agreement means the credit agreement that Reorganized ANV will enter into on the Effective Date, in form and substance consistent with the Amended and Restated Restructuring Support Agreement and Restructuring
Term Sheet and otherwise as reasonably negotiated by the Debtors, the Requisite Consenting Noteholders and the Requisite Secured Lenders, pursuant to which Reorganized ANV will incur, and all of the direct and indirect domestic subsidiaries of
Reorganized ANV will guarantee, the New First Lien Term Loans.
1.102 New First Lien Term Loan Credit
Facility means the credit facility for Reorganized ANV in the form of New First Lien Term Loans incurred pursuant to the New First Lien Term Loan Credit Agreement.
1.103 New First Lien Term Loan Excess Cash Flow Payments means the payments to be made within 21 days after
the end of each New First Lien Term Loan Excess Cash Flow Period, until the maturity of the New First Lien Term Loan Credit Facility, pursuant to which the Reorganized Debtors shall prepay the New First Lien Term Loans on a pro rata basis in an
amount equal to the New First Lien Term Loan Excess Cash Flow Payment Amount for such New First Lien Term Loan Excess Cash Flow Period; provided, however, that each New First Lien Term Loan Excess Cash Flow Payment is subject to
reduction equal to the greater of the New First Lien Term Loan Excess Cash Flow Period-End Reduction and the New First Lien Term Loan Excess Cash Flow Payment Date Reduction (it being understood and agreed, for the avoidance of doubt, that if both
the New First Lien Term Loan Excess Cash Flow Period-End Reduction and the New First Lien Term Loan Excess Cash Flow Payment Date Reduction are applicable, then the amount Reorganized ANV shall have to pay in respect of the New First Lien Term Loan
Excess Cash Flow Payment Amount shall be equal to the lesser of (x) the amount calculated after taking into account the New First Lien Term Loan Excess Cash Flow Period-End Reduction and (y) the amount calculated after taking into account
the New First Lien Term Loan Excess Cash Flow Payment Date Reduction), provided, further, that the amount of any such reduction pursuant to the foregoing proviso shall be automatically due and payable on the first day after the date of
the applicable New First Lien Term Loan Excess Cash Flow Payment on which the Reorganized Debtors have greater than $7.5 million of Cash on hand (such that any Cash on hand in excess of $7.5 million shall be used to repay New First Lien Term Loans
on such day in an amount not to exceed the applicable reduction).
1.104 New First Lien Term Loan Excess Cash Flow
Payment Amount means, for any New First Lien Term Loan Excess Cash Flow Period, (x) 50% of Excess Cash Flow for such New First Lien Term Loan Excess Cash Flow Period minus (y) the amount of voluntary prepayments of the New First
Lien Term Loans made during such New First Lien Term Loan Excess Cash Flow Period (it being understood that the New First Lien Term Loans shall be incurred on the Effective Date in accordance with Article 4.10 of the Plan and, accordingly, no such
voluntary prepayments of New First Lien Term Loans can occur prior to the Effective Date).
1.105 New First Lien
Term Loan Excess Cash Flow Payment Date Reduction means if on the date of such New First Lien Term Loan Excess Cash Flow Payment Reorganized ANV will have less than
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$4.0 million of Cash on hand on such date after giving effect to such New First Lien Term Loan Excess Cash Flow Payment, a reduction of such New First Lien Term Loan Excess Cash Flow Payment in
an amount equal to the amount that will result in Reorganized ANV having at least $4.0 million of Cash on hand on such date.
1.106 New First Lien Term Loan Excess Cash Flow Period means each fiscal month ended after the end of the
Secured ABL/Swap Claims Excess Cash Flow Period, until the maturity of the New First Lien Term Loan Credit Facility.
1.107
New First Lien Term Loan Excess Cash Flow Period-End Reduction means if on the last day of the applicable New First Lien Term Loan Excess Cash Flow Period Reorganized ANV would have had less than $7.5 million of Cash on hand on a
pro forma basis after giving effect to such New First Lien Term Loan Excess Cash Flow Payment had such payment been made on such date, a reduction of such New First Lien Term Loan Excess Cash Flow Payment in an amount equal to the maximum amount
that would have resulted in the Reorganized ANV having at least $7.5 million of Cash on hand on such date, had such New First Lien Term Loan Excess Cash Flow Payment been made on such date.
1.108 New First Lien Term Loans means the new loans incurred by Reorganized ANV pursuant to the New First
Lien Term Loan Credit Facility.
1.109 New Intercreditor Agreement means that certain Intercreditor
Agreement to be entered into on the Effective Date by and among the agent under the New First Lien Term Loan Credit Facility, and the trustee, agent or similar representative of the Exit Facility Lenders under the New Second Lien Convertible Notes
Definitive Agreement, governing, among other things, the respective rights, remedies, and priorities of Claims and Liens held by such parties, or any similar or related agreement (and as the same may have been modified, amended, or restated), which
shall be in form and substance consistent with the Amended and Restated Restructuring Support Agreement and Restructuring Term Sheet and otherwise in form and substance reasonably satisfactory to the Debtors, the Requisite Secured Lenders and the
Requisite Exit Facility Lenders and a substantially final form of which shall be included in the Plan Supplement.
1.110
New Organizational Documents means any amended certificates of formation, bylaws, stockholders agreement, registration rights agreement or other operating agreements as may be necessary for the Reorganized Debtors, which
shall be in form and substance reasonably acceptable to the Debtors, the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders and substantially final forms of which shall be included in the Plan Supplement.
1.111 New Second Lien Convertible Notes means the second lien convertible notes issued by Reorganized ANV
pursuant to the New Second Lien Convertible Notes Definitive Agreement.
1.112 New Second Lien Convertible Notes
Definitive Agreement means (i) the Note Purchase Agreement and (ii) if the Indenture Election occurs, the New Second Lien Convertible Notes Indenture.
1.113 New Second Lien Convertible Notes Indenture means, if the Requisite Exit Facility Lenders make the
Indenture Election, the indenture pursuant to which Reorganized ANV will issue the New Second Lien Convertible Notes and all direct and indirect domestic subsidiaries of Reorganized ANV will guarantee the New Second Lien Convertible Notes, such
indenture to be consistent with the terms set forth in the Exit Facility Commitment Letter and otherwise in form and substance (including affirmative and negative covenants and events of default) reasonably acceptable to the Requisite Exit Facility
Lenders, the Requisite Consenting Noteholders and the Debtors.
1.114 Non-Debtor Affiliates means Allied
Nevada Delaware Holdings Inc. and Allied Nevada (Cayman) Corp.
1.115 Non-Insider KEIP means the
Debtors key employee incentive program approved by the Bankruptcy Court in connection with the Order (A) Authorizing and Approving the Debtors Key Employee Incentive Program and (B) Granting Related Relief [Docket No.
488].
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1.116 Note Purchase Agreement means a note purchase agreement
to be entered into on or prior to the Effective Date between the Exit Facility Lenders and the Debtors providing for, among other things, the purchase by the Exit Facility Lenders from Reorganized ANV, and the issuance and sale by Reorganized ANV to
the Exit Facility Lenders, of the New Second Lien Convertible Notes contemplated by the Exit Facility Commitment Letter, and the guarantee of the New Second Lien Convertible Notes by all direct and indirect domestic subsidiaries of Reorganized ANV,
such note purchase agreement to be consistent with the terms set forth in the Exit Facility Commitment Letter and otherwise in form and substance (including with respect to closing conditions, representations and warranties of the Debtors and
affirmative and negative covenants and events of default applicable to the Debtors) acceptable to the Requisite Consenting Noteholders, the Requisite Exit Facility Lenders and the Debtors; provided, that, at the election of the Requisite Exit
Facility Lenders (the Indenture Election), the New Second Lien Convertible Notes shall instead be issued pursuant to, and the terms therefor (including affirmative and negative covenants and events of default) shall be governed
by, the New Second Lien Convertible Notes Indenture.
1.117 Notes means the 8.75% senior unsecured notes
due 2019 issued by ANV pursuant to the Indenture.
1.118 Notes Claims means Claims arising under the
Indenture or in respect of the Notes, which shall be Allowed Claims pursuant to the Plan in the aggregate amount of $324,154,778.00, including $316,640,000.00 in principal and $7,514,778.00 in accrued and unpaid interest as of the Petition Date.
1.119 Officers Employment Agreements mean the employment agreements between the Debtors and the
current officers of the Debtors.
1.120 Original Restructuring Support Agreement means the restructuring
support agreement, dated as of March 10, 2015 (including all exhibits, annexes and schedules attached thereto), as it may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, both as to
substance and parties thereto, among the Debtors, the Initial Consenting Noteholders and the Initial Secured Lenders, a copy of which is attached as Exhibit 2 to the Declaration of Stephen M. Jones in Support of Chapter 11 Petitions and Various
First Day Applications and Motions [Docket No. 16].
1.121 Original Restructuring Support Effective
Date means March 10, 2015.
1.122 Other Secured Claim means a Secured Claim, other than a
Prepetition Secured Debt Claim.
1.123 Person means any person, including, without limitation, any
individual, partnership, joint venture, venture capital fund, association, corporation, union, limited liability company, limited liability partnership, unlimited liability company, trust, trustee, executor, administrator, legal personal
representative, estate, group, unincorporated association or organization or governmental unit.
1.124 Petition
Date means March 10, 2015.
1.125 Plan means this amended joint chapter 11 plan
(including the Plan Supplement), either in its present form or as it may be altered, amended, modified or supplemented from time to time in accordance herewith, the Bankruptcy Code, the Bankruptcy Rules, the Amended and Restated Restructuring
Support Agreement and the Exit Facility Commitment Letter and shall otherwise be in form and substance reasonably acceptable to the Requisite Consenting Parties.
1.126 Plan Supplement means one or more supplements to the Plan containing certain schedules, documents
and/or forms of documents relevant to the implementation of the Plan (including without limitation the New Organizational Documents (including the Stockholders Agreement and the Registration Rights Agreement, if any such agreement is agreed to by
the Debtors, the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders), the Management Incentive Plan, Post-Emergence Key Employee Retention Plan, the New First Lien Term Loan Credit Agreement, the New Intercreditor Agreement,
the New Second Lien
12
Convertible Notes Definitive Agreement, the Schedule of Assumed Executory Contracts and Unexpired Leases, and any other schedules, documents and/or forms of documents necessary to comply with
Bankruptcy Code sections 1123(a)(7) and 1129(a)(5)), to be filed with the Bankruptcy Court no later than nine (9) days prior to the Voting Deadline, as amended, supplemented, or modified from time to time in accordance with the terms of the
Plan, the Amended and Restated Restructuring Support Agreement, the Exit Facility Commitment Letter, the Bankruptcy Code and the Bankruptcy Rules and shall otherwise be in form and substance reasonably acceptable to the Debtors and the Requisite
Consenting Parties; provided, however, that the Creditors Committee shall have consultation rights with respect to such documents only to the extent any documents or provision thereof may be deemed to affect the treatment of or
distributions to the Holders of General Unsecured Claims or Holders of Note Claims, to the extent such Holders of Note Claims are not Consenting Noteholders; provided, further, however, that any documents or provisions of such
documents that are, or relate to, any of the Excluded Matters shall not be required to be reasonably acceptable to the Requisite Secured Lenders.
1.127 Plan Support Parties means, collectively, the Consenting Noteholders and the Secured Lenders.
1.128 Post-Emergence Key Employee Retention Plan means the post-Effective Date key employee retention and
severance program that the New Board will be authorized to, and shall, implement on the terms set forth in the Plan Supplement and consistent with the presentation dated July 2, 2015 prepared by the Debtors compensation consultant and
provided to the Consenting Noteholders Advisors (unless otherwise agreed to by the Debtors, the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders).
1.129 Prepetition Secured Debt Claims means, collectively, the Secured ABL Claims and the Secured Swap
Claims.
1.130 Priority Claim means any Claim to the extent that it is of the kind described in, and
entitled to priority under, Bankruptcy Code sections 507(a)(3), (4), (5), (6) or (8).
1.131
Professional means (a) any professional employed in these Chapter 11 Cases pursuant to Bankruptcy Code sections 327, 328 or 1103 and (b) any professional or other entity seeking compensation or reimbursement of expenses
in connection with the Chapter 11 Cases pursuant to Bankruptcy Code section 503(b)(4) excluding those entities entitled to compensation for services rendered after the Petition Date in the ordinary course of business pursuant to the Order
Authorizing the Employment and Compensation of Professionals Utilized in the Ordinary Course of Business, Effective Nunc Pro Tunc to the Effective Date [Docket No. 196], as may be amended, modified, or supplemented by the Bankruptcy
Court from time to time.
1.132 Professional Fee Claims means Administrative Expense Claims of a
Professional for compensation for services rendered or reimbursement of costs, expenses, or other charges incurred on or after the Petition Date through and including the Effective Date.
1.133 Proof of Claim means a proof of Claim filed by a Holder of a Claim against any Debtor (as may be
amended and supplemented from time to time pursuant to the Bankruptcy Code or Bankruptcy Rules) on or before the applicable Bar Date, or such other time as may be permitted by the Bankruptcy Court or agreed to by the Debtors with the consent of the
Requisite Consenting Parties, which consent shall not be unreasonably withheld, or the Reorganized Debtors.
1.134
Proof of Interest means a proof of Interest filed by a Holder of an Interest in any Debtor (as may be amended and supplemented from time to time pursuant to the Bankruptcy Code or Bankruptcy Rules) on or before the applicable Bar
Date, or such other time as may be permitted by the Bankruptcy Court or agreed to by the Debtors with the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, or the Reorganized Debtors.
1.135 Pro Rata means the proportion by dollar amount (with respect to an Allowed Claim) or amount (with
respect to an Allowed Interest) that an Allowed Claim or Allowed Interest in a particular Class(es) bears to the aggregate dollar amount of Allowed Claims or aggregate amount of Allowed Interests in that
13
Class(es), or the proportion by dollar amount (with respect to an Allowed Claim) or amount (with respect to an Allowed Interest) that an Allowed Claim or Allowed Interest entitled to share in the
same recovery as other Allowed Claims or Allowed Interests bears to the aggregate dollar amount of Allowed Claims or aggregate amount of Allowed Interests entitled to share in that same recovery under the Plan. The definition of Pro Rata shall apply
to Allowed DIP Facility Claims to the same extent and in the same manner as if DIP Facility Claims were classified in a Class under the Plan.
1.136 Registration Rights Agreement means one or more registration rights agreements that may be entered
into on the Effective Date between one or more of the Reorganized Debtors and certain holders of the New Common Stock and/or other securities of the Reorganized Debtors, such agreement(s) to be in form and substance reasonably acceptable to the
Reorganized Debtors and such holders.
1.137 Reinstated means (a) leaving unaltered the legal,
equitable and contractual rights to which a Claim or Interest entitles the Holder of such Claim or Interest so as to leave such Claim or Interest Unimpaired, or (b) notwithstanding any contractual provision or applicable law that entitles the
Holder of such Claim or Interest to demand or receive accelerated payment of such Claim or Interest after the occurrence of a default, (i) curing any such default that occurred before or after the Petition Date, other than a default of a kind
specified in Bankruptcy Code section 365(b)(2), (ii) reinstating the maturity of such Claim or Interest as such maturity existed before such default, (iii) compensating the Holder of a Claim or Interest for any damages incurred as a result
of any reasonable reliance by such Holder of a Claim or Interest on such contractual provision or such applicable law, and (iv) not otherwise altering the legal, equitable, or contractual rights to which such Claim or Interest entitles the
Holder of such Claim or Interest.
1.138 Released Party means each of the following solely in their
capacity as such: (a) each Holder of Notes Claims who is a Consenting Noteholder; (b) the Indenture Trustee; (c) Scotiabank; (d) Wells Fargo; (e) each Holder of the Secured Swap Claims or Secured ABL Claims; (f) the DIP
Agent; (g) the DIP Lenders; (h) the DIP Backstop Lenders; (i) the Exit Facility Lenders and any agent, trustee or similar representative of the Exit Facility Lenders under the Exit Facility; (j) the Creditors Committee and the
members of the Creditors Committee; (k) with respect to the foregoing entities in clauses (a) through (j), their respective current or former directors, managers, officers, affiliates, partners, consultants, financial advisors,
subsidiaries, principals, employees, agents, managed funds, representatives, attorneys and advisors, together with their successors and assigns; and (l) the Debtors officers, managers, directors, employees, financial advisors, attorneys,
accountants, consultants, and other Professionals, in each case in their capacity as such, and only if serving in such capacity.
1.139 Reorganized ANV means, on and after the Effective Date, ANV reorganized under and pursuant to the
Plan.
1.140 Reorganized Debtors means, on and after the Effective Date, collectively, all of the
Debtors that are reorganized under and pursuant to the Plan.
1.141 Requisite Consenting Noteholders
means, as of any date of determination, the Consenting Noteholders who own or control as of such date at least 50.01% in principal amount of the Notes owned or controlled by all of the Consenting Noteholders as of such date.
1.142 Requisite Consenting Parties means, collectively, the Requisite Consenting Noteholders, the Requisite
Secured Lenders and the Requisite Exit Facility Lenders.
1.143 Requisite Exit Facility Lenders means,
as of any date of determination, the Exit Facility Lenders who own or control as of such date at least 75% of the Exit Facility Commitment as of such date.
1.144 Requisite Secured Lenders means, as of any date of determination, the Secured Lenders who own or
control as of such date at least 50.01% in principal amount of the Secured ABL Claims and Secured Swap Claims owned or controlled by all of the Secured Lenders, as of such date.
14
1.145 Restructuring Documents means all agreements,
instruments, pleadings, orders or other documents (including all exhibits, schedules, supplements, appendices, annexes and attachments thereto) that are utilized to implement or effectuate, or that otherwise relate to, the Plan and/or the
Restructuring Transaction, including, but not limited to, (i) the Plan Supplement, (ii) the Disclosure Statement and any motion seeking the approval thereof, (iii) the Disclosure Statement Order, (iv) the Confirmation Order,
(v) the Ballots, the motion to approve the form of the Ballots and the Solicitation, and the order of the Bankruptcy Court approving the form of the Ballots and the Solicitation, (vi) any documentation relating to the DIP Facility, the New
First Lien Term Loan Credit Facility, the New Intercreditor Agreement, the New Second Lien Convertible Notes Definitive Agreement, the Exit Facility and the Exit Facility Commitment Letter, and (vii) any documentation relating to the use of
cash collateral, distributions provided to the Holders of any Claims and Interests, any exit financing, organizational documents, shareholder-related agreements or other related documents, each of which shall contain terms and conditions materially
consistent with the Plan and the Amended and Restated Restructuring Support Agreement and shall otherwise be in form and substance acceptable to the Debtors, the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders and, as and to
the extent required pursuant to the Amended and Restated Restructuring Support Agreement, the Requisite Secured Lenders.
1.146 Restructuring Support Effective Date means, as to each party to the Amended and Restated Restructuring
Support Agreement, the date on which the Amended and Restated Restructuring Support Agreement becomes effective and binding on such party in accordance with the terms thereof.
1.147 Restructuring Term Sheet means that term sheet attached as Exhibit B to the Amended and Restated
Restructuring Support Agreement.
1.148 Restructuring Transaction means the restructuring transactions
for the Debtors in accordance with, and subject to the terms and conditions set forth in, the Plan.
1.149
Retained Causes of Action has the meaning set forth in Article 9.7 of the Plan.
1.150 RSA
Order means the Final Order authorizing the Debtors assumption of the Amended and Restated Restructuring Support Agreement.
1.151 Schedule of Assumed Executory Contracts and Unexpired Leases means the schedule listing those
executory contracts and unexpired leases to be assumed by the Debtors pursuant to the Plan and the proposed cure amounts, if any, related thereto, in the form filed as part of the Plan Supplement, as the same may be amended, modified, or
supplemented from time to time, all of which shall be reasonably acceptable to the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders.
1.152 Schedules means the schedules of assets and liabilities, schedules of executory contracts, and
statements of financial affairs filed by the Debtors pursuant to Bankruptcy Code section 521, the Official Bankruptcy Forms and the Bankruptcy Rules, and any and all amendments thereto.
1.153 Scotiabank means The Bank of Nova Scotia.
1.154 Scotiabank Cross Currency Swap means the cross currency swap transaction subject to the ISDA 2012
Master Agreement, dated as of May 15, 2012, between ANV and Scotiabank, as amended, supplemented or otherwise modified from time to time, together with all schedules, exhibits and annexes thereto.
1.155 Scotiabank Cross Currency Swap Claim means the Claim arising from the Scotiabank Cross Currency Swap.
1.156 Secured means when referring to a Claim: (a) secured by a Lien on property in which an
Estate has an interest, which Lien is valid, perfected and enforceable pursuant to applicable law or by reason of a Bankruptcy Court order, or that is subject to setoff pursuant to Bankruptcy Code section 553, to the extent of the value of the
creditors interest in an Estates interest in such property or to the extent of the amount subject to setoff, as applicable, as determined pursuant to Bankruptcy Code section 506(a) or (b) Allowed as such pursuant to the Plan.
15
1.157 Secured ABL $10MM Cash Payment means payments in cash
aggregating $10,000,000.00, in respect of the outstanding principal amount of the Secured ABL Claims as of the Petition Date that were made during the pendency of the Chapter 11 Cases.
1.158 Secured ABL Claim means a Claim arising under the Credit Agreement.
1.159 Secured ABL/Swap Cash Payments means payments in Cash aggregating an amount equal to the greater of
(i) $25,000,000.00 and (ii) an amount equal to 100% of the net cash proceeds from the sale of, without duplication, exploration properties and Secured ABL/Swap Claims Asset Sales, in respect of the outstanding principal amount of the
Secured ABL Claims and Secured Swap Claims as of the Petition Date that were made during the pendency of the Chapter 11 Cases or will be made on the Effective Date.
1.160 Secured ABL/Swap Claims Asset Sales means any sale of (i) assets currently identified as Held for
Sale on the Balance Sheet (as defined in the Amended and Restated Restructuring Support Agreement) and (ii) other asset sales and dispositions (other than sales of gold and silver inventory in the ordinary course of business).
1.161 Secured ABL/Swap Claims Excess Cash Flow Payment means the Cash payment to be made to Holders of
Secured ABL Claims and Secured Swap Claims on the Effective Date in an amount equal to 50% of the Excess Cash Flow in respect of the Secured ABL/Swap Claims Excess Cash Flow Payment Period.
1.162 Secured ABL/Swap Claims Excess Cash Flow Payment Period means the period beginning on August 1,
2015 and ending on the last day of the last full fiscal month ended on or prior to the date that is 21 days prior to the Effective Date.
1.163 Secured Lenders means the Initial Secured Lenders and any Successor Secured Lenders.
1.164 Secured Lenders Advisors means (i) Wachtell, Lipton, Rosen & Katz, as counsel to
Scotiabank as administrative agent under the Credit Agreement; (ii) Morris, Nichols, Arsht & Tunnell LLP, as Delaware local counsel for the Secured Lenders; (iii) Fennemore Craig, P.C.; (iv) RPA Advisors, LLC, as financial
advisor to the Secured Lenders; (v) JDS Energy & Mining USA LLC, as technical advisor to the Secured Lenders; (vi) McMillan LLP; and (vii) Fasken Martineau.
1.165 Secured Swap Claims means, collectively, the Scotiabank Cross Currency Swap Claim and the Diesel Swap
Claims.
1.166 Securities means any instruments that qualify under section 2(a)(1) of the Securities
Act, including the New Common Stock.
1.167 Securities Act means the Securities Act of 1933, 15 U.S.C.
§§ 77a-77aa, as now in effect or hereafter amended.
1.168 Securities Exchange Act means the
Securities Exchange Act of 1934, 15 U.S.C. §§ 78a 78pp, as now in effect or hereafter amended.
1.169
SocGen Cross Currency Swap means the cross currency swap transaction subject to the ISDA 2012 Master Agreement, dated as of October 31, 2012, between ANV and Societe Generale, as amended, supplemented or otherwise modified
from time to time, together with all schedules, exhibits and annexes thereto.
16
1.170 Solicitation means the solicitation of votes in
connection with the Plan pursuant to Bankruptcy Code sections 1125 and 1126.
1.171 Specified Asset
Sales means, collectively, the New First Lien Term Loan Asset Sales and the Secured ABL/Swap Claims Asset Sales.
1.172 Specified Employee Benefits Programs has the meaning set forth in Article 5.8 of the Plan.
1.173 Stockholders Agreement means a stockholders agreement for Reorganized ANV.
1.174 Subordinated Securities Claims means all Claims of the type described in and subject to subordination
pursuant to Bankruptcy Code section 510(b).
1.175 Successor Secured Lenders means any successors and
assigns of the Initial Secured Lenders under the Amended and Restated Restructuring Support Agreement.
1.176 Swap
Claims means, collectively, the Cross Currency Swap Claims and the Diesel Swap Claims.
1.177 Swap
Deficiency Claims means the unsecured portion of the Claims arising under the NBC Cross Currency Swap and the SocGen Cross Currency Swap, which shall be Allowed Claims pursuant to the Plan in the aggregate principal amount of $890,603.67
as of the Petition Date.
1.178 Swaps means the Cross Currency Swaps and the Diesel Swaps.
1.179 Taxes means any federal, state, county or local taxes, charges, fees, levies, other assessments, or
withholding taxes or charges imposed by any governmental unit, and includes any interest and penalties (civil or criminal) on or additions to any such taxes and any expenses incurred in connection with the determination, settlement or litigation of
any tax liability.
1.180 Transaction Expenses means all reasonable and documented fees, costs and
expenses of the DIP Lenders and DIP Agent (including, without limitation, such parties professional fees and expenses and the fees and expenses of Houlihan Lokey Capital, Inc. in accordance with the terms of that certain engagement letter
dated February 23, 2015), Consenting Noteholders Advisors, Secured Lenders Advisors, Exit Facility Lenders Advisors and the advisors to the trustee, agent or similar representative of the Exit Facility Lenders under the New
Second Lien Convertible Notes Definitive Agreement, in each case, (i) in connection with the negotiation, formulation, preparation, execution, delivery, implementation, consummation and enforcement of the Amended and Restated Restructuring
Support Agreement, the Original Restructuring Support Agreement, the Plan, the Disclosure Statement, the Exit Facility Commitment Letter, and any of the other Restructuring Documents, and the transactions contemplated thereby, or any amendments,
waivers, consents, supplements or other modifications to any of the foregoing and (ii)(A) consistent with any engagement letters entered into between the Debtors and the applicable Consenting Noteholders Advisors or Secured Lenders
Advisors (as supplemented and/or modified by the Amended and Restated Restructuring Support Agreement or the Original Restructuring Support Agreement), as applicable, or (B) as provided in the DIP Facility Order or the Exit Facility Commitment
Letter.
1.181 Transfer means any sale, transfer, loan, issuance, pledge, hypothecation, assignment,
grant or other disposition (including a participation) by a Consenting Party, directly or indirectly, in whole or in part, of any Claims or Interests, or any option thereon or any right or interest therein (including grants of any proxies, deposits
of any Claims or Interests into a voting trust, or entry into a voting agreement with respect to any Claims or Interests).
17
1.182 Unclassified Claims means Administrative Expense Claims,
DIP Facility Claims and Priority Claims.
1.183 Unimpaired means, with respect to a Claim, Interest, or
Class of Claims or Class of Interests, not impaired within the meaning of Bankruptcy Code sections 1123(a)(4) and 1124.
1.184 Unsecured Claims means Capital Lease Deficiency Claims, General Unsecured Claims, Notes Claims and
Swap Deficiency Claims.
1.185 U.S. Trustee means the United States Trustee for the District of
Delaware.
1.186 Voting Deadline means 4:00 p.m., prevailing Eastern Time, on September 24, 2015.
1.187 Wells Fargo means Wells Fargo Bank, National Association.
ARTICLE II
CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS
A. Unclassified Claims.
2.1 Administrative Expense Claims. In full and final satisfaction, settlement, release and discharge of each Administrative
Expense Claim, except to the extent that a Holder of an Allowed Administrative Expense Claim and the Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, or the Reorganized Debtors, agree
in writing to less favorable treatment for such Administrative Expense Claim, the Debtors (or the Reorganized Debtors, as the case may be) shall pay to each Holder of an Allowed Administrative Expense Claim, as applicable, Cash in an amount equal to
such Allowed Administrative Expense Claim on, or as soon thereafter as is reasonably practicable, (a) the Effective Date or, if payment is not then due, (b) on the due date of such Administrative Expense Claim. Except as otherwise provided
by the Plan, any request for the payment of an Administrative Expense Claim that is not filed and served within thirty (30) days after the Effective Date shall be discharged and forever barred and the Holder of such Administrative Expense Claim
shall be enjoined from commencing or continuing any action, process or act to collect, offset or recover on such Administrative Expense Claim against any of the Debtors or Reorganized Debtors.
The Transaction Expenses incurred, or estimated to be incurred, up to and including the Effective Date shall be paid in full in Cash on the
Effective Date (to the extent not previously paid during the course of the Chapter 11 Cases) without the requirement to file a fee application with the Bankruptcy Court or a formal request for payment prior to the Administrative Bar Date, and
without any requirement for Bankruptcy Court review; provided, however, that copies of invoices for payment of Transaction Expenses shall be provided contemporaneously to the U.S. Trustee.
2.2 Professional Fee Claims. All Professionals seeking allowance by the Bankruptcy Court of Professional Fee Claims shall file
their respective final applications for allowance of compensation for services rendered and reimbursement of expenses incurred by the date that is thirty (30) days after the Effective Date. Allowed Professional Fee Claims shall be paid in full
(i) upon the later of (A) the Effective Date and (B) the date upon which the order relating to any such Allowed Professional Fee Claim is entered by the Bankruptcy Court or (ii) upon such other terms as may be mutually agreed
upon between the Holder of such an Allowed Professional Fee Claim and the Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, or the Reorganized Debtors. The Reorganized Debtors are
authorized to pay compensation for services rendered or reimbursement of expenses incurred after the Effective Date in the ordinary course and without the need for Bankruptcy Court approval.
2.3 Priority Claims. In full and final satisfaction, settlement, release and discharge of each Allowed Priority Claim, except
to the extent that a Holder of an Allowed Priority Claim agrees to less favorable treatment, each Holder of an Allowed Priority Claim due and payable on or before the Effective Date shall, upon the
18
later of (A) the Effective Date or as soon thereafter as reasonably practicable and (B) the date upon which the Priority Claim comes due, be: (i) paid in full in Cash;
(ii) Unimpaired and Reinstated; or (iii) treated on such other terms as may be agreed upon by such Holder and the Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, or
Reorganized Debtors, as applicable, or otherwise determined by an order of the Bankruptcy Court.
2.4 DIP Facility Claims.
In full and final satisfaction, settlement, release and discharge of each Allowed DIP Facility Claim, each Holder of an Allowed DIP Facility Claim, on the Effective Date, shall be paid its Pro Rata share of the DIP Facility Consideration;
provided, however, that only the DIP Backstop Lenders shall receive their Pro Rata share (calculated based on the amount of Allowed DIP Facility Claims held by each of the DIP Backstop Lenders relative to each other) of the 3.0%
Backstop Put Option Payment. For the avoidance of doubt, the DIP Facility Consideration shall be paid in its entirety from the proceeds of the Exit Facility.
B. General Rules.
2.5 Substantive Consolidation of the Debtors for Plan Purposes Only. Pursuant to Article 4.2 of the Plan, the Plan provides for
the substantive consolidation of the Debtors Estates into a single Estate for Plan purposes only and matters associated with Confirmation and consummation of the Plan. As a result of the substantive consolidation of the Debtors Estates
for these limited purposes, each Class of Claims against and Interests in the Debtors will be treated as against a single consolidated Estate for Plan purposes without regard to the corporate separateness of the Debtors.
2.6 Classification. Pursuant to Bankruptcy Code sections 1122 and 1123, the following chart designates the Classes of Claims
and Interests under the Plan. A Claim or Interest is in a particular Class for purposes of voting on, and of receiving distributions pursuant to, the Plan only to the extent that such Claim or Interest is an Allowed Claim or Allowed Interest in that
Class and such Claim or Interest has not been paid, released or otherwise settled prior to the Effective Date. A Claim or Interest shall be deemed classified in a particular Class only to the extent that the Claim or Interest qualifies within the
description of that Class, and shall be deemed classified in a different Class to the extent that any remainder of such Claim or Interest qualifies within the description of such different Class.
C. Summary of Classification for the Debtors.
|
|
|
|
|
|
|
Class |
|
Designation |
|
Impairment |
|
Entitled to Vote |
Class 1 |
|
Secured ABL Claims |
|
Impaired |
|
Yes |
|
|
|
|
Class 2 |
|
Secured Swap Claims |
|
Impaired |
|
Yes |
|
|
|
|
Class 3 |
|
Other Secured Claims |
|
Unimpaired |
|
No
(deemed to accept) |
|
|
|
|
Class 4 |
|
Unsecured Claims |
|
Impaired |
|
Yes |
|
|
|
|
Class 5 |
|
Intercompany Claims |
|
Unimpaired |
|
No
(deemed to accept) |
|
|
|
|
Class 6 |
|
Subordinated Securities Claims |
|
Impaired |
|
No
(deemed to reject) |
|
|
|
|
Class 7 |
|
Intercompany Interests |
|
Unimpaired |
|
No
(deemed to accept) |
|
|
|
|
Class 8 |
|
Existing Equity Interests |
|
Impaired |
|
No
(deemed to reject) |
19
D. Classified Claims and Interests Against the Debtors.
2.7 Class 1 Secured ABL Claims.
(a) Classification. Class 1 consists of all Secured ABL Claims.
(b) Allowance. Class 1 Claims shall be Allowed Claims pursuant to the Plan in the aggregate amount of $75,411,229.34 (including
$74,950,000.00 in principal and $461,229.34 in accrued and unpaid interest and fees as of the Petition Date), less (i) the Secured ABL $10MM Cash Payment and (ii) the Secured ABL Claims Pro Rata (after giving effect to the Secured
ABL $10MM Cash Payment) share of the amount of Secured ABL/Swap Cash Payments made prior to the Effective Date.
(c) Treatment. In
full and complete satisfaction, discharge and release of each Class 1 Claim, each Holder of an Allowed Class 1 Claim shall receive, on the Effective Date: its Pro Rata (after giving effect to the Secured ABL $10MM Cash Payment) share of (i)(A) the
Secured ABL/Swap Cash Payments not made prior to the Effective Date and (B) the Secured ABL/Swap Claims Excess Cash Flow Payment, and (ii) New First Lien Term Loans in an aggregate principal amount equal to (A) the amount of Allowed
Claims pursuant to Article 2.7(b) above minus (B) the amount paid in cash in respect of the Secured ABL Claims pursuant to the foregoing clause (i) of this Article 2.7(c). In addition, for the avoidance of doubt, any unpaid amounts owed to
the holders of Secured ABL Claims pursuant to Section 11 of the DIP Facility Order (including accrued interest to and including the Effective Date pursuant to clause (a) thereof) shall be due and payable in cash on the Effective Date.
(d) Impairment and Voting. Class 1 Claims are Impaired and the Holders thereof are entitled to vote on the Plan.
2.8 Class 2 Secured Swap Claims.
(a) Classification. Class 2 consists of all Secured Swap Claims.
(b) Allowance. Class 2 Claims shall be Allowed Claims pursuant to the Plan in the aggregate principal amount of $86,306,619.00 less
the Secured Swap Claims Pro Rata share of the amount of Secured ABL/Swap Cash Payments made prior to the Effective Date.
(c)
Treatment. In full and complete satisfaction, discharge and release of each Class 2 Claim, each Holder of an Allowed Class 2 Claim shall receive, on the Effective Date: its Pro Rata share of (i)(A) the Secured ABL/Swap Cash Payments not made
prior to the Effective Date and (B) the Secured ABL/Swap Claims Excess Cash Flow Payment, and (ii) New First Lien Term Loans in an aggregate principal amount equal to (A) the amount of Allowed Claims pursuant to Article 2.8(b) above
minus (B) the amount paid in cash in respect of the Secured Swap Claims pursuant to the foregoing clause (i) of this Article 2.8(c). In addition, for the avoidance of doubt, any unpaid amounts owed to the holders of Secured Swap Claims
pursuant to Section 11 of the DIP Facility Order (including accrued interest to and including the Effective Date pursuant to clause (a) thereof ) shall be due and payable in cash on the Effective Date.
(d) Impairment and Voting. Class 2 Claims are Impaired and the Holders thereof are entitled to vote on the Plan.
20
2.9 Class 3 Other Secured Claims.
(a) Classification. Class 3 consists of any and all Other Secured Claims.
(b) Treatment. In full and complete satisfaction, discharge and release of each Allowed Class 3 Claim, except to the extent a Holder
of an Allowed Class 3 Claim agrees to less favorable treatment with the Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, or Reorganized Debtors, as applicable, each Allowed Class 3
Claim, on the Effective Date shall be (i) paid in full in Cash, (ii) Unimpaired and Reinstated or (iii) treated on such other terms as the applicable Debtor, with the consent of the Requisite Consenting Parties, which consent shall
not be unreasonably withheld, or Reorganized Debtor, and the Holder thereof may agree.
(c) Impairment and Voting. Class 3 Claims
are Unimpaired and the Holders thereof are deemed to accept the Plan and are not entitled to vote on the Plan.
2.10 Class 4
Unsecured Claims.
(a) Classification. Class 4 consists of any and all Unsecured Claims.
(b) Treatment. In full and complete satisfaction, discharge and release of each Allowed Class 4 Claim, each Holder of an Allowed Class
4 Claim shall receive its Pro Rata share of 100% of the New Common Stock, subject to dilution on account of the conversion of the New Second Lien Convertible Notes.
(c) Impairment and Voting. Class 4 Claims are Impaired and the Holders thereof are entitled to vote on the Plan.
2.11 Class 5 Intercompany Claims.
(a) Classification. Class 5 consists of any and all Intercompany Claims.
(b) Treatment. Class 5 Claims shall be adjusted, continued, contributed to capital or discharged to the extent determined by the
Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, or the Reorganized Debtors.
(c) Impairment and Voting. Class 5 Claims are Unimpaired and the Holders thereof are deemed to accept the Plan and are not entitled to
vote on the Plan.
2.12 Class 6 Subordinated Securities Claims.
(a) Classification. Class 6 consists of any and all Subordinated Securities Claims.
(b) Treatment. Class 6 Claims shall be extinguished and Holders thereof shall not receive any property or consideration under the Plan
in respect of Class 6 Claims.
(c) Impairment and Voting. Class 6 Claims are Impaired and the Holders thereof are deemed to reject
the Plan and are not entitled to vote on the Plan.
2.13 Class 7 Intercompany Interests.
(b) Classification. Class 7 consists of any and all Intercompany Interests.
(c) Treatment. Class 7 Interests shall be Reinstated and the legal, equitable and contractual rights to which Holders of such
Allowed Interests are entitled shall remain unaltered so as to maintain the organizational structure of the Debtors as such structure existed on the Petition Date.
(d) Impairment and Voting. Class 7 Interests are Unimpaired and the Holders thereof are deemed to accept the Plan and are not entitled
to vote on the Plan.
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2.14 Class 8 Existing Equity Interests
(a) Classification. Class 8 consists of any and all Existing Equity Interests in the Debtors.
(b) Treatment. The Holders of Existing Equity Interests shall receive no recovery on account of their Existing Equity Interests and
the Existing Equity Interests shall be deemed canceled, released and extinguished as of the Effective Date.
(c) Impairment and
Voting. Class 8 Interests are Impaired and the Holders of Class 8 Interests are deemed to reject the Plan and are not entitled to vote on the Plan.
E. Additional Provisions Regarding Unimpaired Claims and Subordinated Claims.
2.15 Special Provision Regarding Unimpaired Claims. Except as otherwise explicitly provided in the Plan, nothing shall affect
the Debtors or the Reorganized Debtors rights and defenses, both legal and equitable, with respect to any Unimpaired Claims, including, but not limited to, all rights with respect to legal and equitable defenses to setoffs or recoupments
asserted against Unimpaired Claims.
2.16 Subordinated Claims. The allowance, classification and treatment of all Allowed
Claims and Allowed Interests and the respective distributions and treatments under the Plan take into account and conform to the relative priority and rights of the Claims and Interests in each Class in connection with any contractual, legal, and
equitable subordination rights relating thereto, whether arising under general principles of equitable subordination, Bankruptcy Code section 510(b), or otherwise. The Debtors or Reorganized Debtors, as applicable, reserve the right to re-classify
any Allowed Claim (or portion thereof) as a Subordinated Claim upon entry of a Final Order ruling that such Allowed Claim (or portion thereof) is a Subordinated Claim.
ARTICLE III
ACCEPTANCE
3.1
Presumed Acceptance of the Plan. Classes 3, 5 and 7 are Unimpaired under the Plan, and are therefore conclusively presumed to have accepted the Plan pursuant to Bankruptcy Code section 1126(f).
3.2 Presumed Rejection of the Plan. Classes 6 and 8 are Impaired under the Plan, and are conclusively presumed to have rejected
the Plan pursuant to Bankruptcy Code section 1126(g).
3.3 Voting Classes. Classes 1, 2 and 4 are Impaired under the Plan,
and Holders of Claims or Interests in Classes 1, 2 and 4 shall be entitled to vote to accept or reject the Plan.
3.4 Elimination
of Vacant Classes. Any Class of Claims that does not have a Holder of an Allowed Claim or a Claim temporarily Allowed by the Bankruptcy Court as of the date of the Confirmation Hearing shall be deemed eliminated from the Plan for purposes of
voting to accept or reject the Plan and for purposes of determining acceptance or rejection of the Plan by such Class pursuant to Bankruptcy Code section 1129(a)(8).
3.5 Cramdown. The Debtors shall request Confirmation of the Plan, as it may be modified from time to time, under Bankruptcy
Code section 1129(b) with respect to Classes 6 and 8 and any other Impaired Class that votes to reject the Plan, if any. The Debtors reserve the right to modify the Plan subject to the terms of the Amended and Restated Restructuring Support
Agreement and the Exit Facility Commitment Letter to the extent, if any, that Confirmation pursuant to Bankruptcy Code section 1129(b) requires modification to the Plan.
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ARTICLE IV
MEANS FOR IMPLEMENTATION OF PLAN
4.1 Restructuring Transactions.
(a) Transactions. The Plan contemplates, among other things: (i) the Reorganized Debtors entering into (x) the New First
Lien Term Loan Credit Facility and (y) the Exit Facility; (ii) the issuance of New Common Stock; and (iii) the adoption of the New Organizational Documents and (where required by applicable law) the filing of the New Organizational
Documents with the applicable authorities of the relevant jurisdictions of organization.
(b) Continued Corporate Existence; Vesting
of Assets in the Reorganized Debtors. Subject to Section 4.16 of the Plan, on and after the Effective Date, each of the Reorganized Debtors shall continue to exist as a separate entity in accordance with applicable law in the respective
jurisdiction in which it is organized and pursuant to the New Organizational Documents. Notwithstanding anything to the contrary in the Plan, the Unimpaired Claims against a Debtor shall remain the obligations solely of such Debtor or such
Reorganized Debtor and shall not become obligations of any other Debtor or Reorganized Debtor by virtue of the Plan, the Chapter 11 Cases, or otherwise. Except as otherwise provided in the Plan, on and after the Effective Date, all Assets of the
Estates or the Debtors, including all claims, rights and Causes of Action and any property acquired by the Debtors or the Reorganized Debtors under or in connection with the Plan, shall vest in the Reorganized Debtors free and clear of all Claims,
Liens, charges, other encumbrances and Interests other than any Claims, Liens, charges or encumbrances arising or created under the New First Lien Term Loan Credit Facility and the Exit Facility. On and after the Effective Date, the Reorganized
Debtors may operate their business and may use, acquire and dispose of Assets and compromise or settle any Claims and Causes of Action without supervision of or approval by the Bankruptcy Court and free and clear of any restrictions of the
Bankruptcy Code or the Bankruptcy Rules, other than restrictions expressly imposed by the Plan or the Confirmation Order.
4.2
Substantive Consolidation for Plan Purposes Only. The Plan shall serve as a motion by the Debtors seeking entry of a Bankruptcy Court order substantively consolidating the Debtors Estates into a single consolidated Estate, solely
for all purposes associated with Confirmation and consummation of the Plan. On the Effective Date, for Plan purposes only, the Debtors shall be deemed merged into ANV, and (a) all assets and liabilities of the Debtors shall be deemed merged
into ANV, (b) all guaranties of any Debtor of the payment, performance, or collection of the obligations of another Debtor shall be eliminated and cancelled, (c) any obligation of any Debtor and all guaranties thereof executed by one or
more of the other Debtors shall be treated as a single obligation, and such guaranties shall be deemed a single Claim against the consolidated Debtors, (d) all joint obligations of two or more Debtors, and all multiple Claims against such
entities on account of such joint obligations shall be treated and Allowed only as a single Claim against the consolidated Debtors and (e) each Claim filed in the Chapter 11 Cases of any Debtor shall be deemed filed against the consolidated
Debtors and a single obligation of the Debtors on and after the Effective Date. Entry of the Confirmation Order will constitute the approval, pursuant to Bankruptcy Code section 105(a), effective as of the Effective Date, of the deemed substantive
consolidation of the Chapter 11 Cases of the Debtors for purposes of voting on, Confirmation of, and distributions under the Plan.
Notwithstanding the foregoing, the deemed consolidation and substantive consolidation (each for Plan purposes only) shall not (other than for
purposes related to funding distributions under the Plan) affect (a) the legal and organizational structure of the Debtors or the Reorganized Debtors, (b) pre- and post-Petition Date guaranties, Liens and security interests that were
required to be maintained (i) in connection with any executory contracts or unexpired leases that were entered into during the Chapter 11 Cases or that have been or will be assumed by the Debtors or (ii) pursuant to the Plan,
(c) distributions out of any insurance policies or proceeds of such policies, and (d) the tax treatment of the Debtors. Furthermore, notwithstanding the foregoing, the deemed consolidation and substantive consolidation (each for Plan
purposes only), shall not affect the statutory obligation of each and every Debtor to pay quarterly fees to the U.S. Trustee pursuant to 28 U.S.C. §1903(a)(6) and Article 10.11 herein.
In the event that the Bankruptcy Court does not order such deemed substantive consolidation of the Debtors, then except as specifically set
forth in the Plan (a) nothing in the Plan or the Disclosure Statement may constitute or be deemed to constitute an admission that one of the Debtors is subject to or liable for any Claim against any other Debtor, (b) Claims against
multiple Debtors may be treated as separate Claims against each applicable Debtor for all
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purposes (including, without limitation, distributions and voting) and such Claims may be administered as provided in the Plan, (c) the Debtors may not, nor may they be required to,
resolicit votes with respect to the Plan and (d) the Debtors may seek Confirmation of the Plan as if the Plan is a separate Plan for each of the Debtors.
The substantive consolidation effected pursuant to this Article shall not affect, without limitation: (i) the Debtors or the
Estates (x) defenses to any Claim or Cause of Action, including, without limitation, the ability to assert any counterclaim, (y) setoff or recoupment rights, or (z) requirements for any third party to establish mutuality prior
to substantive consolidation in order to assert a right of setoff against the Debtors or the Estates; or (ii) distributions to the Debtors and/or the Estates out of any insurance policies or the proceeds of such policies.
4.3 New Securities.
(a) Issuance of New Common Stock. On the Effective Date, Reorganized ANV shall issue the New Common Stock to Holders of Unsecured
Claims in accordance with Article 2.10 of the Plan, subject to dilution on account of the conversion of New Second Lien Convertible Notes. Distribution of New Common Stock hereunder shall together constitute the issuance of 100% of the New Common
Stock that will be issued and outstanding as of the Effective Date. All shares of New Common Stock issued on the Effective Date shall be deemed to have been duly authorized, validly issued, fully paid and nonassessable, and not to have been issued
in violation of any preemptive rights, rights of first refusal or similar rights or any applicable law.
To the extent that Reorganized
ANV is required to register the New Common Stock under the Securities Exchange Act or if the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders shall elect, the Debtors or Reorganized Debtors, as applicable, shall use
commercially reasonable efforts to make all such filings and take all such other actions as may be necessary to register the New Common Stock under the Securities Exchange Act without the need for any further Bankruptcy Court approval. If the
Requisite Consenting Noteholders and the Requisite Exit Facility Lenders shall elect, the Debtors shall use commercially reasonable efforts to make all such filings and take all such other actions as may be necessary to comply with the requirements
of each National Securities Exchange for purposes of listing the shares of New Common Stock on such National Securities Exchange, subject to official notice of issuance.
To the extent that Reorganized ANV is not required and/or does not elect to register the New Common Stock under the Securities Exchange Act
and if the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders shall so elect, the Debtors or Reorganized Debtors, as applicable, shall use commercially reasonable efforts to make all such filings and take all such other actions
as may be necessary to deregister the Existing Equity Interests under the Securities Exchange Act without the need for any further Bankruptcy Court approval.
(b) Section 1145 Exemption. Pursuant to Bankruptcy Code section 1145, the offering, issuance and distribution of any New Common
Stock to the Holders of Unsecured Claims shall be exempt from, among other things, the registration and prospectus delivery requirements of Section 5 of the Securities Act and any other applicable law requiring registration and/or delivery of
prospectuses prior to the offering, issuance, distribution, or sale of securities. In addition, any and all New Common Stock issued to the Holders of Unsecured Claims contemplated by the Plan will be freely tradable by the recipients thereof,
subject to: (i) the provisions of Bankruptcy Code section 1145(b)(1) relating to the definition of an underwriter in section 2(a)(11) of the Securities Act, and compliance with any rules and regulations of the United States Securities and
Exchange Commission, if any, applicable at the time of any future transfer of such Securities or instruments; and (ii) applicable regulatory approval, if any.
(c) Section 4(a)(2) Exemption. Pursuant to Section 4(a)(2) of the Securities Act, the offering, issuance, distribution and
sale of New Second Lien Convertible Notes (and the guarantees thereof) and the shares of New Common Stock or other Securities to be received upon conversion thereof shall be exempt from, among other things, the registration and prospectus delivery
requirements of Section 5 of the Securities Act and any other applicable law requiring registration and/or delivery of prospectuses prior to the offering, issuance, distribution or sale of securities. The New Second Lien Convertible Notes (and
the guarantees thereof) and the shares of New Common Stock or other Securities to be received upon conversion thereof may not be transferred or resold absent registration or exemption under the Securities Act or any applicable state securities law.
All New Second Lien Convertible Notes
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(and the guarantees thereof) issued on the Effective Date and, upon issuance thereof, all shares of New Common Stock or other Securities to be received upon conversion of any New Second Lien
Convertible Notes shall be deemed to have been duly authorized, validly issued, fully paid and nonassessable, and not to have been issued in violation of any preemptive rights, rights of first refusal or similar rights or any applicable law.
4.4 Plan Funding.
(a) New First Lien Term Loan Credit Facility. On the Effective Date, Reorganized ANV will enter into the New First Lien Term Loan
Credit Facility in the form of the New First Lien Term Loan Credit Agreement pursuant to which the New First Lien Term Loans will be incurred in an original aggregate principal amount equal to (i) the total amount of (A) the Secured Swap
Claims plus (B) the Secured ABL Claims less (ii) the aggregate amount of (A) the Secured ABL/Swap Cash Payments, (B) the Secured ABL $10MM Cash Payment and (C) the Secured ABL/Swap Claims Excess Cash Flow Payment. The
payment of the New First Lien Term Loans and other obligations under the New First Lien Term Loan Credit Facility will be guaranteed by all of the direct and indirect domestic subsidiaries of Reorganized ANV. The New First Lien Term Loan Credit
Facility will be secured by liens on substantially all assets of Reorganized ANV and its direct and indirect domestic subsidiaries, subject to exceptions consistent with the Amended and Restated Restructuring Support Agreement and Restructuring Term
Sheet.
(b) Exit Facility. On the Effective Date, Reorganized ANV will enter into the Exit Facility in the form of the New Second
Lien Convertible Notes Definitive Agreement pursuant to which the New Second Lien Convertible Notes will be issued in an original aggregate principal amount equal to the greater of (a) an amount sufficient for Reorganized ANV to have at least
$8.0 million of Cash on the Effective Date after giving pro forma effect to, without duplication, (i) all Cash payments to be made under (A) the Plan or (B) an order of the Bankruptcy Court, in each case whether paid on or in
connection with the Effective Date (excluding, for the avoidance of doubt, New First Lien Term Loan Excess Cash Flow Payments), (ii) the payment of all Fees accrued through and including the Effective Date and (iii) the payment of any
Compensation Plan Payments and (b) an amount such that the aggregate amount of (i) the Cash proceeds of the DIP Facility received by the Debtors prior to the Effective Date plus (ii) the Cash proceeds of the Exit Facility not
used to pay the DIP Facility Consideration equals $65.0 million; provided, however, that in no event shall the Exit Facility Lenders be obligated to fund amounts under clause (a) above which would cause the aggregate principal
amount of the New Second Lien Convertible Notes issued pursuant to the Exit Facility on the Effective Date to exceed $80.0 million. The payment of the New Second Lien Convertible Notes will be guaranteed by all of the direct and indirect domestic
subsidiaries of Reorganized ANV. The New Second Lien Convertible Notes, the guarantees by the guarantors in respect thereof and all obligations under the New Second Lien Convertible Notes and such guarantees shall be secured by liens on
substantially all assets of the Reorganized Debtors, subject to limited exceptions that are acceptable to the Requisite Exit Facility Lenders and the Debtors or Reorganized Debtors, as applicable.
(c) Other Plan Funding. Other than as set forth in Articles 4.4(a) and (b) of the Plan, all Cash necessary for the Reorganized
Debtors to make payments required by the Plan shall be obtained from the Debtors Cash balances then on hand, after giving effect to the transactions contemplated herein or that occur during the pendency of the Chapter 11 Cases.
4.5 Corporate Governance, Managers, Officers and Corporate Action.
(a) New Organizational Documents. On the Effective Date, the New Organizational Documents, including, upon agreement by the Debtors,
the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders, the Stockholders Agreement, substantially in forms to be filed with the Plan Supplement, shall be deemed to be valid, binding, and enforceable in accordance with their
terms and provisions, such terms and provisions being satisfactory to the Requisite Consenting Noteholders, the Requisite Exit Facility Lenders and the Reorganized Debtors. If a Stockholders Agreement is put in place, any Holder of a Claim that is
to be distributed shares of New Common Stock pursuant to the Plan shall be deemed to have duly executed and delivered to Reorganized ANV a counterpart to the Stockholders Agreement, and the Stockholders Agreement shall be deemed to be a valid,
binding and enforceable obligation of such Holder (including any obligation set forth therein to waive or refrain from exercising any appraisal, dissenters or similar rights). On the Effective Date, the applicable Reorganized Debtors may enter
into and deliver the Registration Rights Agreement, which shall be deemed to be valid, binding, and enforceable in accordance with its terms on those parties set forth in such agreement.
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(b) New Board. Subject to any requirement of Bankruptcy Court approval pursuant to
Bankruptcy Code section 1129(a)(5), as of the Effective Date, the New Board shall be the persons identified in the Plan Supplement. On the Effective Date, the directors on the New Board will be comprised of the Chief Executive Officer of the
Reorganized Debtors and such other individuals selected by the Requisite Consenting Noteholders with the consent of the Requisite Exit Facility Lenders, which consent shall not be unreasonably withheld. Pursuant to Bankruptcy Code section
1129(a)(5), the Debtors shall disclose the identity and affiliations of any person proposed to serve on the New Board after the Confirmation Date and prior to the Effective Date, and to the extent such person is an insider other than by virtue of
being a New Board Member, the nature of any compensation for such person.
(c) Officers of the Reorganized Debtors. On and after
the Effective Date, the current officers of the Debtors shall continue to serve in their same capacity with the Reorganized Debtors in accordance with the Officers Employment Agreements, to be assumed under the Plan to the extent set forth in
the Schedule of Assumed Executory Contracts and Unexpired Leases; provided, however, that the assumption of the Officers Employment Agreements for the Debtors Chief Executive Officer and Chief Financial Officer shall be
subject to the consent of the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders, which consent shall not be unreasonably withheld; provided, further that no Officers Employment Agreement shall be assumed or
deemed assumed by any of the Debtors unless the officer party thereto agrees in writing (in the form of an amendment to such Officers Employment Agreement) that, from and after the date such Officers Employment Agreement is assumed, any
provision in such Officers Employment Agreement that grants or provides such officer with any right to any Excluded Benefits shall no longer be effective and shall be deleted in its entirety from such Officers Employment Agreement and
such officer shall no longer be entitled to any benefits, entitlements or rights thereto, such amendment to be in form and substance acceptable to the applicable officer, the Debtors, the Requisite Consenting Noteholders and the Requisite Exit
Facility Lenders.
4.6 Management Incentive Plan/Post-Emergence Key Employee Retention Program. Subject only to the
occurrence of the Effective Date, the Management Incentive Plan and Post-Emergence Key Employee Retention Program shall be effective without any further action by the Reorganized Debtors. For the avoidance of doubt, the Management Incentive Plan and
Post-Emergence Key Employee Retention Program are entirely post-Effective Date compensation plans and awards thereunder, to the extent earned, shall be paid by the Reorganized Debtors.
4.7 Cancellation of Notes, Instruments, and Interests. On the Effective Date, except as otherwise provided for in the Plan or
any agreement, instrument or other document incorporated in the Plan or the Plan Supplement, (i) the promissory notes, share certificates (including treasury stock), the Notes, the Indenture, the Swaps, the Credit Agreement, the Existing Equity
Interests and other instruments or agreements evidencing any Claims or Interests (other than Intercompany Interests), (ii) all options, warrants, calls, rights, puts, awards, commitments or any other agreements of any character to acquire
Claims or Interests and (iii) all registration rights, preemptive rights, rights of first refusal, rights of first offer, co-sale rights and other investor rights governing or relating to any Interests, in any such case shall be deemed
automatically extinguished, cancelled and of no further force and effect, without any further act or action under any applicable agreement, law, regulation, order or rule, and the obligations of the Debtors under the notes, share certificates, the
Notes, the Indenture, the Swaps, the Credit Agreement, the Existing Equity Interests and other instruments evidencing any Claims or Interests (other than Intercompany Interests) shall be automatically discharged. The Holders of or parties to such
cancelled notes, share certificates, Notes, the Indenture, the Swaps, the Credit Agreement, the Existing Equity Interests and other agreements and instruments shall have no rights arising from or relating to such notes, share certificates, Notes,
Indenture, Swaps, Credit Agreement, Existing Equity Interests and other agreements and instruments or the cancellation thereof, except the rights provided pursuant to the Plan. Notwithstanding the foregoing, (a) (i) the Notes and Indenture
shall continue in effect solely for the purpose of (x) allowing the Indenture Trustee or its agents to make distributions to Holders of Notes in accordance with the terms of the Plan and the Confirmation Order and to enforce its rights and
those of the Holders of Notes under the Plan and the Confirmation Order in the Chapter 11 Cases and any appeals; (y) allowing Holders of Notes to receive distributions hereunder; and (z) preserving the rights and liens of the Indenture
Trustee arising under Sections 6.11 and 7.08 of the Indenture with respect to actions taken to perform its obligations under the Plan and the Confirmation Order, and (ii) the Indenture shall terminate completely upon the completion of all
distributions to the Holders of the
26
Notes and the satisfaction in full of any and all obligations to the Indenture Trustee under Section 7.08 of the Indenture and (b) (i) the Credit Agreement shall continue in effect
solely for the purpose of (x) allowing the Administrative Agent or its agents to make distributions to Holders of Secured ABL Claims and Secured Swap Claims and (y) allowing Holders of Secured ABL Claims and Secured Swap Claims to receive
distributions hereunder and (ii) the Credit Agreement shall terminate completely upon the completion of all distributions to the Holders of the Secured ABL Claims. At such time as the Indenture Trustee has completed performance of all of its
duties set forth in the Plan and the Confirmation Order, if any, the Indenture Trustee, and its successors and assigns, shall be relieved of all obligations under the Indenture.
4.8 Cancellation of Liens. On the Effective Date, except as set forth in the Plan, any Lien securing any Claim shall be deemed
released, and the Holder of such Claim shall be authorized and directed to release any collateral or other property of any Debtor (including any cash collateral) held by such Holder and to take such actions as may be requested by the Debtors (or the
Reorganized Debtors, as the case may be) to evidence the release of such Lien, including the execution, delivery and filing or recording of such releases as may be requested by the Debtors (or the Reorganized Debtors, as the case may be).
4.9 Corporate Action. On and after the Effective Date, the Debtors or the Reorganized Debtors may take all actions as may be
necessary or appropriate to effect any transactions described in, approved by, contemplated by, or necessary to effectuate the Restructuring Transaction under and in connection with the Plan, including: (a) the execution, delivery and/or
filing, as applicable, of appropriate agreements or other documents of merger, consolidation, restructuring, conversion, disposition, transfer, dissolution or liquidation containing terms that are consistent with the terms of the Plan and that
satisfy the applicable requirements of applicable law and any other terms to which the applicable entities may agree; (b) the execution, delivery and/or filing, as applicable, of appropriate instruments of transfer, assignment, assumption or
delegation of any asset, property, right, liability, debt or obligation on terms consistent with the terms of the Plan and having other terms for which the applicable parties agree; (c) the execution, delivery and/or filing, as applicable, of
appropriate certificates or articles of incorporation, reincorporation, merger, consolidation, conversion or dissolution and the New Organizational Documents pursuant to applicable state law; (d) the issuance and distribution of the shares of
New Common Stock as provided for herein; (e) the adoption of the Management Incentive Plan; (f) the issuance and sale of the New Second Lien Convertible Notes (and the guarantees thereof) as provided for herein and in the New Second Lien
Convertible Definitive Agreement, and the issuance and distribution of the shares of New Common Stock or other Securities upon conversion of the New Second Lien Convertible Notes; and (g) all other actions that may be required by applicable
law, subject, in each case, to the New Organizational Documents. All matters provided for in the Plan involving the corporate structure of the Debtors, and any corporate action required by the Debtors in connection therewith, shall be deemed to have
occurred on, and shall be in effect as of, the Effective Date, without any requirement of further action by the security holders, directors, managers, authorized persons or officers of the Debtors. The authorizations and approvals contemplated by
Article 4.9 of the Plan shall be effective notwithstanding any requirements under nonbankruptcy law.
4.10 New First Lien Term Loan
Credit Facility and Exit Facility. On the Effective Date, without any requirement of further action by the security holders, directors, managers, authorized persons or officers of the Debtors, the Reorganized Debtors shall be authorized to
enter into, perform their obligations under, and consummate the transactions contemplated by, the New First Lien Term Loan Credit Facility, the New Intercreditor Agreement, the Exit Facility, and any notes, documents, instruments, certificates or
agreements in connection therewith, including, without limitation, any documents required in connection with the creation, perfection or priority of the Liens on any collateral securing the New First Lien Term Loan Credit Facility and/or the Exit
Facility.
4.11 Effectuating Documents; Further Transactions. On and after the Effective Date, the Reorganized Debtors and
the officers and members of the boards of managers or directors thereof, are authorized to and may issue, execute, deliver, file or record such contracts, securities, instruments, releases and other agreements or documents and take such actions as
may be necessary or appropriate to effectuate, implement and further evidence the terms and conditions of the Plan and the securities issued pursuant to the Plan in the name of and on behalf of the Reorganized Debtors, without the need for any
approvals, authorization, or consents except for those expressly required pursuant to the Plan.
4.12 Exemption from Certain
Transfer Taxes and Recording Fees. To the fullest extent permitted by Bankruptcy Code section 1146(a), any transfer from a Debtor to a Reorganized Debtor or to any entity
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pursuant to, in contemplation of, or in connection with the Plan or pursuant to: (a) the issuance, distribution, transfer, or exchange of any debt, securities, or other interest in the
Debtors or the Reorganized Debtors; (b) the creation, modification, consolidation, or recording of any mortgage, deed of trust or other security interest, or the securing of additional indebtedness by such or other means; (c) the making,
assignment, or recording of any lease or sublease; or (d) the making, delivery, or recording of any deed or other instrument of transfer under, in furtherance of, or in connection with, the Plan, including any deeds, bills of sale, assignments,
or other instrument of transfer executed in connection with any transaction arising out of, contemplated by, or in any way related to the Plan, shall not be subject to any document recording tax, stamp tax, conveyance fee, intangibles, or similar
tax, mortgage tax, real estate transfer tax, mortgage recording tax, sales or use tax, Uniform Commercial Code filing or recording fee, regulatory filing or recording fee, or other similar tax or governmental assessment, and the appropriate state or
local governmental officials or agents shall forego the collection of any such tax or governmental assessment and to accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax or
governmental assessment.
4.13 No Further Approvals. The transactions contemplated by the Plan shall be approved and
effective as of the Effective Date without the need for any further state or local regulatory approvals or, unless otherwise required by the Plan, approvals by any non-Debtor parties, and without any requirement for further action by the Debtors,
Reorganized Debtors, or any entity created to effectuate the provisions of the Plan.
4.14 Dissolution of Committees. The
Creditors Committee and the Equity Committee shall continue in existence until the Effective Date to exercise those powers and perform those duties specified in Bankruptcy Code section 1103 and shall perform such other duties as they may have been
assigned by the Bankruptcy Court prior to the Effective Date. On the Effective Date, the Creditors Committee and the Equity Committee shall be dissolved and the Creditors Committees and Equity Committees members shall be deemed released
of all their duties, responsibilities, and obligations arising from or related to the Chapter 11 Cases, and the retention or employment of the Creditors Committees and Equity Committees Professionals shall terminate, except with respect
to any Professional Fee Claim. After the Effective Date, the Creditors Committee, the Creditors Committees Professionals, the Equity Committee and the Equity Committees Professionals shall not be entitled to compensation or reimbursement
of expenses from the Reorganized Debtors for any services incurred after the Effective Date, except for services rendered or expenses incurred with respect to any Professional Fee Claim.
4.15 Pre-Effective Date Injunctions or Stays. All injunctions or stays, whether by operation of law or by order of the
Bankruptcy Court, provided for in the Chapter 11 Cases pursuant to Bankruptcy Code sections 105 or 362 or otherwise that are in effect on the Confirmation Date shall remain in full force and effect until the Effective Date.
4.16 Dissolution of Certain Debtors. On the Effective Date, each of the Debtors identified in the Plan Supplement to be
dissolved shall be deemed dissolved and their obligations under Article 5.9 of the Plan assumed by the Reorganized Debtors. On, or as soon as practicable after, the Effective Date, such Debtors shall, and the officers, directors, members, managers
or other similar representatives of such Debtors shall be authorized and directed to: (a) execute, acknowledge and/or file for each such Debtor a certificate of dissolution, articles of dissolution or similar document, together with all other
necessary corporate and company documents, to effect the dissolution of such Debtor under the applicable laws of its state of incorporation or formation (as applicable); (b) complete, execute and file all final or otherwise required federal,
state and local tax returns for each such Debtor, and pursuant to section 505(b) of the Bankruptcy Code, request an expedited determination of any unpaid tax liability of such Debtor or its Estate for any tax incurred during the administration of
such Debtors Chapter 11 Case, as determined under applicable tax laws; and (c) take such other actions as the Debtors may determine to be necessary or desirable to carry out this provision, in each case (other than any relief sought under
section 505(b) of the Bankruptcy Code) without the need for any further Bankruptcy Court approval. All actions necessary to effectuate such dissolutions shall be deemed authorized and approved in all respects without further action under applicable
law, regulation, order or rule, including, without limitation, any action by the stockholders, members, board of directors, board of managers or other governing body of each such Debtor. Upon the dissolution of any such Debtor, the Reorganized
Debtors shall be entitled to obtain a final decree closing the Chapter 11 Case of such Debtor.
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ARTICLE V
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
5.1 Assumption and Rejection of Executory Contracts and Unexpired Leases. Except as otherwise set forth herein, all executory
contracts or unexpired leases of the Debtors shall be deemed rejected in accordance with the provisions and requirements of Bankruptcy Code sections 365 and 1123 as of the Effective Date, unless such executory contract or unexpired lease:
(a) was previously assumed or rejected by the Debtors; (b) previously expired or terminated pursuant to its terms; (c) is the subject, as mutually agreed to by the Debtors, the Requisite Consenting Noteholders and the Requisite Exit
Facility Lenders, of a motion to assume or reject filed by the Debtors under Bankruptcy Code section 365 pending as of the Effective Date; or (d) is designated specifically or by category on the Schedule of Assumed Executory Contracts and
Unexpired Leases, as reasonably agreed to by the Debtors, the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders. Entry of the Confirmation Order by the Bankruptcy Court shall constitute approval of such respective assumptions
and rejections pursuant to Bankruptcy Code sections 365(a) and 1123.
5.2 Cure of Defaults for Assumed Executory Contracts and
Unexpired Leases. The proposed cure amount for an executory contract or unexpired lease that is assumed pursuant to this Plan shall be zero dollars unless otherwise indicated in a Schedule of Assumed Executory Contracts and Unexpired Leases.
Cure obligations, if any, shall be satisfied, pursuant to Bankruptcy Code section 365(b)(1), by payment of the cure amount in Cash on the Effective Date or on such other terms as the parties to such executory contract or unexpired lease may
otherwise agree. In the event of a dispute regarding (a) the amount of any cure payments, (b) the ability of the Reorganized Debtors to provide adequate assurance of future performance (within the meaning of Bankruptcy Code
section 365) under the executory contract or unexpired lease to be assumed or (c) any other matter pertaining to assumption, any cure payments required by Bankruptcy Code section 365(b)(1) shall be made following entry of a Final Order
resolving the dispute and approving the assumption; provided, however, that following the resolution of any such dispute, the Debtors or Reorganized Debtors shall have the right to reject such executory contract or unexpired lease,
with any such rejection by the Debtors to be subject to the consent of the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders, such consent not to be unreasonably withheld.
5.3 No Change in Control, Assignment or Violation. To the extent applicable, any executory contracts or unexpired leases,
including related instruments and agreements, assumed during the Chapter 11 Cases, including those assumed pursuant to Article V of the Plan, shall be deemed modified such that the transactions contemplated by the Plan shall not constitute a
change of control or assignment (or terms with similar effect) under, or any other transaction or matter that would result in a violation, breach or default under, or increase, accelerate or otherwise alter any obligations or
liabilities of the Debtors or the Reorganized Debtors under, or result in the creation or imposition of a Lien upon any property or asset of the Debtors or the Reorganized Debtors pursuant to, the applicable executory contract or unexpired lease,
and any consent or advance notice required under such executory contract or unexpired lease shall be deemed satisfied by Confirmation. For the avoidance of doubt, the transactions contemplated by the Plan shall not result in the payment or provision
of, and no officer party to any Officers Employment Agreement shall be entitled or have any right to receive, any Excluded Benefits.
5.4 Modifications, Amendments, Supplements, Restatements, or Other Agreements. Unless otherwise provided in the Plan, each
executory contract or unexpired lease that is assumed shall include all modifications, amendments, supplements, restatements, or other agreements that in any manner affect such executory contract or unexpired lease, and all executory contracts and
unexpired leases related thereto, if any, including all easements, licenses, permits, rights, privileges, immunities, options, rights of first refusal, and any other interests, unless any of the foregoing agreements has been previously rejected or
repudiated or is rejected or repudiated under the Plan. Except to the extent a Final Order provides otherwise, modifications, amendments, supplements and restatements to prepetition executory contracts and unexpired leases that have been executed by
the Debtors during the Chapter 11 Cases shall not be deemed to alter the prepetition nature of the executory contract or unexpired lease, or the validity, priority, or amount of any Claims that may arise in connection therewith.
5.5 Rejection and Repudiation of Executory Contracts and Unexpired Leases. On the Effective Date, each executory contract and
unexpired lease that is not listed on the Schedule of Assumed Executory Contracts and Unexpired Leases shall be deemed rejected or repudiated pursuant to Bankruptcy Code section 365. Each contract or lease not listed on the Schedule of Assumed
Executory Contracts and Unexpired Leases shall be
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rejected only to the extent that such contract or lease constitutes an executory contract or unexpired lease. Until the Effective Date, the Debtors, with the consent of the Requisite Consenting
Noteholders and the Requisite Exit Facility Lenders, which consent shall not be unreasonably withheld, expressly reserve their right to amend the Schedule of Assumed Executory Contracts and Unexpired Leases to delete any executory contract or
unexpired lease therefrom or to add any executory contract or unexpired lease thereto. Listing a contract or lease on the Schedule of Assumed Executory Contracts and Unexpired Leases shall not constitute an admission by the Debtors or Reorganized
Debtors that such contract or lease is an executory contract or unexpired lease or that such Debtor or Reorganized Debtor has any liability thereunder. The Debtors, with the consent of the Requisite Consenting Noteholders and the Requisite Exit
Facility Lenders, which consent shall not be unreasonably withheld, or Reorganized Debtors, as applicable, may abandon any personal property that may be located at any premises that are subject to any rejected unexpired lease.
5.6 Claims Based on Rejection or Repudiation of Executory Contracts and Unexpired Leases. If the rejection or repudiation of an
executory contract or unexpired lease pursuant to the Plan results in a Claim, then such Claim shall be forever barred and shall not be enforceable against the Debtors or Reorganized Debtors or their properties, or any of their interests in
properties as agent, successor or assign, unless a Proof of Claim is filed with the Claims and Noticing Agent and served upon counsel to the Reorganized Debtors within thirty (30) days after the later of (i) service of the Confirmation
Order and (ii) service of notice of the effective date of rejection or repudiation of the executory contract or unexpired lease.
5.7 Limited Extension of Time to Assume or Reject. In the event of a dispute as to whether a contract or lease is executory or
unexpired, the right of the Debtors or Reorganized Debtors, as applicable, to move to assume or reject such contract or lease shall be extended until the date that is thirty (30) days after the entry of a Final Order by the Bankruptcy Court
determining that the contract or lease is executory or unexpired. The deemed assumptions and rejections provided for in Article V of the Plan shall not apply to such contract or lease.
5.8 Employee Compensation and Benefit Programs; Deferred Compensation Programs. The Debtors ordinary course employee
benefit programs (including, without limitation, its savings plans, retirement plans (including the supplemental executive retirement program), healthcare plans, disability plans, life, accidental death and dismemberment insurance plans, and
short-term cash-based bonus program applicable to hourly employees of the Debtors and paid on a quarterly basis) that are reasonably agreed to by the Debtors, the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders and which are
(i) entered into before the Petition Date and (ii)(a) not since terminated or (b) not expressly rejected under the Plan (such employee benefit programs, collectively, the Specified Employee Benefits Programs), shall
survive Confirmation and will be fulfilled in the ordinary course of business; provided, however, that Specified Employee Benefits Programs shall in no event include (v) any equity based (including any phantom equity) compensation
plan, (w) any Excluded Benefits, (x) any Excluded Indemnification Agreements (as defined in Article 5.9 of the Plan), (y) the Non-Insider KEIP and (z) any and all incentive plans available to the Debtors employees that
existed prior to the Petition Date other than the Debtors short-term cash-based bonus program applicable to hourly employees of the Debtors, which is paid on a quarterly basis, or the Debtors supplemental executive retirement program.
From and after the Effective Date, the Reorganized Debtors shall have the right to terminate, amend or modify any of the Specified Employee Benefits Programs without approval of the Bankruptcy Court.
5.9 Survival of Certain Indemnification and Reimbursement Obligations. Except as otherwise provided by the Plan, any and all
respective obligations, whether pursuant to indemnification agreements, certificates of incorporation, codes of regulation, by-laws, limited liability company agreements, operating agreements, limited liability partnership agreements, or any
combination of the foregoing, of the Debtors for indemnification, reimbursement and advancement of expenses and other similar payments customarily found in such agreements in place for persons who are current or former directors, officers, employees
and agents of any of the Debtors as of the Petition Date (collectively, the Indemnity Obligations) shall survive Confirmation and shall be Reinstated, shall remain unaffected by the Plan, and shall not be discharged or Impaired by
the Plan, irrespective of whether the indemnification, reimbursement or advancement obligation is owed in connection with any event occurring before, on or after the Petition Date, it being understood that all indemnification provisions in place on
and prior to both the Petition Date and the Effective Date for directors, officers, members, managers or employees and agents of the Debtors as of the Petition Date shall survive the effectiveness of the Plan for claims related to or in connection
with any actions, omissions or transactions prior to the Effective Date (including prior to the Petition Date); provided, however, that the assumption by the Debtors of any of the Indemnity Obligations shall not be deemed
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an assumption by the Debtors of any contract, agreement, resolution, instrument or document in which such Indemnity Obligations are contained, memorialized, agreed to, embodied or created (or any
of the terms or provisions thereof) if such contract, agreement, resolution, instrument or document requires the Debtors or the Reorganized Debtors to make any payments or provide any arrangements (including any severance payments) to any such
director, officer, employee or agent other than indemnification payments, reimbursement and advancement of expenses and other similar payments (such contracts, agreements, resolutions, instruments and documents, collectively, the Excluded
Indemnification Agreements). For the avoidance of doubt, nothing in this Article 5.9 shall be a determination of the allowance, disallowance or priority of the Claims, if any, of any directors, officers, members, managers, managing
members, employees or agents of any of the Debtors that served in such capacity only prior to the Petition Date.
5.10 Insurance
Policies. All insurance policies pursuant to which the Debtors have any obligations in effect as of the date of the Confirmation Order shall be deemed and treated as executory contracts pursuant to the Plan and shall be assumed by the
respective Debtors and shall continue in full force and effect. In addition, the Debtors or Reorganized Debtors, as applicable, shall obtain and maintain tail coverage for current and former directors and officers for a period of at least six
(6) years after the Effective Date.
ARTICLE VI
PROCEDURES FOR RESOLVING AND TREATING CONTESTED CLAIMS
6.1 Objections to Claims. Prior to the Effective Date, the Debtors or any other party in interest may object to the allowance
of any Claim (unless previously Allowed by an order of the Bankruptcy Court or expressly Allowed pursuant to the terms of the Plan) or Professional Fee Claim. After the Effective Date, only the Reorganized Debtors may object to the allowance of any
Claim (unless previously Allowed by an order of the Bankruptcy Court or expressly Allowed pursuant to the terms of the Plan) or Professional Fee Claim; provided, however, that the U.S. Trustee may object to the allowance of any
Professional Fee Claim. Any objections to those Claims (other than Administrative Expense Claims) shall be served and filed on or before the later of: (a) the date that is 180 days after the Effective Date; and (b) such other date as may
be fixed by the Bankruptcy Court, whether fixed before or after the date specified in clause (a) hereof. Any Claims filed after the applicable Bar Date, shall be deemed disallowed and expunged in their entirety without further order of the
Bankruptcy Court or any action being required on the part of the Debtors or the Reorganized Debtors, unless the Person wishing to file such untimely Claim has received the Bankruptcy Courts authorization to do so. Notwithstanding any authority
to the contrary, an objection to a Claim shall be deemed properly served on the claimant if the objecting party effects service in any of the following manners: (i) in accordance with Federal Rule of Civil Procedure 4, as modified and made
applicable by Bankruptcy Rule 7004; (ii) by first class mail, postage prepaid, on the signatory on the proof of claim as well as all other representatives identified in the proof of claim or any attachment thereto; or (iii) if counsel has
agreed to accept service, by first class mail, postage prepaid, on any counsel that has appeared on the claimants behalf in the Chapter 11 Cases (so long as such appearance has not been subsequently withdrawn). From and after the Effective
Date, the Reorganized Debtors may settle or compromise any Disputed Claim without approval of the Bankruptcy Court.
6.2 Amendment
to Claims. From and after the Effective Date, no Proof of Claim may be amended to increase or assert additional claims not reflected in a previously timely filed Claim (or Claim scheduled on the applicable Debtors Schedules, unless
superseded by a filed Claim), and any such Claim shall be deemed disallowed and expunged in its entirety without further order of the Bankruptcy Court or any action being required on the part of the Debtors or the Reorganized Debtors unless the
claimant has obtained the Bankruptcy Courts prior approval to file such amended or increased claim.
6.3 Disputed
Claims. Disputed Claims shall not be entitled to any Plan distributions unless and until they become Allowed Claims.
6.4
Estimation of Claims. The Debtors and/or Reorganized Debtors may request that the Bankruptcy Court enter an order estimating any Claim, pursuant to Bankruptcy Code section 502(c), for purposes of determining the Allowed amount of such
Claim (the Estimated Amount) regardless of whether any Person has previously objected to such Claim or whether the Bankruptcy Court has ruled on any such objection; provided, however, that the Debtors and/or
Reorganized Debtors may not request estimation of a non-contingent, liquidated Claim if the Debtors and/or Reorganized Debtors objection to such Claim was previously overruled. The Bankruptcy Court shall retain jurisdiction to estimate
any Claim at any time (including during the pendency of any
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appeal with respect to the allowance or disallowance of such Claims). In the event that the Bankruptcy Court estimates any contingent or unliquidated Claim for allowance purposes, that estimated
amount will constitute either the Allowed amount of such Claim or a maximum limitation on such Claim, as determined by the Bankruptcy Court. If the estimated amount constitutes a maximum limitation on such Claim, the objecting party may elect to
pursue any supplemental proceedings to object to any ultimate allowance of such Claim. All of the objection, estimation, settlement, and resolution procedures set forth in the Plan are cumulative and not exclusive of one another. Claims may be
estimated and subsequently compromised, settled, resolved or withdrawn by any mechanism approved by the Bankruptcy Court.
6.5
Expenses Incurred on or After the Effective Date. Except as otherwise ordered by the Bankruptcy Court, and subject to the written agreement of the Reorganized Debtors, the amount of any reasonable fees and expenses incurred by any
Professional or the Claims and Noticing Agent on or after the Effective Date in connection with implementation of the Plan, including without limitation, reconciliation of, objection to, and settlement of Claims, shall be paid in Cash by the
Reorganized Debtors.
ARTICLE VII
DISTRIBUTIONS
7.1
Manner of Payment and Distributions under the Plan. Except as otherwise provided herein, all distributions under the Plan with respect to Allowed Claims shall be made by the Reorganized Debtors or a Distribution Agent selected by the
Reorganized Debtors. The Reorganized Debtors or the Distribution Agent will make initial distributions on account of Allowed Claims as of the Distribution Date. The Reorganized Debtors or the Distribution Agent will make subsequent distributions to
a Holder of such Allowed Claim within a reasonable period of time after such Claim becomes Allowed. Payments of Cash by the Reorganized Debtors or the Distribution Agent pursuant to the Plan may be by check drawn on a domestic bank and shall be made
to the address of the Holder of such Allowed Claim as most recently indicated on or prior to the Effective Date on the Debtors records. At the option of the Reorganized Debtors or the Distribution Agent, payments may be made in Cash by wire
transfer of immediately available funds from a bank.
7.2 Interest and Penalties on Claims. Unless otherwise specifically
provided for in the Plan or the Confirmation Order or the DIP Facility Order, required by applicable bankruptcy law or necessary to render a Claim Unimpaired, postpetition interest and penalties shall not accrue or be paid on any Claims (other than
DIP Facility Claims and other than Secured Swap Claims and Secured ABL Claims as provided in the DIP Facility Order, as applicable), and no Holder of a Claim (other than a DIP Facility Claim, Secured Swap Claim or Secured ABL Claim, as provided in
the DIP Facility Order, as applicable) shall be entitled to interest and penalties accruing on or after the Petition Date through the date such Claim is satisfied in accordance with the terms of the Plan.
7.3 Record Date for Distributions. Under the terms of the Plan, the Distribution Record Date shall be the Confirmation Date.
None of the Debtors or Reorganized Debtors will have any obligation to recognize the transfer of, or the sale of any participation in, any Allowed Claim that occurs after the close of business on the Distribution Record Date, and will be entitled
for all purposes herein to recognize and make distributions only to those Holders of Allowed Claims that are Holders of such Claims as of the close of business on the Distribution Record Date. The Debtors and Reorganized Debtors shall be entitled to
recognize and deal for all purposes under the Plan with only those record holders stated on the official claims register as of the close of business on the Distribution Record Date.
7.4 Withholding and Reporting Requirements. In connection with the Plan, the Reorganized Debtors shall comply with all
withholding and reporting requirements imposed by federal, state, local and foreign taxing authorities and all distributions hereunder shall be subject to such withholding and reporting requirements. The Reorganized Debtors shall be authorized to
take any and all actions that may be necessary or appropriate to comply with such withholding and reporting requirements. Notwithstanding the foregoing, each Holder of an Allowed Claim that is to receive a distribution hereunder shall have the sole
and exclusive responsibility for the satisfaction and payment of any tax obligations imposed by any government unit, including income, withholding and other tax obligations, on account of such distribution. The Reorganized Debtors have the right,
but not the obligation, not to make a distribution until such Holder has made arrangements satisfactory to the Reorganized Debtors for payment of any such tax obligations. The Reorganized Debtors may require, as a condition to the receipt of a
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distribution, that the Holder of an Allowed Claim complete the appropriate Form W-8 or Form W-9, as applicable to each Holder. If such Holder fails to comply with such request within one year,
such distribution shall be deemed an unclaimed distribution, shall revert to the Reorganized Debtors and such Holder shall be forever barred from asserting any such Allowed Claim against the Debtors or their Assets, the Reorganized Debtors or their
Assets or other Assets transferred pursuant to the Plan.
7.5 Setoffs. Except as provided under the Plan, the Debtors
and/or Reorganized Debtors may, but shall not be required to, set off against any Claim and the payments to be made pursuant to the Plan in respect of such Claim, any claims of any nature whatsoever that the Debtors may have against the Holder of a
Claim, but neither the Debtors or Reorganized Debtors failure to do so nor the allowance of any Claim hereunder shall constitute a waiver or release by the Debtors or Reorganized Debtors of any such claim the Debtors or Reorganized
Debtors may have against such Holder of a Claim; provided, however, that such Holder of a Claim may contest such a set off by the Debtors or Reorganized Debtors, in the Bankruptcy Court or any other court of competent jurisdiction.
7.6 Allocation of Plan Distributions Between Principal and Interest. To the extent that any Allowed Claim entitled to
distribution under the Plan consists of indebtedness and accrued but unpaid interest thereon, such distributions shall, for all income tax purposes, be allocated first to the principal amount of the Claim (as determined for federal income tax
purposes) and then, to the extent the consideration exceeds the principal amount of the Claim, to the portion of such Claim representing accrued but unpaid interest.
7.7 Surrender of Cancelled Instruments or Securities. Except as otherwise provided herein, as a condition precedent to
receiving any distribution on account of its Allowed Claim, each Holder of an Allowed Claim based upon an instrument or other security shall be deemed to have surrendered such instrument, security or other documentation underlying such Claim and all
such surrendered instruments, securities and other documentation shall be deemed cancelled pursuant to Articles 4.8 and 7.7 of the Plan.
7.8 Undeliverable or Returned Distributions. If any Allowed Claim distribution is returned to the Reorganized Debtors or other
Distribution Agent as undeliverable, the Reorganized Debtors or other Distribution Agent shall use reasonable efforts to determine the correct address of the Holder of such Claim. If such reasonable efforts are unsuccessful, no further distributions
shall be made to the Holder of such Claim unless and until the Reorganized Debtors or other Distribution Agent are notified in writing of such Holders then current address. Upon receipt by the Reorganized Debtors or other Distribution Agent,
returned Cash shall not earn any interest or be entitled to any dividends or other accruals of any kind. Any Holder of an Allowed Claim that does not assert a Claim pursuant to Article 7.8 of the Plan for a returned distribution within one
(1) year after such returned distribution shall be forever barred from asserting any such Claim against the Debtors or their property, the Reorganized Debtors or their property or other property transferred pursuant to the Plan. In such cases,
any Cash held for distribution on account of such Allowed Claim shall revert to the Reorganized Debtors. Except as provided herein, nothing contained in the Plan shall require the Debtors, the Reorganized Debtors or any other Distribution Agent to
attempt to locate any Holder of an Allowed Claim.
7.9 Fractional Distributions. No fractional shares of New Common Stock
or fractional dollars in Cash of New First Lien Term Loans or New Second Lien Convertible Notes shall be distributed. Where a fractional share of New Common Stock would otherwise be called for, the actual issuance shall reflect a rounding up (in the
case of more than .50) of such fraction to the nearest whole share of New Common Stock or a rounding down of such fraction (in the case of .50 or less than .50) to the nearest whole share of New Common Stock. Where fractional dollars in Cash of New
First Lien Term Loans or New Second Lien Convertible Notes would otherwise be called for, the actual issuance shall reflect a rounding up (in the case of more than .50) of such fraction to the nearest whole dollar or a rounding down of such fraction
(in the case of .50 or less than .50) to the nearest whole dollar.
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7.10 Distributions to Administrative Agent. Distributions under the Plan to
Holders of Secured ABL Claims shall be made by the Reorganized Debtors to the Administrative Agent, which, in turn, shall make the distributions to such Holders. The Reorganized Debtors shall reimburse the Administrative Agent for the reasonable
fees and expenses incurred by the Administrative Agent in connection with making distributions to the Holders of Secured ABL Claims.
7.11 Distributions to Indenture Trustee. Unless otherwise agreed by the Indenture Trustee and the Reorganized Debtors,
distributions under the Plan to Holders of Notes Claims shall be made by the Reorganized Debtors to the Indenture Trustee, which, in turn, shall make the distributions to such Holders. Subject to the Debtors receipt of invoices in customary
form in connection therewith and without the requirement to file a fee application with the Bankruptcy Court, the Reorganized Debtors shall promptly reimburse the Indenture Trustee for the reasonable fees and expenses incurred by the Indenture
Trustee on and after the Effective Date in connection with the performance of its duties and the exercise of rights and those of the Holders of Notes Claims under the Plan and Confirmation Order.
7.12 Miscellaneous Distribution Provisions.
(a) Foreign Currency Exchange Rate. Except as specifically provided for in the Plan or an order of the Bankruptcy Court, as of the
Effective Date, any Claim asserted in currency other than U.S. dollars automatically shall be deemed converted to the equivalent U.S. dollar value using Bank of Americas noon spot rate as of the Petition Date for all purposes under the Plan,
including voting, allowance and distribution.
(b) Distributions on Non-Business Days. Any payment or distribution due on a day
other than a Business Day shall be made, without interest, on the next Business Day.
(c) Partial Distributions on Disputed
Claims. The Debtors or the Reorganized Debtors as applicable may, but are not required to, make partial distributions to Holders of Disputed Claims for the amount of the undisputed portion of such Holders Disputed Claim.
(d) Disputed Payments. If any dispute arises as to the identity of the Holder of an Allowed Claim entitled to receive any distribution
under the Plan, the Reorganized Debtors may retain such distribution until its disposition is determined by a Final Order or written agreement among the interested parties to such dispute.
(e) Post-Consummation Effect of Evidence of Claims or Interests. Except as otherwise provided herein, notes, stock certificates,
membership certificates, unit certificates, and other evidence of Claims against or Interests in the Debtors shall, effective on the Effective Date, represent only the right to participate in the distributions contemplated by the Plan and shall not
be valid or effective for any other purpose.
(f) Disgorgement. To the extent that any property, including Cash, is distributed to
a Person on account of a Claim that is not an Allowed Claim, such property shall be held in trust for and shall promptly be returned to the Reorganized Debtors.
ARTICLE VIII
CONDITIONS PRECEDENT TO EFFECTIVENESS OF THE PLAN
8.1 Conditions to the Effective Date. Consummation of the Plan and the occurrence of the Effective Date are subject to
satisfaction of the following conditions:
(a) The Confirmation Order shall have been entered and not have been stayed or vacated on
appeal.
(b) The Exit Facility Commitment Letter shall not have been terminated and shall be in full force and effect.
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(c) The Exit Facility Commitment Order shall have been entered and not have been stayed or
vacated on appeal.
(d) The Exit Facility in the form of the New Second Lien Convertible Notes Definitive Agreement shall have been
executed, the New Second Lien Convertible Notes shall have been issued to the Exit Facility Lenders pursuant to the terms of the New Second Lien Convertible Notes Definitive Agreement and all conditions precedent to the consummation of the Exit
Facility shall have been waived or satisfied in accordance with the terms of the Exit Facility Commitment Letter and/or the New Second Lien Convertible Notes Definitive Agreement and the Exit Facility Commitment Order.
(e) The RSA Order shall have been entered and not have been stayed or vacated on appeal.
(f) The Amended and Restated Restructuring Support Agreement shall not have been terminated as to all parties thereto.
(g) All of the schedules, documents, supplements, and exhibits to the Plan shall be in form and substance as required by the Amended and
Restated Restructuring Support Agreement and the Exit Facility Commitment Letter.
(h) The aggregate amount of Administrative Expense
Claims (excluding (x) Professional Fee Claims, (y) post-petition trade payables incurred in the ordinary course of business and (z) claims allowed under Bankruptcy Code section 503(b)(9)) shall not exceed $5,000,000.00 in the
aggregate.
(i) All the Transaction Expenses shall have been paid in full in Cash, as required by the DIP Facility Order, the Exit
Facility Commitment Letter, the Amended and Restated Restructuring Support Agreement and the Restructuring Term Sheet, pursuant to Bankruptcy Code section 1129(a)(4) or otherwise.
(j) All statutory fees and obligations then due and payable to the Office of the U.S. Trustee shall have been paid and satisfied.
(k) All governmental and material third party approvals and consents necessary in connection with the transactions contemplated by the Plan
shall have been obtained, not be subject to unfulfilled conditions and be in full force and effect.
8.2 Waiver of
Condition. The conditions set forth in Article 8.1 of the Plan may be waived in whole or in part by the Debtors, subject to the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, and in
consultation with the Creditors Committee; provided, that the condition requiring that the Confirmation Order shall have been entered by the Bankruptcy Court may not be waived.
8.3 Notice of Effective Date. The Debtors shall file with the Bankruptcy Court a notice of the occurrence of the Effective Date
within a reasonable period of time after the conditions in Article 8.1 of the Plan have been satisfied or waived pursuant to Article 8.2 of the Plan.
8.4 Order Denying Confirmation. If the Plan is not consummated, then nothing contained in the Plan shall: (a) constitute a
waiver or release of any Claims against or Interests in the Debtors; (b) prejudice in any manner the rights of the Holder of any Claim against, or Interest in, the Debtors; (c) prejudice in any manner any right, remedy, defense or claim of
the Debtors; (d) be deemed an admission against interest by the Debtors; or (e) constitute a settlement, implicit or otherwise, of any kind whatsoever.
ARTICLE IX
EFFECT OF THE PLAN ON CLAIMS AND INTERESTS
9.1 Compromise and Settlement of Claims, Interests and Controversies. Pursuant to Bankruptcy Rule 9019 and in consideration for
the distributions and other benefits provided pursuant to the Plan, the
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provisions of the Plan shall constitute a good faith compromise of all Claims, Interests, and controversies relating to the contractual, legal, and subordination rights that a Holder of a Claim
or Interest may have with respect to any Allowed Claim or Interest, or any distribution to be made on account of such Allowed Claim or Interest. The entry of the Confirmation Order shall constitute the Bankruptcy Courts approval of the
compromise or settlement of all such Claims, Interests, and controversies, as well as a finding by the Bankruptcy Court that such compromise or settlement is in the best interests of the Debtors, their Estates, and Holders of Claims and Interests
and is fair, equitable, and reasonable.
9.2 Discharge of Claims and Termination of Interests.
(a) As of the Effective Date, except as otherwise provided in the Plan or the Confirmation Order, the rights afforded under the Plan and
the treatment of Claims and Interests under the Plan shall be in exchange for and in complete satisfaction, discharge and release of all Claims and satisfaction or termination of all Interests. Except as otherwise provided in the Plan or the
Confirmation Order, Confirmation shall, as of the Effective Date: (i) discharge the Debtors and the Reorganized Debtors from all Claims or other debts that arose before the Effective Date, whether liquidated or unliquidated, fixed or
contingent, matured or unmatured, and all debts of the kind specified in Bankruptcy Code sections 502(g), 502(h) or 502(i), in each case whether or not (w) a Proof of Claim is filed or deemed filed pursuant to Bankruptcy Code section 501,
(x) a Claim based on such debt is Allowed pursuant to Bankruptcy Code section 502, (y) the Holder of a Claim based on such debt has accepted the Plan or (z) such Claim is listed in the Schedules; and (ii) satisfy, terminate or
cancel all Interests and other rights of equity security holders in the Debtors other than the Intercompany Interests.
(b) As of
the Effective Date, except as otherwise provided in the Plan or the Confirmation Order, all Persons shall be precluded from asserting against the Debtors or the Reorganized Debtors, or their respective successors or property, any other or further
Claims, demands, debts, rights, causes of action, liabilities or equity interests based upon any act, omission, transaction or other activity of any kind or nature that occurred prior to the Effective Date. In accordance with the foregoing, except
as provided in the Plan or the Confirmation Order, the Confirmation Order will be a judicial determination, as of the Effective Date, of a discharge of all such Claims and other debts and liabilities against the Debtors and satisfaction, termination
or cancellation of all Interests and other rights of equity security holders in the Debtors, pursuant to Bankruptcy Code sections 524 and 1141, and such discharge will void any judgment obtained against the Debtors or the Reorganized Debtors at any
time, to the extent that such judgment relates to a discharged Claim.
9.3 Injunction. Except as otherwise provided
in the Plan or the Confirmation Order, as of the Effective Date, all Persons that have held, currently hold or may hold a Claim or other debt or liability that is discharged or an Interest or other right of an equity security holder that is
terminated pursuant to the terms of the Plan are permanently enjoined from taking any of the following actions on account of any such discharged Claims, debts or liabilities or terminated Interests or rights: (i) commencing or continuing in any
manner any action or other proceeding against the Debtors or the Reorganized Debtors or their respective property; (ii) enforcing, attaching, collecting or recovering in any manner any judgment, award, decree or order against the Debtors or the
Reorganized Debtors or their respective property; (iii) creating, perfecting or enforcing any lien or encumbrance against the Debtors or the Reorganized Debtors or their respective property; (iv) asserting a setoff, right of subrogation or
recoupment of any kind against any debt, liability or obligation due to the Debtors or the Reorganized Debtors or their respective property; and (v) commencing or continuing any action, in any manner, in any place that does not comply with or
is inconsistent with the provisions of the Plan. Notwithstanding anything contained in the Confirmation Order or the Plan to the contrary, any rights of Holders of Claims under Bankruptcy Code section 553(a) or other applicable law to assert any
counterclaims, cross claims, setoff and/or recoupment rights that they may have under applicable law shall not be impaired by the Confirmation Order or the Plan, and subject to applicable law may be asserted and/or exercised after the Effective
Date.
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9.4 Releases.
(a) Debtor Releases. Notwithstanding anything contained herein to the contrary, on the Confirmation Date and effective as of the
Effective Date and to the fullest extent permitted by applicable law, for good and valuable consideration provided by each of the Released Parties, the adequacy of which is hereby confirmed, the Released Parties are deemed released and discharged by
the Debtors and their Estates from any and all claims, interests, obligations, rights, suits, damages, causes of action, remedies, and liabilities whatsoever, including any derivative claims, whether known or unknown, foreseen or unforeseen,
existing or hereinafter arising, in law, equity, or otherwise, based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the Debtors restructuring, the Restructuring Transaction, the Chapter 11 Cases, the DIP
Facility, the Exit Facility, the purchase, sale, or rescission of the purchase or sale of any security of the Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the
business or contractual arrangements between any Debtor and any Released Party, the restructuring of Claims and Interests prior to or during the Chapter 11 Cases, the negotiation, formulation, or preparation of the Plan, the Disclosure Statement,
the Plan Supplement, the Original Restructuring Support Agreement, the Amended and Restated Restructuring Support Agreement, the Restructuring Documents, or any related agreements, instruments, or other documents, upon any other act or omission,
transaction, agreement, event, or other occurrence taking place on or before the Effective Date, other than claims or liabilities arising out of or relating to any act or omission of a Released Party that constitutes actual fraud, willful misconduct
or gross negligence.
(b) Released Parties Releases. Notwithstanding anything contained herein to the contrary, on the
Confirmation Date and effective as of the Effective Date and to the fullest extent permitted by applicable law, the Released Parties and any Holders of Claims of or Interests in the Debtors who vote to accept the Plan or who vote to reject the Plan
and do not elect to opt-out of the releases are deemed to have released and discharged the other Released Parties, the Debtors and their Estates from any and all claims, interests, obligations, rights, suits, damages, causes of action, remedies, and
liabilities whatsoever, including any derivative claims, asserted on behalf of any Debtor, whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity, or otherwise, that any such Released Party or any such
Holder of Claims of or Interests in the Debtors would have been legally entitled to assert (whether individually or collectively), based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the Debtors
restructuring, the Restructuring Transaction, the Chapter 11 Cases, the DIP Facility, the Exit Facility, the purchase, sale, or rescission of the purchase or sale of any security of the Debtors, the subject matter of, or the transactions or events
giving rise to, any Claim or Interest that is treated in the Plan, the business or contractual arrangements between any Debtor and (i) any Released Party or (ii) any Holder of Claims of or Interests in the Debtors who votes to accept the Plan or who
votes to reject the Plan and does not elect to opt-out of the releases, the restructuring of Claims and Interests prior to or in the Chapter 11 Cases, the negotiation, formulation, or preparation of the Plan, the Disclosure Statement, the Plan
Supplement, the Original Restructuring Support Agreement, the Amended and Restated Restructuring Support Agreement, the Restructuring Documents, or any related agreements, instruments, or other documents, upon any other act or omission, transaction,
agreement, event, or other occurrence taking place on or before the Effective Date, other than claims or liabilities arising out of or relating to any act or omission of a Released Party that constitutes actual fraud, willful misconduct, or gross
negligence.
9.5 Exculpation. Notwithstanding anything contained herein to the contrary, on the Confirmation Date
and effective as of the Effective Date and to the fullest extent permitted by applicable law, the Exculpated Parties shall not have nor incur any liability for any claim, cause of action, or other assertion of liability solely for any act taken or
omitted in or in connection with, related to, or arising out of the Restructuring Transaction, the Chapter 11 Cases, the DIP Facility, the Exit Facility, the Original Restructuring Support Agreement, the Amended and Restated Restructuring Support
Agreement, the negotiation, formulation, preparation, administration, consummation and/or implementation of the Plan or any contract, instrument, document, or other agreement entered into in connection with the Plan (including the Restructuring
Documents) or any other matter relating to the Debtors or their operations; provided, however, that the foregoing exculpation shall not affect the liability of any Exculpated Party that otherwise would result from any act or omission
to the extent that such act or omission is determined by a Final Order to have constituted actual fraud, willful misconduct, or gross negligence.
37
9.6 Preservation of Insurance. The Debtors discharge, exculpation and
release, and the exculpation and release in favor of the Released Parties and Exculpated Parties, as provided herein, shall not diminish or impair any rights that a Holder of Claims or Interests may have against existing insurance maintained by the
Debtors for (a) themselves, (b) their current and former directors and officers, or (c) any other Person.
9.7
Retention and Enforcement of Causes of Action. Except as otherwise provided in the Plan, or in any document, instrument, release or other agreement entered into in connection with the Plan, in accordance with Bankruptcy Code section
1123(b), the Debtors and their Estates shall retain the Causes of Action including, without limitation, the Causes of Action identified in the Plan Supplement (the Retained Causes of Action). The Reorganized Debtors, as the
successors in interest to the Debtors and their Estates, may enforce, sue on, settle or compromise (or decline to do any of the foregoing) any or all Causes of Action, including the Retained Causes of Action. The Debtors or the Reorganized Debtors
expressly reserve all rights to prosecute any and all Causes of Action, including the Retained Causes of Action against any Person, except as otherwise expressly provided in the Plan, and no preclusion doctrine, including the doctrines of res
judicata, collateral estoppel, issue preclusion, claim preclusion, estoppel (judicial, equitable or otherwise), or laches, shall apply to such Cause of Action or Retained Cause of Action upon, after, or as a consequence of Confirmation or the
occurrence of the Effective Date.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Retention of Jurisdiction. Following the Effective Date, the Bankruptcy Court shall retain jurisdiction over all matters
arising from or relating to the Chapter 11 Cases to the fullest extent of applicable law, including, without limitation:
(a) To
determine the validity under any applicable law, allowability, classification and priority of Claims and Interests upon objection, or to estimate, pursuant to Bankruptcy Code section 502(c) or as provided for in the Plan, the amount of any Claim
that is, or is anticipated to be, contingent or unliquidated as of the Effective Date;
(b) To construe and to take any action authorized
by the Bankruptcy Code and requested by the Reorganized Debtors or any other party in interest to enforce all orders previously entered by the Bankruptcy Court, the Plan and the documents and agreements filed and/or executed in connection with the
Plan, issue such orders (including those which may relate to injunctive relief) as may be necessary for the implementation, execution and consummation of the Plan, and to ensure conformity with the terms and conditions of the Plan, such documents
and agreements and other orders of the Bankruptcy Court, notwithstanding any otherwise applicable non-bankruptcy law;
(c) To determine
any and all applications for allowance of Professional Fee Claims, and to determine any other request for payment of Administrative Expense Claims;
(d) To determine all matters that may be pending before the Bankruptcy Court on or before the Effective Date;
(e) To resolve any dispute regarding the implementation or interpretation of the Plan, or any related agreement or document that arises at
any time before the Chapter 11 Cases are closed, including the determination, to the extent a dispute arises, of the entities entitled to a distribution within any particular Class of Claims and of the scope and nature of the Reorganized
Debtors obligations to cure defaults under assumed contracts, leases and permits;
(f) To determine any and all matters relating to
the rejection, assumption or assignment of executory contracts or unexpired leases entered into prior to the Petition Date, the nature and amount of any cure required for the assumption of any executory contract or unexpired lease, and the allowance
of any Claim resulting therefrom;
38
(g) To determine all applications, adversary proceedings, contested matters and other litigated
matters, that were brought or that could have been brought in the Bankruptcy Court on or before the Effective Date over which this Bankruptcy Court otherwise has jurisdiction;
(h) To determine matters concerning local, state and federal taxes in accordance with Bankruptcy Code sections 346, 505 and 1146, and to
determine any tax claims that may arise against the Debtors or the Reorganized Debtors as a result of the transactions contemplated by the Plan;
(i) To modify the Plan pursuant to Bankruptcy Code section 1127 or to remedy any apparent nonmaterial defect or omission in the Plan, or to
reconcile any nonmaterial inconsistency in the Plan so as to carry out its intent and purposes;
(j) To issue and enforce injunctions,
enter and implement other orders or take such other actions as may be necessary or appropriate to restrain interference by any entity with consummation or enforcement of this Plan, except as otherwise provided in the Plan;
(k) To hear, determine and resolve any cases, controversies, suits or disputes with respect to the releases, exculpations, indemnifications
and other provisions contained in Article IX of the Plan and enter such orders or take such others actions as may be necessary or appropriate to implement or enforce all such provisions;
(l) To enter an order concluding or closing the Chapter 11 Cases; and
(m) To hear any other matter not inconsistent with the Bankruptcy Code.
10.2 Terms Binding. Upon the occurrence of the Effective Date, all provisions of the Plan, including all agreements,
instruments and other documents filed in connection with the Plan and executed by the Debtors or the Reorganized Debtors in connection with the Plan, shall be binding upon the Debtors, the Reorganized Debtors, all Holders of Claims and Interests and
all other Persons that are affected in any manner by the Plan. All agreements, instruments and other documents filed in connection with the Plan shall have full force and effect, and shall bind all parties thereto, subject to the occurrence of the
Effective Date, upon the entry of the Confirmation Order, whether or not such agreements, instruments or other documents actually shall be executed by parties other than the Debtors or the Reorganized Debtors, or shall be issued, delivered or
recorded on the Effective Date or thereafter. The rights, benefits and obligations of any Person named or referred to in the Plan shall be binding on, and shall inure to the benefit of, any heir, executor, administrator, successor, or assign of such
Person.
10.3 Severability. If, before Confirmation, any term or provision of the Plan is held by the Bankruptcy Court to
be invalid, void or unenforceable, the Bankruptcy Court shall have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or
provision held to be invalid, void or unenforceable, and such term or provision shall then be applicable as altered or interpreted. Notwithstanding any such holding, alteration or interpretation, but subject to the consent of the Requisite
Consenting Parties, which consent shall not be unreasonably withheld, the remainder of the terms and provisions of the Plan will remain in full force and effect and will in no way be affected, impaired or invalidated by such holding, alteration or
interpretation. The Confirmation Order shall constitute a judicial determination and shall provide that each term and provision of the Plan, as it may have been altered or interpreted in accordance with the foregoing, is: (a) valid and
enforceable pursuant to its terms; (b) integral to the Plan and may not be deleted or modified without the Debtors consent (and any modification or deletion made before the Effective Date to be made only with the consent of the Requisite
Consenting Parties, which consent shall not be unreasonably withheld); and (c) non-severable and mutually dependent.
10.4
Computation of Time. In computing any period of time prescribed or allowed by the Plan, the provisions of Bankruptcy Rule 9006(a) will apply.
10.5 Confirmation Order and Plan Control. Except as otherwise provided in the Plan, in the event of any inconsistency between
the Plan and the Amended and Restated Restructuring Support Agreement, Disclosure Statement, any exhibit to the Plan or any other instrument or document created or executed pursuant to the Plan, the Plan shall control. In the event of any
inconsistency between the Plan and the Confirmation Order, the Confirmation Order shall control.
39
10.6 Incorporation by Reference. The Plan Supplement is incorporated herein by
reference.
10.7 Modifications to the Plan. Subject to the terms of the Amended and Restated Restructuring Support
Agreement and the Exit Facility Commitment Letter, the Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, and in consultation with the Creditors Committee may amend or modify the Plan,
the Plan Supplement, and any schedule or supplement hereto, at any time prior to the Effective Date in accordance with the Bankruptcy Code, Bankruptcy Rules and any applicable court order, provided, however, that no consent of the
Requisite Secured Lenders shall be required with respect to any such amendment or modification to any such document or any provision to any such document that is, or relates to, any of the Excluded Matters; provided, further that the
Debtors may make technical amendments or modifications upon two (2) Business Days advance notice to the Plan Support Parties and the Creditors Committee. Subject to certain restrictions and requirements set forth in Bankruptcy Code section 1127
and Bankruptcy Rule 3019 and those restrictions on modification set forth in the Plan, the Amended and Restated Restructuring Support Agreement and the Exit Facility Commitment Letter, the Debtors, subject to the reasonable consent of the Requisite
Consenting Parties (but the consent of the Requisite Secured Lenders shall not be required with respect to documents or provisions in documents that are, or relate to, any of the Excluded Matters), expressly reserve their rights to alter, amend or
modify materially the Plan with respect to the Debtors, one or more times, after Confirmation, and, to the extent necessary, may initiate proceedings in the Bankruptcy Court to so alter, amend, or modify the Plan, or remedy any defect or omission,
or reconcile any inconsistencies in the Plan, the Disclosure Statement, or the Confirmation Order, in such matters as may be necessary to carry out the purposes and intent of the Plan. A Holder of a Claim or Interest that has accepted the Plan shall
be deemed to have accepted the Plan, as altered, amended, modified or supplemented, if the proposed alteration, amendment, modification or supplement does not materially and adversely change the treatment of the Claim or Interest of such Holder.
10.8 Revocation, Withdrawal or Non-Consummation. The Debtors reserve the right to revoke or withdraw the Plan at any time
prior to the Effective Date. If the Debtors revoke or withdraw the Plan prior to the Effective Date, or if the Confirmation Date or the Effective Date does not occur, then the Plan (including the fixing or limiting to an amount certain any Claim or
Class of Claims), the assumption or rejection of executory contracts or leases effected by the Plan, and any document or agreement executed pursuant to the Plan, shall be null and void; provided, however, that all orders of the
Bankruptcy Court and all documents executed pursuant thereto, except the Confirmation Order, shall remain in full force and effect. In such event, nothing contained herein, and no acts taken in preparation for consummation of the Plan, shall be
deemed to constitute a waiver or release of any Claims by or against any of the Debtors or any other Person, to prejudice in any manner the rights of any of the Debtors or any Person in any further proceedings or to constitute an admission of any
sort by any of the Debtors or any other Person.
10.9 Courts of Competent Jurisdiction. If the Bankruptcy Court abstains
from exercising, or declines to exercise, jurisdiction or is otherwise without jurisdiction over any matter arising out of the Plan or in the Chapter 11 Cases, such abstention, refusal or failure of jurisdiction shall have no effect upon and shall
not control, prohibit, or limit the exercise of jurisdiction by any other court having competent jurisdiction with respect to such matter.
10.10 Payment of Indenture Trustee Fees. On the Effective Date, all reasonable fees and expenses of the Indenture Trustee
incurred before the Effective Date (and their counsel) shall be paid in full by the Debtors in Cash without a reduction to the recoveries of applicable Holders of Allowed Notes Claims as of the Effective Date (subject to the Debtors receipt of
invoices in customary form in connection therewith and without the requirement to file a fee application with the Bankruptcy Court); provided, however, that the Indenture Trustee shall provide a copy of such invoices to the U.S.
Trustee. To the extent invoices are submitted after the Effective Date, such invoices shall be paid as soon as reasonably practicable. Notwithstanding the foregoing, to the extent that any fees or expenses of the Indenture Trustee are not paid in
accordance with the provisions of the Plan, the Indenture Trustee may assert its charging lien against any recoveries received on account of Allowed Notes Claims for payment of such unpaid amounts. All disputes related to the fees and expenses of
the Indenture Trustee shall be subject to the jurisdiction of and decided by the Bankruptcy Court.
40
10.11 Payment of U.S. Trustee Quarterly Fees. All fees due and payable pursuant to
section 1930 of title 28 of the United States Code prior to the Effective Date shall be paid by the Debtors. On and after the Effective Date, the Reorganized Debtors shall pay any and all such fees when due and payable, and shall file with the
Bankruptcy Court quarterly reports in a form reasonably acceptable to the U.S. Trustee. Each and every one of the Debtors shall remain obligated to pay quarterly fees to the Office of the U.S. Trustee until the earliest of that particular
Debtors case being closed, dismissed, or converted to a case under chapter 7 of the Bankruptcy Code.
10.12 Notice.
All notices, requests and demands to or upon the Debtors, the Creditors Committee, and the Plan Support Parties, to be effective shall be in writing and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made
when actually delivered or, in the case of notice by facsimile transmission, when received, addressed as follows:
If to the Debtors, or to
any one of them:
|
|
|
Akin Gump Strauss Hauer & Feld LLP
One Bryant Park New York, New York 10036-6745 |
Telephone: |
|
(212) 872-1000 |
Facsimile: |
|
(212) 872-1002 |
Attention: |
|
Ira S. Dizengoff, Esq. |
|
|
Philip C. Dublin, Esq. |
|
|
Alexis Freeman, Esq. |
|
|
Matthew C. Fagen, Esq. |
|
|
|
|
- and - |
|
Blank Rome LLP 1201 N. Market
Street, Suite 800 Wilmington, Delaware 19801 |
Telephone: |
|
(302) 425-6400 |
Facsimile: |
|
(302) 425-6464 |
Attention: |
|
Stanley B. Tarr, Esq. |
|
|
Michael D. DeBaecke, Esq. |
|
|
Victoria A. Guilfoyle, Esq. |
If to the DIP Lenders, DIP Agent, the Consenting Noteholders or the Exit Facility Lenders:
|
|
|
Stroock & Stroock & Lavan LLP
180 Maiden Lane New York, New York 10038 |
Telephone: |
|
(212) 806-5400 |
Facsimile: |
|
(212) 806-6006 |
Attention: |
|
Kristopher M. Hansen, Esq. |
|
|
Jayme T. Goldstein, Esq. |
|
|
|
|
- and - |
|
Young Conaway Stargatt & Taylor, LLP
1000 North King Street Wilmington, Delaware 19801 |
Telephone: |
|
(302) 571-6600 |
Facsimile: |
|
(302) 571-1253 |
Attention: |
|
Matthew B. Lunn, Esq. |
41
If to Scotiabank:
|
|
|
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street New York, New York 10019 |
Telephone: |
|
(212) 403-1000 |
Facsimile: |
|
(212) 403-2000 |
Attention: |
|
Richard G. Mason |
|
|
John R. Sobolewski |
|
|
Alisha J. Turak |
|
|
|
|
- and - |
|
Morris, Nichols, Arsht & Tunnell, LLP
1201 N. Market Street, 16th Floor Wilmington, Delaware
19801 |
Telephone: |
|
(302) 658-9200 |
Facsimile: |
|
(302) 658-3989 |
Attention: |
|
Derek C. Abbott |
If to Wells Fargo:
|
|
|
Paul Hastings LLP 75 East 55th
Street New York, New York 10022 |
Telephone: |
|
(212) 318-6000 |
Facsimile: |
|
(212) 319-4090 |
Attention: |
|
Andrew V. Tenzer |
If to the Creditors Committee:
|
|
|
Arent Fox LLP 1675 Broadway
New York, New York 10019 |
Telephone: |
|
(212) 484-3900 |
Facsimile: |
|
(212) 484-3990 |
Attention: |
|
Robert M. Hirsh |
|
|
Jeffrey N. Rothleder |
|
|
|
|
- and - |
|
Polsinelli PC 222 Delaware Avenue,
Suite 1101 Wilmington, Delaware 19801 |
Telephone: |
|
(302) 252-0920 |
Facsimile: |
|
(302) 252-0921 |
Attention: |
|
Christopher A. Ward |
42
If to the Equity Committee:
|
|
|
LeClairRyan 885 Third Avenue, 16th
Floor New York, New York 10022 |
Telephone: |
|
(212) 446-5006 |
Facsimile: |
|
(212) 430-8079 |
Attention: |
|
Gregory J. Mascitti |
|
|
|
|
- and - |
|
Cole Schotz P.C. 500 Delaware
Avenue, Suite 1410 Wilmington, Delaware 19801 |
Telephone: |
|
(302) 651-2004 |
Facsimile: |
|
(302) 574-2104 |
Attention: |
|
Patrick J. Reiley |
10.13 Reservation of Rights. The filing of the Plan, the Disclosure Statement, any statement or
provision contained in the Plan or Disclosure Statement, or the taking of any action by the Debtors or Reorganized Debtors with respect to the Plan or Disclosure Statement, shall not be deemed to be an admission or waiver of any rights of the
Debtors or Reorganized Debtors with respect to any Holders of Claims against or Interests in the Debtors.
10.14 No Waiver.
Neither the failure of a Debtor to list a Claim or Interest in the Debtors Schedules, the failure of a Debtor to object to any Claim or Interest for purposes of voting, the failure of a Debtor to object to a Claim (including, without
limitation, an Administrative Expense Claim) or Interest prior to the Confirmation Date or the Effective Date, nor the failure of a Debtor to assert a Retained Cause of Action prior to the Confirmation Date or the Effective Date shall, in the
absence of a legally-effective express waiver or release executed by the Debtor with the approval of the Bankruptcy Court, if required, and with any other consents or approvals required under the Plan, be deemed a waiver or release of the right of a
Debtor or a Reorganized Debtor or their respective successors, either before or after solicitation of votes on the Plan, the Confirmation Date or the Effective Date, to (a) object to or examine such Claim (including, without limitation, an
Administrative Expense Claim) or Interest, in whole or in part, or (b) retain or either assign or exclusively assert, pursue, prosecute, utilize, or otherwise act or enforce any Retained Cause of Action against the Holder of such Claim
(including, without limitation, an Administrative Expense Claim) or Interest.
43
Dated: , 2015
|
|
|
Allied Nevada Gold Corp. |
|
|
By: |
|
/s/ |
|
|
Name: |
|
Stephen M. Jones |
Title: |
|
Executive Vice President, Secretary and Chief Financial Officer |
|
Allied Nevada Gold Holdings LLC |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
|
Allied VGH Inc. |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
|
Allied VNC Inc. |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
|
ANG Central LLC |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
44
|
|
|
ANG Cortez LLC |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
|
ANG Eureka LLC |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
|
ANG North LLC |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
|
ANG Northeast LLC |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
|
ANG Pony LLC |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
45
|
|
|
Hasbrouck Production Company LLC |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
|
Hycroft Resources & Development, Inc. |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
|
Victory Exploration Inc. |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
|
Victory Gold Inc. |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
46
Exhibit 99.2
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
|
|
|
|
|
|
|
) |
|
|
In re: |
|
) |
|
Chapter 11 |
|
|
) |
|
|
Allied Nevada Gold Corp., et al.,1 |
|
) |
|
Case No. 15-10503 (MFW) |
|
|
) |
|
|
Debtors. |
|
) |
|
Jointly Administered |
|
|
) |
|
|
AMENDED DISCLOSURE STATEMENT FOR THE
DEBTORS AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION
|
|
|
AKIN GUMP STRAUSS HAUER & FELD LLP
Ira S. Dizengoff (admitted pro hac vice) Philip C. Dublin
(admitted pro hac vice) Alexis Freeman (admitted pro hac vice)
Matthew C. Fagen (admitted pro hac vice) One Bryant
Park New York, New York 10036-6745 Telephone: (212)
872-1000 Facsimile: (212) 872-1002 |
|
BLANK ROME LLP Stanley B. Tarr (No.
5535) Michael D. DeBaecke (No. 3186) Victoria A. Guilfoyle
(No. 5183) 1201 N. Market Street, Suite 800 Wilmington,
Delaware 19801 Telephone: (302) 425-6400 Facsimile: (302)
425-6464 |
Counsel to the Debtors and Debtors in Possession
Dated: July 23, 2015
1 |
The Debtors in these cases, along with the last four digits of each Debtors federal tax identification number, are: Allied Nevada Gold Corp. (7115); Allied Nevada Gold Holdings LLC (7115); Allied VGH Inc. (3601);
Allied VNC Inc. (3291); ANG Central LLC (7115); ANG Cortez LLC (7115); ANG Eureka LLC (7115); ANG North LLC (7115); ANG Northeast LLC (7115); ANG Pony LLC (7115); Hasbrouck Production Company LLC (3601); Hycroft Resources & Development,
Inc. (1989); Victory Exploration Inc. (8144); and Victory Gold Inc. (8139). The corporate headquarters for each of the above Debtors are located at, and the mailing address for each of the above Debtors, except Hycroft Resources &
Development, Inc., is 9790 Gateway Drive, Suite 200, Reno, NV 89521. The mailing address for Hycroft Resources & Development, Inc. is P.O. Box 3030, Winnemucca, NV 89446. |
IMPORTANT NOTICE
ALLIED NEVADA GOLD CORP. (ANV) AND CERTAIN OF ITS DIRECT AND INDIRECT SUBSIDIARIES, AS CHAPTER 11 DEBTORS AND DEBTORS IN POSSESSION
(COLLECTIVELY, THE DEBTORS), ARE SENDING YOU THIS DOCUMENT AND THE ACCOMPANYING MATERIALS (THE DISCLOSURE STATEMENT) BECAUSE YOU MAY BE A HOLDER OF CLAIMS AGAINST THE DEBTORS AND ENTITLED TO VOTE ON THE
DEBTORS AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION, AS THE SAME MAY BE AMENDED FROM TIME TO TIME (THE PLAN).2
THIS DISCLOSURE STATEMENT PROVIDES INFORMATION REGARDING THE PLAN. THIS DISCLOSURE STATEMENT AND ITS RELATED DOCUMENTS ARE THE ONLY DOCUMENTS AUTHORIZED BY
THE BANKRUPTCY COURT TO BE USED IN CONNECTION WITH THE SOLICITATION OF VOTES TO ACCEPT THE PLAN. NO REPRESENTATIONS HAVE BEEN AUTHORIZED BY THE BANKRUPTCY COURT CONCERNING THE DEBTORS, THEIR BUSINESS OPERATIONS OR THE VALUE OF THEIR ASSETS, EXCEPT
AS EXPLICITLY SET FORTH IN THIS DISCLOSURE STATEMENT.
THE DEBTORS URGE YOU TO READ THIS DISCLOSURE STATEMENT CAREFULLY FOR A DISCUSSION OF VOTING
INSTRUCTIONS, RECOVERY INFORMATION, CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS, THE HISTORY OF THE DEBTORS AND THE CHAPTER 11 CASES, THE DEBTORS BUSINESS, PROPERTIES AND RESULTS OF OPERATIONS, HISTORICAL AND PROJECTED FINANCIAL
RESULTS AND A SUMMARY AND ANALYSIS OF THE PLAN. IF YOU ARE ENTITLED TO VOTE ON THE PLAN, YOU ARE ENCOURAGED TO READ THIS DISCLOSURE STATEMENT IN ITS ENTIRETY, INCLUDING WITHOUT LIMITATION, THE PLAN, AND THE SECTION ENTITLED RISK FACTORS,
BEFORE SUBMITTING YOUR BALLOT TO VOTE ON THE PLAN.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. THE DEBTORS RESERVE THE RIGHT,
WITH THE CONSENT OF THE REQUISITE CONSENTING PARTIES, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD, AND IN CONSULTATION WITH THE CREDITORS COMMITTEE (AS FURTHER SET FORTH IN THE PLAN), TO FILE A FURTHER AMENDED PLAN AND RELATED DISCLOSURE
STATEMENT FROM TIME TO TIME, SUBJECT TO THE TERMS OF THE PLAN.
THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH BANKRUPTCY CODE SECTION
1125 AND BANKRUPTCY RULE 3016(b). THE PLAN AND THIS DISCLOSURE STATEMENT WERE NOT REQUIRED TO BE PREPARED IN ACCORDANCE WITH FEDERAL OR STATE SECURITIES LAWS OR OTHER APPLICABLE NONBANKRUPTCY LAW. DISSEMINATION OF THIS DISCLOSURE STATEMENT IS
CONTROLLED BY BANKRUPTCY RULE 3017. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
2 |
Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to such terms in the Plan. |
i
THIS DISCLOSURE STATEMENT WAS PREPARED TO PROVIDE PARTIES IN INTEREST IN THESE CASES WITH ADEQUATE
INFORMATION (AS DEFINED IN BANKRUPTCY CODE SECTION 1125) SO THAT THOSE HOLDERS OF CLAIMS WHO ARE ENTITLED TO VOTE ON THE PLAN CAN MAKE AN INFORMED JUDGMENT REGARDING SUCH VOTE.
THIS DISCLOSURE STATEMENT CONTAINS ONLY A SUMMARY OF THE PLAN. THIS DISCLOSURE STATEMENT IS NOT INTENDED TO REPLACE A CAREFUL AND DETAILED REVIEW AND ANALYSIS
OF THE PLAN; RATHER, THIS DISCLOSURE STATEMENT IS INTENDED ONLY TO AID AND SUPPLEMENT SUCH REVIEW. THIS DISCLOSURE STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE PLAN, THE PLAN SUPPLEMENT (WHICH WILL BE FILED NO LATER THAN 9 DAYS PRIOR
TO THE DEADLINE FOR OBJECTIONS TO THE PLAN), AND THE EXHIBITS ATTACHED THERETO AND THE AGREEMENTS AND DOCUMENTS DESCRIBED THEREIN. IF THERE IS A CONFLICT BETWEEN THE PLAN AND THIS DISCLOSURE STATEMENT, THE PROVISIONS OF THE PLAN WILL GOVERN. YOU ARE
ENCOURAGED TO REVIEW THE FULL TEXT OF THE PLAN AND PLAN SUPPLEMENT AND TO READ CAREFULLY THE ENTIRE DISCLOSURE STATEMENT, INCLUDING ALL EXHIBITS, BEFORE DECIDING HOW TO VOTE WITH RESPECT TO THE PLAN.
THE VOTING DEADLINE TO ACCEPT OR REJECT THE PLAN IS 4:00 P.M. (PREVAILING EASTERN TIME) ON SEPTEMBER 24, 2015, UNLESS EXTENDED BY THE DEBTORS
(THE VOTING DEADLINE). TO BE COUNTED, BALLOTS INDICATING ACCEPTANCE OR REJECTION OF THE PLAN MUST BE ACTUALLY RECEIVED BY PRIME CLERK LLC, THE DEBTORS NOTICE, CLAIMS, AND BALLOTING AGENT (THE BALLOTING
AGENT) NO LATER THAN THE VOTING DEADLINE.
THE EFFECTIVENESS OF THE PLAN IS SUBJECT TO MATERIAL CONDITIONS PRECEDENT. THERE IS NO
ASSURANCE THAT THESE CONDITIONS WILL BE SATISFIED OR WAIVED.
IF THE PLAN IS CONFIRMED BY THE BANKRUPTCY COURT AND THE EFFECTIVE DATE OCCURS, ALL HOLDERS
OF CLAIMS AGAINST, AND HOLDERS OF INTERESTS IN, THE DEBTORS (INCLUDING, WITHOUT LIMITATION, THOSE HOLDERS OF CLAIMS AND INTERESTS WHO DO NOT SUBMIT BALLOTS TO ACCEPT OR REJECT THE PLAN OR WHO ARE NOT ENTITLED TO VOTE ON THE PLAN) WILL BE BOUND BY
THE TERMS OF THE PLAN AND THE TRANSACTIONS CONTEMPLATED THEREBY.
THIS DISCLOSURE STATEMENT HAS NOT BEEN FILED WITH OR REVIEWED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE SEC) UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR WITH ANY OTHER SECURITIES REGULATORY AUTHORITY OF ANY STATE UNDER ANY STATE SECURITIES OR BLUE SKY
LAWS. ADDITIONALLY, THE SECURITIES TO BE ISSUED ON OR AFTER THE EFFECTIVE DATE WILL NOT HAVE BEEN THE SUBJECT OF, OR REGISTERED PURSUANT TO, A REGISTRATION STATEMENT FILED WITH THE
ii
SEC. THE PLAN HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY OTHER SECURITIES REGULATORY AUTHORITY, OR ANY STATE SECURITIES COMMISSION, AND NEITHER THE SEC NOR ANY STATE SECURITIES
COMMISSION HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED HEREIN. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS DISCLOSURE STATEMENT DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY STATE OR OTHER
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED.
THE DEBTORS BELIEVE THAT THE SOLICITATION OF VOTES ON THE PLAN MADE BY THIS
DISCLOSURE STATEMENT, AND THE OFFER OF CERTAIN NEW SECURITIES THAT MAY BE DEEMED TO BE MADE PURSUANT TO THE SOLICITATION, ARE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND RELATED STATE STATUTES BY REASON OF THE EXEMPTION PROVIDED BY
BANKRUPTCY CODE SECTION 1145(a)(1), AND EXPECT THAT THE OFFER, ISSUANCE AND DISTRIBUTION OF THE SECURITIES UNDER THE PLAN WILL BE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND RELATED STATE STATUTES BY REASON OF THE APPLICABILITY OF
BANKRUPTCY CODE SECTION 1145(a)(1), IN EACH CASE TO THE EXTENT SET FORTH HEREIN.
EXCEPT AS OTHERWISE SET FORTH HEREIN, THE STATEMENTS CONTAINED IN THIS
DISCLOSURE STATEMENT ARE MADE BY THE DEBTORS AS OF THE DATE HEREOF, AND THE DELIVERY OF THIS DISCLOSURE STATEMENT WILL NOT, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AT ANY TIME SUBSEQUENT TO
THE DATE HEREOF OR CREATE ANY DUTY TO UPDATE SUCH INFORMATION.
NO PERSON HAS BEEN AUTHORIZED BY THE DEBTORS IN CONNECTION WITH THE PLAN OR THE
SOLICITATION THEREOF TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS DISCLOSURE STATEMENT, THE PLAN AND THE EXHIBITS, NOTICES AND SCHEDULES ATTACHED TO OR INCORPORATED BY REFERENCE OR REFERRED TO IN THIS
DISCLOSURE STATEMENT AND/OR THE PLAN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE DEBTORS.
IT IS THE DEBTORS POSITION THAT THIS DISCLOSURE STATEMENT MAY NOT BE RELIED ON FOR ANY PURPOSE OTHER THAN TO DETERMINE WHETHER TO VOTE TO ACCEPT OR
REJECT THE PLAN, AND NOTHING STATED HEREIN SHALL CONSTITUTE AN ADMISSION OF ANY FACT OR LIABILITY BY ANY PERSON, OR BE ADMISSIBLE IN ANY PROCEEDING INVOLVING THE DEBTORS OR ANY OTHER PERSON, OR BE DEEMED CONCLUSIVE EVIDENCE OF THE TAX OR OTHER LEGAL
EFFECTS OF THE PLAN ON THE DEBTORS OR HOLDERS OF CLAIMS OR INTERESTS.
EXCEPT WHERE SPECIFICALLY NOTED, THE FINANCIAL INFORMATION CONTAINED HEREIN HAS NOT
BEEN AUDITED BY A CERTIFIED PUBLIC ACCOUNTANT AND HAS NOT BEEN PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
iii
HOLDERS OF CLAIMS OR INTERESTS SHOULD NOT CONSTRUE THE CONTENTS OF THIS DISCLOSURE STATEMENT AS PROVIDING ANY
LEGAL, BUSINESS, FINANCIAL OR TAX ADVICE. EACH HOLDER SHOULD CONSULT WITH ITS OWN LEGAL, BUSINESS, FINANCIAL AND TAX ADVISOR(S) WITH RESPECT TO ANY SUCH MATTERS CONCERNING THIS DISCLOSURE STATEMENT, THE SOLICITATION OF VOTES TO ACCEPT THE PLAN, THE
PLAN, THE PLAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.
FORWARD-LOOKING STATEMENTS:
THIS DISCLOSURE STATEMENT CONTAINS FORWARD-LOOKING STATEMENTS BASED PRIMARILY ON THE CURRENT EXPECTATIONS OF THE DEBTORS AND PROJECTIONS ABOUT FUTURE EVENTS
AND FINANCIAL TRENDS AFFECTING THE FINANCIAL CONDITION OF THE DEBTORS AND THE REORGANIZED DEBTORS BUSINESSES. IN PARTICULAR, STATEMENTS USING WORDS SUCH AS BELIEVE, MAY, ESTIMATE, CONTINUE,
ANTICIPATE, INTEND, EXPECT AND SIMILAR EXPRESSIONS IDENTIFY THESE FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO A NUMBER OF RISKS, UNCERTAINTIES AND ASSUMPTIONS, INCLUDING THOSE
DESCRIBED BELOW UNDER SECTION VIII. IN LIGHT OF THESE RISKS AND UNCERTAINTIES, THE FORWARD-LOOKING EVENTS AND CIRCUMSTANCES DISCUSSED IN THE DISCLOSURE STATEMENT MAY NOT OCCUR, AND ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THE
FORWARD-LOOKING STATEMENTS. CONSEQUENTLY, THE PROJECTED FINANCIAL INFORMATION AND OTHER FORWARD-LOOKING STATEMENTS CONTAINED HEREIN SHOULD NOT BE REGARDED AS REPRESENTATIONS BY ANY OF THE DEBTORS, THE REORGANIZED DEBTORS, THEIR ADVISORS OR ANY OTHER
PERSON THAT THE PROJECTED FINANCIAL CONDITIONS OR RESULTS OF OPERATIONS CAN OR WILL BE ACHIEVED. EXCEPT AS OTHERWISE REQUIRED BY LAW, NEITHER THE DEBTORS NOR THE REORGANIZED DEBTORS UNDERTAKE ANY OBLIGATION TO UPDATE OR REVISE PUBLICLY ANY
FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE FOLLOWING APPROVAL OF THIS DISCLOSURE STATEMENT BY THE BANKRUPTCY COURT.
THE DEBTORS SUPPORT CONFIRMATION OF THE PLAN, AND URGE ALL HOLDERS OF CLAIMS WHOSE VOTES ARE BEING SOLICITED TO ACCEPT THE PLAN.
iv
TABLE OF CONTENTS
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Page |
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I. |
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EXECUTIVE SUMMARY |
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1 |
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II. |
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QUESTIONS AND ANSWERS REGARDING THIS DISCLOSURE STATEMENT AND THE PLAN |
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2 |
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A. |
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What is chapter 11? |
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2 |
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B. |
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Why are the Debtors sending me this Disclosure Statement? |
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2 |
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C. |
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Am I entitled to vote on the Plan? |
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3 |
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D. |
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What will I receive from the Debtors if the Plan is consummated? |
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4 |
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E. |
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What will Holders of Class 1 Secured ABL Claims receive under the Plan? |
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4 |
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F. |
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What will Holders of Class 2 Secured Swap Claims receive under the Plan? |
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4 |
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G. |
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What will Holders of Class 4 Unsecured Claims receive under the Plan? |
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4 |
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H. |
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What will Holders of Class 8 Existing Equity Interests receive under the Plan? |
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5 |
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I. |
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How do I vote on the Plan and what is the Voting Deadline? |
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5 |
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J. |
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What will I receive from the Debtors if I hold an Administrative Expense Claim, a Professional Fee Claim, a Priority Claim or a DIP
Facility Claim? |
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5 |
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K. |
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What happens to my recovery if the Plan is not confirmed or the confirmed Plan does not go effective? |
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5 |
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L. |
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If the Plan provides that I get a distribution, do I get it upon Confirmation or when the Plan goes effective, and what is meant by
Confirmation, Effective Date and Consummation? |
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5 |
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M. |
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What are the Debtors Intercompany Claims and Intercompany Interests? |
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5 |
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N. |
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Are there risks to owning the New Common Stock upon emergence from chapter 11? |
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6 |
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O. |
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Will there be releases granted to parties in interest as part of the Plan? |
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6 |
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P. |
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Why is the Bankruptcy Court holding a Confirmation Hearing and when is the Confirmation Hearing set to occur? |
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6 |
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Q. |
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What is the purpose of the Confirmation Hearing? |
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6 |
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R. |
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What is the effect of the Plan on the Debtors ongoing business? |
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7 |
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S. |
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Who do I contact if I have additional questions with respect to this Disclosure Statement or the Plan? |
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7 |
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T. |
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Do the Debtors recommend voting in favor of the Plan? |
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7 |
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III. |
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THE DEBTORS BACKGROUND |
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7 |
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A. |
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Debtors Corporate Structure |
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8 |
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B. |
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Overview of the Debtors Mineral Reserves and Development Projects |
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8 |
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C. |
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Regulatory Matters |
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9 |
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D. |
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Summary of the Debtors Prepetition Capital Structure and Liabilities under Derivative Instruments |
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9 |
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IV. |
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EVENTS LEADING TO THE COMMENCEMENT OF THE CHAPTER 11 CASES AND ENTRY INTO THE ORIGINAL RESTRUCTURING SUPPORT
AGREEMENT |
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12 |
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A. |
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Events Leading to the Commencement of the Chapter 11 Cases |
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12 |
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B. |
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Prepetition Restructuring Initiatives and the Original Restructuring Support Agreement |
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13 |
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V. |
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EVENTS DURING THE CHAPTER 11 CASES |
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13 |
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A. |
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The First and Second Day Pleadings and Other Case Matters |
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13 |
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B. |
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Debtor in Possession Financing |
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15 |
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C. |
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Mining Suspension Plan and Proposed Compensation Plans |
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15 |
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D. |
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Events Leading up to the Debtors Entry into the Amended and Restated Restructuring Support Agreement |
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17 |
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VI. |
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SUMMARY OF THE PLAN |
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18 |
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A. |
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General Basis for the Plan |
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18 |
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B. |
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Treatment of Unclassified Claims |
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18 |
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C. |
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Classification and Treatment of Claims and Interests |
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19 |
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D. |
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Means for Implementation of the Plan |
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21 |
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E. |
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Discharge, Release, Injunction and Related Provisions |
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28 |
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VII. |
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PROJECTED FINANCIAL INFORMATION |
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30 |
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VIII. |
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RISK FACTORS |
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30 |
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A. |
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Risks Related to Bankruptcy |
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31 |
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B. |
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Risks Related to the Debtors or the Reorganized Debtors Business |
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33 |
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C. |
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Risks Related to Environmental Issues |
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39 |
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D. |
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Risks Related to the Debtors Indebtedness and Plan Securities |
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40 |
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E. |
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Risks Associated with Financial Information and Projections |
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42 |
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IX. |
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SOLICITATION AND VOTING PROCEDURES |
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43 |
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X. |
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CONFIRMATION OF THE PLAN |
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43 |
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A. |
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Requirements for Confirmation of the Plan |
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43 |
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B. |
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Best Interests of Creditors/Liquidation Analysis |
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43 |
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C. |
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Feasibility |
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44 |
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D. |
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Acceptance by Impaired Classes |
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44 |
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E. |
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Confirmation without Acceptance by All Impaired Classes |
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44 |
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F. |
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Valuation of the Debtors |
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45 |
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XI. |
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APPLICABILITY OF FEDERAL AND OTHER SECURITIES LAWS |
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45 |
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A. |
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Plan Securities |
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45 |
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B. |
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Issuance and Resale of Plan Securities Under the Plan |
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45 |
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C. |
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Listing of New Common Stock |
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47 |
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A. |
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U.S. Federal Income Tax Consequences to the Debtors Under the Plan |
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48 |
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B. |
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U.S. Federal Income Tax Consequences to U.S. Holders Under the Plan |
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52 |
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C. |
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Information Reporting and Backup Withholding |
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59 |
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D. |
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U.S. Federal Income Tax Considerations for Non-U.S. Holders |
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59 |
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XIII. |
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CONCLUSION AND RECOMMENDATION |
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63 |
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ii
EXHIBITS
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Exhibit A |
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Plan of Reorganization |
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Exhibit B |
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Amended and Restated Restructuring Support Agreement |
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Exhibit C |
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Financial Projections |
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Exhibit D |
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Liquidation Analysis |
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Exhibit E |
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Valuation Analysis |
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Exhibit F |
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Debtors Corporate Structure |
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THE DEBTORS HEREBY ADOPT AND INCORPORATE EACH
EXHIBIT ATTACHED TO THIS DISCLOSURE STATEMENT
BY REFERENCE AS THOUGH FULLY SET FORTH HEREIN |
iii
The Debtors submit this Disclosure Statement pursuant to Bankruptcy
Code section 1125 to certain Holders of Claims against the Debtors in connection with the solicitation of acceptances with respect to the Plan. A copy of the Plan is attached hereto as Exhibit A and incorporated herein by reference. This
Disclosure Statement describes certain aspects of the Plan, including the treatment of Claims and Interests, and also describes certain aspects of the Debtors operations, financial projections, and other related matters.
As of March 10, 2015, the Debtors had principal outstanding funded indebtedness of (a) approximately $74.95 million under the Credit
Agreement, (b) approximately $58.3 million under the Term and Security Deposit Loan Agreement, (c) $5,189,706 on account of the Jacobs Promissory Note, (d) approximately $97.6 million of capital lease obligations, and (e) CDN
$400.0 million in respect of the Notes. In addition, as a result of the applicable counterparties exercise of early termination rights with respect to the Debtors Cross Currency Swaps and Diesel Swaps, the Debtors had outstanding funded
indebtedness of (a) approximately $86.3 million with respect to close-out amounts under the Secured Swaps (as defined below), (b) approximately $371,666.67 with respect to the close-out amounts under a Cross Currency Swap (the NBC
Cross Currency Swap) with National Bank of Canada (NBC) after realization of collateral and (c) approximately $518,937.00 with respect to the close-out amounts under a Cross Currency Swap (the SocGen Cross
Currency Swap) with Société Générale (Canada Branch) (SocGen) after realization of collateral.
The Debtors are pleased to report that after extensive, good-faith and arms-length negotiations with the Plan Support Parties, the Plan
embodies a settlement among the Debtors and the majority of their key stakeholders on a consensual restructuring transaction (the Restructuring Transaction) that will de-lever the Debtors balance sheet and enable the Debtors
to implement a financial and operational restructuring. To evidence their support of the Debtors restructuring plan, Holders of 76.24% of the aggregate outstanding principal amount of the Notes Claims, 100% of the Holders of Secured ABL Claims
and 100% of the Holders of Secured Swap Claims, executed the Amended and Restated Restructuring Support Agreement, dated July 23, 2015, attached hereto as Exhibit B, which provides for the implementation of the Restructuring Transaction
through the Plan.
After giving effect to the following transactions contemplated by the Amended and Restated Restructuring Support
Agreement and the Plan, the Debtors will emerge from chapter 11 appropriately capitalized with access to favorable financing to support their emergence and go-forward business needs:
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each Holder of an Allowed Secured ABL Claim shall receive, on the Effective Date: its Pro Rata (after giving effect to the Secured ABL $10MM Cash Payment) share of (i)(A) the Secured ABL/Swap Cash Payments not made
prior to the Effective Date and (B) the Secured ABL/Swap Claims Excess Cash Flow Payment, and (ii) New First Lien Term Loans in an aggregate principal amount equal to (A) the amount of Allowed Claims pursuant to Article 2.7(b) of the
Plan minus (B) the amount paid in cash in respect of the Secured ABL Claims pursuant to clause (i) of Article 2.7(c) of the Plan. In addition, for the avoidance of doubt, any unpaid amounts owed to the holders of Secured ABL Claims
pursuant to Section 11 of the DIP Facility Order (including accrued interest to and including the Effective Date pursuant to clause (a) thereof) shall be due and payable in cash on the Effective Date; |
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each Holder of an Allowed Secured Swap Claim shall receive, on the Effective Date: its Pro Rata share of (i)(A) the Secured ABL/Swap Cash Payments not made prior to the Effective Date and (B) the Secured ABL/Swap
Claims Excess Cash Flow Payment, and (ii) New First Lien Term Loans in an aggregate principal amount equal to (A) the amount of Allowed Claims pursuant to Article 2.8(b) of the Plan minus (B) the amount paid in cash in respect of the
Secured Swap Claims pursuant to clause (i) of Article 2.8(c) of the Plan. In addition, for the avoidance of doubt, any unpaid amounts owed to the holders of Secured Swap Claims pursuant to Section 11 of the DIP Facility Order (including
accrued interest to and including the Effective Date pursuant to clause (a) thereof ) shall be due and payable in cash on the Effective Date; |
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each Holder of an Allowed DIP Facility Claim shall receive, on the Effective Date: its Pro Rata share of the DIP Facility Consideration; provided, however, that only the DIP Backstop Lenders shall receive
their Pro Rata share (calculated based on the amount of Allowed DIP Facility Claims held by each of the DIP Backstop Lenders relative to each other) of the 3.0% Backstop Put Option Payment (for the avoidance of doubt, the DIP Facility Consideration
shall be paid in its entirety from the proceeds of the Exit Facility); |
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each Holder of an Allowed Unsecured Claim shall receive, on the Effective Date, its Pro Rata share of 100% of the New Common Stock, subject to dilution on account of the conversion of the New Second Lien Convertible
Notes; |
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all Allowed Subordinated Securities Claims shall be extinguished and Holders of Allowed Subordinated Securities Claims shall not receive any property or consideration under the Plan; |
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all Allowed Intercompany Claims between the Debtors shall be adjusted, continued, contributed to capital or discharged to the extent determined by the Debtors, with the consent of the Requisite Consenting Parties, which
consent shall not be unreasonably withheld, or the Reorganized Debtors; and |
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all Existing Equity Interests shall be deemed canceled, released and extinguished as of the Effective Date and Holders of Existing Equity Interests shall receive no recovery on account of their Existing Equity
Interests. |
As provided by Article IV of the Plan, the Debtors may also undertake certain other restructuring transactions to implement the
Plan.
THE DEBTORS BELIEVE THAT THE COMPROMISE CONTEMPLATED UNDER THE PLAN IS FAIR AND EQUITABLE, MAXIMIZES THE VALUE OF THE ESTATES
AND PROVIDES THE BEST RECOVERY TO HOLDERS OF CLAIMS. AT THIS TIME, THE DEBTORS BELIEVE THIS IS THE BEST AVAILABLE ALTERNATIVE FOR COMPLETING THE CHAPTER 11 CASES. FOR THESE REASONS AND OTHERS DESCRIBED HEREIN, THE DEBTORS STRONGLY RECOMMEND THAT
CREDITORS ENTITLED TO VOTE ON THE PLAN VOTE TO ACCEPT THE PLAN.
II. |
QUESTIONS AND ANSWERS REGARDING THIS DISCLOSURE STATEMENT AND THE PLAN |
Chapter 11 is the principal business reorganization chapter of the
Bankruptcy Code. In addition to permitting debtor rehabilitation, chapter 11 promotes equality of treatment for similarly situated creditors and similarly situated equity interest holders, subject to the priority of distributions prescribed by the
Bankruptcy Code.
The commencement of a chapter 11 case creates an estate that comprises all of the legal and equitable interests of the
debtor as of the bankruptcy commencement date. The Bankruptcy Code provides that the debtor may continue to operate its business and remain in possession of its property as a debtor in possession.
Consummating a plan is the principal objective of a chapter 11 case. The Bankruptcy Courts confirmation of a plan binds the debtor, any
person acquiring property under the plan, any creditor or equity interest holder of a debtor, and any other person or entity as may be ordered by the Bankruptcy Court, in accordance with the applicable provisions of the Bankruptcy Code. Subject to
certain limited exceptions, the order issued by the Bankruptcy Court confirming a plan provides for the treatment of the debtors debt in accordance with the terms of the confirmed plan.
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B. |
Why are the Debtors sending me this Disclosure Statement? |
The Debtors will be seeking
Bankruptcy Court approval of the Plan. In connection with soliciting acceptances of the Plan, Bankruptcy Code section 1125 requires the Debtors to prepare a disclosure statement containing adequate information of a kind, and in sufficient detail, to
enable a hypothetical reasonable investor to make an informed judgment regarding acceptance of the Plan. This Disclosure Statement has been prepared in accordance with these requirements.
2
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C. |
Am I entitled to vote on the Plan? |
Your ability to vote on, and your distribution
under, the Plan, if any, depends on what type of Claim or Interest you hold. Each category of Holders of Claims or Interests, as set forth in Article II of the Plan pursuant to Bankruptcy Code section 1122(a), is referred to as a Class.
Each Class respective voting status is set forth below.
The tables below designate the Classes of Claims against, and Interests in,
each of the Debtors and specify which of those Classes are Impaired or Unimpaired by the Plan. FOR A COMPLETE DESCRIPTION OF THE DEBTORS CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS, REFERENCE SHOULD BE MADE TO ARTICLE II OF THE PLAN.
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Class |
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Designation |
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Impairment |
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Entitled to Vote |
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Class 1 |
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Secured ABL Claims |
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Impaired |
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Yes |
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Class 2 |
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Secured Swap Claims |
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Impaired |
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Yes |
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Class 3 |
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Other Secured Claims |
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Unimpaired |
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No
(deemed to accept) |
|
|
|
|
Class 4 |
|
Unsecured Claims |
|
Impaired |
|
Yes |
|
|
|
|
Class 5 |
|
Intercompany Claims |
|
Unimpaired |
|
No
(deemed to accept) |
|
|
|
|
Class 6 |
|
Subordinated Securities Claims |
|
Impaired |
|
No
(deemed to reject) |
|
|
|
|
Class 7 |
|
Intercompany Interests |
|
Unimpaired |
|
No
(deemed to accept) |
|
|
|
|
Class 8 |
|
Existing Equity Interests |
|
Impaired |
|
No
(deemed to reject) |
3
|
D. |
What will I receive from the Debtors if the Plan is consummated? |
The following table
summarizes the anticipated recoveries for Holders of Allowed Claims and Holders of Allowed Interests under the Plan. THE EXPECTED RECOVERIES SET FORTH BELOW ARE FOR ILLUSTRATIVE PURPOSES ONLY AND ARE SUBJECT TO MATERIAL CHANGE.3
|
|
|
|
|
|
|
Class |
|
Designation |
|
Plan Treatment |
|
Estimated Recovery Under the Plan |
|
|
|
|
Class 1 |
|
Secured ABL Claims |
|
Impaired |
|
100% |
|
|
|
|
Class 2 |
|
Secured Swap Claims |
|
Impaired |
|
100% |
|
|
|
|
Class 3 |
|
Other Secured Claims |
|
Unimpaired |
|
100% |
|
|
|
|
Class 4 |
|
Unsecured Claims |
|
Impaired |
|
[To Come] |
|
|
|
|
Class 5 |
|
Intercompany Claims |
|
Unimpaired |
|
100% |
|
|
|
|
Class 6 |
|
Subordinated Securities Claims |
|
Impaired |
|
0% |
|
|
|
|
Class 7 |
|
Intercompany Interests |
|
Unimpaired |
|
100% |
|
|
|
|
Class 8 |
|
Existing Equity Interests |
|
Impaired |
|
0% |
|
E. |
What will Holders of Class 1 Secured ABL Claims receive under the Plan? |
In full and
complete satisfaction, discharge and release of each Class 1 Claim, each Holder of an Allowed Secured ABL Claim shall receive, on the Effective Date: its Pro Rata (after giving effect to the Secured ABL $10MM Cash Payment) share of (i)(A) the
Secured ABL/Swap Cash Payments not made prior to the Effective Date and (B) the Secured ABL/Swap Claims Excess Cash Flow Payment, and (ii) New First Lien Term Loans in an aggregate principal amount equal to (A) the amount of Allowed
Claims pursuant to Article 2.7(b) of the Plan minus (B) the amount paid in cash in respect of the Secured ABL Claims pursuant to clause (i) of Article 2.7(c) of the Plan. In addition, for the avoidance of doubt, any unpaid amounts owed to
the holders of Secured ABL Claims pursuant to Section 11 of the DIP Facility Order (including accrued interest to and including the Effective Date pursuant to clause (a) thereof) shall be due and payable in cash on the Effective Date.
|
F. |
What will Holders of Class 2 Secured Swap Claims receive under the Plan? |
In full and
complete satisfaction, discharge and release of each Allowed Class 2 Claim, each Holder of an Allowed Secured Swap Claim shall receive, on the Effective Date: its Pro Rata share of (i)(A) the Secured ABL/Swap Cash Payments not made prior to the
Effective Date and (B) the Secured ABL/Swap Claims Excess Cash Flow Payment, and (ii) New First Lien Term Loans in an aggregate principal amount equal to (A) the amount of Allowed Claims pursuant to Article 2.8(b) of the Plan minus
(B) the amount paid in cash in respect of the Secured Swap Claims pursuant to clause (i) of Article 2.8(c) of the Plan. In addition, for the avoidance of doubt, any unpaid amounts owed to the holders of Secured Swap Claims pursuant to
Section 11 of the DIP Facility Order (including accrued interest to and including the Effective Date pursuant to clause (a) thereof ) shall be due and payable in cash on the Effective Date.
|
G. |
What will Holders of Class 4 Unsecured Claims receive under the Plan? |
In full and
complete satisfaction, discharge and release of each Allowed Class 4 Claim, each Holder of an Allowed Class 4 Claim shall receive, on the Effective Date, its Pro Rata share of 100% of the New Common Stock, subject to dilution on account of the
conversion of the New Second Lien Convertible Notes.
3 |
The recoveries set forth herein may change based upon changes in the amount of Claims that are Allowed as well as other factors related to the Debtors business operations and general economic
conditions. Allowed means, with reference to any Claim or Interest, or any portion thereof, in any Class or category specified, against or of a Debtor, (a) a Claim or Interest that has been listed by such Debtor in the Schedules, as
such Schedules may be amended by the Debtors from time to time in accordance with Bankruptcy Rule 1009, as liquidated in amount and not disputed or contingent and for which no contrary Proof of Claim has been filed; (b) a Claim for which a
Proof of Claim has been timely filed in a liquidated amount and not contingent and as to which no objection to allowance, to alter priority, or request for estimation has been timely interposed and not withdrawn within the applicable period of
limitation fixed by the Plan or applicable law; (c) a Claim or Interest as to which any objection has been settled, waived, withdrawn or denied by a Final Order to the extent such Final Order provides for the allowance of all or a portion of
such Claim or Interest; or (d) a Claim or Interest that is expressly allowed (i) pursuant to a Final Order, (ii) pursuant to an agreement between the Holder of such Claim or Interest and the Debtors (with the consent of the Requisite
Consenting Parties) or the Reorganized Debtors, as applicable or (iii) pursuant to the terms of the Plan. Unless otherwise specified in the Plan or in an order of the Bankruptcy Court allowing such Claim or Interest, Allowed in
reference to a Claim shall not include (a) any interest on the amount of such Claim accruing from and after the Petition Date; (b) any punitive or exemplary damages; or (c) any fine, penalty or forfeiture. Any Claim listed in the
Schedules as disputed, contingent, or unliquidated, and for which no Proof of Claim has been timely filed, is not considered Allowed and shall be expunged without further action and without any further notice to or action, order, or approval of the
Bankruptcy Court. |
4
|
H. |
What will Holders of Class 8 Existing Equity Interests receive under the Plan? |
Holders
of Existing Equity Interests shall receive no recovery on account of their Existing Equity Interests.
|
I. |
How do I vote on the Plan and what is the Voting Deadline? |
Detailed instructions
regarding how to vote on the Plan are contained on the applicable Ballots distributed to Holders of Claims that are entitled to vote on the Plan. For your vote to be counted, your Ballot must be completed, signed and submitted so that it is
actually received by the Balloting Agent by 4:00 p.m. (prevailing Eastern Time) on September 24, 2015.
|
J. |
What will I receive from the Debtors if I hold an Administrative Expense Claim, a Professional Fee Claim, a Priority Claim or a DIP Facility Claim? |
In accordance with Bankruptcy Code section 1123(a)(1), Administrative Expense Claims, Professional Fee Claims, Priority Claims and DIP Facility
Claims have not been classified and, thus, are excluded from the Classes of Claims and Interests set forth in Article II of the Plan. These Claims will be satisfied as set forth in Articles 2.1, 2.2, 2.3 and 2.4 of the Plan, respectively.
|
K. |
What happens to my recovery if the Plan is not confirmed or the confirmed Plan does not go effective? |
In the event that the Plan is not confirmed, there is no assurance that the Debtors will be able to reorganize their business. It is possible
that any alternative may provide Holders of Claims with less than they would have received pursuant to the Plan. For a more detailed description of the consequences of an extended chapter 11 case, or of a liquidation scenario, see
Confirmation of the PlanBest Interests of Creditors/Liquidation Analysis, which begins on page 43, and the Liquidation Analysis attached as Exhibit D to this Disclosure Statement.
|
L. |
If the Plan provides that I get a distribution, do I get it upon Confirmation or when the Plan goes effective, and what is meant by Confirmation, Effective Date and Consummation?
|
Confirmation of the Plan refers to the approval of the Plan by the Bankruptcy Court. Confirmation of the
Plan does not guarantee that you will receive the distribution indicated under the Plan. After Confirmation of the Plan by the Bankruptcy Court, there are conditions that need to be satisfied or waived so that the Plan can go effective. See
Confirmation of the Plan, which begins on page 43 of this Disclosure Statement, for a discussion of the conditions to confirmation and consummation of the Plan.
All distributions under the Plan with respect to Allowed Claims shall be made by the Reorganized Debtors or a Distribution Agent selected by
the Debtors. The Reorganized Debtors or the Distribution Agent will make distributions on account of Allowed Claims as of the Effective Date or as soon as reasonably practicable after the Effective Date. The Reorganized Debtors or the Distribution
Agent will make distributions to a Holder of such Allowed Claim within a reasonable period of time after such Claim becomes Allowed; provided, however, that unless otherwise agreed by the Indenture Trustee and the Reorganized Debtors,
distributions under the Plan to Holders of Notes Claims shall be made by the Reorganized Debtors to the Indenture Trustee, which, in turn, shall make the distributions to such Holders. Subject to the Debtors receipt of invoices in customary
form in connection therewith and without the requirement to file a fee application with the Bankruptcy Court, the Reorganized Debtors shall promptly reimburse the Indenture Trustee for the reasonable fees and expenses incurred by the Indenture
Trustee on and after the Effective Date in connection with the performance of its duties and the exercise of its rights and those of the Holders of Notes Claims under the Plan and Confirmation Order.
|
M. |
What are the Debtors Intercompany Claims and Intercompany Interests? |
In the
ordinary course of business and as a result of their corporate structure, certain of the Debtor entities hold equity of other Debtor entities and maintain business relationships with each other, resulting in Intercompany Claims and Intercompany
Interests. The Intercompany Claims reflect costs and revenues, which are allocated among the appropriate Debtor entities, resulting in Intercompany Claims.
5
Specifically, ANV holds an Intercompany Claim against Hycroft Resources & Development,
Inc., in the amount of $933 million for the use of proceeds from the various equity raises, the Notes offering and the drawing on the Credit Agreement by ANV. Additionally, ANV has an Intercompany Claim against the exploration entities in the amount
of $85 million for payment of the annual claims fees made for the benefit of each of the various exploration properties that such entities held until they were sold on June 29, 2015.
The Plans treatment of Intercompany Claims and Intercompany Interests represents a common component of a chapter 11 plan involving
multiple debtors in which the value of the going-concern enterprise may be replicated upon emergence for the benefit of creditor constituents receiving distributions under a plan. The Plan provides that the Reorganized Debtors shall reinstate
Intercompany Interests so as to preserve the Reorganized Debtors corporate structure as such structure existed on the Petition Date. The Plan further provides that Intercompany Claims will be adjusted, continued or discharged to the extent
determined appropriate by the Debtors, subject to the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, or, after the Effective Date, by the Reorganized Debtors in their sole discretion.
|
N. |
Are there risks to owning the New Common Stock upon emergence from chapter 11? |
Yes.
See Risk Factors, which begins on page 30.
|
O. |
Will there be releases granted to parties in interest as part of the Plan? |
Yes.
See Article IX of the Plan, which is incorporated herein by reference.
|
P. |
Why is the Bankruptcy Court holding a Confirmation Hearing and when is the Confirmation Hearing set to occur? |
Bankruptcy Code section 1128(a) requires the Bankruptcy Court to hold a hearing on Confirmation of the Plan and recognizes that any party in
interest may object to Confirmation of the Plan.
In connection with the approval of solicitation of votes to accept the Plan, the Debtors
will request that the Bankruptcy Court schedule a Confirmation Hearing and will provide notice of such hearing to all necessary parties. The Confirmation Hearing may be adjourned or continued from time to time without further notice except for an
announcement of the adjourned date made at the Confirmation Hearing or any adjournment thereof.
Objections to Confirmation of the Plan
must be filed and served on the Debtors and certain other parties prior to the Confirmation Hearing in accordance with the notice of the Confirmation Hearing.
The Debtors will publish the notice of the Confirmation Hearing, which will contain, among other things, the deadline for objections to the
Plan and the date and time of the Confirmation Hearing, in the Reno Gazette Journal, Elko Daily Free Press, Humboldt Sun and the national edition of The Wall Street Journal.
|
Q. |
What is the purpose of the Confirmation Hearing? |
The confirmation of a plan of
reorganization by a bankruptcy court binds the debtor, any issuer of securities under the plan of reorganization, any person acquiring property under the plan of reorganization, any creditor or equity interest holder of a debtor and any other person
or entity as may be ordered by a bankruptcy court in accordance with the applicable provisions of the Bankruptcy Code. Subject to certain limited exceptions, an order issued by a bankruptcy court confirming a plan of reorganization discharges a
debtor from any debt that arose before the confirmation of the plan of reorganization upon the occurrence of the effective date and provides for the treatment of such debt in accordance with the terms of the confirmed plan of reorganization.
6
|
R. |
What is the effect of the Plan on the Debtors ongoing business? |
The Debtors are
reorganizing under chapter 11 of the Bankruptcy Code. As a result, subject to the occurrence of the Effective Date, Confirmation means that the Debtors will not be liquidated or forced to go out of business. Following Confirmation, the Plan will be
consummated on the Effective Date, which is a date that is a Business Day on or after the Confirmation Date on which (i) no stay of the Confirmation Order is in effect and (ii) the conditions to the effectiveness of the Plan specified in
Article 8.1 of the Plan have been satisfied, or if capable of being waived, waived.
On or after the Effective Date, and unless otherwise
provided in the Plan or the Confirmation Order, the Reorganized Debtors may operate their business and, except as otherwise provided by the Plan, may use, acquire or dispose of property and compromise or settle any Claims, Interests or Causes of
Action without supervision or approval by the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules.
|
S. |
Who do I contact if I have additional questions with respect to this Disclosure Statement or the Plan? |
If you have any questions regarding this Disclosure Statement or the Plan, you may contact the Debtors co-counsel at the addresses and
phone numbers listed on the cover page of this Disclosure Statement. Copies of the Plan and this Disclosure Statement may be obtained by contacting the Balloting Agent, located at 830 Third Avenue, 9th Floor, New York, NY 10022, by calling
(855) 936-2883 or by emailing angballots@PrimeClerk.com.
|
T. |
Do the Debtors recommend voting in favor of the Plan? |
Yes. The Debtors believe the Plan
provides for a larger distribution to the Holders of Claims than would otherwise result from any other available alternative. The Debtors believe the Plan, which contemplates a significant deleveraging of their balance sheet, is in the best
interests of all Holders of Claims and Interests.
III. |
THE DEBTORS BACKGROUND |
Debtor Allied Nevada Gold Corp. (ANV),
a Delaware corporation, together with its Debtor and non-Debtor subsidiaries, is a U.S.-based gold and silver producer engaged in mining,4 developing and, from time to time, exploring properties
in the State of Nevada. ANVs stock has been trading on the NYSE MKT, LLC (the NYSE) and the Toronto Stock Exchange (the TSX) since May 2007 under the symbol ANV.5
ANV was spun off from Vista Gold Corp. (Vista) in 2006 and began
operations in May 2007. In connection with that certain Arrangement and Merger Agreement between ANV, Vista and Carl and Janet Pescio (the Pescios), ANV acquired Vistas Nevada-based mining properties and related assets,
including the Hycroft Mine6 and a portfolio of
4 |
As described in more detail in Section V.C. below, the Debtors have recently suspended their mining operations. |
5 |
On March 10, 2015, ANV received notice from the NYSE that the NYSE had suspended its common stock from trading immediately and determined to commence proceedings to delist its common stock pursuant to
Section 1003(c)(iii) of the NYSE Company Guide. The NYSEs determination was based on the filings in the Chapter 11 Cases, which contemplate that the Debtors existing common stock will be extinguished pursuant to the Plan. The last
day that ANVs common stock traded on the NYSE was March 9, 2015. ANVs common stock was delisted by the NYSE on May 12, 2015. In addition, on March 10, 2015, the TSX suspended ANVs common stock from trading
immediately while the TSX reviewed ANVs continued eligibility for listing under the TSXs Expedited Review Process. On March 17, 2015, the TSX determined to delist ANVs common stock at the close of business on April 16,
2015. The last day that ANVs common stock traded on the TSX was March 9, 2015. On March 10, 2015, ANVs common stock began being traded in the over-the-counter market under the symbol ANVGQ. |
6 |
Vista acquired the deed to the Hycroft Mine from Henry C. Crofoot and Daniel M. Crofoot (the Crofoots), who retained certain patented and unpatented mining claims that are leased to the Debtors in
exchange for a 4% net profit royalty payment. This mining lease also requires an annual advance payment of $120,000 every year mining occurs on the leased claims. All advance annual payments are credited against the future payments due under the 4%
net profit royalty. The total payments due under the mining lease are capped at $7.6 million, of which the Debtors have paid approximately $2.1 million through December 31, 2014. The Debtors currently estimate the remaining payments due under
the mining lease will approximate $0.1 million in 2015 and $0.2 million in each year 2016 to 2021. Patented mining claims are rights covering private land that is owned by the Crofoots. Unpatented mining claims are rights covering public land on
which the Crofoots own restricted rights to extract and develop certain mineral deposits, including gold and silver. |
7
gold and silver exploration properties located throughout Nevada, all of which exploration properties have since been sold or released back to the BLM (as defined below). In addition, ANV
acquired the mineral property interests previously held by the Pescios, including royalty and/or other interests in a number of the properties, all of which have since been sold or released back to the BLM.
|
A. |
Debtors Corporate Structure |
A diagram presenting the corporate structure of ANV
and each of its direct and indirect subsidiaries, including each Debtor and each non-Debtor entity, is attached hereto as Exhibit F. As demonstrated on Exhibit F, ANV, directly or indirectly, holds 100% of the equity interests in each
of the following (i) Debtors: Allied Nevada Gold Holdings LLC, Allied VGH Inc., Allied VNC Inc., ANG Central LLC, ANG Cortez LLC, ANG Eureka LLC, ANG North LLC, ANG Northeast LLC, ANG Pony LLC, Hycroft Resources & Development, Inc.
(HRDI), Victory Exploration Inc., Victory Gold Inc. and Hasbrouck Production Company LLC and (ii) non-Debtors: Allied Nevada Delaware Holdings Inc. and Allied Nevada (Cayman) Corp.
The Debtors primarily operate through ANV and its wholly-owned subsidiary HRDI. ANV is the corporate center of the Debtors and is, among other
things, responsible for all of the Debtors general corporate functions. HRDI owns the Hycroft Mine, which is currently, and historically has been, the Debtors sole operating and/or producing mine.7 The remaining Debtors held, as of the Petition Date, interests in various exploration properties that have since been sold or released back to the BLM or are legacy entities with no material assets
or operations.
|
B. |
Overview of the Debtors Mineral Reserves and Development Projects |
|
1. |
Hycroft Mine and Mill Expansion |
The Hycroft Mine is an open-pit
heap leach mine8 located 54 miles west of Winnemucca, Nevada. As of December 31, 2014, there were estimated proven and probable mineral reserves at the Hycroft Mine of 10.6 million
ounces of gold and 465.3 million ounces of silver, which are contained in oxide (heap leach) and sulfide (mill) ores. Additionally, the Hycroft Mine remains open to the south with the potential for further expansion which could provide
additional heap leach mineralized material. In 2014, the Hycroft Mine produced approximately 216,900 ounces of gold and 1.8 million ounces of silver from its heap leach operations.9
In September 2011, the Debtors announced and began a plan for a mill expansion project (the Hycroft Mill), which would
allow the Debtors to process sulfide (mill) ores and extend the operating life of the Hycroft Mine. However, due to declining metal prices and the resultant lower than expected cash flows generated by the Debtors oxide mining operations, in
the second quarter of 2013, the Debtors deferred the construction of the Hycroft Mill and other expansion plans. The Debtors are implementing a sulfide demonstration plant to test their ability to process their sulfide reserves on a larger scale
than previous sulfide pilot plants, the data from which the Debtors expect any potential financing source or potential purchaser of the Debtors assets to want to review prior to making a decision with respect to providing the financing
necessary to implement the sulfide mining operations or to considering purchasing the Debtors assets. The demonstration plant is expected to begin running in September 2015 and a final report with respect to the demonstration plant should be
available by the end of October 2015.
|
2. |
Principal Products and Revenues |
The Debtors principal
products consist of unrefined gold bars (doré) and in-process inventories (metal-laden carbon), both of which are sent to third party refineries before being sold, generally at prevailing spot prices, to precious metals traders or financial
institutions. Doré bars and metal-laden carbon are sent to refineries to produce bullion that meets the required market standards of 99.95% pure gold and 99.90% pure silver. Under the terms of the Debtors refining
7 |
As described in more detail in Section V.C. below, the Debtors have recently suspended their mining operations. |
8 |
Open-pit mining is a process whereby ore is reached by digging or blasting from the ground level. Heap leaching is a process by which gold or silver is extracted from ore by heaping the ore on impermeable
leach pads and continually applying a weak cyanide solution that dissolves the gold and silver from the ore. The gold- or silver-laden solution is then collected for gold or silver recovery. |
9 |
As described in more detail in Section V.C. below, the Debtors have recently suspended their mining operations. |
8
agreements, doré bars and metal-laden carbon are refined for a fee, and the Debtors share of the refined gold and the separately- recovered silver are credited to the Debtors
account or delivered to its buyers. Although the Debtors reported operating revenues of approximately $310.4 million for the 2014 fiscal year, the Debtors incurred a gross loss of approximately $518.9 million.
Mining operations and exploration activities are subject to various
federal, state and local laws and regulations in the U.S., which govern prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous
substances and other matters. The Debtors have obtained or have pending applications for those licenses, permits or other authorizations currently required to conduct mining, exploration and other programs. The Debtors believe that they are in
compliance in all material respects with applicable mining, health, safety and environmental statutes and the regulations passed thereunder in Nevada and the U.S. Although the Debtors are not aware of any current claims, orders or directions
relating to their business with respect to the foregoing laws and regulations, changes to, or more stringent application or interpretation of, such laws and regulations in Nevada, or in jurisdictions where the Debtors may operate in the future,
could require additional capital expenditures and increased operating and/or reclamation costs, which could adversely impact the profitability levels of the Debtors projects.
In addition, the Debtors are subject to regulation by the Federal Mine Safety and Health Administration (MSHA) under the
Federal Mine Safety and Health Act of 1977 (the Mine Act). MSHA inspects the Debtors mines on a regular basis and issues various citations and orders when it believes a violation has occurred under the Mine Act. The number
of citations and orders charged against mining operations, and the dollar penalties assessed for such citations, have generally increased in recent years.
Finally, the Debtors production, mining and exploration activities, to the extent undertaken, are subject to various federal and state
laws and regulations governing the protection of the environment. The Debtors asset retirement obligation (ARO), consisting of estimated future mine reclamation and closure costs, may increase or decrease significantly in
the future as a result of changes in regulations, mine plans, estimates, or other factors. The Debtors ARO relates to the Hycroft Mine and was recognized as a liability at fair value in the period incurred. An ARO, which is initially estimated
based on discounted cash flow estimates, is accreted to full value over time through charges to accretion expense. Resultant ARO cost assets are depreciated on a units of production method over the related long-lived assets useful life. The
Debtors ARO is adjusted annually, or more frequently at interim periods if necessary, to reflect changes in the estimated present value resulting from revisions to the timing or amount of reclamation and closure costs.
|
D. |
Summary of the Debtors Prepetition Capital Structure and Liabilities under Derivative Instruments |
|
1. |
Prepetition Funded Indebtedness |
Credit Agreement
ANV is the borrower under the Credit Agreement, among ANV, the lender parties thereto, the Administrative Agent, and Wells Fargo and the
Administrative Agent as co-collateral agents. The obligations under the Credit Agreement are collateralized by substantially all of the Debtors assets and are guaranteed by all of the other Debtors. Borrowings under the Credit Agreement bear
interest per annum at either LIBOR plus 4.5% or at an Alternate Base Rate Canada (as defined in the Credit Agreement) plus 3.5%. As of the Petition Date, the total principal amount of borrowings outstanding under the Credit Agreement was
approximately $56.5 million, the total face amount of the letters of credit issued under the Credit Agreement was approximately $18.5 million (corresponding to the letters of credit posted in connection with the NBC Cross Currency Swap and SocGen
Cross Currency Swap discussed in Section III.D.2 below) and approximately $0.5 million of accrued interest was outstanding.
In addition,
as discussed below, as a result of the applicable counterparties exercise of early termination rights with respect to the Debtors Cross Currency Swaps and Diesel Swaps, the Debtors had outstanding funded indebtedness of
(a) $86,306,619.00 with respect to close-out amounts under the Secured Swaps, (b) $371,666.67 with respect to the close-out amounts under the NBC Cross Currency Swap, after realization of collateral and (c) $518,937.00 with respect to
the close-out amounts under the SocGen Cross Currency Swap, after realization of collateral.
9
Term and Security Deposit Loan Agreement
On March 27, 2013, HRDI entered into a term and security deposit loan agreement (as amended, amended and restated, supplemented or
otherwise modified from time to time, the Term and Security Deposit Loan Agreement), with Caterpillar Financial Services Corporation (Caterpillar) as lender in connection with the purchase of three electric rope
shovels. Pursuant to the Term and Security Deposit Loan Agreement, up to $60.0 million (75% of the total equipment cost) was made available to HRDI for scheduled progress payments pursuant to purchase agreements for the electric rope shovels, and up
to $90.0 million was made available to HRDI in term loan financing to fund the purchase of the electric rope shovels once commissioned at the Hycroft Mine.
Under the Term and Security Deposit Loan Agreement, as electric rope shovels were commissioned, amounts previously advanced to HRDI for
security deposits, together with the remaining purchase price of each electric rope shovel, were converted to term loan obligations. Caterpillar has a first lien security interest on the electric rope shovels under the Term and Security Deposit Loan
Agreement and HRDIs obligations thereunder are guaranteed by ANV. As of the Petition Date, $40.3 million remained outstanding on the two executed term loan obligations, which are due by 2020 and bear interest at a fixed rate of approximately
5.7%, and $18.0 million, plus $1.6 million of accrued interest, remained outstanding as advances for security deposits under the Term and Security Deposit Loan Agreement, which bear interest at an applicable rate plus three-month LIBOR, which
approximated 4.8% as of the Petition Date.
Jacobs Promissory Note
On October 15, 2014, HRDI issued a $7,189,706.00 promissory note (the Jacobs Promissory Note) to Jacobs Field Services
North America Inc. pursuant to a Release and Settlement Agreement between HRDI and Jacobs settling the action captioned Jacobs Field Services North America, Inc. v. Hycroft Resources & Development, Inc., United States District Court
for the District of Nevada Case No. 3:14-cv-00289. The Jacobs Promissory Note is secured, through a deed of trust, by a security interest in certain of HRDIs real property, namely the Merrill Crowe Facility Hycroft Mine, located in
Humboldt County, Nevada, which security interest is second in priority and subordinate to the security interests securing the obligations under the Credit Agreement, and HRDIs obligations thereunder are guaranteed by ANV. As of the Petition
Date, the aggregate outstanding principal amount of the Jacobs Promissory Note was $5,189,706.
Notes
ANV has issued CDN $400.0 million of Notes pursuant to that certain indenture, dated as of May 25, 2012, by and between ANV and
Computershare Trust Company of Canada, as Indenture Trustee. The Notes are denominated in Canadian dollars, pay interest semi-annually at a rate of 8.75% per annum and mature in June 2019. The obligations under the Notes are guaranteed by all
of the Debtors except for Hasbrouck Production Company LLC. As of the Petition Date, the aggregate outstanding principal amount of the Notes was CDN $400.0 million.
|
2. |
Liabilities Under Derivative Instruments |
Swaps with Scotiabank
In connection with the issuance of the Notes, ANV entered into a cross currency swap with Scotiabank, a portion of which was
subsequently novated to NBC and SocGen (collectively, the Cross Currency Swaps), based upon a notional amount of US $400.4 million, which fixed the interest rate under the Notes to an effective rate of 8.375%. In addition, as of
December 31, 2014, the Debtors had five outstanding diesel swaps (the Diesel Swaps and, together with the Cross Currency Swap with Scotiabank, the Secured Swaps) with Scotiabank covering the year 2015 for
7.2 million gallons of diesel at an average price of approximately $2.62 per gallon, which represented approximately 60% of the Debtors forecasted 2015 diesel consumption. The obligations remaining under the Secured Swaps are secured by a
lien on the same assets that secure the Debtors obligations under the Credit Agreement on a pari passu basis. On the Petition Date, ANV received a notice of early termination from Scotiabank, which notice had the effect of terminating
each such swap with Scotiabank causing the close-out amount under each such swap to immediately become due and payable. As of March 11, 2015, which is the designated early termination date thereunder, the close-out amount under the Secured
Swaps was $86,306,619.00.
10
Swaps with NBC and SocGen
As described above, a portion of the Cross Currency Swaps was novated to NBC and SocGen. ANV was required to collateralize any mark-to-market
liability position of the NBC Cross Currency Swap and SocGen Cross Currency Swap in the form of either letters of credit or Cash. On the Petition Date, ANV received notices of early termination from NBC and SocGen, which notices had the effect of
immediately terminating each such swap and causing the close-out amount under each such swap to become due and payable.
As of
March 10, 2015, which is the designated early termination date with respect to the NBC Cross Currency Swap, the close-out amount owed by ANV relating to such swap was approximately $12.6 million. NBC exercised its right against letters of
credit and cash collateral granted in its favor. After realization of NBCs collateral, the remaining unsecured deficiency Claims of NBC aggregated to $371,666.67.
As of March 11, 2015, which is the designated early termination date with respect to the SocGen Cross Currency Swap, the close-out amount
owed by ANV relating to such swap was approximately $10.37 million. SocGen exercised its right against letters of credit and cash collateral. After realization of SocGens collateral, the remaining unsecured deficiency Claims of SocGen are in
the amount of $518,937.00.
|
3. |
Capital Lease Obligations. |
The Debtors capital lease
obligations (the Capital Lease Obligations), which are for the purchase of mining equipment, bear interest at rates between 4% and 7% and carry 60 month terms. As of the Petition Date, the Debtors owed $97.6 million in Capital
Lease Obligations.
As a gold and silver producer, the Debtors purchased
mining equipment, processing commodities and other inputs from numerous vendors. As of the Petition Date, the Debtors estimate that they owed approximately $33.1 million in prepetition trade debt claims, which includes amounts owed to, among others,
critical vendor claimants, shippers, warehousemen, miscellaneous lien claimants and claimants who may assert claims arising under Bankruptcy Code section 503(b)(9).
As of the Petition Date, 126,193,336 shares of
common stock of the Debtors were outstanding.10 As discussed above, the Debtors common stock was traded on the NYSE and the TSX. The Debtors market capitalization was approximately
$107.9 million as of the Petition Date, though the Debtors do not believe that the market capitalization was indicative of the Debtors value and the Debtors were insolvent as of the Petition Date.
|
6. |
Prior and Pending Litigation Proceedings |
In the ordinary course of
business, the Debtors are, from time to time, the subject of complaints or litigation in the ordinary course of the Debtors business. Below is a brief summary of the Debtors pending litigation proceedings.
The Debtors and certain of their Officers are subject to a class action securities litigation brought by certain shareholders (the
Securities Litigation). The plaintiffs in the Securities Litigation seek unspecified damages as a result of purported violations of federal securities laws, which violations allegedly arose out of misrepresentations and omissions
concerning the Debtors gold and silver mining operations at the Hycroft Mine. The Securities Litigation is ongoing. In addition, two shareholders filed a statement of claim in the Ontario Superior Court in Canada (the Canadian
Litigation) asserting substantially the same allegations as the U.S. class action complaints and seeking $80 million in damages for
10 |
The Debtors also have 10 million shares of authorized but not issued preferred stock. |
11
violations of Canadian securities laws. The Canadian Litigation is ongoing. In addition, the Debtors and certain of their Officers are subject to a derivative action (the Derivative
Action) seeking unspecified damages and asserting breaches of fiduciary duties by the defendants. The allegations in the Derivative Action are substantially similar to the allegations contained in the Securities Litigation.
The costs of the Securities Litigation, Canadian Litigation and Derivative Action are covered by the Debtors insurance policies, which
have a total cap of $40 million with respect to indemnified claims and $50 million with respect to non-indemnified claims, with a $1.5 million retention.
IV. |
EVENTS LEADING TO THE COMMENCEMENT OF THE CHAPTER 11 CASES AND ENTRY INTO THE ORIGINAL RESTRUCTURING SUPPORT AGREEMENT |
|
A. |
Events Leading to the Commencement of the Chapter 11 Cases |
A number of factors
contributed to the Debtors decision to pursue a restructuring through the chapter 11 process. Over the two years prior to the Petition Date, despite a nearly doubling of gold and silver ounces sold, revenue increased only modestly, mainly due
to declining gold and silver prices. Gold and silver sales represent 100% of the Debtors revenues and, accordingly, the market prices of gold and silver significantly impact the Debtors financial position, operating results, and cash
flows. The market price of gold peaked at $1,895 per ounce in August 2011. As of March 9, 2015, gold closed at $1,168.50 per ounce, down approximately 38% from the 2011 peak and down 16% from the last twelve-month high of $1,385 per ounce.
Similarly, the market price per silver ounce decreased approximately 46.8% over the two years prior to the Petition Date, from $29.95 per ounce as of December 31, 2012 to $15.92 per ounce as of March 9, 2015.
Despite the Debtors prepetition efforts to increase revenue, decrease costs, sell non-core assets, reduce or delay capital expenditures
and raise capital to address the Debtors liquidity constraints, the Debtors liquidity continued to deteriorate. In an effort to meet their liquidity needs, during 2014 the Debtors increased their borrowing capacity under the Credit
Agreement by $35.0 million, sold a mineral property for $20.0 million and completed a public offering of common stock and warrants for $21.8 million. Despite these efforts, the Debtors cash and cash equivalents decreased from $81.5 million at
December 31, 2013 to $7.6 million at December 31, 2014. The continuing loss of liquidity was largely due to (a) the drop in gold and silver prices in the years leading up to the Petition Date, (b) an overleveraged capital
structure, the servicing of which requires significant capital resources, (c) the significant contractual capital requirements and delay of the Hycroft Mill expansion project and (d) exposure under the Cross Currency Swaps. Each of these
factors is discussed in greater detail below.
|
1. |
Decreased Gold and Silver Prices |
As discussed above, the market
prices for gold and silver declined substantially from previous highs, which had a direct negative impact on earnings and cash flows derived from the Debtors operations. The Debtors average operating margin per gold ounce sold decreased
approximately 66% to $295 in 2014 from $854 in 2012, thereby straining the Debtors ability to fund their operations, service their debt and fund capital requirements.
|
2. |
Overleveraged Capital Structure |
The Debtors prepetition
capital structure placed a significant burden on free cash flow and contributed to the depletion of existing cash balances. As discussed above, prior to the Petition Date, the Debtors had, among other things, substantial (a) Capital Lease
Obligations related to the purchase of expensive equipment for their planned use in the Hycroft Mill expansion project, which bear interest at rates between 4% and 7%, (b) semi-annual interest payment obligations under the Notes and (c) an
almost fully-drawn $75.0 million revolving loan under the Credit Agreement.
|
3. |
Exposure under the Cross Currency Swaps |
As discussed above, the
Debtors had significant exposure under the Cross Currency Swaps and were required to collateralize any mark-to-market liability position under the Cross Currency Swaps with NBC and SocGen with either letters of credit or cash. Pursuant to the Cross
Currency Swaps with NBC and SocGen, the Debtors had posted approximately $18.5 million in letters of credit, which were issued under the Credit Agreement, and approximately $3.6 million in cash, contributing to the Debtors prepetition
liquidity position.
12
|
4. |
Capital Requirements and Delay of the Hycroft Mill Expansion Project |
From 2012 to 2014, the Debtors incurred approximately $668.9 million of capital expenditures for plant and equipment in connection with the
expansion efforts of the Hycroft Mine, the majority of which related to the Hycroft Mill, including mills and mill-related components, a crushing system, and engineering and infrastructure costs. During that same time period, the Debtors repaid an
additional $113.2 million in principal of financed capital expenditures for the Hycroft Mines expanded mobile mine equipment fleet. The Debtors cash and cash equivalents, sources of liquidity and capital resources were depleted as the
Debtors sought to satisfy the Hycroft Mines capital requirements.
During 2013 and 2014, the Debtors were unable to raise the
remaining capital required to complete the construction of the Hycroft Mill, which, as of November 2014, was estimated at $1.39 billion. Specifically, in May 2014, the Debtors undertook a strategic process to finance the expansion of the Hycroft
Mine. Over 60 parties were approached to provide financing, acquire a stake in the Debtors or acquire the Debtors. Not a single buyer expressed interest in a sale or financing at a price that would enable the Debtors to finance the construction of
the Hycroft Mill. The Debtors inability to fund the construction of the Hycroft Mill prevented the Debtors from increasing annual mine production to approximately 450,000 ounces of gold and 23.0 million ounces of silver per year
quantities which would increase revenues and total cash flows from operations using current metal prices.11 Although the Debtors invested significant capital in the expansion of the Hycroft Mine,
in particular for the Hycroft mills and motors, they will not be able to realize any significant operational benefits until the Hycroft Mill is constructed, commissioned and operational. However, due to the lack of liquidity and over-levered balance
sheet, the Debtors were unable to raise the $1.39 billion necessary to commence and implement the Hycroft Mill expansion project
|
B. |
Prepetition Restructuring Initiatives and the Original Restructuring Support Agreement |
Faced with the foregoing issues, the Debtors proactively sought to right-size their capital structure and to position themselves for ongoing
success in the current industry and economic environment. To this end, beginning in December 2014, the Debtors engaged legal advisors and, in January 2015, financial advisors to explore various restructuring alternatives. The Debtors and their
advisors commenced negotiations with certain of their lenders under the Credit Agreement as well as the Consenting Noteholders, and their respective advisors, regarding terms of a potential restructuring that would de-lever the Debtors balance
sheet and enable the Debtors to implement a financial and operational restructuring. After extensive, good faith and arms-length negotiations, the Debtors ultimately reached an agreement with the Initial Consenting Noteholders (as defined in
the Original Restructuring Support Agreement) and the Initial Secured Lenders, which was formalized by the Original Restructuring Support Agreement. As discussed in Section V.D. below, on July 23, 2015, the Original Restructuring Support
Agreement was amended and restated pursuant to the terms thereof by the Amended and Restated Restructuring Support Agreement.
V. |
EVENTS DURING THE CHAPTER 11 CASES |
|
A. |
The First and Second Day Pleadings and Other Case Matters |
|
1. |
The First and Second Day Pleadings |
To facilitate the
administration of the Chapter 11 Cases and minimize disruption to the Debtors operations, the Debtors filed certain first day and second day motions and applications with the Bankruptcy Court on the Petition Date and
thereafter seeking certain relief. The relief sought in the first day and second day pleadings facilitated the Debtors seamless transition into chapter 11 and aided in the preservation of the Debtors going-concern
value. Specifically, the Debtors, among other things, sought authority to: (i) obtain secured postpetition financing (as discussed below); (ii) pay certain employee, insurance and tax obligations; (iii) pay claims of certain critical
vendors, shippers, warehousemen,
11 |
As of March 9, 2015, gold closed at $1,168.50 per ounce and silver closed at $15.92 per ounce. |
13
miscellaneous lien claimants and claimants who may assert claims arising under Bankruptcy Code section 503(b)(9); (iv) provide adequate assurance of payment to certain utility providers; and
(v) maintain their cash management system. In addition, the Debtors sought to (a) establish procedures for the sale of certain de minimis assets; (b) retain various professionals of the Debtors; and (c) establish
procedures for the retention of ordinary course professionals and compensation of various other professionals.
|
2. |
The Sale of the Debtors Exploration Properties |
On
March 31, 2015, the Debtors filed the Debtors Motion for Orders (I)(A) Authorizing Selling Debtors Entry into the Stalking Horse Purchase Agreement for the Sale of the Selling Debtors Exploration Properties and Related
Assets, (B) Approving Bidding Procedures and Bid Protections, (C) Scheduling a Hearing to Consider Approval of the Sale of Assets, (D) Approving Form and Manner of Notice of Sale, and (E) Granting Related Relief; and (II)(A)
Authorizing and Approving the Sale of the Selling Debtors Assets Free and Clear of Liens, Claims, Interests and Encumbrances, (B) Authorizing the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases, and
(C) Granting Related Relief [Docket No. 133] (the Sale Motion) seeking authority to enter into a stalking horse purchase agreement with Clover Nevada LLC for the sale of certain of the Debtors exploration
properties and related assets and seeking approval of bidding procedures in connection therewith. On April 24, 2015, the Bankruptcy Court entered an order approving the bidding procedures with respect to the Sale Motion. On June 18, 2015,
the Bankruptcy Court entered an order approving the sale of the exploration properties to Clover Nevada LLC. On June 29, 2015, the Debtors and Clover Nevada LLC closed on the sale of the exploration properties.
On May 11, 2015, the Debtors filed the
Debtors Motion for Entry of an Order (A) Authorizing and Approving the Debtors Key Employee Incentive Program and (B) Granting Related Relief [Docket No. 362] seeking to implement a key employee incentive program
(the Non-Insider KEIP) for 95 non-insider employees (the Non-Insider KEIP Participants) for Q2 and Q3 2015 based on the attainment of certain operational and/or strategic goals. On May 29,
2015, the Court entered an order authorizing and approving the Debtors implementation of the Non-Insider KEIP. The Non-Insider KEIP Participants earned $194,000 in the aggregate for Q2 2015 on account of the Non-Insider KEIP. The Debtors
expect to pay the awards earned under the Non-Insider KEIP for Q2 2015 but discontinued the Non-Insider KEIP for Q3 2015.
On April 28, 2015, each of the Debtors filed a
schedule of assets and liabilities, schedule of executory contracts and unexpired leases, and statement of financial affairs pursuant to Bankruptcy Code section 521, the Official Bankruptcy Forms and the Bankruptcy Rules (collectively, the
Schedules). On May 15, 2015, the Bankruptcy Court entered an order (the Bar Date Order) establishing June 24, 2015 at 4:00 p.m. (prevailing Eastern Time) as the deadline for each entity to file Proofs
of Claim based on prepetition Claims. Additionally, the Bar Date Order established separate deadlines for the filing of Claims arising from the Debtors rejection of executory contracts and unexpired leases, claims filed by governmental units
(as defined in Bankruptcy Code section 101(27)) and Claims that the Debtors have amended in the Debtors Schedules. As of June 29, 2015, approximately 998 Proofs of Claim had been filed against the Debtors, asserting approximately
$8,363,717,193.84 in aggregate Claims.
|
5. |
The Appointment of the Creditors Committee |
On March 19, 2015,
the US Trustee appointed a statutory committee of unsecured creditors in the Chapter 11 Cases (the Creditors Committee) pursuant to Bankruptcy Code section 1102. The Creditors Committee consists of three members:
(i) Computershare Trust Company of Canada, as Indenture Trustee to the Notes (the Indenture Trustee); (ii) FLSmidth US Inc.; and (iii) International Lining Technology. The Creditors Committee engaged Arent Fox LLP
and Polsinelli PC as its counsel and Zolfo Cooper, LLC as its financial advisor.
|
6. |
The Appointment of the Equity Committee |
On April 10, 2015,
the US Trustee appointed a statutory committee of equity security holders in the Chapter 11 Cases (the Equity Committee) pursuant to Bankruptcy Code section 1102. The Equity Committee originally consisted
14
of five members: (i) James Anderson; (ii) John Connor; (iii) Ajay Maskar; (iv) George Murphy; and (v) Michael Richey. Since the appointment of the Equity Committee, the
composition of the Equity Committee has been reconstituted from time to time. The Equity Committee currently consists of three members: (i) John Connor; (ii) Ajay Maskar; and (iii) Michael Richey. The Equity Committee originally
sought to engage Susman Godfrey L.L.P. and Ashby & Geddes, P.A. as its counsel, Peter J. Solomon Company as its financial advisor and Behre Dolbear as its mining consultant (collectively, the Initial Equity Committee
Advisors). The Initial Equity Committee Advisors are no longer representing the Equity Committee. The Equity Committee subsequently engaged LeClairRyan, A Professional Corporation and Cole Schotz P.C. as its counsel, Navigant Consulting as
its financial advisor and Runge, Inc. d/b/a RungePincockMinarco as its technical mining expert.
|
B. |
Debtor in Possession Financing |
On the Petition Date, the Debtors filed a motion seeking
authority to (i) obtain a $78 million DIP Facility, (ii) grant liens and superpriority claims to the DIP Lenders, (iii) utilize cash collateral of Prepetition Secured Parties and (iv) grant adequate protection to the Prepetition
Secured Parties. On March 12, 2015, the Bankruptcy Court entered an order authorizing the Debtors to borrow up to $35 million of principal amount of the total $78 million on an interim basis (the Interim DIP Order). On
April 17, 2015, the Bankruptcy Court entered an order authorizing the Debtors to borrow the full $78 million DIP Facility on a final basis (the Final DIP Order).
The DIP Facility (x) is junior to (i) the Carve-Out (as defined in the Final DIP Order) and (ii) the Prepetition Liens,
Permitted Liens and Prepetition Lender Replacement Liens (each as defined in the Interim DIP Order), and (y) pays interest on a monthly basis at the rate of 12% per annum, 6% to be paid in cash and 6% to be paid in kind; provided,
however, that upon occurrence of certain trigger events set forth in the Final DIP Order, all interest under the DIP Facility shall be paid in Cash. Such trigger events occur if: (1) the loans under the DIP Facility are repaid in their
entirety in cash or (2) the loans under the DIP Facility are repaid, or are required to be repaid, prior to the scheduled maturity date under the DIP Facility (including by voluntary prepayment, mandatory prepayment, upon acceleration or
otherwise).
The proceeds of the DIP Facility shall be used in a manner consistent with the DIP Credit Agreement and the Approved Budget
(as defined in the DIP Credit Agreement). The DIP Facility will mature one year from the execution of the DIP Credit Agreement, on March 12, 2016, unless terminated earlier upon the occurrence of certain events set forth in the DIP Credit
Agreement.
The Debtors believe that the DIP Facility provides the Debtors with the necessary financing to meet their needs through
consummation of the Plan.
|
C. |
Mining Suspension Plan and Proposed Compensation Plans |
Since the Petition Date, a
number of factors have severely impeded the Debtors mining operations. First, the Debtors have experienced high employee turnover which has resulted in reduced productivity, a lower amount of ore being placed on the pads and a reduction in the
effectiveness and timeliness of getting the ore under leach. Second, the leach kinetics (i.e., the rate and timing at which ounces of gold and silver are recovered from the ore) of the ore placed on the leach pads in Q4 2014 and Q1 2015 have been
slower than projected, resulting in a reduction of 17,000 ounces of gold production versus forecast. Third, the Debtors have experienced several issues with vendors due to the pendency of the Chapter 11 Cases. Finally, the market price of gold
remains below the forecasted price, thereby curtailing operating margins. Each of these challenges is discussed in more detail below.
|
1. |
Reduced Employee Productivity |
The Hycroft Mine is located outside
of Winnemucca, Nevada. There are a number of other mining operations in the region, two of whichBarrick Gold Corporation and Newmont Mining Corporationare among the worlds largest mining companies. The Debtors compete for
employees, including, and especially, senior employees, with these nearby mining operations. Since the Petition Date, certain of the local mining companies have held job fairs in Winnemucca and have capitalized on the Debtors bankruptcy to
attract the Debtors most experienced employees. In addition, the Debtors have lost employees to local construction companies, some of whom offer higher compensation than the Debtors and more stable employment opportunities.
15
The combination of competitors poaching the Debtors employees by providing more desirable
compensation and benefits packages and the surge in construction hiring has resulted in extremely high employee turnover during the Debtors time in bankruptcy. Specifically, as of July 8, 2015, the Debtors had lost 105 employees as a
result of voluntary resignations since the Petition Date, 23 of whom were in key supervisory and/or managerial roles. The Debtors entered bankruptcy with 420 employees and only had 368 employees prior to July 8, 2015, with many of the
replacements for the 105 departed employees having little to no mining experience prior to their employment by the Debtors.
In order to
continue operations through July 8, 2015, the Debtors had to find new employees to fill these vital roles. However, despite hiring several highly regarded recruitment firms, the Debtors had difficulty finding experienced employees to replace
the loss of experienced employees. Experienced candidates with training and expertise are often able to choose among multiple employment options, including mining facilities in more favorable locations than Winnemucca, Nevada or with companies that,
unlike the Debtors, are not in bankruptcy. Consequently, in order to fill pivotal roles, the Debtors had to hire employees with substantially less than optimal mining experience, which contributed toward (i) reduced productivity, (ii) a
lower amount of ore being placed on the pads, and (iii) a lower volume of gold and silver being recovered from the processing plant. Overall, the net effect of the productivity decline arising from the Debtors employee issues was a 40%
reduction in tons mined/hour.
The Debtors have also experienced slower
than projected leach kinetics, largely because the material placed on the leach pads since late 2014 has been significantly more hydrophobic12 than expected. Consequently, the material has not
been absorbing the cyanide solution as quickly as anticipated, which has required the Debtors to use a higher concentration of cyanide and delayed the Debtors ability to mobilize the gold and silver from the leach pads.
From the Petition Date through June 30, 2015, the Debtors produced 37,000 fewer ounces of gold than projected in the Debtors
February 2015 business plan (the February Business Plan). Revenues for the same period, using the budgeted $1,200 price of gold, were approximately $44.4 million lower than projected in the February Business Plan and $42.8 million
lower than projected in the February Business Plan based on gold prices as of July 8, 2015. 17,000 ounces of the 37,000 ounce shortfall (accounting for approximately 46% of the decline in revenue versus forecast) is attributable to the slower
leach kinetics. The reduced production coupled with the associated fixed costs and other challenges has caused the Debtors mining operations to operate at a loss.
In addition, the Debtors have struggled in their
negotiations with several important vendors as a result of the pendency of the Chapter 11 Cases. Many of the Debtors key vendors refused to meet the Debtors supply requirements, largely because of the fact that the Debtors are in
bankruptcy. In fact, in several instances, vendors that do not have contracts with the Debtors refused to do business altogether with the Debtors. As a result, the Debtors were unable to commission the construction of a new leach pad, in accordance
with their original operational plans, because no vendor was willing to timely construct the leach pad on commercially reasonable terms. Other vendors chose to allocate their resources elsewhere and only delivered a portion of their contractual
commitments to the Debtors.13 Indeed, the trucking company that transports the Debtors lime, a key ingredient in the leaching process, was only delivering 80% of the contractually committed
lime deliveries to the Debtors, and the Debtors were unable to fill this shortfall from other vendors. This directly contributed to the delay in the tonnage of ore that was placed on the leach pads.
|
4. |
Low Gold Prices and Low Operating Margins |
In addition to the
reduced employee productivity, slower leach kinetics and vendor issues, the Debtors have also experienced adverse conditions in the gold market against which the Debtors operate. The February Business Plan was built on a gold price of $1,200 per
ounce. Since the Petition Date, however, gold prices have averaged less than $1,190 per ounce, and gold was trading at approximately $1,158 per ounce as of July 8, 2015, a significant decrease from the peak market price of $1,895 per ounce in
August 2011. As a result of the depressed gold prices, the Debtors mining operations generated lower than forecasted revenue.
12 |
Hydrophobic refers to material that is so dry that it does not absorb water-based solutions adequately. |
13 |
The Debtors are assessing potential breach of contract claims against such vendors. |
16
The Debtors productivity issues are further exacerbated by the low-grade nature of their
ore reserves. As of December 31, 2014, the Debtors proven and probable heap leach reserves contained 0.009 and 0.007 gold ounces per ton, respectively, and 0.24 and 0.20 silver ounces per ton, respectively. This is significantly below
industry average. In order to recover sufficient gold and silver to be profitable, the Debtors would be required to mine substantially more ore than if their reserves contained higher-grade ore. As a result, the productivity issues described above
are exponentially more harmful to the profitability of the Debtors mining operations than they would be to a mine with higher-grade ore. At low productivity levels and low gold prices, mining the ore is not profitable.
|
5. |
Implementation of the Mining Suspension Plan and Proposed Compensation Plans |
The employee attrition, vendor difficulties and slower leach kinetics appear to be long-term problems, and there is no indication that market
gold prices will rebound in the near term. The Debtors low-grade ore and the limited resulting margins make these issues even more problematic as they magnify the negative impact of these problems. Accordingly, as these challenges are likely
to continue or increase further as the Debtors progress through chapter 11, to maximize estate value and reduce costs, on July 8, 2015, the Debtors initiated a mining suspension plan (the Mining Suspension Plan).14 Pursuant to the Mining Suspension Plan, the Debtors suspended mining operations and terminated approximately 230 of 368 employees. However, the Debtors continue to, among other things, produce and
sell the approximately 260,000 ounces of gold (and additional silver) that were on the heap leach pads as of July 8, 2015, complete and run (at least on an initial provisional basis) a sulfide demonstration plant and collect data related
thereto, and comply with environmental and other regulatory requirements related to the Mining Suspension Plan, including continuing controls related to flows to and from the pads (collectively, the Ongoing Operations). The
Debtors are implementing a sulfide demonstration plant to test their ability to process their sulfide reserves on a larger scale than previous sulfide pilot plants. The demonstration plant is expected to begin running in September 2015 and a final
report with respect to the demonstration plant should be available by the end of October 2015. The Debtors expect that any potential financing source or potential purchaser of the Debtors assets will want to review the data from the sulfide
demonstration plant prior to making a decision with respect to providing the financing necessary to implement the sulfide mining operations or to considering purchasing the Debtors assets. The Mining Suspension Plan will allow the Reorganized
Debtors the flexibility to determine post-emergence the best way to maximize value, whether through recommencing operations or through a sale of the Debtors assets.
On July 8, 2015, the Debtors filed the Debtors Motion for Entry of an Order (I) Authorizing and Approving Debtors
(A) Key Employee Incentive Plan, (B) Non-Insider Key Employee Retention Plan and (C) Severance Plan and (II) Granting Related Relief [Docket No. 672] (the Proposed Compensation Motion), seeking to implement
a key employee incentive plan for 4 insider-employees, a tier-based key employee retention plan for 51 non-insider employees, and a tier-based severance plan for all of the Debtors remaining employees to stabilize the Debtors remaining
workforce to continue to allow them to implement the Mining Suspension Plan and their Ongoing Operations and key business functions. A hearing on the Proposed Compensation Motion is scheduled for August 20, 2015 at 11:30 a.m. (prevailing
Eastern Time).
|
D. |
Events Leading up to the Debtors Entry into the Amended and Restated Restructuring Support Agreement |
As described in Section V.C. above, the Debtors implemented the Mining Suspension Plan on July 8, 2015 as a result of extraordinary
challenges, including (i) massive employee attrition, (ii) a refusal by key vendors to contract with the Debtors on commercially reasonable terms, (iii) a materially slower than forecasted recovery rate of gold and silver ounces from
the Debtors ore, and (iv) continuing low gold prices. Once it became apparent to the Debtors that they would be required to suspend mining operations at the Hycroft Mine, the Debtors began negotiating modifications to the Original
Restructuring Support Agreement with the Plan Support Parties, premised on a suspension case business plan. Additionally, the Debtors discussed certain modifications to the Original Restructuring Support Agreement and the chapter 11 plan
contemplated thereby with the Creditors Committee. These negotiations led to the Debtors entry into the Amended and Restated Restructuring Support Agreement on July 23, 2015, which amended and restated the Original
14 |
The Debtors and their key constituents considered alternatives to the Mining Suspension Plan, including shutting down the Debtors operations completely, but ultimately determined that suspending operations
presented the best opportunity to maximize value for the Debtors estates and their stakeholders. |
17
Restructuring Support Agreement15 in accordance with the terms thereof. On July 23, 2015, the Debtors filed the Debtors Motion
for an Order Authorizing the Debtors to (I) Assume the Amended and Restated Restructuring Support Agreement and (II) (A) Enter into the Exit Facility Commitment Letter, (B) Pay Fees and Expenses in Connection Therewith and
(C) Provide Related Indemnities [Docket No. 755] (the RSA Assumption and Exit Financing Motion), seeking, among other things, approval of the Debtors assumption of the Amended and Restated Restructuring Support
Agreement, the payment of certain fees thereunder, and the Debtors entry into the Exit Facility Commitment Letter with the Exit Facility Lenders to secure the funding of the Exit Facility. A hearing on the RSA Assumption and Exit Financing
Motion is scheduled for August 20, 2015 at 11:30 a.m. (prevailing Eastern Time).
VI. |
SUMMARY OF THE PLAN16 |
|
A. |
General Basis for the Plan |
The contours of the Plan (as set forth in the Plan and
described herein) are designed to provide for the restructuring of the Debtors liabilities in a manner designed to maximize recovery to stakeholders and to enhance the financial viability of the Reorganized Debtors.
|
B. |
Treatment of Unclassified Claims |
|
1. |
Administrative Expense Claims. |
In full and final satisfaction,
settlement, release and discharge of each Administrative Expense Claim, except to the extent that a Holder of an Allowed Administrative Expense Claim and the Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be
unreasonably withheld, or the Reorganized Debtors, agree in writing to less favorable treatment for such Administrative Expense Claim, the Debtors (or the Reorganized Debtors, as the case may be) shall pay to each Holder of an Allowed Administrative
Expense Claim, as applicable, Cash in an amount equal to such Allowed Administrative Expense Claim on, or as soon thereafter as is reasonably practicable, (a) the Effective Date or, if payment is not then due, (b) on the due date of such
Administrative Expense Claim. Except as otherwise provided by the Plan, any request for the payment of an Administrative Expense Claim that is not filed and served within thirty (30) days after the Effective Date shall be discharged and forever
barred and the Holder of such Administrative Expense Claim shall be enjoined from commencing or continuing any action, process or act to collect, offset or recover on such Administrative Expense Claim against any of the Debtors or Reorganized
Debtors.
The Transaction Expenses incurred, or estimated to be incurred, up to and including the Effective Date shall be paid in full in
Cash on the Effective Date (to the extent not previously paid during the course of the Chapter 11 Cases) without the requirement to file a fee application with the Bankruptcy Court or a formal request for payment prior to the Administrative Bar
Date, and without any requirement for Bankruptcy Court review; provided, however, that copies of invoices for payment of Transaction Expenses shall be provided contemporaneously to the U.S. Trustee.
15 |
Wells Fargo is a party to the Amended and Restated Restructuring Support Agreement. However, as described in more detail in the Amended and Restated Restructuring Support Agreement, Wells Fargo and Mudrick
Distressed Opportunity Fund Global, LP and Blackwell Partners, LLC (collectively, Mudrick) have executed and delivered certain trade confirmations (the Trade Confirmations), dated as of July 20, 2015. Wells
Fargo and Mudrick have represented that, pursuant to and to the extent set forth in the Trade Confirmations, Wells Fargo has agreed to sell to Mudrick, and Mudrick has agreed to purchase from Wells Fargo, substantially all of Wells Fargos
rights and obligations as a lender under the Credit Agreement. Mudrick has consented to the execution of the Amended and Restated Restructuring Support Agreement by Wells Fargo. Upon the closing date of the transactions under the Trade
Confirmations, Mudrick shall execute a Joinder Agreement in its capacity as the holder of the claims transferred to it by Wells Fargo and otherwise in accordance with Section 3(c) of the Amended and Restated Restructuring Support Agreement.
|
16 |
This Section VI is intended only to provide a summary of the key terms, structure, classification, treatment, and implementation of the Plan, and is qualified in its entirety by reference to the entire Plan and exhibits
thereto. Although the statements contained in this Disclosure Statement include summaries of the provisions contained in the Plan and in documents referred to therein, this Disclosure Statement does not purport to be a precise or complete statement
of all such terms and provisions, and should not be relied on for a comprehensive discussion of the Plan. Instead, reference is made to the Plan and all such documents for the full and complete statement of such terms and provisions. The Plan itself
(including attachments) will control the treatment of Claims and Interests under the Plan. To the extent there are any inconsistencies between this Section VI and the Plan (including attachments) the Plan shall govern. |
18
|
2. |
Professional Fee Claims. |
All Professionals seeking allowance by
the Bankruptcy Court of Professional Fee Claims shall file their respective final applications for allowance of compensation for services rendered and reimbursement of expenses incurred by the date that is thirty (30) days after the Effective
Date. Allowed Professional Fee Claims shall be paid in full (i) upon the later of (A) the Effective Date and (B) the date upon which the order relating to any such Allowed Professional Fee Claim is entered by the Bankruptcy Court or
(ii) upon such other terms as may be mutually agreed upon between the Holder of such an Allowed Professional Fee Claim and the Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, or
the Reorganized Debtors. The Reorganized Debtors are authorized to pay compensation for services rendered or reimbursement of expenses incurred after the Effective Date in the ordinary course and without the need for Bankruptcy Court approval.
In full and final satisfaction, settlement,
release and discharge of each Allowed Priority Claim, except to the extent that a Holder of an Allowed Priority Claim agrees to less favorable treatment, each Holder of an Allowed Priority Claim due and payable on or before the Effective Date shall,
upon the later of (A) the Effective Date or as soon thereafter as reasonably practicable and (B) the date upon which the Priority Claim comes due, be: (i) paid in full in Cash; (ii) Unimpaired and Reinstated; or
(iii) treated on such other terms as may be agreed upon by such Holder and the Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, or Reorganized Debtors, as applicable, or otherwise
determined by an order of the Bankruptcy Court.
In full and final satisfaction, settlement,
release and discharge of each Allowed DIP Facility Claim, each Holder of an Allowed DIP Facility Claim, on the Effective Date, shall be paid its Pro Rata share of the DIP Facility Consideration; provided, however, that only the DIP
Backstop Lenders shall receive their Pro Rata share (calculated based on the amount of Allowed DIP Facility Claims held by each of the DIP Backstop Lenders relative to each other) of the 3.0% Backstop Put Option Payment. For the avoidance of doubt,
the DIP Facility Consideration shall be paid in its entirety from the proceeds of the Exit Facility.
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C. |
Classification and Treatment of Claims and Interests |
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1. |
Class 1 Secured ABL Claims |
a. Classification. Class
1 consists of all Secured ABL Claims.
b. Allowance. Class 1 Claims shall be Allowed Claims pursuant to the Plan in the aggregate
amount of $75,411,229.34 (including $74,950,000.00 in principal and $461,229.34 in accrued and unpaid interest and fees as of the Petition Date), less (i) the Secured ABL $10MM Cash Payment and (ii) the Secured ABL Claims Pro
Rata (after giving effect to the Secured ABL $10MM Cash Payment) share of the amount of Secured ABL/Swap Cash Payments made prior to the Effective Date.
c. Treatment. In full and complete satisfaction, discharge and release of each Class 1 Claim, each Holder of an Allowed Class 1 Claim
shall receive, on the Effective Date: its Pro Rata (after giving effect to the Secured ABL $10MM Cash Payment) share of (i)(A) the Secured ABL/Swap Cash Payments not made prior to the Effective Date and (B) the Secured ABL/Swap Claims Excess
Cash Flow Payment, and (ii) New First Lien Term Loans in an aggregate principal amount equal to (A) the amount of Allowed Claims pursuant to Article 2.7(b) of the Plan minus (B) the amount paid in cash in respect of the Secured ABL
Claims pursuant to clause (i) of Article 2.7(c) of the Plan. In addition, for the avoidance of doubt, any unpaid amounts owed to the holders of Secured ABL Claims pursuant to Section 11 of the DIP Facility Order (including accrued interest
to and including the Effective Date pursuant to clause (a) thereof) shall be due and payable in cash on the Effective Date.
d.
Impairment and Voting. Class 1 Claims are Impaired and the Holders thereof are entitled to vote on the Plan.
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2. |
Class 2 Secured Swap Claims |
a. Classification.
Class 2 consists of all Secured Swap Claims.
b. Allowance. Class 2 Claims shall be Allowed Claims pursuant to the Plan in the
aggregate principal amount of $86,306,619.00 less the Secured Swap Claims Pro Rata share of the amount of Secured ABL/Swap Cash Payments made prior to the Effective Date.
c. Treatment. In full and complete satisfaction, discharge and release of each Class 2 Claim, each Holder of an Allowed Class 2 Claim
shall receive, on the Effective Date: its Pro Rata share of (i)(A) the Secured ABL/Swap Cash Payments not made prior to the Effective Date and (B) the Secured ABL/Swap Claims Excess Cash Flow Payment, and (ii) New First Lien Term Loans in
an aggregate principal amount equal to (A) the amount of Allowed Claims pursuant to Article 2.8(b) of the Plan minus (B) the amount paid in cash in respect of the Secured Swap Claims pursuant to clause (i) of Article 2.8(c) of the
Plan. In addition, for the avoidance of doubt, any unpaid amounts owed to the holders of Secured Swap Claims pursuant to Section 11 of the DIP Facility Order (including accrued interest to and including the Effective Date pursuant to clause
(a) thereof ) shall be due and payable in cash on the Effective Date.
d. Impairment and Voting. Class 2 Claims are Impaired
and the Holders thereof are entitled to vote on the Plan.
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3. |
Class 3 Other Secured Claims |
a. Classification.
Class 3 consists of all Other Secured Claims against the Debtors.
b. Treatment. In full and complete satisfaction, discharge and
release of each Allowed Class 3 Claim, except to the extent a Holder of an Allowed Class 3 Claim agrees to less favorable treatment with the Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be unreasonably
withheld, or Reorganized Debtors, as applicable, each Allowed Class 3 Claim, on the Effective Date shall be (i) paid in full in Cash, (ii) Unimpaired and Reinstated, or (iii) treated on such other terms as the applicable Debtor, with
the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, or Reorganized Debtor, and the Holder thereof may agree.
c. Impairment and Voting. Class 3 Claims are Unimpaired and the Holders thereof are deemed to accept the Plan and are not entitled to
vote on the Plan.
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4. |
Class 4 Unsecured Claims |
a. Classification. Class 4
consists of any and all Unsecured Claims.
b. Treatment. In full and complete satisfaction, discharge and release of each Allowed
Class 4 Claim, each Holder of an Allowed Class 4 Claim shall receive its Pro Rata share of 100% of the New Common Stock, subject to dilution on account of the conversion of the New Second Lien Convertible Notes.
c. Impairment and Voting. Class 4 Claims are Impaired and are entitled to vote on the Plan.
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5. |
Class 5 Intercompany Claims |
a. Classification.
Class 5 consists of any and all Intercompany Claims.
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b. Treatment. Class 5 Claims shall be adjusted, continued, contributed to capital or
discharged to the extent determined by the Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, or the Reorganized Debtors.
c. Impairment and Voting. Class 5 Claims are Unimpaired and the Holders thereof are deemed to accept the Plan and are not entitled to
vote on the Plan.
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6. |
Class 6 Subordinated Securities Claims |
a.
Classification. Class 6 consists of any and all Subordinated Securities Claims.
b. Treatment. Class 6 Claims shall be
extinguished and Holders thereof shall not receive any property or consideration under the Plan in respect of Class 6 Claims.
c.
Impairment and Voting. Class 6 Claims are Impaired and the Holders thereof are deemed to reject the Plan and are not entitled to vote on the Plan.
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7. |
Class 7 Intercompany Interests |
a. Classification.
Class 7 consists of any and all Intercompany Interests.
b. Treatment. Class 7 Interests shall be Reinstated and the legal,
equitable and contractual rights to which Holders of such Allowed Interests are entitled shall remain unaltered so as to maintain the organizational structure of the Debtors as such structure existed on the Petition Date.
c. Impairment and Voting. Class 7 Interests are Unimpaired and the Holders thereof are deemed to accept the Plan and are not entitled
to vote on the Plan.
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8. |
Class 8 Existing Equity Interests |
a.
Classification. Class 8 Interests consists of any and all Existing Equity Interests in the Debtors.
b. Treatment. The
Holders of Existing Equity Interests shall receive no recovery on account of their Existing Equity Interests and the Existing Equity Interests shall be deemed canceled, released and extinguished as of the Effective Date.
c. Impairment and Voting. Class 8 Interests are Impaired and the Holders of Class 8 Interests are deemed to reject the Plan and are
not entitled to vote on the Plan.
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D. |
Means for Implementation of the Plan |
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1. |
Restructuring Transactions |
a. Transactions.
The Plan contemplates, among other things: (i) the Reorganized Debtors entering into (x) the New First Lien Term Loan Credit
Facility and (y) the Exit Facility; (ii) the issuance of New Common Stock; and (iii) the adoption of the New Organizational Documents and (where required by applicable law) the filing of the New Organizational Documents with the
applicable authorities of the relevant jurisdictions of organization.
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b. Continued Corporate Existence; Vesting of Assets in the Reorganized Debtors.
Subject to Section 4.16 of the Plan, on and after the Effective Date, each of the Reorganized Debtors shall continue to exist as a
separate entity in accordance with applicable law in the respective jurisdiction in which it is organized and pursuant to the New Organizational Documents. Notwithstanding anything to the contrary in the Plan, the Unimpaired Claims against a Debtor
shall remain the obligations solely of such Debtor or such Reorganized Debtor and shall not become obligations of any other Debtor or Reorganized Debtor by virtue of the Plan, the Chapter 11 Cases, or otherwise. Except as otherwise provided in the
Plan, on and after the Effective Date, all Assets of the Estates or the Debtors, including all claims, rights and Causes of Action and any property acquired by the Debtors or the Reorganized Debtors under or in connection with the Plan, shall vest
in the Reorganized Debtors free and clear of all Claims, Liens, charges, other encumbrances and Interests other than any Claims, Liens, charges or encumbrances arising or created under the New First Lien Term Loan Credit Facility and the Exit
Facility. On and after the Effective Date, the Reorganized Debtors may operate their business and may use, acquire and dispose of Assets and compromise or settle any Claims and Causes of Action without supervision of or approval by the Bankruptcy
Court and free and clear of any restrictions of the Bankruptcy Code or the Bankruptcy Rules, other than restrictions expressly imposed by the Plan or the Confirmation Order.
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2. |
Substantive Consolidation for Plan Purposes Only |
The Plan shall
serve as a motion by the Debtors seeking entry of a Bankruptcy Court order substantively consolidating the Debtors Estates into a single consolidated Estate, solely for all purposes associated with Confirmation and consummation of the Plan. On
the Effective Date, for Plan purposes only, the Debtors shall be deemed merged into ANV, and (a) all assets and liabilities of the Debtors shall be deemed merged into ANV, (b) all guaranties of any Debtor of the payment, performance, or
collection of the obligations of another Debtor shall be eliminated and cancelled, (c) any obligation of any Debtor and all guaranties thereof executed by one or more of the other Debtors shall be treated as a single obligation, and such
guaranties shall be deemed a single Claim against the consolidated Debtors, (d) all joint obligations of two or more Debtors, and all multiple Claims against such entities on account of such joint obligations shall be treated and Allowed only
as a single Claim against the consolidated Debtors and (e) each Claim filed in the Chapter 11 Cases of any Debtor shall be deemed filed against the consolidated Debtors and a single obligation of the Debtors on and after the Effective Date.
Entry of the Confirmation Order will constitute the approval, pursuant to Bankruptcy Code section 105(a), effective as of the Effective Date, of the deemed substantive consolidation of the Chapter 11 Cases of the Debtors for purposes of voting on,
Confirmation of, and distributions under the Plan.
Notwithstanding the foregoing, the deemed consolidation and substantive consolidation
(each for Plan purposes only) shall not (other than for purposes related to funding distributions under the Plan) affect (a) the legal and organizational structure of the Debtors or the Reorganized Debtors, (b) pre- and post-Petition Date
guaranties, Liens and security interests that were required to be maintained (i) in connection with any executory contracts or unexpired leases that were entered into during the Chapter 11 Cases or that have been or will be assumed by the
Debtors or (ii) pursuant to the Plan, (c) distributions out of any insurance policies or proceeds of such policies, and (d) the tax treatment of the Debtors. Furthermore, notwithstanding the foregoing, the deemed consolidation and
substantive consolidation (each for Plan purposes only), shall not affect the statutory obligation of each and every Debtor to pay quarterly fees to the U.S. Trustee pursuant to 28 U.S.C. §1903(a)(6) and Article 10.11 of the Plan.
In the event that the Bankruptcy Court does not order such deemed substantive consolidation of the Debtors, then except as specifically set
forth in the Plan (a) nothing in the Plan or the Disclosure Statement may constitute or be deemed to constitute an admission that one of the Debtors is subject to or liable for any Claim against any other Debtor, (b) Claims against
multiple Debtors may be treated as separate Claims against each applicable Debtor for all purposes (including, without limitation, distributions and voting) and such Claims may be administered as provided in the Plan, (c) the Debtors may not,
nor may they be required to, resolicit votes with respect to the Plan and (d) the Debtors may seek Confirmation of the Plan as if the Plan is a separate Plan for each of the Debtors.
The substantive consolidation effected pursuant to this Article shall not affect, without limitation: (i) the Debtors or the
Estates (x) defenses to any Claim or Cause of Action, including, without limitation, the ability to assert any counterclaim, (y) setoff or recoupment rights, or (z) requirements for any third party to establish mutuality prior
to substantive consolidation in order to assert a right of setoff against the Debtors or the Estates; or (ii) distributions to the Debtors and/or the Estates out of any insurance policies or the proceeds of such policies.
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a. Issuance of New Common Stock
On the Effective Date, Reorganized ANV shall issue the New Common Stock to Holders of Unsecured Claims in accordance with Article 2.10 of the
Plan, subject to dilution on account of the conversion of New Second Lien Convertible Notes. Distribution of New Common Stock hereunder shall together constitute the issuance of 100% of the New Common Stock that will be issued and outstanding as of
the Effective Date. All shares of New Common Stock issued on the Effective Date shall be deemed to have been duly authorized, validly issued, fully paid and nonassessable, and not to have been issued in violation of any preemptive rights, rights of
first refusal or similar rights or any applicable law.
To the extent that Reorganized ANV is required to register the New Common Stock
under the Securities Exchange Act or if the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders shall elect, the Debtors or Reorganized Debtors, as applicable, shall use commercially reasonable efforts to make all such filings
and take all such other actions as may be necessary to register the New Common Stock under the Securities Exchange Act without the need for any further Bankruptcy Court approval. If the Requisite Consenting Noteholders and the Requisite Exit
Facility Lenders shall elect, the Debtors shall use commercially reasonable efforts to make all such filings and take all such other actions as may be necessary to comply with the requirements of each National Securities Exchange for purposes of
listing the shares of New Common Stock on such National Securities Exchange, subject to official notice of issuance.
To the extent that
Reorganized ANV is not required and/or does not elect to register the New Common Stock under the Securities Exchange Act and if the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders shall so elect, the Debtors or Reorganized
Debtors, as applicable, shall use commercially reasonable efforts to make all such filings and take all such other actions as may be necessary to deregister the Existing Equity Interests under the Securities Exchange Act without the need for any
further Bankruptcy Court approval.
b. Section 1145 Exemption
Pursuant to Bankruptcy Code section 1145, the offering, issuance and distribution of any New Common Stock to the Holders of Unsecured Claims
shall be exempt from, among other things, the registration and prospectus delivery requirements of Section 5 of the Securities Act and any other applicable law requiring registration and/or delivery of prospectuses prior to the offering,
issuance, distribution, or sale of securities. In addition, any and all New Common Stock issued to the Holders of Unsecured Claims contemplated by the Plan will be freely tradable by the recipients thereof, subject to: (i) the provisions of
Bankruptcy Code section 1145(b)(1) relating to the definition of an underwriter in section 2(a)(11) of the Securities Act, and compliance with any rules and regulations of the United States Securities and Exchange Commission, if any, applicable at
the time of any future transfer of such Securities or instruments; and (ii) applicable regulatory approval, if any.
c.
Section 4(a)(2) Exemption.
Pursuant to Section 4(a)(2) of the Securities Act, the offering, issuance, distribution and
sale of New Second Lien Convertible Notes (and the guarantees thereof) and the shares of New Common Stock or other Securities to be received upon conversion thereof shall be exempt from, among other things, the registration and prospectus delivery
requirements of Section 5 of the Securities Act and any other applicable law requiring registration and/or delivery of prospectuses prior to the offering, issuance, distribution or sale of securities. The New Second Lien Convertible Notes (and
the guarantees thereof) and the shares of New Common Stock or other Securities to be received upon conversion thereof may not be transferred or resold absent registration or exemption under the Securities Act or any applicable state securities law.
All New Second Lien Convertible Notes (and the guarantees thereof) issued on the Effective Date and, upon issuance thereof, all shares of New Common Stock or other Securities to be received upon conversion of any New Second Lien Convertible Notes
shall be deemed to have been duly authorized, validly issued, fully paid and nonassessable, and not to have been issued in violation of any preemptive rights, rights of first refusal or similar rights or any applicable law. For the avoidance of
doubt, the New Second Lien Convertible Notes are being issued pursuant to the Exit Facility and the Disclosure Statement is not a solicitation or offering with respect to the New Second Lien Convertible Notes.
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a. New First Lien Term Loan Credit Facility.
On the Effective Date, Reorganized ANV will enter into the New First Lien Term Loan Credit Facility in the form of the New First Lien
Term Loan Credit Agreement pursuant to which the New First Lien Term Loans will be incurred in an original aggregate principal amount equal to (i) the total amount of (A) the Secured Swap Claims plus (B) the Secured ABL Claims less
(ii) the aggregate amount of (A) the Secured ABL/Swap Cash Payments, (B) the Secured ABL $10MM Cash Payment and (C) the Secured ABL/Swap Claims Excess Cash Flow Payment. The payment of the New First Lien Term Loans and other
obligations under the New First Lien Term Loan Credit Facility will be guaranteed by all of the direct and indirect domestic subsidiaries of Reorganized ANV. The New First Lien Term Loan Credit Facility will be secured by liens on substantially all
assets of Reorganized ANV and its direct and indirect domestic subsidiaries, subject to exceptions consistent with the Amended and Restated Restructuring Support Agreement and Restructuring Term Sheet.
b. Exit Facility.
On
the Effective Date, Reorganized ANV will enter into the Exit Facility in the form of the New Second Lien Convertible Notes Definitive Agreement pursuant to which the New Second Lien Convertible Notes will be issued in an original aggregate principal
amount equal to the greater of (a) an amount sufficient for Reorganized ANV to have at least $8.0 million of Cash on the Effective Date after giving pro forma effect to, without duplication, (i) all Cash payments to be made under
(A) the Plan or (B) an order of the Bankruptcy Court, in each case whether paid on or in connection with the Effective Date (excluding, for the avoidance of doubt, New First Lien Term Loan Excess Cash Flow Payments), (ii) the payment
of all Fees accrued through and including the Effective Date and (iii) the payment of any Compensation Plan Payments and (b) an amount such that the aggregate amount of (i) the Cash proceeds of the DIP Facility received by the Debtors
prior to the Effective Date plus (ii) the Cash proceeds of the Exit Facility not used to pay the DIP Facility Consideration equals $65.0 million; provided, however, that in no event shall the Exit Facility Lenders be obligated to
fund amounts under clause (a) above which would cause the aggregate principal amount of the New Second Lien Convertible Notes issued pursuant to the Exit Facility on the Effective Date to exceed $80.0 million. The payment of the New Second Lien
Convertible Notes will be guaranteed by all of the direct and indirect domestic subsidiaries of Reorganized ANV. The New Second Lien Convertible Notes, the guarantees by the guarantors in respect thereof and all obligations under the New Second Lien
Convertible Notes and such guarantees shall be secured by liens on substantially all assets of the Reorganized Debtors, subject to limited exceptions that are acceptable to the Requisite Exit Facility Lenders and the Debtors or Reorganized Debtors,
as applicable.
c. Other Plan Funding.
Other than as set forth in Articles 4.4(a) and (b) of the Plan, all Cash necessary for the Reorganized Debtors to make payments required
by the Plan shall be obtained from the Debtors Cash balances then on hand, after giving effect to the transactions contemplated in the Plan or that occur during the pendency of the Chapter 11 Cases.
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5. |
Corporate Governance, Managers, Officers and Corporate Action. |
a.
New Organizational Documents.
On the Effective Date, the New Organizational Documents, including, upon agreement by the Debtors,
the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders, the Stockholders Agreement, substantially in forms to be filed with the Plan Supplement, shall be deemed to be valid, binding, and enforceable in accordance with their
terms and provisions, such terms and provisions being satisfactory to the Requisite Consenting Noteholders, the Requisite Exit Facility Lenders and the Reorganized Debtors. If a Stockholders Agreement is put in place, any Holder of a Claim that is
to be distributed shares of New Common Stock pursuant to the Plan shall be deemed to have duly executed and delivered to Reorganized ANV a counterpart to the Stockholders Agreement, and the Stockholders Agreement shall be deemed to be a valid,
binding and enforceable obligation of such Holder (including any obligation set forth therein to waive or refrain from exercising any appraisal, dissenters or similar rights). On the Effective Date, the applicable Reorganized Debtors may enter
into and deliver the Registration Rights Agreement, which shall be deemed to be valid, binding, and enforceable in accordance with its terms on those parties set forth in such agreement.
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b. New Board.
Subject to any requirement of Bankruptcy Court approval pursuant to Bankruptcy Code section 1129(a)(5), as of the Effective Date, the New
Board shall be the persons identified in the Plan Supplement. On the Effective Date, the directors on the New Board will be comprised of the Chief Executive Officer of the Reorganized Debtors and such other individuals selected by the Requisite
Consenting Noteholders with the consent of the Requisite Exit Facility Lenders, which consent shall not be unreasonably withheld. Pursuant to Bankruptcy Code section 1129(a)(5), the Debtors shall disclose the identity and affiliations of any person
proposed to serve on the New Board after the Confirmation Date and prior to the Effective Date, and to the extent such person is an insider other than by virtue of being a New Board Member, the nature of any compensation for such person.
c. Officers of the Reorganized Debtors.
On and after the Effective Date, the current officers of the Debtors shall continue to serve in their same capacity with the Reorganized
Debtors in accordance with the Officers Employment Agreements, to be assumed under the Plan to the extent set forth in the Schedule of Assumed Executory Contracts and Unexpired Leases; provided, however, that the assumption of
the Officers Employment Agreements for the Debtors Chief Executive Officer and Chief Financial Officer shall be subject to the consent of the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders, which consent shall
not be unreasonably withheld; provided, further, that no Officers Employment Agreement shall be assumed or deemed assumed by any of the Debtors unless the officer party thereto agrees in writing (in the form of an amendment to
such Officers Employment Agreement) that, from and after the date such Officers Employment Agreement is assumed, any provision in such Officers Employment Agreement that grants or provides such officer with any right to any
Excluded Benefits shall no longer be effective and shall be deleted in its entirety from such Officers Employment Agreement and such officer shall no longer be entitled to any benefits, entitlements or rights thereto, such amendment to be in
form and substance acceptable to the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders.
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6. |
Management Incentive Plan/Post-Emergence Key Employee Retention Plan. |
Subject only to the occurrence of the Effective Date, the Management Incentive Plan and Post-Emergence Key Employee Retention Program shall be
effective without any further action by the Reorganized Debtors. For the avoidance of doubt, the Management Incentive Plan and Post-Emergence Key Employee Retention Program are entirely post-Effective Date compensation plans and any awards
thereunder, to the extent earned, shall be paid by the Reorganized Debtors.
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7. |
Cancellation of Notes, Instruments, and Existing Equity Interests. |
On the Effective Date, except as otherwise provided for in the Plan or any agreement, instrument or other document incorporated in the Plan or
the Plan Supplement, (i) the promissory notes, share certificates (including treasury stock), the Notes, the Indenture, the Swaps, the Credit Agreement, the Existing Equity Interests and other instruments or agreements evidencing any Claims or
Interests (other than Intercompany Interests), (ii) all options, warrants, calls, rights, puts, awards, commitments or any other agreements of any character to acquire Claims or Interests and (iii) all registration rights, preemptive
rights, rights of first refusal, rights of first offer, co-sale rights and other investor rights governing or relating to any Interests, in any such case shall be deemed automatically extinguished, cancelled and of no further force and effect,
without any further act or action under any applicable agreement, law, regulation, order or rule, and the obligations of the Debtors under the notes, share certificates, the Notes, the Indenture, the Swaps, the Credit Agreement, the Existing Equity
Interests and other instruments evidencing any Claims or Interests (other than Intercompany Interests) shall be automatically discharged. The Holders of or parties to such cancelled notes, share certificates, Notes, the Indenture, the Swaps, the
Credit Agreement, the Existing Equity Interests and other agreements and instruments shall have no rights arising from or relating to such notes, share certificates, Notes, Indenture, Swaps, Credit Agreement, Existing Equity Interests and other
agreements and instruments or the cancellation thereof, except the rights provided pursuant to the Plan. Notwithstanding the foregoing, (a) (i) the Notes and Indenture shall continue in effect solely for the purpose of (x) allowing
the Indenture Trustee or its agents to make distributions to Holders of Notes in accordance with the terms of the Plan and the Confirmation Order and to enforce its rights and those of the Holders of Notes under the Plan and the Confirmation Order
in the Chapter 11 Cases and any appeals; (y) allowing Holders of Notes to receive distributions under the Plan; and (z) preserving the rights and liens of the Indenture Trustee arising under Sections 6.11 and 7.08 of the Indenture with
25
respect to actions taken to perform its obligations under the Plan and the Confirmation Order, and (ii) the Indenture shall terminate completely upon the completion of all distributions to
the Holders of the Notes and the satisfaction in full of any and all obligations to the Indenture Trustee under Section 7.08 of the Indenture and (b) (i) the Credit Agreement shall continue in effect solely for the purpose of
(x) allowing the Administrative Agent or its agents to make distributions to Holders of Secured ABL Claims and Secured Swap Claims and (y) allowing Holders of Secured ABL Claims and Secured Swap Claims to receive distributions hereunder
and (ii) the Credit Agreement shall terminate completely upon the completion of all distributions to the Holders of the Secured ABL Claims. At such time as the Indenture Trustee has completed performance of all of its duties set forth in the
Plan and the Confirmation Order, if any, the Indenture Trustee, and its successors and assigns, shall be relieved of all obligations under the Indenture.
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8. |
Cancellation of Liens. |
On the Effective Date, except as set forth
in the Plan, any Lien securing any Claim shall be deemed released, and the Holder of such Claim shall be authorized and directed to release any collateral or other property of any Debtor (including any cash collateral) held by such Holder and to
take such actions as may be requested by the Debtors (or the Reorganized Debtors, as the case may be) to evidence the release of such Lien, including the execution, delivery and filing or recording of such releases as may be requested by the Debtors
(or the Reorganized Debtors, as the case may be).
On and after the Effective Date, the Debtors or
the Reorganized Debtors may take all actions as may be necessary or appropriate to effect any transactions described in, approved by, contemplated by, or necessary to effectuate the Restructuring Transaction under and in connection with the Plan,
including: (a) the execution, delivery and/or filing, as applicable, of appropriate agreements or other documents of merger, consolidation, restructuring, conversion, disposition, transfer, dissolution or liquidation containing terms that are
consistent with the terms of the Plan and that satisfy the applicable requirements of applicable law and any other terms to which the applicable entities may agree; (b) the execution, delivery and/or filing, as applicable, of appropriate
instruments of transfer, assignment, assumption or delegation of any asset, property, right, liability, debt or obligation on terms consistent with the terms of the Plan and having other terms for which the applicable parties agree; (c) the
execution, delivery and/or filing, as applicable, of appropriate certificates or articles of incorporation, reincorporation, merger, consolidation, conversion or dissolution and the New Organizational Documents pursuant to applicable state law;
(d) the issuance and distribution of the shares of New Common Stock as provided for in the Plan; (e) the adoption of the Management Incentive Plan; (f) the issuance and sale of the New Second Lien Convertible Notes (and the guarantees
thereof) as provided for herein and in the New Second Lien Convertible Notes Definitive Agreement, and the issuance and distribution of the shares of New Common Stock or other Securities upon conversion of the New Second Lien Convertible Notes; and
(g) all other actions that may be required by applicable law, subject, in each case, to the New Organizational Documents. All matters provided for in the Plan involving the corporate structure of the Debtors, and any corporate action required
by the Debtors in connection therewith, shall be deemed to have occurred on, and shall be in effect as of, the Effective Date, without any requirement of further action by the security holders, directors, managers, authorized persons or officers of
the Debtors. The authorizations and approvals contemplated by Article 4.9 of the Plan shall be effective notwithstanding any requirements under nonbankruptcy law.
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10. |
New First Lien Term Loan Credit Facility and Exit Facility. |
On the
Effective Date, without any requirement of further action by the security holders, directors, managers, authorized persons or officers of the Debtors, the Reorganized Debtors shall be authorized to enter into, perform their obligations under, and
consummate the transactions contemplated by, the New First Lien Term Loan Credit Facility, the New Intercreditor Agreement, the Exit Facility, and any notes, documents, instruments, certificates or agreements in connection therewith, including,
without limitation, any documents required in connection with the creation, perfection or priority of the Liens on any collateral securing the New First Lien Term Loan Credit Facility and/or the Exit Facility.
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11. |
Effectuating Documents; Further Transactions. |
On and after the
Effective Date, the Reorganized Debtors and the officers and members of the boards of managers or directors thereof, are authorized to and may issue, execute, deliver, file or record such contracts, securities, instruments, releases and other
agreements or documents and take such actions as may be necessary or appropriate to effectuate, implement and further evidence the terms and conditions of the Plan and the securities issued pursuant to the Plan in the name of and on behalf of the
Reorganized Debtors, without the need for any approvals, authorization, or consents except for those expressly required pursuant to the Plan.
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|
12. |
Exemption from Certain Transfer Taxes and Recording Fees. |
To the
fullest extent permitted by Bankruptcy Code section 1146(a), any transfer from a Debtor to a Reorganized Debtor or to any entity pursuant to, in contemplation of, or in connection with the Plan or pursuant to: (a) the issuance, distribution,
transfer, or exchange of any debt, securities, or other interest in the Debtors or the Reorganized Debtors; (b) the creation, modification, consolidation, or recording of any mortgage, deed of trust or other security interest, or the securing
of additional indebtedness by such or other means; (c) the making, assignment, or recording of any lease or sublease; or (d) the making, delivery, or recording of any deed or other instrument of transfer under, in furtherance of, or in
connection with, the Plan, including any deeds, bills of sale, assignments, or other instrument of transfer executed in connection with any transaction arising out of, contemplated by, or in any way related to the Plan, shall not be subject to any
document recording tax, stamp tax, conveyance fee, intangibles, or similar tax, mortgage tax, real estate transfer tax, mortgage recording tax, sales or use tax, Uniform Commercial Code filing or recording fee, regulatory filing or recording fee, or
other similar tax or governmental assessment, and the appropriate state or local governmental officials or agents shall forego the collection of any such tax or governmental assessment and to accept for filing and recordation any of the foregoing
instruments or other documents without the payment of any such tax or governmental assessment.
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13. |
No Further Approvals. |
The transactions contemplated by the Plan
shall be approved and effective as of the Effective Date without the need for any further state or local regulatory approvals or, unless otherwise required by the Plan, approvals by any non-Debtor parties, and without any requirement for further
action by the Debtors, Reorganized Debtors, or any entity created to effectuate the provisions of the Plan.
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14. |
Dissolution of Committees. |
The Creditors Committee and the Equity
Committee shall continue in existence until the Effective Date to exercise those powers and perform those duties specified in Bankruptcy Code section 1103 and shall perform such other duties as they may have been assigned by the Bankruptcy Court
prior to the Effective Date. On the Effective Date, the Creditors Committee and the Equity Committee shall be dissolved and the Creditors Committees and Equity Committees members shall be deemed released of all their duties,
responsibilities, and obligations arising from or related to the Chapter 11 Cases, and the retention or employment of the Creditors Committees and Equity Committees Professionals shall terminate, except with respect to any Professional
Fee Claim. After the Effective Date, the Creditors Committee, the Creditors Committees Professionals, the Equity Committee and the Equity Committees Professionals shall not be entitled to compensation or reimbursement of expenses from
the Reorganized Debtors for any services incurred after the Effective Date, except for services rendered or expenses incurred with respect to any Professional Fee Claim.
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15. |
Pre-Effective Date Injunctions or Stays. |
All injunctions or stays,
whether by operation of law or by order of the Bankruptcy Court, provided for in the Chapter 11 Cases pursuant to Bankruptcy Code sections 105 or 362 or otherwise that are in effect on the Confirmation Date shall remain in full force and effect
until the Effective Date.
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16. |
Dissolution of Certain Debtors. |
On the Effective Date, each of the
Debtors identified in the Plan Supplement to be dissolved shall be deemed dissolved and their obligations under Article 5.9 of the Plan assumed by the Reorganized Debtors. On, or as soon as practicable, after the Effective Date, such Debtors shall,
and the officers, directors, members, managers or other similar representatives of such Debtors shall be authorized and directed to: (a) execute, acknowledge and/or file for each such Debtor a certificate of dissolution, articles of dissolution
or similar document, together with all other necessary corporate and company documents, to effect the dissolution of such Debtor under the applicable laws of its state of incorporation or formation (as applicable); (b) complete, execute and
file all final or otherwise required federal, state and local tax returns for each such Debtor, and pursuant to section 505(b) of the Bankruptcy Code, request an expedited determination of any
27
unpaid tax liability of such Debtor or its Estate for any tax incurred during the administration of such Debtors Chapter 11 Case, as determined under applicable tax laws; and (c) take
such other actions as the Debtors may determine to be necessary or desirable to carry out this provision, in each case (other than any relief sought under section 505(b) of the Bankruptcy Code) without the need for any further Bankruptcy Court
approval. All actions necessary to effectuate such dissolutions shall be deemed authorized and approved in all respects without further action under applicable law, regulation, order or rule, including, without limitation, any action by the
stockholders, members, board of directors, board of managers or other governing body of each such Debtor. Upon the dissolution of any such Debtor, the Reorganized Debtors shall be entitled to obtain a final decree closing the Chapter 11 Case of such
Debtor.
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E. |
Discharge, Release, Injunction and Related Provisions |
|
1. |
Discharge of Claims and Termination of Interests. |
As of the
Effective Date, except as otherwise provided in the Plan or the Confirmation Order, the rights afforded under the Plan and the treatment of Claims and Interests under the Plan shall be in exchange for and in complete satisfaction, discharge and
release of all Claims and satisfaction or termination of all Interests. Except as otherwise provided in the Plan or the Confirmation Order, Confirmation shall, as of the Effective Date: (i) discharge the Debtors and the Reorganized Debtors from
all Claims or other debts that arose before the Effective Date, whether liquidated or unliquidated, fixed or contingent, matured or unmatured, and all debts of the kind specified in Bankruptcy Code sections 502(g), 502(h) or 502(i), in each case
whether or not (w) a Proof of Claim is filed or deemed filed pursuant to Bankruptcy Code section 501, (x) a Claim based on such debt is Allowed pursuant to Bankruptcy Code section 502, (y) the Holder of a Claim based on such debt has
accepted the Plan or (z) such Claim is listed in the Schedules; and (ii) cancel, release and extinguish all Interests and other rights of equity security holders in the Debtors other than the Intercompany Interests.
As of the Effective Date, except as otherwise provided in the Plan or the Confirmation Order, all Persons shall be precluded from asserting
against the Debtors or the Reorganized Debtors, or their respective successors or property, any other or further Claims, demands, debts, rights, causes of action, liabilities or equity interests based upon any act, omission, transaction or other
activity of any kind or nature that occurred prior to the Effective Date. In accordance with the foregoing, except as provided in the Plan or the Confirmation Order, the Confirmation Order will be a judicial determination, as of the Effective Date,
of a discharge of all such Claims and other debts and liabilities against the Debtors and cancellation, release and extinguishment of all Interests and other rights of equity security holders in the Debtors, pursuant to Bankruptcy Code sections 524
and 1141, and such discharge will void any judgment obtained against the Debtors or the Reorganized Debtors at any time, to the extent that such judgment relates to a discharged Claim.
Except as otherwise provided in the Plan or the
Confirmation Order, as of the Effective Date, all Persons that have held, currently hold or may hold a Claim or other debt or liability that is discharged or an Interest or other right of an equity security holder that is terminated pursuant to the
terms of the Plan are permanently enjoined from taking any of the following actions on account of any such discharged Claims, debts or liabilities or terminated Interests or rights: (i) commencing or continuing in any manner any action or other
proceeding against the Debtors or the Reorganized Debtors or their respective property; (ii) enforcing, attaching, collecting or recovering in any manner any judgment, award, decree or order against the Debtors or the Reorganized Debtors or
their respective property; (iii) creating, perfecting or enforcing any lien or encumbrance against the Debtors or the Reorganized Debtors or their respective property; (iv) asserting a setoff, right of subrogation or recoupment of any kind
against any debt, liability or obligation due to the Debtors or the Reorganized Debtors or their respective property; and (v) commencing or continuing any action, in any manner, in any place that does not comply with or is inconsistent with the
provisions of the Plan. Notwithstanding anything contained in the Confirmation Order or the Plan to the contrary, any rights of Holders of Claims under Bankruptcy Code section 553(a) or other applicable law to assert any counterclaims, cross claims,
setoff and/or recoupment rights that they may have under applicable law shall not be impaired by the Confirmation Order or the Plan, and subject to applicable law may be asserted and/or exercised after the Effective Date.
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The releases set forth in the Plan and described
herein are the product of a compromise and settlement with various parties in interest in these cases. The Debtors believe that the releases are reasonable, narrowly tailored and necessary for the Debtors to reorganize effectively.
The Debtors believe that the Released Parties have benefitted the Debtors estates. The Plan Support Parties have supported the Plan
by negotiating a settlement and compromise that forms the basis for the Plan and providing financing that enables the Debtors to exit Chapter 11. The Plan Support Parties, the Debtors and their respective Related Persons have, through their
expertise, effort and collaboration, crafted the Plan. The DIP Agent, DIP Lenders and DIP Backstop Lenders have provided postpetition financing to the Debtors. The Exit Facility Lenders (and any agent, trustee or similar representatives of the Exit
Facility Lenders under the Exit Facility) are providing the financing necessary to effectuate the Plan.
Debtor Releases.
Notwithstanding anything contained in the Plan to the contrary, on the Confirmation Date and effective as of the Effective Date and
to the fullest extent permitted by applicable law, for good and valuable consideration provided by each of the Released Parties, the adequacy of which is hereby confirmed, the Released Parties are deemed released and discharged by the Debtors and
their Estates from any and all claims, interests, obligations, rights, suits, damages, causes of action, remedies, and liabilities whatsoever, including any derivative claims, whether known or unknown, foreseen or unforeseen, existing or hereinafter
arising, in law, equity, or otherwise, based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the Debtors restructuring, the Restructuring Transaction, the Chapter 11 Cases, the DIP Facility, the Exit
Facility, the purchase, sale, or rescission of the purchase or sale of any security of the Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the business or contractual
arrangements between any Debtor and any Released Party, the restructuring of Claims and Interests prior to or during the Chapter 11 Cases, the negotiation, formulation, or preparation of the Plan, the Disclosure Statement, the Plan Supplement, the
Original Restructuring Support Agreement, the Amended and Restated Restructuring Support Agreement, the Restructuring Documents, or any related agreements, instruments, or other documents, upon any other act or omission, transaction, agreement,
event, or other occurrence taking place on or before the Effective Date, other than claims or liabilities arising out of or relating to any act or omission of a Released Party that constitutes actual fraud, willful misconduct or gross negligence.
Released Parties Releases.
Notwithstanding anything contained in the Plan to the contrary, on the Confirmation Date and effective as of the Effective Date and to the
fullest extent permitted by applicable law, the Released Parties and any Holders of Claims of or Interests in the Debtors who vote to accept the Plan or who vote to reject the Plan and do not elect to opt-out of the releases are deemed to have
released and discharged the other Released Parties, the Debtors and their Estates from any and all claims, interests, obligations, rights, suits, damages, causes of action, remedies, and liabilities whatsoever, including any derivative claims,
asserted on behalf of any Debtor, whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity, or otherwise, that any such Released Party or any such Holder of Claims of or Interests in the Debtors would have
been legally entitled to assert (whether individually or collectively), based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the Debtors restructuring, the Restructuring Transaction, the Chapter 11 Cases,
the DIP Facility, the Exit Facility, the purchase, sale, or rescission of the purchase or sale of any security of the Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan,
the business or contractual arrangements between any Debtor and (i) any Released Party or (ii) any Holder of Claims of or Interests in the Debtors who votes to accept the Plan or who votes to reject the Plan and does not elect to opt-out
of the releases, the restructuring of Claims and Interests prior to or in the Chapter 11 Cases, the negotiation, formulation, or preparation of the Plan, the Disclosure Statement, the Plan Supplement, the Original Restructuring Support Agreement,
the Amended and Restated Restructuring Support Agreement, the Restructuring Documents, or any related agreements, instruments, or other documents, upon any other act or omission, transaction, agreement, event, or other occurrence taking place on or
before the Effective Date, other than claims or liabilities arising out of or relating to any act or omission of a Released Party that constitutes actual fraud, willful misconduct, or gross negligence.
29
Notwithstanding anything contained in the Plan to
the contrary, on the Confirmation Date and effective as of the Effective Date and to the fullest extent permitted by applicable law, the Exculpated Parties shall not have nor incur any liability for any claim, cause of action, or other assertion of
liability solely for any act taken or omitted in or in connection with, related to, or arising out of the Restructuring Transaction, the Chapter 11 Cases, the DIP Facility, the Exit Facility, the Original Restructuring Support Agreement, the Amended
and Restated Restructuring Support Agreement, the negotiation, formulation, preparation, administration, consummation and/or implementation of the Plan or any contract, instrument, document, or other agreement entered into in connection with the
Plan (including the Restructuring Documents) or any other matter relating to the Debtors or their operations; provided, however, that the foregoing exculpation shall not affect the liability of any Exculpated Party that otherwise would
result from any act or omission to the extent that such act or omission is determined by a Final Order to have constituted actual fraud, willful misconduct, or gross negligence.
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5. |
Preservation of Insurance |
The Debtors discharge, exculpation
and release, and the exculpation and release in favor of the Released Parties and Exculpated Parties, as provided in the Plan, shall not diminish or impair any rights that a Holder of Claims or Interests may have against existing insurance
maintained by the Debtors for (a) themselves, (b) their current and former directors and officers, or (c) any other Person.
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6. |
Retention and Enforcement of Causes of Action. |
Except as otherwise
provided in the Plan, or in any document, instrument, release or other agreement entered into in connection with the Plan, in accordance with Bankruptcy Code section 1123(b), the Debtors and their Estates shall retain the Causes of Action including,
without limitation, the Causes of Action identified in the Plan Supplement (the Retained Causes of Action). The Reorganized Debtors, as the successors in interest to the Debtors and their Estates, may enforce, sue on, settle or
compromise (or decline to do any of the foregoing) any or all Causes of Action, including the Retained Causes of Action. The Debtors or the Reorganized Debtors expressly reserve all rights to prosecute any and all Causes of Action, including the
Retained Causes of Action against any Person, except as otherwise expressly provided in the Plan, and no preclusion doctrine, including the doctrines of res judicata, collateral estoppel, issue preclusion, claim preclusion, estoppel (judicial,
equitable or otherwise), or laches, shall apply to such Cause of Action or Retained Cause of Action upon, after, or as a consequence of Confirmation or the occurrence of the Effective Date.
VII. |
PROJECTED FINANCIAL INFORMATION |
Attached hereto as Exhibit C are
projected consolidated financial statements, which include consolidated, projected, unaudited, financial statement information of the Reorganized Debtors (collectively, the Financial Projections) for the period [to come]. The
Financial Projections are based on an assumed Effective Date of [to come]. To the extent that the Effective Date occurs after [to come], recoveries under the Plan by Holders of Allowed Claims could be impacted.
Creditors and other interested parties should see the below Risk Factors for a discussion of certain factors that may affect the
future financial performance of the Reorganized Debtors.
Holders of Claims entitled to vote on the Plan should read and consider
carefully the risk factors set forth below before voting to accept or reject the Plan. Although there are many risk factors discussed below, these factors should not be regarded as constituting the only risks present in connection with the
Debtors business or the Plan and its implementation.
30
|
A. |
Risks Related to Bankruptcy |
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1. |
Parties in interest may object to the Plans classification of Claims and Interests. |
Bankruptcy Code section 1122 provides that a plan may place a claim or an interest in a particular class only if such claim or interest is
substantially similar to the other claims or interests in such class. The Debtors believe that the classification of the Claims and Interests under the Plan complies with the requirements set forth in the Bankruptcy Code because the Debtors created
Classes of Claims and Interests, each encompassing Claims or Interests, as applicable, that are substantially similar to the other Claims and Interests in each such Class. Nevertheless, there can be no assurance that the Bankruptcy Court will reach
the same conclusion.
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2. |
The Debtors may fail to satisfy vote requirements. |
In the event
that votes are received in number and amount sufficient to enable the Bankruptcy Court to confirm the Plan, the Debtors intend to seek, as promptly as practicable thereafter, Confirmation of the Plan. In the event that sufficient accepting votes are
not received, the Debtors may seek to confirm an alternative chapter 11 plan. There can be no assurance that the terms of any such alternative chapter 11 plan would be similar or as favorable to the Holders of Allowed Claims as those proposed in the
Plan.
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3. |
The Debtors may not be able to secure Confirmation of the Plan. |
Bankruptcy Code section 1129 sets forth the requirements for confirmation of a chapter 11 plan, and requires, among other things, a finding by
the Bankruptcy Court that: (a) such plan does not unfairly discriminate and is fair and equitable with respect to any non-accepting classes; (b) confirmation of such plan is not likely to be followed by a
liquidation or a need for further financial reorganization unless such liquidation or reorganization is contemplated by the plan; and (c) the value of distributions to non-accepting holders of claims and equity interests within a particular
class under such plan will not be less than the value of distributions such holders would receive if the debtors were liquidated under chapter 7 of the Bankruptcy Code.
There can be no assurance that the requisite acceptances to confirm the Plan will be received. Even if the requisite acceptances are received,
there can be no assurance that the Bankruptcy Court will confirm the Plan. A non-accepting Holder of a Claim, or a Holder of a Claim or Interest that is deemed to reject the Plan, might challenge either the adequacy of this Disclosure Statement or
whether the balloting procedures and voting results satisfy the requirements of the Bankruptcy Code or Bankruptcy Rules. Even if the Bankruptcy Court determined that this Disclosure Statement, the balloting procedures and voting results were
appropriate, the Bankruptcy Court could still decline to confirm the Plan if it found that any of the statutory requirements for Confirmation had not been met. If the Plan is not confirmed, it is unclear what distributions, if any, Holders of
Allowed Claims and Holders of Allowed Interests would receive with respect to such Claims and Interests.
The Debtors, subject to the
terms and conditions of the Plan and the Amended and Restated Restructuring Support Agreement, reserve the right to modify the terms and conditions of the Plan as necessary for Confirmation. Any such modifications could result in a less favorable
treatment of any non-accepting Class, as well as of any Classes junior to such non-accepting Class, than the treatment currently provided in the Plan. Such a less favorable treatment could include a distribution of property to the Class affected by
the modification of a lesser value than currently provided in the Plan or no distribution of property whatsoever under the Plan.
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4. |
The conditions precedent to the Effective Date may not occur. |
As
more fully set forth in Article VIII of the Plan, the Effective Date is subject to a number of conditions precedent. If such conditions precedent are not met or waived, the Effective Date will not occur.
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|
5. |
Nonconsensual Confirmation. |
In the event that any Impaired Class
of Claims does not vote to accept the Plan, or if an Impaired Class of Claims or Interests is deemed to reject the Plan, the Bankruptcy Court may nevertheless confirm the Plan at the Debtors request if at least one Impaired Class of Claims has
accepted the Plan (with such acceptance being determined without including the vote of any insider in such class), and, as to each Impaired Class that has not accepted the Plan, the Bankruptcy Court determines that the Plan does
not discriminate unfairly and is fair and equitable with respect to the dissenting Impaired Classes. The Debtors intend to seek Confirmation over the deemed rejection of the Plan by Holders of Class 6 Claims and Class 8 Interests.
Although the Debtors believe that the Plan satisfies the nonconsensual Confirmation requirements of Bankruptcy Code section 1129(b), there can be no assurance that the Bankruptcy Court will reach the same conclusion. In addition, the pursuit of
nonconsensual Confirmation or consummation of the Plan may result in, among other things, delay and increased expenses relating to Professional Fee Claims.
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6. |
The Debtors may not be able to achieve their projected financial results. |
The Financial Projections set forth on Exhibit C to this Disclosure Statement represent the Debtors best estimate of the
Debtors future financial performance based on currently known facts and assumptions about the Debtors future operations as well as the U.S. and world economy in general and the industry segments in which the Debtors exist in particular.
The Debtors actual financial results may differ significantly from the Financial Projections. If the Debtors do not achieve their projected financial results, the Debtors may lack sufficient liquidity to continue as planned after the Effective
Date. Moreover, the financial condition and results of the Reorganized Debtors from and after the Effective Date may not be comparable to the financial condition or results of operations reflected in the Debtors historical financial
statements.
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7. |
Certain tax implications of the Chapter 11 Cases. |
Holders of
Claims and Interests should carefully review Section XII hereof, Certain Federal Income Tax Consequences of the Plan, to determine how the tax implications of the Plan and the Chapter 11 Cases may adversely affect the Reorganized Debtors
and certain Holders of Claims and Interests. The tax consequences of the Plan are very complicated, especially for non-U.S. Holders of Unsecured Claims.
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8. |
The Debtors emergence from chapter 11 is not assured. |
While
the Debtors expect to emerge from chapter 11, there can be no assurance that the Debtors will successfully reorganize or when this reorganization will occur, irrespective of the Debtors obtaining Confirmation of the Plan.
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9. |
Confirmation and consummation may be delayed if the Debtors have to resolicit. |
If the Debtors resolicit acceptances of the Plan from parties entitled to vote thereon, or if the Debtors are required to solicit the votes of
the Holders of Claims and Interests that have been deemed to reject the Plan, Confirmation of the Plan could be delayed and possibly jeopardized. Nonconfirmation of the Plan could result in an extended chapter 11 proceeding, during which time the
Debtors could experience significant deterioration in their relationships with trade vendors and major customers. Furthermore, if the Effective Date is significantly delayed, there is a risk that the Amended and Restated Restructuring Support
Agreement may expire or be terminated in accordance with its terms.
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|
B. |
Risks Related to the Debtors or the Reorganized Debtors Business |
|
1. |
A decline in gold and silver prices could result in decreased revenues, decreased net income, increased losses, and decreased cash flows, and may negatively affect the Debtors business.
|
Gold and silver are commodities. Their prices fluctuate and are affected by many factors beyond the Debtors
control, including interest rates, expectations regarding inflation, speculation, currency values, central bank activities, governmental decisions regarding the disposal of precious metals stockpiles, global and regional demand and production,
political and economic conditions and other factors. The prices of gold and silver, as quoted by the London Bullion Market Association on July 22, 2015, were $1,088.60 per ounce for gold and $14.78 per ounce for silver, respectively. The prices
of gold and silver may decline in the future. A substantial or extended decline in gold or silver prices would adversely impact the Debtors financial position, revenues, net income and cash flows, particularly in light of the Debtors
current strategy of not engaging in hedging transactions with respect to gold or silver. In addition, sustained lower gold or silver prices may: (i) reduce or eliminate the profit, if any, that the Debtors currently expect from ore stockpiles
and ore on leach pads; (ii) halt, delay, modify, or cancel plans for the construction of a mill for the sulfide ores or the development of new and existing projects; (iii) make it more difficult for the Debtors to satisfy and/or service
their debt obligations; (iv) reduce existing reserves by removing ores from reserves that can no longer be economically processed at prevailing prices; (v) cause the Debtors to recognize an impairment to the carrying values of mineral
properties and long-lived assets; and (vi) reduce funds available for potential future exploration with the result that depleted reserves may not be replaced.
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2. |
The Reorganized Debtors may not be able to recommence their mining and exploration operations. |
As described in Section V.C. above, on July 8, 2015, the Debtors commenced the implementation of the Mining Suspension Plan. The Debtors
believe that the Mining Suspension Plan will allow the Reorganized Debtors the flexibility to determine post-emergence the best way to maximize value, whether through recommencing operations or through a sale of the Debtors assets. There can
be no guarantee that the Reorganized Debtors will be able to recommence mining operations or that they will be able to sell their assets.
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3. |
Because the Debtors do not currently use forward sale or other significant hedging arrangements to protect against gold and silver prices and commodity prices (other than related to a portion of the
Debtors diesel costs from time to time), the Debtors operating results are exposed to the impact of any significant decrease in the price of gold or silver or any significant increase in commodity prices.
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The Debtors do not currently enter into forward sales or other significant hedging arrangements to reduce the risk of
exposure to volatility in metal and commodity prices. Accordingly, the Debtors future operations are exposed to the impact of any significant decrease in gold or silver prices and any significant increase in commodity prices. If such prices
change significantly, the Debtors will realize reduced revenues and increased costs. The Debtors are restricted from entering into forward sales or other significant hedging arrangements at a future date pursuant to the terms of the DIP Credit
Agreement. The terms of the New First Lien Term Loan Credit Agreement and the New Second Lien Convertible Notes Definitive Agreement may also preclude the Debtors from entering into such arrangements.
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4. |
Cost estimates and timing of the Hycroft Mine expansion project and new projects is uncertain, which may adversely affect expected production and profitability. |
The capital expenditures and time required to further develop and explore the Hycroft Mine are considerable and changes in costs, construction
schedules or both, can adversely affect project economics and expected production and profitability. There are a number of factors that can affect costs and construction schedules, including, among others: (i) changes in input commodity prices
and labor costs; (ii) availability and terms of financing; (iii) availability of labor, energy, transportation, equipment, and infrastructure; (iv) fluctuations in currency exchange rates; (v) changes in anticipated tonnage,
grade and metallurgical characteristics of the ore to be mined and processed; (vi) recovery rates of
33
gold and other metals from the ore; (vii) difficulty of estimating construction costs over a period of years; (viii) delays in completing any environmental review or in obtaining
environmental or other government permits; (ix) weather and severe climate impacts; and (x) potential delays related to social and community issues.
The Debtors currently recover gold and silver from oxide and transitional ores at the Hycroft Mine. The Debtors recently completed an updated
Hycroft mill feasibility study, which relates to the economic potential of recovering metals from the sulfide mineralization at the Hycroft property. The Debtors have not yet secured the financing required to begin construction of the mill
expansion, but they continue to explore potential available financing options.
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5. |
The Debtors results of operations, liquidity, and financial position may be negatively impacted if actual recoveries of gold and silver from the Hycroft Mine are lower than initial
estimations. |
The Hycroft Mine utilizes a heap leach process to extract gold and silver from ore. The heap
leach process extracts gold and silver by placing ore on an impermeable pad and applying a dilute cyanide solution that dissolves a portion of the contained gold and silver, which are then recovered in metallurgical processes. The Debtors use
several integrated steps in the process of extracting gold and silver to estimate the metal content of ore placed on the leach pad. Although the Debtors refine their estimates as appropriate at each step in the process, the final amounts are not
determined until a third-party smelter refines the doré and/or metal-laden carbon and determines the final ounces of gold and silver available for sale. The Debtors then review this end result and reconcile it to the estimates developed and
used throughout the production process. Based on this review, the Debtors adjust their estimation procedures when appropriate. Due to the complexity of the estimation process and the number of steps involved, among other things, actual recoveries
can vary from estimates, and the amount of the variation could be significant and could have a material adverse impact on the Debtors financial condition and results of operations.
Each of these factors not only applies to current and future gold recovery operations at the Hycroft Mine, but also would apply to any future
development of other properties acquired in the future. In the case of mines that the Debtors may acquire and develop in the future, the Debtors will not have the benefit of actual experience in their estimates with respect to those mines, and there
is a greater likelihood that actual results will vary from the estimates.
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6. |
The Debtors may not achieve their production and/or sales estimates and the Debtors costs may be higher than their estimates, thereby reducing cash flows and negatively impacting the results of
operations. |
The Debtors prepare estimates of future production, sales, and costs for their operations. The
Debtors develop their estimates based on, among other things, mining experience, reserve and other mineralized material estimates, assumptions regarding ground conditions and physical characteristics of ores (such as hardness and presence or absence
of certain metallurgical characteristics) and estimated rates and costs of processing. All of the Debtors estimates are subject to numerous uncertainties, many of which are beyond their control. Actual production and/or sales may be lower than
the Debtors estimates and actual costs may be higher than estimates, which could negatively impact cash flows and results of operations. While the Debtors believe that their estimates are reasonable at the time they are made, actual results
will vary and such variations may be material. These estimates are necessarily speculative in nature, and it may be the case that one or more of the assumptions underlying such projections and estimates may not materialize.
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7. |
The Debtors gold and silver production may decline, reducing the Debtors revenues and negatively impacting their business. |
The Debtors future gold and silver production may decline as a result of an exhaustion of reserves, the inability to process existing
sulfide ores, possible closure of mines and continued suspension of mining operations. From time to time, it has been the Debtors business strategy to conduct gold and silver exploratory activities at the Hycroft Mine; however, if the Debtors
cannot expand and/or replace oxide ore reserves or complete expansion projects that would allow the Debtors to process sulfide reserves, revenues from the sale of gold and silver may decline, negatively affecting their results of operations or the
duration in which the Debtors are able to operate. The Debtors can provide no assurance that their future gold and silver production will not decline.
34
|
8. |
A shortage of equipment and supplies and/or the time it takes such items to arrive at the Hycroft Mine could adversely affect the Debtors ability to operate their business.
|
The Debtors are dependent on various supplies and equipment to carry out their producing, mining, exploration and
development operations (to the extent the Debtors or the Reorganized Debtors decide to recommence mining, and exploration operations). The shortage of such supplies, equipment and parts and/or the time it takes such items to arrive at the Hycroft
Mine could have a material adverse effect on the Debtors ability to continue their Ongoing Operations, recommence mining, exploration and development operations, and complete expansion projects and therefore limit production or increase the
cost of production. Such shortages could also result in increased construction costs and cause delays in expansion projects.
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9. |
Changes in the cost or supply of energy or commodities used in operations may adversely affect the profitability of the Debtors operations and financial condition. |
The Debtors mining and production operations and exploration activities (with respect to the Debtors mining operations and
exploration activities, to the extent they are recommenced), are intensive users of energy. The Debtors principal energy sources are electricity and diesel fuel. The Debtors rely upon third parties for their supply of energy resources consumed
in mining activities. Energy prices can be affected by numerous factors beyond the Debtors control, including global and regional supply and demand, political and economic conditions, and applicable regulatory regimes. The prices of various
sources of energy may increase significantly from current levels. An increase in energy prices could materially and adversely affect the results of operations and financial condition.
Disruptions in the supply of the Debtors energy resources could temporarily impair their ability to produce gold and silver or delay any
expansion projects or plans. The Hycroft Mine is in a remote location requiring the building of power lines and long distance transmission of power. A disruption in the transmission of energy, inadequate energy transmission infrastructure or the
termination of any of the Debtors energy supply contracts could interrupt their supply and adversely affect the Debtors operations or expansion projects.
The Debtors production costs are also affected by the prices of commodities that they consume or use in their operations, such as diesel
fuel, lime, sodium cyanide and explosives. The prices of such commodities are influenced by supply and demand trends affecting the mining industry in general and other factors outside the Debtors control. Increases in the price for materials
consumed in their mining and production activities could materially and adversely affect the Debtors results and financial condition.
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10. |
The Debtors face intense competition in the mining industry. |
The
mining industry is intensely competitive. As a result of this competition, some of which is with large established mining companies with substantial capabilities and with greater financial and technical resources than the Debtors have available, the
Debtors may be unable to acquire additional attractive mining claims or financing on terms they consider acceptable, which may adversely impact the Debtors growth and development. This, in turn, may adversely affect the Debtors financial
condition and results. The Debtors also compete with other mining companies in the recruitment and retention of qualified managerial and technical employees. If the Debtors are unable to successfully attract and retain qualified employees, their
exploration and development programs, to the extent recommenced, may again be slowed down or suspended.
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11. |
The Debtors reliance on third party contractors and consultants to conduct a significant portion of the Debtors operations and construction projects exposes the Debtors to risks.
|
The Debtors contract and engage third party contractors and consultants for a portion of their operations and for
construction projects, including the crushing facility and the mill expansion project. As a result, the Debtors operations and construction projects are subject to a number of risks, some of which are outside the Debtors control,
including: (i) negotiating agreements with contractors and consultants on acceptable terms; (ii) the inability to replace a contractor or
35
consultant and their operating equipment in the event that either party terminates the agreement; (iii) reduced control over those aspects of operations which are the responsibility of the
contractor or consultant; (iv) failure of a contractor or consultant to perform under their agreement or disputes relative to their performance; (v) interruption of operations or increased costs in the event that a contractor or consultant
ceases their business due to insolvency or other unforeseen events; (vi) failure of a contractor or consultant to comply with applicable legal and regulatory requirements, to the extent they are responsible for such compliance; and
(vii) problems of a contractor or consultant with managing their workforce, labor unrest or other employment issues.
In addition,
the Debtors may incur liability to third parties as a result of the actions of their contractors or consultants. The occurrence of one or more of these risks could decrease the Debtors gold and silver production, increase the Debtors
costs, delay expansion projects, and adversely affect their results and financial position.
|
12. |
The Debtors cannot be certain that their development and potential future exploration activities will be commercially successful. |
Substantial expenditures are required to further explore the Hycroft Mine, to establish reserves and other mineralized material through
drilling and analysis, to develop metallurgical processes to extract metal from the ore and, in the case of new properties or the expansion of their existing projects, to develop the mining and processing facilities and infrastructure at any site
chosen for mining. The Debtors cannot provide assurance that any reserves or other mineralized material discovered will be in sufficient quantities to justify commercial operations or that the funds required for development can be obtained on a
timely basis. A number of factors, including costs, actual mineralization, consistency and reliability of ore grades and commodity prices, affect successful project development. The efficient operation of processing facilities, the existence of
competent operational management, as well as the availability and reliability of appropriately skilled and experienced consultants also can affect successful project development. There can be no assurance that the Debtors development and
future exploration programs, including the advancement of the Hycroft Mine oxide operation (to the extent mining is recommenced, if at all) and the updated Hycroft milling feasibility study for the mill expansion project, will result in economically
viable mining operations or yield new mineral reserves or other mineralized material.
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13. |
The Debtors ability to find and acquire new mineral properties and prospects for the future growth of the Debtors business are uncertain. |
Because mines have limited lives based on proven and probable ore reserves, the Debtors are continually seeking to replace and expand their ore
reserves. Identifying promising mining properties is difficult and speculative. The Debtors encounter strong competition from other mining companies in connection with the acquisition of properties producing or capable of producing gold and silver.
Many of these companies have greater financial resources than the Debtors. Consequently, the Debtors may be unable to replace and expand current ore reserves through the acquisition of new mining properties or interests therein on terms that they
consider acceptable. As a result, the Debtors revenues from the future sale of gold and silver may decline, resulting in lower income and reduced growth.
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14. |
Mining development, exploration, and processing operations pose risks and costs that may negatively impact the Debtors business. |
Mining development, exploration, and processing operations involve many hazards and uncertainties, including, among others: (i) unusual
and unexpected rock formations or water conditions; (ii) seismic activity; (iii) metallurgical or other processing problems; (iv) ground or slope failures; (v) industrial accidents; (vi) environmental contamination or
leakage; (vii) fires; (viii) flooding and periodic interruptions due to inclement or hazardous weather conditions or other acts of nature; (ix) organized labor disputes or work slow-downs; (x) mechanical equipment failure and
facility performance problems; and (xi) the availability of critical materials, equipment and skilled labor.
These occurrences could
result in damage to, or destruction of, the Debtors properties or production facilities, personal injury or death, environmental damage, delays in mining or processing, increased production costs, asset write downs, monetary losses and legal
liability, any of which could have an adverse effect on the Debtors results and financial condition and adversely affect their projected development and production estimates.
36
|
15. |
The Debtors may be adversely affected by challenges relating to slope stability. |
The Debtors open pit mines get deeper as and to the extent they mine them, presenting certain geotechnical challenges including the
possibility of slope failure. If the Debtors are required to decrease pit slope angles or provide additional road access to prevent such a failure, their stated reserves could be negatively affected. Further, hydrological conditions relating to pit
slopes, renewal of material displaced by slope failures and increased stripping requirements could also negatively affect their stated reserves. The Debtors have taken actions in order to maintain slope stability, but cannot provide any assurances
that they will not have to take additional action in the future or that their actions taken to date will be sufficient. Unexpected failure or additional requirements to prevent slope failure may negatively affect the Debtors results and
financial condition, as well as have the effect of diminishing their stated ore reserves.
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16. |
The Debtors insurance may not cover all of the risks associated with the Debtors business. |
The mining business is subject to risks and hazards, including construction risks, environmental hazards, industrial accidents, the
encountering of unusual or unexpected geological formations, slide-ins, flooding, earthquakes, and periodic interruptions due to inclement or hazardous weather conditions. These occurrences could result in damage to, or destruction of, mineral
properties or production facilities, personal injury or death, environmental damage, reduced production and delays in mining, asset write-downs, monetary losses and possible legal liability. Insurance fully covering many of these risks is not
generally available to the Debtors and if it is, the Debtors may elect not to obtain such insurance because of the high premium costs or commercial impracticality. The Debtors do not currently carry business interruption insurance and have no plans
to obtain such insurance in the future. Any liabilities that the Debtors incur for these risks and hazards could be significant and could adversely affect the Debtors results, cash flows and financial condition.
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17. |
The Debtors operations are subject to numerous governmental permits that are difficult to obtain and the Debtors may not be able to obtain or renew all of the permits they require, or such permits may
not be timely obtained or renewed. |
In the ordinary course of business the Debtors are required to obtain and
renew governmental permits for the Debtors operations, including in connection with the Debtors mining and exploration plans at the Hycroft Mine. The Debtors also need additional governmental permits in order to complete their expansion
of the Hycroft Mine operations, including without limitation, permits to construct the tailings impoundment and allow mining below the water table. Obtaining or renewing the necessary governmental permits is a complex, costly and time-consuming
process. The duration and success of the Debtors efforts to obtain and renew permits are contingent upon many variables not within the Debtors control, including the interpretation of applicable requirements implemented by the permitting
authority and intervention by third parties in any required environmental review. The Debtors may not be able to obtain or renew permits that are necessary to their operations on a timely basis or at all, and the cost to obtain or renew permits may
exceed the Debtors estimates. Failure to comply with the terms of the Debtors permits may result in injunctions, fines, suspension or revocation of permits and other penalties. The Debtors can provide no assurance that they have been, or
will at all times be, in full compliance with all of the terms of their permits or that they have all required permits.
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18. |
Compliance with current and future government regulations may cause the Debtors to incur significant costs. |
The Debtors operations are subject to extensive federal and state legislation governing matters such as mine safety, occupational health,
labor standards, prospecting, exploration, production, exports, toxic and hazardous substances, explosives, management of natural resources, price controls, land use, water use, air emissions, waste disposal, environmental review and taxes.
Compliance with this and other legislation could require the Debtors to make significant financial outlays. The enactment of new legislation or more stringent enforcement of current legislation may increase costs, which could have a negative effect
on the Debtors financial position, results of operations, and liquidity. The Debtors cannot make assurances that they will be able to adapt to these regulatory developments on a timely or cost-effective basis. Violations of these laws,
regulations and other regulatory requirements could lead to substantial fines, penalties or other sanctions, including possible shut-downs of the Hycroft Mine or future operations, as applicable.
37
|
19. |
Any defects in title could cause the Debtors to lose their rights in mineral properties and jeopardize their business operations. |
The Debtors mineral properties consist of private mineral rights, leases covering private lands, leases of patented mining claims and
unpatented mining claims. Many of the Debtors mining properties in the U.S. are unpatented mining claims located on lands administered by the Bureau of Land Management (the BLM), Nevada State Office to which the Debtors have
only possessory title. Because title to unpatented mining claims is subject to inherent uncertainties, it is difficult to determine conclusively ownership of such claims. These uncertainties relate to such things as sufficiency of mineral discovery,
proper location and posting and marking of boundaries, and possible conflicts with other claims not determinable from descriptions of record. The Debtors believe that a substantial portion of all mineral exploration, development and mining in the
U.S. now occurs on unpatented mining claims, and this uncertainty is inherent in the mining industry.
The present status of the
Debtors unpatented mining claims located on public lands allows the Debtors the right to mine and remove valuable minerals, such as precious and base metals, from the claims conditioned upon applicable environmental reviews and permitting
programs. The Debtors also are generally allowed to use the surface of the land solely for purposes related to mining and processing the mineral-bearing ores. However, legal ownership of the land remains with the U.S. government. The Debtors remain
at risk that the mining claims may be forfeited either to the U.S. government or to rival private claimants due to failure to comply with statutory requirements. If the Debtors do not obtain fee title to their unpatented mining claims, the Debtors
can provide no assurance that they will be able to obtain compensation in connection with the forfeiture of such claims.
Finally, there
may be challenges to title to the mineral properties in which the Debtors hold a material interest. If there are title defects with respect to any properties, the Debtors might be required to compensate other persons or perhaps reduce their interest
in the affected property. Also, in any such case, the investigation and resolution of title issues could divert the Debtors managements time from any ongoing production, exploration and development programs.
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20. |
Proposed legislation, if enacted, could significantly affect the cost of the Debtors operations on their unpatented mining claims or the amount of Net Proceeds of Mineral Tax the Debtors pay to the
State of Nevada. |
Members of the U.S. Congress have repeatedly introduced bills which would supplant or alter
the provisions of the Mining Law of 1872. Such bills have proposed, among other things, to either eliminate or greatly limit the right to a mineral patent and to impose a federal royalty on production from unpatented mining claims. Such proposed
legislation could change the cost of holding unpatented mining claims and could significantly impact the Debtors ability to develop mineralized material on unpatented mining claims. A majority of the Debtors mining claims are on
unpatented claims. Although the Debtors cannot predict what legislated royalties might be, the enactment of these proposed bills could adversely affect the potential for development of their unpatented mining claims and the economics of their
existing operating mines on federal unpatented mining claims. Passage of such legislation could adversely affect the Debtors financial performance.
The Debtors pay Net Proceeds of Mineral Tax (NPT) to the state of Nevada on up to 5% of net proceeds generated from the
Hycroft Mine. Net proceeds are calculated as the excess of gross yield over direct costs. Gross yield is determined as the value received when minerals are sold, exchanged for anything of value or removed from the state. Direct costs generally
include the costs to develop, extract, produce, transport and refine minerals. From time to time Nevada legislators introduce bills which aim to increase the amount of NPT mining companies operating in the state pay. If legislation is passed that
increases the NPT that the Debtors must pay to the state of Nevada, the Debtors business, results of operations, and cash flows could be negatively impacted.
38
|
C. |
Risks Related to Environmental Issues |
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1. |
Environmental regulations could require the Debtors to make significant expenditures or expose the Debtors to potential liability. |
To the extent that the Debtors become subject to environmental liabilities, the payment of such liabilities or the costs that the Debtors may
incur, including costs to investigate and/or remediate environmental pollution, would reduce funds otherwise available to the Debtors and could have a material adverse effect on their financial condition, results of operations, and liquidity. If the
Debtors are unable to fully remediate an environmental violation or release of hazardous substances, they may be required to suspend operations or enter into interim compliance measures pending completion of the required remedial or corrective
action. The environmental standards that may ultimately be imposed at a mine site can vary and may impact the cost of remediation. Actual remedial costs may exceed the financial accruals that have been made for such remediation. The potential
exposure may be significant and could have a material adverse effect on the Debtors financial condition and results of operations.
Moreover, governmental authorities and private parties may bring lawsuits based upon damage to property or natural resources and injury to
persons resulting from the environmental, health and safety impacts of the Debtors past and current operations, which could lead to the imposition of substantial fines, remediation costs, penalties, injunctive relief and other civil and
criminal sanctions. Substantial costs and liabilities, including those required to restore the environment after the closure of mines, are inherent in the Debtors operations. Although the Debtors believe that they are in substantial compliance
with applicable laws and regulations, they cannot provide any assurance that any such law, regulation, enforcement or private claim will not have a negative effect on the Debtors business, financial condition or results of operations.
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2. |
The Debtors exploration activities (to the extent recommenced) and development operations are subject to extensive environmental regulations, which could result in the incurrence of additional costs
and operational delays. |
All phases of the Debtors operations are subject to extensive federal and state
environmental regulation. These environmental regulations require the Debtors to obtain various operating permits, approvals and licenses and also impose standards and controls relating to exploration, development and production activities. For
instance, the Debtors are required to hold a Nevada Reclamation Permit with respect to the Hycroft Mine. This permit mandates concurrent and post-mining reclamation of mines and requires the posting of reclamation bonds sufficient to guarantee the
cost of mine reclamation. The Debtors have set up a provision for their reclamation bond at the Hycroft Mine. Compliance with this and other federal and state regulations could result in delays in beginning or expanding operations, incurring
additional costs for investigation or cleanup of hazardous substances, payment of penalties for non-compliance or discharge of pollutants, and post-mining closure, reclamation and bonding, all of which could have an adverse impact on the
Debtors financial performance and results of operations.
The Debtors are required to mitigate long-term environmental impacts by
stabilizing, contouring, re-sloping and re-vegetating various portions of a site after mining and mineral processing operations are completed. These reclamation efforts will be conducted in accordance with detailed plans, which must be reviewed and
approved by the appropriate regulatory agencies. The Debtors principal reclamation liability is at the Hycroft Mine and is fully secured by surface management surety bonds that meet the financial bonding requirements of the BLM. The
Debtors most recent reclamation cost estimate was approved by the BLM in their January 2014 decision letter and totals $58.3 million. At December 31, 2014, the Debtors surface management surety bonds totaled $59.9 million, which
were partially collateralized by restricted cash of $38.1 million. If the Debtors were to carry out unanticipated reclamation work in the future, their financial position could be adversely affected or their posted bonds may be insufficient.
In connection with the issuance of the surety bonds, the Debtors entered into indemnity agreements with their commercial surety companies that
obligate the Debtors to indemnify the sureties in the event that the Debtors fail to comply with applicable regulations and the surety bonds are forfeited to the governmental agencies. Therefore, default by the Debtors or the Reorganized Debtors may
result in additional claims for indemnity by any surety that had issued surety bonds related to the operations.
39
One of the sureties, Westchester Fire Insurance Company (Westchester), has
asserted that the existing surety bonds may not be assumed by the Debtors for use by the Reorganized Debtors. Westchester has asserted that under certain facts and circumstances the state and federal regulatory authorities may require the transfer
of the Hycroft mining permit and a replacement of the existing surety bonds with new surety bonds or other adequate financial assurance. Westchester has also asserted that the Bankruptcy Code prevents the assumption of the existing surety bonds for
use by the Reorganized Debtors unless an agreement is reached with the surety for consent for such an assumption. The Debtors dispute Westchesters assertions. The ability of the Reorganized Debtors to replace the approximate $59.9 million in
surety bonds in the event that Westchester prevails with respect to its assertions may affect the Debtors ability to complete the reorganization.
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3. |
Changes in environmental regulations could adversely affect the Debtors cost of operations or result in operational delays. |
The regulatory environment in which the Debtors operate is evolving in a manner that will require stricter standards and enforcement, increased
fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. New environmental laws and regulations or
changes in existing environmental laws and regulations could have a negative effect on exploration activities, operations, production levels and methods of production. The Debtors can provide no assurance that future changes in environmental laws
and regulations will not adversely affect their current operations or future projects. Any changes to these laws and regulations could have an adverse impact on the Debtors financial performance and results by, for example, requiring changes
to operating constraints, technical criteria, fees or surety requirements.
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4. |
Regulations and pending legislation governing issues involving climate change could result in increased operating costs, which could have a material adverse effect on the Debtors business, and climate
change could have an adverse impact on the Debtors cost of operations. |
Regulations and pending
legislation governing issues involving climate change could result in increased operating costs, which could have a material adverse effect on the Debtors business. A number of governments or governmental bodies have introduced or are
contemplating regulatory changes in response to various climate change interest groups and the potential impact of climate change. Legislation and increased regulation regarding climate change could impose significant costs on the Debtors, their
venture partners and their suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting and other costs to comply with such regulations. Any adopted future climate change regulations
could also negatively impact the Debtors ability to compete with companies situated in areas not subject to such regulations. Given the emotion, political significance and uncertainty around the impact of climate change and how it should be
dealt with, the Debtors cannot predict how legislation and regulation will affect their financial condition, operating performance and ability to compete. Furthermore, even without such regulation, increased awareness and any adverse publicity in
the global marketplace about potential impacts on climate change by the Debtors or other companies in the mining industry could harm the Debtors reputation.
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D. |
Risks Related to the Debtors Indebtedness and Plan Securities |
|
1. |
The outstanding indebtedness may adversely affect the Reorganized Debtors financial health and operating flexibility. |
The terms of the New First Lien Term Loans and the New Second Lien Convertible Notes may require the Reorganized Debtors to take, or refrain
from taking, certain actions in order to satisfy certain customary affirmative and negative covenants and to meet certain financial ratios and tests, including ratios and tests based on leverage, interest coverage, and net worth. For example, these
covenants and other restrictions may limit the ability of the Reorganized Debtors to, among other things, incur indebtedness, create liens on assets, sell assets, manage cash flows, transfer assets to other subsidiaries, make capital expenditures,
engage in mergers and acquisitions, enter into risk management contracts, and make distributions to equity holders. These covenants and other restrictions may adversely affect the financial health and operating flexibility of the Reorganized Debtors
by, among other things: (a) limiting the Reorganized Debtors ability to borrow additional amounts for working capital, capital expenditures, debt service requirements, execution of business
40
strategies, and development or other purposes; (b) limiting the Reorganized Debtors ability to use operating cash flows in other areas of the business or to pay dividends;
(c) increasing the vulnerability of the Reorganized Debtors to general adverse economic and industry conditions, including increases in interest rates; (d) limiting the Reorganized Debtors ability to capitalize on business
opportunities, reinvest in or develop the Reorganized Debtors assets, and react to competitive pressures and adverse changes in government regulations; (e) limiting the Reorganized Debtors ability, or increasing the costs, to
restructure funded indebtedness; (f) limiting the Reorganized Debtors ability to enter into marketing transactions by reducing the number of potential counterparties to such transactions as well as the volume of those transactions; and
(g) giving secured lenders the ability to foreclose on assets.
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2. |
Continuing leverage and ability to service their debts. |
The
Debtors believe that, following consummation of the Plan, the Reorganized Debtors will be able to meet their anticipated future operating expenses, capital expenditures, and debt service obligations. However, the Reorganized Debtors ability to
meet their debt service obligations and to carry out capital spending that is important to their growth and productivity will depend on a number of factors, including future performance, cash flows, and their ability to achieve their business plan.
These factors will be affected by general economic, financial, competitive, regulatory, business, and other factors that are beyond the Reorganized Debtors control. Accordingly, the Reorganized Debtors cannot provide assurances that they will
be able to meet their debt service obligations. In the event the Reorganized Debtors are unable to meet their debt service obligations, the lenders or other holders of indebtedness could declare a default. In the event of such a default:
(a) the lenders or other holders of indebtedness could require the Reorganized Debtors to restructure their debt, post additional collateral, enhance their equity and liquidity, increase their interest payments or pay down their indebtedness;
(b) the lenders or other holders of indebtedness could elect to declare all the funds borrowed thereunder to be due and payable and, if not paid on demand, institute foreclosure proceedings against the Reorganized Debtors assets securing
such indebtedness; or (c) even if those lenders or other holders do not declare a default, they may be able to cause all of the Reorganized Debtors available Cash to be used to repay the indebtedness owed to them or restrict the
Reorganized Debtors access to their Cash.
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3. |
The value of the New Common Stock may be volatile and adversely affected by a number of factors. |
The value of the New Common Stock may be volatile and adversely affected by a number of factors, including many of the risks described in this
Disclosure Statement, as well as the Reorganized Debtors actual results and prospects. If, for example, the Reorganized Debtors fail to comply with the covenants in the agreements governing the New First Lien Term Loans, or the New Second Lien
Convertible Notes, resulting in an event of default thereunder, certain of the Reorganized Debtors outstanding indebtedness could be accelerated, which could have a material adverse effect on the value of the New Common Stock.
|
4. |
The New Common Stock in Reorganized ANV will be subordinated to the indebtedness under the New First Lien Term Loans and the New Second Lien Convertible Notes. |
The Debtors obligations under the New First Lien Term Loans and the New Second Lien Convertible Notes and other non-equity claims will
rank senior to the New Common Stock in Reorganized ANV as to rights upon any foreclosure, dissolution, winding up, liquidation or reorganization, or other bankruptcy proceeding. In the event of any distribution or payment of the Reorganized
Debtors assets under any of the foregoing circumstances, the Reorganized Debtors creditors will have a superior claim and interest, as applicable, to the equity in Reorganized ANV. If any of the foregoing events occur, there can be no
assurance that there will be sufficient assets to warrant any distribution to holders of equity in Reorganized ANV.
|
5. |
The New Common Stock may not have an established trading market. |
The New Common Stock may not be listed on a national securities exchange and the Reorganized Debtors may not file any reports with the SEC.
Accordingly, there may be no public market for the New Common Stock and there can be no guarantee that liquid trading markets for the New Common Stock will develop. In the event a liquid trading market for the New Common Stock does not develop, the
ability to transfer or sell New Common Stock may be substantially limited.
41
|
6. |
Certain Holders of New Common Stock may be restricted in their ability to transfer or sell their securities. |
To the extent that the offer and sale of the New Common Stock issued under the Plan is covered by Bankruptcy Code section 1145(a)(1), the
New Common Stock may be resold by the holders thereof without registration under the Securities Act, provided that the holder is not an underwriter as defined in Bankruptcy Code section 1145(b) with respect to such securities.
Resales by Persons who receive New Common Stock pursuant to the Plan that are deemed to be underwriters would not be exempted from registration under the Securities Act by Bankruptcy Code section 1145. Such Persons only would be
permitted to resell the New Common Stock without registration if they are able to comply with an applicable exemption from registration, which would be the case in connection with a resale transaction satisfying the conditions to Rule 144 under the
Securities Act.
To the extent that the offer, issuance, distribution and sale of the New Second Lien Convertible Notes (and the
guarantees thereof) and the shares of New Common Stock or other Securities to be received upon conversion thereof are covered by Section 4(a)(2) of the Securities Act, the New Second Lien Convertible Notes (and the guarantees thereof) and the
shares of New Common Stock or other Securities to be received upon conversion thereof are restricted securities within the meaning of Rule 144 under the Securities Act and subject to the transfer restrictions applicable thereto. For the
avoidance of doubt, the New Second Lien Convertible Notes are being issued pursuant to the Exit Facility and the Disclosure Statement is not a solicitation or offering with respect to the New Second Lien Convertible Notes.
The New Common Stock may not be registered under the Securities Act or any state securities laws, and the Debtors make no representation
regarding the right of any Holder of New Common Stock to freely resell the New Common Stock.
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E. |
Risks Associated with Financial Information and Projections |
|
1. |
Inherent uncertainty of Debtors Financial Projections. |
The
Financial Projections, attached hereto as Exhibit C, were prepared by the Debtors to demonstrate to the Bankruptcy Court the feasibility of the Plan and their ability to continue the Ongoing Operations upon emergence from chapter 11. This
information was prepared for the limited purpose of furnishing recipients of this Disclosure Statement with adequate information to make an informed judgment regarding acceptance of the Plan, and was not prepared for the purpose of providing the
basis for an investment decision relating to the issuance of the New Common Stock. This information was not audited or reviewed by the Debtors independent public accountants. The Debtors do not intend to update or otherwise revise the
Financial Projections, including any revisions to reflect events or circumstances existing or arising after the date of this Disclosure Statement or to reflect the occurrence of unanticipated events, even if any or all of the underlying assumptions
do not come to fruition. Furthermore, the Debtors do not intend to update or revise the Financial Projections to reflect changes in general economic or industry conditions.
At the time they were prepared, the Financial Projections reflected numerous assumptions concerning the Debtors anticipated future
performance and with respect to prevailing and anticipated market and economic conditions that were and remain beyond their control and that may not materialize. Projections are inherently subject to substantial and numerous uncertainties and to a
wide variety of significant business, economic and competitive risks, and the assumptions underlying the Financial Projections and/or valuation estimates may prove to be wrong in material respects. Actual results may vary significantly from those
contemplated by the Financial Projections. As a result, such projections are only an estimate and should not be relied upon as necessarily indicative of future, actual recoveries.
The business plan was developed by the Debtors with the help of their advisors. There can be no assurances that the Debtors business
plan will not change, perhaps materially, as a result of decisions management makes after fully evaluating the strategic direction of the Debtors and their business plan. Any deviations from the Debtors business plan would necessarily cause a
deviation from the Financial Projections, and could result in materially different outcomes from those projected.
42
|
2. |
The financial information contained in this Disclosure Statement has not been audited |
In preparing this Disclosure Statement, the Debtors relied on financial data derived from their books and records that was available at the
time of such preparation. Although the Debtors have used their reasonable business judgment to ensure the accuracy of the financial information provided in this Disclosure Statement, and while the Debtors believe that such financial information
fairly reflects the financial condition of the Debtors, the Debtors are unable to represent or warrant that the financial information contained in this Disclosure Statement and attached hereto is without inaccuracies.
IX. |
SOLICITATION AND VOTING PROCEDURES |
On April 24, 2015 the Debtors filed the
Debtors Motion for an Order (I) Approving Proposed Disclosure Statement and the Form and Manner of the Notice of the Disclosure Statement Hearing, (II) Establishing Solicitation and Voting Procedures, (III) Scheduling a Confirmation
Hearing, and (IV) Establishing Notice and Objection Procedures for Confirmation of Debtors Plan of Reorganization [Docket No. 253]. Revised Ballots and the proposed order of the Bankruptcy Court approving the form of the Ballots and
the Solicitation of the Plan, which had been amended to reflect the terms of the Amended and Restated Restructuring Support Agreement and the Plan, were filed by the Debtors on July 23, 2015.
The Disclosure Statement Order will be accompanied by an applicable Ballot to be used for voting on the Plan, and will be distributed to the
Holders of Claims in Class 1, Class 2 and Class 4, as applicable. The procedures and instructions for voting and related deadlines will be attached to the applicable Ballot. Any party who desires additional copies of these documents may
request them from the Balloting Agent by writing to 830 Third Avenue, 9th Floor, New York, NY 10022, calling (855) 936-2883 or emailing angballots@PrimeClerk.com.
X. |
CONFIRMATION OF THE PLAN |
|
A. |
Requirements for Confirmation of the Plan |
Among the requirements for Confirmation of
the Plan pursuant to Bankruptcy Code section 1129 are: (i) the Plan is in the best interests of Holders of Claims and Interests; (ii) the Plan is feasible; and (iii) the Plan is accepted by all Impaired Classes of Claims
and Interests, or if rejected by an Impaired Class or if an Impaired Class is deemed to reject, the Plan does not discriminate unfairly and is fair and equitable as to the Class.
At the Confirmation Hearing, the Bankruptcy Court will determine whether the Plan satisfies all of the requirements of Bankruptcy Code section
1129. The Debtors believe that: (i) the Plan satisfies or will satisfy all of the necessary statutory requirements of chapter 11; (ii) the Debtors have complied or will have complied with all of the necessary requirements of chapter 11;
and (iii) the Plan has been proposed in good faith.
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B. |
Best Interests of Creditors/Liquidation Analysis |
Often called the best
interests test, Bankruptcy Code section 1129(a)(7) requires that a bankruptcy court find as a condition to confirmation, that a chapter 11 plan provides, with respect to each impaired17
class of claims or interests, that each holder of an impaired claim or interest in such class either (i) has accepted the plan or (ii) will receive or retain under the plan property of a value that is not less than the amount that the
holder would receive or retain if the debtors liquidated under chapter 7.
The Debtors believe that the Plan meets the best
interests of creditors test of Bankruptcy Code section 1129(a)(7). Attached hereto as Exhibit D and incorporated herein by reference is a liquidation analysis (the Liquidation Analysis) prepared by the Debtors with
the assistance of the Debtors financial and legal advisors. As reflected in the
17 |
A class of claims or interests is impaired within the meaning of Bankruptcy Code section 1124 unless the plan (i) leaves unaltered the legal, equitable and contractual rights to which the claim or
interest entitles the holder of such claim or interest or (ii) cures any default, reinstates the original terms of such obligation, compensates the holder for certain damages or losses, as applicable, and does not otherwise alter the legal,
equitable or contractual rights to which such claim or interest entitles the holder of such claim or interest. |
43
Liquidation Analysis, the Debtors believe that liquidation of the Debtors business under chapter 7 of the Bankruptcy Code would result in significantly reduced recoveries for Holders of
Impaired Claims or Interests as compared to distributions contemplated under the Plan.
Bankruptcy Code section 1129(a)(11) requires that confirmation of a plan of
reorganization is not likely to be followed by the liquidation, or the need for further financial reorganization of the debtor, or any successor to the debtor (unless such liquidation or reorganization is proposed in the plan of reorganization).
To determine whether the Plan meets this feasibility requirement, the Debtors have analyzed their ability to meet their respective
obligations under the Plan. As part of this analysis, the Debtors have prepared the Financial Projections attached hereto as Exhibit C and incorporated herein by reference. Based upon the Financial Projections, the Debtors believe that they
will be a viable operation following these Chapter 11 Cases and that the Plan will meet the feasibility requirements of the Bankruptcy Code.
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D. |
Acceptance by Impaired Classes |
The Bankruptcy Code requires, as a condition to
confirmation, except as described in the following section, that each class of claims or equity interests impaired under a plan, accept the plan. A class that is not impaired under a plan is deemed to have accepted the plan and, therefore,
solicitation of acceptances with respect to such a class is not required.
Bankruptcy Code section 1126(c) defines acceptance of a plan by
a class of impaired creditors as acceptance by holders of at least two-thirds in dollar amount and more than one-half in number of claims in that class, but for that purpose counts only those who actually vote to accept or to reject a plan. Thus, a
Class of Claims will have voted to accept the Plan only if two-thirds in amount and more than one-half in number actually voting cast their Ballots in favor of acceptance, subject to Article III of the Plan.
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E. |
Confirmation without Acceptance by All Impaired Classes |
Bankruptcy Code section 1129(b)
allows a bankruptcy court to confirm a plan even if impaired classes entitled to vote on the plan have not accepted it or if an impaired class is deemed to reject the plan; provided, however, the plan is accepted by at least one
impaired class of claims (without regard to the votes of insiders). Pursuant to Bankruptcy Code section 1129(b), notwithstanding an impaired classs rejection or deemed rejection of the plan, such plan will be confirmed, at the plan
proponents request, in a procedure commonly known as cram down, so long as the plan does not discriminate unfairly and is fair and equitable with respect to each class of claims or interests that is impaired
under, and has not accepted, the plan.
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1. |
No Unfair Discrimination |
The test for unfair discrimination
applies to classes of claims or interests that are of equal priority and are receiving different treatment under a plan. The test does not require that the treatment be the same or equivalent but that such treatment be fair. In general,
bankruptcy courts consider whether a plan discriminates unfairly in its treatment of classes of claims of equal rank (e.g., classes of the same legal character). The Debtors do not believe the Plan discriminates unfairly against any Impaired Class
of Claims or Interests. The Debtors believe that the Plan and the treatment of all Classes of Claims and Interests satisfy the foregoing requirements for non-consensual Confirmation.
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2. |
Fair and Equitable Test |
The fair and equitable test applies to
classes of different priority and status (e.g., secured versus unsecured) and includes the general requirement that no class of claims receive more than 100% of the amount of the allowed claims in such class. As to each non-accepting class,
the test sets different standards depending on the type of claims or interests in such class. As set forth below, the Debtors believe that the Plan satisfies the fair and equitable requirement, notwithstanding the fact that certain
Classes are deemed to reject the Plan. There is no Class receiving more than a 100 percent recovery and no junior Class is receiving a distribution under the Plan until all senior Classes have received a 100 percent recovery.
44
Secured Claims
The condition that a plan be fair and equitable to a non-accepting class of secured claims may be satisfied, among other things, if
a debtor demonstrates that: (i) the holders of such secured claims retain the liens securing such claims to the extent of the allowed amount of the claims, whether the property subject to the liens is retained by the debtor or transferred to
another entity under the plan; and (ii) each holder of a secured claim in the class receives deferred cash payments totaling at least the allowed amount of such claim with a present value, as of the effective date of the plan, at least
equivalent to the value of the secured claimants interest in the debtors property subject to the liens.
Unsecured Claims
The condition that a plan be fair and equitable to a non-accepting class of unsecured claims includes the requirement that either:
(i) the plan provides that each holder of a claim of such class receive or retain on account of such claim property of a value, as of the effective date of the plan, equal to the allowed amount of such claim; or (ii) the holder of any
claim or interest that is junior to the claims of such class will not receive or retain any property under the plan on account of such junior claim or junior interest.
Interests
The condition that a plan be
fair and equitable to a non-accepting class of interests includes the requirements that either: (i) the plan provides that each holder of an interest in that class receives or retains under the plan on account of that interest
property of a value, as of the effective date of the plan, equal to the greater of: (1) the allowed amount of any fixed liquidation preference to which such holder is entitled; (2) any fixed redemption price to which such holder is
entitled; or (3) the value of such interest; or (ii) if the class does not receive the amount as required under (i) no class of interests junior to the non-accepting class may receive a distribution under the plan.
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F. |
Valuation of the Debtors |
In conjunction with formulating the Plan and satisfying their
obligations under Bankruptcy Code section 1129, the Debtors determined that it was necessary to estimate the post-Confirmation going concern value of the Reorganized Debtors. Based on the projections and solely for the purposes of the Plan,
Moelis & Company LLC, the Debtors financial advisor, has undertaken a valuation analysis (the Valuation Analysis) to estimate the value available for distribution to Holders of Allowed Claims and Interests entitled
to receive distributions under the Plan. The Valuation Analysis is set forth in Exhibit E attached hereto and is incorporated herein by reference.
XI. |
APPLICABILITY OF FEDERAL AND OTHER SECURITIES LAWS |
On the Effective Date, Reorganized ANV shall issue on a Pro Rata basis,
100% of the shares of the New Common Stock to Holders of Allowed Unsecured Claims in accordance with Article 2.10 of the Plan (the Plan Securities), subject to dilution on account of the conversion of the New Second Lien
Convertible Notes.
The Debtors believe that the Plan Securities constitute securities, as defined in section 2(a)(1) of the
Securities Act, Bankruptcy Code section 101, and applicable state securities laws (Blue Sky Laws).
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B. |
Issuance and Resale of Plan Securities Under the Plan |
|
1. |
Exemptions from Registration |
The Debtors are relying on Bankruptcy
Code section 1145(a) to exempt from registration under the Securities Act and Blue Sky Laws the offer, issuance, and distribution of the Plan Securities.
45
Bankruptcy Code section 1145 provides that the registration requirements of section 5 of the
Securities Act (and any state Blue Sky Law requirements) shall not apply to the offer or sale of stock, options, warrants, or other securities by a debtor if (a) the offer or sale occurs under a plan of reorganization; (b) the recipients
of the securities hold a claim against, an interest in, or claim for administrative expense against, the debtor; and (c) the securities are issued in exchange for a claim against or interest in a debtor or are issued principally in such
exchange and partly for Cash and property.
In reliance upon this exemption, the offer and sale of the Plan Securities will not be
registered under the Securities Act or any state Blue Sky Laws.
The offering, issuance and distribution of the Plan Securities is covered
by Bankruptcy Code section 1145 and will be deemed a public offering. Accordingly, the Plan Securities will not be deemed restricted securities as defined under Rule 144(a)(3) of the Securities Act and may be resold without registration
under the Securities Act, unless the Holder is an underwriter (as discussed below) with respect to such securities, as that term is defined in Bankruptcy Code section 1145(b). In addition, the Plan Securities generally may be resold
without registration under state securities laws pursuant to various exemptions provided by the respective Blue Sky Laws of those states; however, the availability of such exemptions cannot be determined unless individual state Blue Sky Law
provisions are examined. Therefore, recipients of the Plan Securities are advised to consult with their own legal advisors as to the availability of any such exemption from registration under state Blue Sky Laws in any given instance and as to any
applicable requirements or conditions to such availability.
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2. |
Resales of Plan Securities; Definition of Underwriter |
If the
Holder of the Plan Securities is an underwriter as defined in Bankruptcy Code section 1145(b), the Plan Securities may be resold under the Securities Act and applicable state Blue Sky Laws only via an effective registration statement under the
Securities Act or pursuant to an applicable exemption from registration, including, with respect to the latter, a resale transaction satisfying the applicable conditions of Rule 144 promulgated under the Securities Act. Bankruptcy Code section
1145(b)(1) defines an underwriter as one who, except with respect to ordinary trading transactions of an entity that is not an issuer, (a) purchases a claim against, interest in, or claim for an administrative expense in
the case concerning, the debtor, if such purchase is with a view to distribution of any security received or to be received in exchange for such claim or interest; (b) offers to sell securities offered or sold under a plan for the holders of
such securities; (c) offers to buy securities offered or sold under a plan from the holders of such securities, if such offer to buy is (i) with a view to distribution of such securities and (ii) under an agreement made in connection
with the plan, with the consummation of the plan, or with the offer or sale of securities under the plan; or (d) is an issuer of the securities within the meaning of section 2(a)(11) of the Securities Act. In addition, a Person who receives a
fee in exchange for purchasing an issuers securities could also be considered an underwriter within the meaning of section 2(a)(11) of the Securities Act.
The definition of an issuer for purposes of whether a Person is an underwriter under Bankruptcy Code section 1145(b)(1)(D), by
reference to section 2(a)(11) of the Securities Act, includes as statutory underwriters all persons who, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with, an issuer
of securities. The reference to issuer, as used in the definition of underwriter contained in section 2(a)(11), is intended to cover controlling persons of the issuer of the securities. Control, as
defined in Rule 405 of the Securities Act, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or
otherwise. Accordingly, an officer or director of a reorganized debtor or its successor under a plan of reorganization may be deemed to be a controlling person of such debtor or successor, particularly if the management position or
directorship is coupled with ownership of a significant percentage of the reorganized debtors or its successors voting securities. Moreover, the legislative history of Bankruptcy Code section 1145 suggests that a creditor who owns ten
percent (10%) or more of a class of voting securities of a reorganized debtor may be presumed to be a controlling person and, therefore, an underwriter.
Under certain circumstances, Holders of Plan Securities who are deemed to be underwriters may be entitled to resell their Plan
Securities pursuant to the limited resale safe harbor provisions of Rule 144. Generally, Rule 144 would permit the public resale of securities received by such person if current information regarding the issuer is publicly available and if volume
limitations, manner of sale requirements and certain other conditions are met. However, the Debtors do not presently intend to make publicly available the requisite current information regarding the Debtors, and as a result, Rule 144 will not be
available for resales of Plan Securities by Persons deemed to be underwriters. Whether any particular Person would be deemed to be an underwriter (including whether such Person is a controlling person) with
46
respect to the Plan Securities would depend upon various facts and circumstances applicable to that Person. Accordingly, the Debtors express no view whether any Person would be deemed an
underwriter with respect to the Plan Securities. In view of the complex nature of the question of whether a particular Person may be an underwriter, the Debtors make no representations concerning the right of any Person to
freely resell Plan Securities. Accordingly, the Debtors recommend that potential recipients of Plan Securities consult their own counsel concerning their ability to freely trade such securities without compliance with the federal and state
securities laws.
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C. |
Listing of New Common Stock |
The Debtors may, but shall not be obligated to, list the
New Common Stock on a national securities exchange.
XII. |
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN |
The following is a summary of
certain U.S. federal income tax consequences of the Plan to the Debtors and certain Holders of Claims or Interests. This summary is based on the Internal Revenue Code of 1986, as amended (the Tax Code), Treasury regulations
thereunder, and administrative and judicial interpretations and practice, all as in effect on the date of this Disclosure Statement and all of which are subject to change, with possible retroactive effect. Due to the lack of definitive judicial and
administrative authority in a number of areas, substantial uncertainty may exist with respect to some of the tax consequences described below. No opinion of counsel has been obtained, and the Debtors do not intend to seek a ruling from the Internal
Revenue Service (the IRS) as to any of the tax consequences of the Plan discussed below. Events occurring after the date of this Disclosure Statement, including changes in law and changes in administrative positions, could affect
the U.S. federal income tax consequences of the Restructuring Transaction. No representations are being made regarding the particular tax consequences of the confirmation and consummation of the Offer or the Plan to the Debtors or any Holder of a
Claim or Interest. There can be no assurance that the IRS will not challenge one or more of the tax consequences of the Plan described below.
This summary does not apply to Holders of Claims or Interests that are otherwise subject to special treatment under U.S. federal income tax
law (including, for example, banks, governmental authorities or agencies, financial institutions, insurance companies, pass-through entities, tax-exempt organizations, brokers and dealers in securities, mutual funds, small business investment
companies, employees, persons who receive their Claims or Interests pursuant to the exercise of an employee stock option or otherwise as compensation, persons holding Claims or Interests that are a hedge against, or that are hedged against, currency
risk or that are part of a straddle, constructive sale, or conversion transaction and regulated investment companies). The following discussion assumes that Holders of Claims or Interests hold such Claims or Interests as capital assets
within the meaning of Tax Code section 1221. Moreover, this summary does not purport to cover all aspects of U.S. federal income taxation that may apply to the Debtors and Holders of Claims or Interests based upon their particular circumstances.
Additionally, this summary does not discuss any tax consequences that may arise under any laws other than U.S. federal income tax law, including under state, local, estate, gift, non-U.S. or any other applicable tax law.
For purposes of this summary, a U.S. Holder means a Holder of a Claim or Interest that, in any case, is, for U.S. federal income
tax purposes: (i) an individual that is a citizen or resident of the U.S.; (ii) a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the U.S., any state
thereof or the District of Columbia; (iii) an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or (iv) a trust, if (a) a court within the U.S. is able to exercise primary supervision
over its administration and one or more U.S. persons have the authority to control all of the substantial decisions of such trust, or (b) it has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person. A
Non-U.S. Holder means a Holder of a Claim or Interest that is not a U.S. Holder and is, for U.S. federal income tax purposes, an individual, corporation (or other entity treated as a corporation for U.S. federal income tax purposes),
estate or trust.
If an entity taxable as a partnership for U.S. federal income tax purposes holds a Claim, the U.S. federal income tax
treatment of a partner (or other owner) of the entity generally will depend on the status of the partner (or other owner) and the activities of the entity. Such partner (or other owner) should consult its tax advisor as to the tax consequences of
the Plan.
This summary assumes that the Credit Agreement, the Scotiabank Cross Currency Swap, the Diesel Swaps, the Notes, the DIP Credit
Facility, the New First Lien Term Loans and the New Second Lien Convertible Notes are debt for
47
U.S. federal income tax purposes. If the IRS were to successfully assert that any such obligations are not debt for U.S. federal income tax purposes, the U.S. federal income tax consequences to
Holders of such obligations would be materially different from the consequences described herein.
The U.S. federal income tax
consequences of the Plan are complex. The following summary is for informational purposes only and is not a substitute for careful tax planning and advice based on the individual circumstances pertaining to a Holder of a Claim or Interest. All
Holders of Claims and Interests are urged to consult their own tax advisors as to the consequences of the restructuring described in the Plan under federal, state, local, non-U.S. and any other applicable tax laws.
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A. |
U.S. Federal Income Tax Consequences to the Debtors Under the Plan |
For U.S. federal
income tax purposes, the Debtors are ANV and certain of its direct and indirect U.S. subsidiaries. The U.S. corporate Debtors, together with any of their U.S. subsidiaries, are referred to collectively as the ANV Consolidated
Group. The ANV Consolidated Group has consolidated estimated net operating loss (NOL) carryforwards as of December 31, 2014, of approximately $177 million. However, the ANV Consolidated Groups NOLs are subject
to audit and possible challenge by the IRS. Accordingly, the amount of the ANV Consolidated Groups NOLs ultimately may vary from the amounts set forth above.
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1. |
Cancellation of Indebtedness Income |
Generally, a corporation will
recognize cancellation of debt (COD) income upon satisfaction of its outstanding indebtedness for total consideration less than the amount of such indebtedness. Subject to the discussion below on foreign currency exchange rules,
the amount of COD income, in general, is the excess of (a) the adjusted issue price of the indebtedness satisfied, over (b) the sum of (x) the amount of cash paid, and (y) the issue price of any new indebtedness of the taxpayer
issued and (z) fair market value of any other new consideration (including stock of the debtor) given in satisfaction of such indebtedness at the time of the exchange.
A corporation will not, however, be required to include any amount of COD income in gross income if the corporation is a debtor under the
jurisdiction of a court in a case under chapter 11 of the Bankruptcy Code and the discharge of debt occurs pursuant to that proceeding (the Section 108(a) Bankruptcy Exception). Instead, as a consequence of such exclusion, the
debtor must reduce its tax attributes by the amount of COD income excluded from gross income. Under Tax Code section 108(b), a debtor that excludes COD income from gross income under the Section 108(a) Bankruptcy Exception generally must reduce
certain tax attributes by the amount of the excluded COD income. In general, tax attributes are reduced in the following order: (a) NOLs and NOL carryforwards, (b) general business and minimum tax credit carryforwards, (c) capital
loss carryforwards, (d) basis of the debtors assets, and (e) foreign tax credit carryforwards. A debtors tax basis in its assets generally may not be reduced below the amount of liabilities remaining immediately after the
discharge of indebtedness. NOLs for the taxable year of the discharge and NOL carryovers to such year generally are the first attributes subject to reduction. However, a debtor may elect under Tax Code section 108(b)(5) (the Section
108(b)(5) Election) to reduce its basis in its depreciable property first. If a debtor makes a Section 108(b)(5) Election, the limitation on reducing the debtors basis in its assets below the amount of its remaining liabilities
does not apply.
COD income is determined on a company-by-company basis. If a debtor with excluded COD income is a member of a
consolidated group, Treasury regulations address the application of the rules for the reduction of tax attributes (the Consolidated Attribute Reduction Rules). If the debtor is a member of a consolidated group and is required to
reduce its basis in the stock of another group member, a look-through rule generally requires a corresponding reduction in the tax attributes of the lower-tier member. If the amount of a debtors excluded COD income exceeds the
amount of attribute reduction resulting from the application of the foregoing rules, certain other tax attributes of the consolidated group may also be subject to reduction. If the debtor is a member of a consolidated group, the debtor may treat
stock in another group member as depreciable property for purposes of the Section 108(b)(5) Election, provided the lower-tier member consents to a corresponding reduction in its basis in its depreciable property. Finally, if the attribute
reduction is less than the amount of COD income and a member of the ANV Consolidated Group has an excess loss account (an ELA) (i.e., negative basis in the stock of another member of the consolidated group), the ANV
Consolidated Group will recognize taxable income to the extent of the lesser of such ELA or the amount of the COD income that was not offset by tax attributes.
48
The Debtors expect to realize a significant amount of COD income as a result of the Plan. The
amount of COD income will depend upon, among other things, the currency gain (described below) and the fair market value of the New Common Stock, which may not be determined until after the Effective Date of the Plan. Pursuant to the
Section 108(a) Bankruptcy Exception, the Debtors will not include this COD income in gross income. Instead, the Debtors will be required to reduce their tax attributes in accordance with the Consolidated Attribute Reduction Rules after
determining the taxable income (or loss) of the ANV Consolidated Group for the taxable year of discharge. Accordingly, the tax attributes (and, in particular, NOLs) are available to offset taxable income that accrues between the Effective Date and
the end of Reorganized ANVs taxable year. Basis reduction applies to assets owned by a debtor at the beginning of the tax year following the discharge.
Under the Consolidated Attribute Reduction Rules, the Debtors excluded COD income will be applied to reduce their NOLs and, if
necessary, other tax attributes, including the Debtors tax basis in their assets. The Debtors currently anticipate that the application of Consolidated Attribute Reduction Rules (unless a Section 108(b)(5) Election is made) will result in
the elimination of the ANV Consolidated Groups consolidated NOLs and a reduction of the basis in their assets.
The extent to which
NOLs and other tax attributes remain following the application of the Consolidated Attribute Reduction Rules will depend upon a number of factors, including the amount of COD income that is actually incurred and whether the Debtors make the
Section 108(b)(5) Election. The Debtors have not yet determined whether they will make a Section 108(b)(5) Election.
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2. |
Impact of Foreign Currency Exchange Rules on the COD Income Calculation |
In determining the adjusted issue price of the Notes for purposes of calculating COD income, the amount of COD income will be calculated after
applying the special foreign currency rules of Tax Code section 988 because the Notes were issued in Canadian dollars, while the functional currency of the Debtors is the U.S. dollar. These rules provide that the Debtors will recognize foreign
exchange gain or loss equal to the difference between the functional currency value of the nonfunctional currency received when the debt was incurred and the value of the nonfunctional currency when the debt is retired. Foreign currency gain is
treated as ordinary income. The Debtors will therefore recognize foreign currency gain due to the decline of the Canadian dollar since the issue date of the Notes (May 25, 2012). This currency gain will be treated as ordinary income to the Debtors
and will reduce the adjusted issue price of the indebtedness satisfied by the amount of its currency gain prior to calculating the amount of COD. It is expected that this currency gain will be more than offset by the deduction for the amount paid by
the Debtors on the Secured Swap Claims.
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3. |
Potential Limitations on NOL Carryforwards and Other Tax Attributes |
|
a. |
Limitation on NOLs and Other Tax Attributes |
Under Tax Code section 382, if a loss
corporation (generally, a corporation with NOLs and/or built-in losses) undergoes an ownership change, the amount of its pre-change losses (including certain losses or deductions which are built-in, i.e.,
economically accrued but unrecognized as of the date of the ownership change) that may be utilized to offset future taxable income generally are subject to an annual limitation. Similar rules apply to a corporations capital loss carryforwards
and tax credits.
The Debtors issuance of New Common Stock pursuant to the Plan is expected to result in an ownership change for
purposes of Tax Code section 382. Accordingly, assuming that the Debtors emerge with any NOLs following attribute reduction, and subject to the discussion below of certain special bankruptcy exceptions in this Section XII.A.3.a, the ANV Consolidated
Groups pre-change losses may be subject to an annual limitation. This limitation applies in addition to, and not in lieu of, any other limitation that may already or in the future be in effect and the attribute reduction that may result from
COD.
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b. |
General Section 382 Limitation |
In general, the amount of the annual limitation to
which a corporation that undergoes an ownership change will be subject is equal to the product of (i) the fair market value of the stock of the loss corporation (or, in the case of a
49
consolidated group, generally the stock of the common parent) immediately before the ownership change (with certain adjustments) and (ii) the long term tax exempt rate in effect
for the month in which the ownership change occurs (e.g., 2.82% for ownership changes occurring in August 2015). As noted below in Section XII.A.3.d, if a corporation (or a consolidated group) in bankruptcy undergoes an ownership change
pursuant to a confirmed bankruptcy plan, the fair market value of the stock of the corporation is generally determined immediately after (rather than before) the ownership change, after giving effect to the discharge of creditors claims but
subject to certain adjustments. In no event, however, can the stock value for this purpose exceed the pre-change gross value of the corporations assets. If a loss corporation has a net unrealized built-in gain (NUBIG)
immediately prior to the ownership change, the annual limitation may be increased as certain gains are recognized during the five-year period beginning on the date of the ownership change (the Recognition Period). If a loss
corporation has a net unrealized built-in loss (NUBIL) immediately prior to the ownership change, certain losses recognized during the Recognition Period also would be subject to the annual limitation and thus may reduce the
amount of pre-change NOLs that could be used by the loss corporation during the Recognition Period.
Any portion of the annual limitation
that is not used in a given year may be carried forward, thereby adding to the annual limitation for the subsequent taxable year. However, if the corporation (or the consolidated group) does not continue its historic business or use a significant
portion of its historic assets in a new business for at least two years after the ownership change, unless the corporation qualifies for certain bankruptcy exceptions discussed below in Section XII.A.3.d, the annual limitation resulting from the
ownership change is reduced to zero, thereby precluding any utilization of the corporations pre-change losses, absent any increases due to recognized built-in gains (RBIGs). In addition, if a redemption or other corporate
contraction occurs in connection with the ownership change of the loss corporation (or the consolidated group), or if the loss corporation (or the consolidated group) has substantial nonbusiness assets, the annual limitation is reduced to take the
redemption, other corporate contraction or nonbusiness assets into account. Furthermore, if the corporation (or the consolidated group) undergoes a second ownership change, the second ownership change may result in a lesser (but never a greater)
annual limitation with respect to any losses that existed at the time of the first ownership change.
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c. |
Built-in Gains and Losses |
A NUBIG or NUBIL is generally the difference between the fair
market value of a loss corporations assets and its tax basis in the assets, subject to a statutorily defined threshold amount. The amount of a loss corporations NUBIG or NUBIL must be adjusted for built-in items of income or deduction
that would be attributable to a pre-change period if recognized during the Recognition Period. The NUBIG or NUBIL of a consolidated group generally is calculated on a consolidated basis, subject to special rules.
If a loss corporation has a NUBIG immediately prior to an ownership change, any RBIGs will increase the annual limitation in the taxable year
the RBIG is recognized. An RBIG generally is any gain (and certain income) with respect to an asset held immediately before the date of the ownership change that is recognized during the Recognition Period to the extent of the fair market value of
the asset over its tax basis immediately prior to the ownership change. However, the aggregate amount of all RBIGs that are recognized during the Recognition Period may not exceed the NUBIG. On the other hand, if a loss corporation has a NUBIL
immediately prior to an ownership change, any recognized built-in losses (RBILs) will be subject to the annual limitation in the same manner as pre-change NOLs. An RBIL generally is any loss (and certain deductions) with respect
to an asset held immediately before the date of the ownership change that is recognized during the Recognition Period to the extent of the excess of the tax basis of the asset over its fair market value immediately prior to the ownership change.
However, the aggregate amount of all RBILS that are recognized during the Recognition Period may not exceed the NUBIL. RBIGs and RBILs may be recognized during the Recognition Period for depreciable and amortizable assets that are not actually
disposed. The Debtors believe that the ANV Consolidated Group will have a NUBIL on the Effective Date and will have RBILs recognized during the Recognition Period on depreciable and amortizable assets.
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d. |
Special Bankruptcy Exceptions |
An exception to the foregoing annual limitation rules
generally applies when existing shareholders and qualified creditors of a debtor corporation under the jurisdiction of a court in a chapter 11 case receive, in respect of their claims or interests, at least 50% of the vote and value of
the stock of the reorganized debtor (or a controlling corporation if also in chapter 11) pursuant to a confirmed plan (the Section 382(l)(5) Exception). Under the Section 382(l)(5) Exception, a
50
debtors pre-change losses are not limited on an annual basis, but instead NOL carryforwards will be reduced by the amount of any interest deductions claimed during the three taxable years
preceding the effective date of the plan of reorganization, and during the part of the taxable year prior to and including the effective date of the plan of reorganization, in respect of all debt converted into stock in the reorganization. If the
Section 382(l)(5) Exception applies and a debtor undergoes another ownership change within two years after the effective date of the plan of reorganization, then the debtors pre-change losses effectively are eliminated in their entirety.
For purposes of the Section 382(l)(5) Exception, a qualified creditor generally consists of certain long-term creditors (who held the claims continuously for at least 18 months prior to the filing of the bankruptcy petition),
ordinary course creditors (e.g., trade creditors) or creditors receiving less than 5% of the stock of the debtor in a bankruptcy case. If a debtor qualifies for the Section 382(l)(5) Exception, the exception applies unless the debtor
affirmatively elects for it not to apply.
Where the Section 382(l)(5) Exception is not applicable to a corporation in bankruptcy
(either because the debtor does not qualify for it or the debtor otherwise elects not to utilize the Section 382(l)(5) Exception), a second special rule will generally apply (the Section 382(l)(6) Exception). Under the
Section 382(l)(6) Exception, the annual limitation will be calculated by reference to the lesser of the value of the debtor corporations new stock (with certain adjustments) immediately after the ownership change or the value of such
debtor corporations assets (determined without regard to liabilities) immediately before the ownership change. This differs from the ordinary rule that requires the fair market value of a debtor corporation that undergoes an ownership change
to be determined before the events giving rise to the change. The Section 382(l)(6) Exception also differs from the Section 382(l)(5) Exception in that the debtor corporation is not required to reduce its NOL carryforwards by the amount of
interest deductions claimed within the prior three-year period, and the debtor may undergo a change of ownership within two years of the Effective Date without triggering the elimination of its pre-change losses.
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e. |
Application of Section 382 to the Debtors |
The Debtors estimate that they have
approximately $177 million of consolidated NOLs as of December 31, 2014; however, interest deductions attributable to debt that will be equitized will reduce the NOLs that would be available under the Section 382(l)(5) Exception.
It is expected that the amount of the Debtors COD will exceed its NOLs. Even if the Debtors emerge with NOLs, it is possible that the
Debtors will not qualify for the Section 382(l)(5) Exception. Alternatively, the Debtors may decide to elect out of the Section 382(l)(5) Exception, particularly if it appears likely that another ownership change will occur within two
years after the Effective Date. In either case, the Debtors expect that their use of any pre-change losses after the Effective Date will be subject to limitations based on the rules discussed above, but taking into account the Section 382(l)(6)
Exception. Regardless of whether the Debtors take advantage of the Section 382(l)(6) Exception or the Section 382(l)(5) Exception, the Debtors use of their pre-change losses after the Effective Date may be adversely affected if an
ownership change within the meaning of Tax Code section 382 were to occur after the Effective Date.
The Debtors do not currently
anticipate utilizing the Section 382(l)(5) Exception. As explained above, if the Debtors do utilize the Section 382(l)(5) Exception and another ownership change were to occur within the two-year period after consummation of the Plan, then
the Debtors pre-change losses would effectively be eliminated. If the Section 382(l)(5) Exception applies, the New Common Stock may be subject to certain trading restrictions. Such trading restrictions would generally apply only to a
person who owns or desires to own 4.75% or more of the New Common Stock.
Aside from the objective limitations of Tax Code section 382, the IRS
may disallow the subsequent use of a corporations pre-change losses following an acquisition of control of a corporation by one or more persons if the principal purpose of the acquisition is the avoidance or evasion of tax by securing a tax
benefit which such person(s) or the corporation would not otherwise enjoy. Other provisions of the Tax Code may also preclude the use of a corporations NOLs and certain tax attributes in other ways under certain circumstances.
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4. |
Alternative Minimum Tax |
In general, a federal alternative minimum
tax (AMT) is imposed on a corporations alternative minimum taxable income (AMTI) each year at a 20% rate to the extent that such tax exceeds the corporations regular federal income tax for such year.
AMTI is generally equal to regular taxable income with certain adjustments. For purposes of
51
computing AMTI, certain tax deductions and other beneficial allowances are modified or eliminated. In particular, even though a corporation may otherwise be able to offset all of its taxable
income for regular tax purposes by available NOLs, only 90% of a corporations AMTI generally may be offset by its AMT NOLs.
In
addition, if a corporation (or a consolidated group) undergoes an ownership change within the meaning of Tax Code section 382 and has a NUBIL at the time of such change, the corporations (or the consolidated groups) aggregate basis in
its assets would be reduced for certain AMT purposes to reflect the fair market value of such assets as of the date of the ownership change.
Any AMT that a corporation pays generally will be allowed as a nonrefundable credit against its regular federal income tax liability in future
years when the corporation is not subject to the AMT. Any unused credit may be carried forward indefinitely.
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B. |
U.S. Federal Income Tax Consequences to U.S. Holders Under the Plan |
The U.S. federal
income tax consequences of the Plan to U.S. Holders of Claims and Interests (including the character, amount and timing of income, gain or loss recognized) generally will depend upon, among other factors: (i) the manner in which the U.S. Holder
acquired a Claim or Interest; (ii) the length of time a Claim or Interest has been held; (iii) whether a Claim was acquired at a discount; (iv) whether the U.S. Holder has taken a bad debt deduction in the current or prior years;
(v) whether the U.S. Holder has previously included accrued but unpaid interest with respect to a Claim; (vi) the U.S. Holders method of tax accounting; (vii) whether the U.S. Holder will realize foreign currency exchange gain
or loss with respect to a Claim or Interest; and (viii) whether the Debtors reorganize as is expected. Therefore, U.S. Holders of Claims and Interests are urged to consult their tax advisors for information that may be relevant to their
specific situation and circumstances and the particular tax consequences to such Holders as a result thereof.
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1. |
Treatment of a Debt Instrument as a Security |
The U.S. federal
income tax consequences to U.S. Holders of Claims will depend, in part, on whether a debt instrument exchanged is treated as a security under the reorganization provisions of the Tax Code. Whether a debt instrument constitutes a security
for U.S. federal income tax purposes is determined based on all the relevant facts and circumstances, but most authorities have held that the length of the term of a debt instrument is an important factor in determining whether such instrument is a
security for U.S. federal income tax purposes. These authorities have indicated that a term of less than five years is evidence that the instrument is not a security, whereas a term of ten years or more is evidence that it is a security. There are
numerous other factors that could be taken into account in determining whether a debt instrument is a security, including the security for payment, the creditworthiness of the obligor, the subordination or lack thereof to other creditors, the right
to vote or otherwise participate in the management of the obligor, convertibility of the instrument into an equity interest of the obligor, whether payments of interest are fixed, variable or contingent, and whether such payments are made on a
current basis or accrued.
The term of the Notes is approximately seven years, one month. Although there is no assurance that the IRS will
agree with such characterization, the Debtors expect to take the position that the Notes constitute securities for U.S. federal income tax purposes. The Debtors do not anticipate that the DIP Facility Claims, the Secured ABL Claims or the Secured
Swap Claims will be treated as securities for U.S. federal income tax purposes.
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2. |
Treatment of U.S. Holders of DIP Facility Claims |
On the Effective
Date, each Holder of an Allowed DIP Facility Claim shall receive its Pro Rata share of the DIP Facility Consideration, i.e., Cash equal to the aggregate amount of all loans and other monetary obligations owed by the Debtors to the DIP Agent
and/or the DIP Lenders under the DIP Credit Agreement and/or pursuant to the DIP Facility Order that are unpaid as of the Effective Date), including, without limitation, (a) the aggregate outstanding principal amount of the outstanding loans
under the DIP Facility at par (including any interest thereon that was previously paid-in-kind (PIK)), (b) all accrued and unpaid interest on the loans under the DIP Facility, (c) the 4.0% PIK Put Option Payment and
(d) the 3.0% Backstop Put Option Payment; provided, however, that only the DIP Backstop Lenders shall receive their Pro Rata share of the 3.0% Backstop Put Option Payment. For the avoidance of doubt, the DIP Facility Consideration
shall be paid in its entirety from the proceeds of the Exit Facility.
52
The DIP Facility will be treated as issued with original issue discount (OID)
for U.S. federal income tax purposes if its issue price is less than its stated redemption price at maturity by at least a de minimis amount. A debt instruments stated redemption price at maturity includes all principal, interest, and
other amounts payable over the term of the debt instrument, other than qualified stated interest. Stated interest is qualified stated interest if it is unconditionally payable in cash at least annually. Because Holders of DIP
Facility Claims will receive payments other than qualified stated interest, the DIP Facility is treated as being issued with OID for U.S. federal income tax purposes. The DIP Facility is issued with OID in an aggregate amount equal to the excess of
(a) the sum of all payments on the DIP Facility other than qualified stated interest, including PIK interest and put option payments, over (b) the issue price (as described below under Section XII.B.7.a) of the DIP Facility.
The Debtors expect that the DIP Facility Claims will be subject to the rules under Tax Code section 1271(a)(4) as a short-term nongovernment
obligation. Under these rules, and subject to the discussion below on obligations subject to Tax Code section 1281, OID on the DIP Facility is not currently included in the Holders income. Instead, the Holders ratable portion
of OID (based, generally speaking, on the number of days the Holder held the obligation) is treated as ordinary interest income when the DIP Facility Claim is disposed of or retired. While not free from doubt, Holders of DIP Facility Claims may be
required to report cash payments on the DIP Credit Agreement in the year received. Although Tax Code section 1271(a)(4) indicates that gain realized on the sale or exchange of a DIP Facility Claim will be treated as ordinary interest income to the
Holder to the extent of the ratable portion of the OID, Tax Code section 1271(a)(2) requires that gain recognized on the disposition of a debt instrument, up to the amount of the debt instruments OID, be treated as ordinary income
to the DIP Facility if at the time of original issue there was an intention to call the debt instrument before maturity. It is currently anticipated that the DIP Facility will be repaid on the Effective Date of the Plan and that such date will be
prior to the one-year maturity date of the DIP Facility. Accordingly, the Debtors expect to take the position that, to the extent any gain on the disposition of the DIP Facility Claims does not exceed the OID on the DIP Facility Claims, such gain
should be treated as ordinary interest income for federal income tax purposes. Moreover, if a DIP Facility Claim is disposed of at loss, the entire discount would not be recognized by the Holder. Any gain realized on disposition in excess of the OID
will be treated as capital gain.
Certain specified types of short-term obligations are subject to different rules under Tax Code section
1281. Section 1281 applies to any short-term obligation that is (a) held by a taxpayer using an accrual method of accounting; (b) held primarily for sale to customers in the ordinary course of the taxpayers trade or business;
(c) held by a bank; (d) held by a regulated investment company or a common trust fund; (e) identified by the taxpayer under Tax Code section 1256(e)(2) as being part of a hedging transaction; or (f) a stripped bond or stripped
coupon held by the person who stripped the bond or coupon. Short-term obligations that are not subject to Tax Code section 1281 generally are taxed in a manner similar to the treatment of market discount bonds.
The Debtors do not anticipate that Tax Code section 1281 will apply to most Holders of DIP Facility Claims. However, a Holder can elect to
have Tax Code section 1281 apply to an obligation, in which case OID must be included in income currently as it accrues. Accrual of OID on short-term obligations for cash basis taxpayers generally is based ratably on the number of days accrued over
the period, but such taxpayers can elect to use economic accrual principles. Holders of DIP Facility Claims should consult their independent tax advisors regarding the tax consequences of an election to treat such Claims under the rules of Tax Code
section 1281.
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3. |
Treatment of U.S. Holders of Secured ABL Claims |
The Secured ABL
Claims shall be Allowed Claims pursuant to the Plan in the aggregate amount of $75,411,229.34 (including $74,950,000.00 in principal and $461,229.34 in accrued and unpaid interest and fees). Under the Plan, each Holder of an Allowed Secured ABL
Claim shall receive its Pro Rata (after giving effect to the Secured ABL $10MM Cash Payment) share of (i)(A) the Secured ABL/Swap Cash Payments not made prior to the Effective Date and (B) the Secured ABL/Swap Claims Excess Cash Flow Payment,
and (ii) New First Lien Term Loans in an aggregate principal amount equal to (A) the amount of allowed claims pursuant to Section 2.7(b) of the Plan minus (B) the amount paid in cash in respect of the Secured ABL Claims pursuant
to clause (i) of Section 2.7(c) of the Plan.
A U.S. Holder of an Allowed Secured ABL Claim should be treated as exchanging such
Claim for its Pro Rata share of New First Lien Term Loans and Secured ABL/Swap Cash Payments not made prior to the Effective Date, if any, in a fully taxable exchange because the Secured ABL Claims will not qualify as securities for U.S. Federal
income tax purposes. A U.S. Holder who is subject to this treatment should recognize gain or loss equal to the excess of (a) the issue
53
price of its share of the New First Lien Term Loans and the Secured ABL/Swap Cash Payments, if any, received, over (b) such Holders adjusted tax basis in its Secured ABL Claim
surrendered in the exchange. If the Secured ABL Claim is held as a capital asset, the gain generally would be long-term capital gain if the U.S. Holder held its Secured ABL Claim for more than one year at the time of the exchange. The deductibility
of capital losses is subject to certain limitations discussed below in Section XII.B.7.e. A U.S. Holders tax basis in the New First Lien Term Loans should equal the adjusted issue price of its share of the New First Lien Term Loans received. A
U.S. Holders holding period for the New First Lien Term Loans received on the Effective Date should begin on the day following the Effective Date.
To the extent that a portion of the New First Lien Term Loans and Secured ABL/Swap Cash Payments, if any, received in exchange for a U.S.
Holders Secured ABL Claim is allocable to accrued but untaxed interest, the U.S. Holder will recognize ordinary income (see the discussions of accrued interest and market discount below in Sections XII.B.7.b-c). The tax
basis of any portion of the New First Lien Term Loans treated as received in satisfaction of accrued but untaxed interest should equal the amount of such accrued but untaxed interest, and the holding period for any such New First Lien Term Loans
should begin on the day following the Effective Date.
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4. |
Treatment of U.S. Holders of Secured Swap Claims |
The Secured Swap
Claims shall be Allowed Claims pursuant to the Plan in the aggregate principal amount of $86,306,619.00, less the Secured Swap Claims Pro Rata share of the amount of Secured ABL/Swap Cash Payments made prior to the Effective Date. Under the
Plan, each Holder of an Allowed Secured Swap Claim shall receive its Pro Rata share of (i)(A) the Secured ABL/Swap Cash Payments not made prior to the Effective Date and (B) the Secured ABL/Swap Claims Excess Cash Flow Payment, and
(ii) New First Lien Term Loans in an aggregate principal amount equal to (A) the amount of allowed claims pursuant to Section 2.8(b) of the Plan minus (B) the amount paid in cash in respect of the Secured Swap Claims pursuant to
clause (i) of Section 2.8(c) of the Plan.
A U.S. Holder of a Secured Swap Claim should be treated as exchanging such Claim for
its interest in the New First Lien Term Loans and Secured ABL/Swap Cash Payments in a fully taxable exchange because the Secured Swap Claims will not qualify as securities for U.S. Federal income tax purposes. A U.S. Holder who is subject to this
treatment should recognize gain or loss equal to the excess of (a) the issue price of the New First Lien Term Loans and the Secured ABL/Swap Cash Payments, if any, received, over (b) such Holders adjusted tax basis in its Secured
Swap Claim surrendered in the exchange, which gain is expected to be ordinary. A U.S. Holders tax basis in the New First Lien Term Loans should equal the adjusted issue price of the debt received. A U.S. Holders holding period for the
New First Lien Term Loans received on the Effective Date should begin on the day following the Effective Date.
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5. |
Treatment of U.S. Holders of Unsecured Claims |
Under the terms of
the Plan, Allowed Unsecured Claims, including, among others, Notes Claims, will be cancelled on the Effective Date and each Holder of an Allowed Unsecured Claim will receive its Pro Rata share of 100% of the New Common Stock, subject to dilution on
account of the conversion of the New Second Lien Convertible Notes.
The analysis of the tax consequences to a U.S. Holder of Notes Claims
of the exchange of Allowed Notes Claims for New Common Stock of Reorganized ANV depends on whether the Notes are treated as securities for U.S. federal income tax purposes, as defined above in Section XII.B.1. As mentioned above, given the length of
the maturity and other considerations, the Debtors expect to treat the Notes as securities.
If (a) the Notes are treated as
securities for U.S. federal income tax purposes and (b) a U.S. Holder of Notes Claims solely receives New Common Stock, the exchange of Notes Claims for New Common Stock would be treated as a recapitalization, and therefore a reorganization,
under Tax Code section 368(a)(1)(E). Except to the extent that any portion of the New Common Stock received is allocable to accrued but untaxed interest (discussed below in Section XII.B.7.b), a U.S. Holder of Notes Claims would not recognize
taxable gain or loss with respect to this exchange. Such Holders tax basis in its New Common Stock received in exchange for the Notes Claim should be equal to such Holders tax basis in such Notes Claims surrendered therefor. A U.S.
Holders holding period for its New Common Stock should include the holding period for the surrendered Notes Claims.
To the extent
that the Notes Claims were acquired with market discount and the treatment in the immediately preceding paragraph applies, any market discount that accrued on such Notes Claims (i.e., up to the time of the exchange) but was not included in
gross income by the U.S. Holder is carried over to the New Common Stock received therefor and
54
any gain recognized on the subsequent sale, exchange, redemption or other disposition of such New Common Stock is treated as ordinary income to the extent of such accrued, but not recognized,
market discount (see discussion in Section XII.B.7.c, below).
If the Notes are not treated as securities for U.S. federal income tax
purposes, a U.S. Holder of Notes Claims would be treated as exchanging such Claims for the New Common Stock in a fully taxable exchange. A U.S. Holder who is subject to this treatment would recognize gain or loss equal to the excess of (I) the
fair market value of the New Common Stock received over (II) such Holders adjusted tax basis in its Notes Claim surrendered in the exchange. If the Notes were held as a capital asset, the gain generally would be long-term capital gain if the
U.S. Holder held its Notes Claim for more than one year at the time of the exchange. The deductibility of capital losses is subject to certain limitations discussed below in Section XII.B.7.e. Such U.S. Holders tax basis in the New Common
Stock should equal the fair market value of such interests. A U.S. Holders holding period for the New Common Stock received on the Effective Date would begin on the day following the Effective Date.
Regardless of whether the exchange is treated as a recapitalization or as a taxable exchange, a U.S. Holder of Notes Claims will recognize
foreign currency gain or loss on the exchange under the rules in Tax Code section 988 and the regulations thereunder. Such gain or loss will be ordinary gain or loss. The amount characterized as foreign currency gain or loss generally will be equal
to the difference between (i) the U.S. dollar value of the foreign currency purchase price of the Notes on the date the Holder purchased such Notes and (ii) the U.S. dollar value of such foreign currency purchase price on the date of the
disposition. Similarly, a U.S. Holder will recognize exchange gain or loss on the disposition of Notes with respect to any accrued market discount on such Notes that such U.S. Holder has included in gross income. Any such exchange gain or loss
recognized on such disposition will be ordinary gain or loss.
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6. |
Treatment of U.S. Holders of Existing Equity Interests |
Under the
Plan, U.S. Holders of Existing Equity Interests will receive no recovery on account of their Existing Equity Interests, which shall be deemed canceled, released and extinguished as of the Effective Date. U.S. Holders of Existing Equity Interests
will recognize loss equal to the respective Holders adjusted tax basis in its Existing Equity Interests canceled, released and extinguished under the terms of the Plan. If the Existing Equity Interests were held as a capital asset, the loss
generally would be long-term capital loss if the U.S. Holder held its Existing Equity Interests for more than one year at the time of the exchange. The deductibility of capital losses is subject to certain limitations discussed below in Section
XII.B.7.e.
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7. |
Other Considerations for U.S. Holders |
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a. |
Issue Price and Original Issue Discount |
A debt instrument, such as the New First Lien
Term Loans and New Second Lien Convertible Notes (together, the New Debt), is treated as issued with OID for U.S. federal income tax purposes if its issue price is less than its stated redemption price at maturity by at least a
de minimis amount. A debt instruments stated redemption price at maturity includes all principal and interest payable over the term of the debt instrument, other than qualified stated interest. Stated interest is
qualified stated interest if it is unconditionally payable in cash at least annually.
The issue price of the New First Lien
Term Loans will depend on whether a substantial amount of either the New First Lien Term Loans or the Secured ABL Claims and Secured Swap Claims for which they are exchanged is considered to be traded on an established market at the time
of the exchange. In general, debt instruments will be treated as traded on an established market if, within the 31-day period ending 15 days after the applicable measurement date, (a) a sales price for trades of the debt instrument
is available, (b) a firm price quote for the debt instrument is available, or (c) one or more indicative quotes are available, each as defined in Treasury Regulations section 1.1273-2(f)(1). Notwithstanding the
foregoing, Treasury Regulations section 1.1273-2(f)(6) provides that a debt instrument will not be treated as traded on an established market if the outstanding stated principal amount of the issue that includes that a debt instrument does not
exceed $100 million on the date on which the instrument is tested under these rules.
Although neither the Secured ABL Claims nor the
Secured Swap Claims have balances exceeding $100 million outstanding, the stated principal amount of the New First Lien Term Loans for which these Secured ABL Claims and Secured Swap Claims will be exchanged will exceed $100 million. Accordingly,
the issue price of the New First Lien Term Loans will be considered to be traded on an established market if it meets one of the conditions of Treasury
55
Regulations section 1.1273-2(f)(1). If the New First Lien Term Loans are traded on an established market within 15 days following the exchange, the issue price of the New First Lien Terms will
equal the trading price, as indicated by the source(s) set forth in (a) through (c) above. If the New First Lien Term Loans are not traded on an established market at the time of the exchange, the issue price of the New First Lien Term
Loans will generally equal the stated principal amount.
Since the New Second Lien Convertible Notes are being issued for money, the issue
price of the New Second Lien Convertible Notes should be the first price at which a substantial amount of the New Second Lien Convertible Notes is sold.
A portion of the consideration received by U.S. Holders of Allowed
Claims may be attributable to accrued but untaxed interest on such Claims. Any such amount should be taxable to that U.S. Holder as interest income if such accrued interest has not been previously included in the U.S. Holders gross income for
U.S. federal income tax purposes. However, the IRS has privately ruled that a holder of a security of a corporate issuer, in an otherwise tax-free exchange, could not claim a current deduction with respect to any unpaid OID. Accordingly, it is also
unclear whether, by analogy, a U.S. Holder that disposes of a Claim that does not constitute a security in a taxable transaction would be required to recognize a capital loss, rather than an ordinary loss, with respect to previously included OID
that is not paid in full.
If the fair value of the consideration is not sufficient to fully satisfy all principal and interest on the
Claims, the extent to which such consideration will be attributable to accrued but untaxed interest is uncertain. Under the Plan, the aggregate consideration to be distributed to U.S. Holders of Allowed Claims in each Class will be allocated first
to the principal amount of Allowed Claims, with any excess allocated to untaxed interest that accrued on such Claims, if any. Certain legislative history indicates that an allocation of consideration as between principal and interest provided in a
chapter 11 plan of reorganization is binding for U.S. federal income tax purposes, while certain Treasury regulations treat payments as allocated first to any accrued but untaxed interest. The IRS could take the position that the consideration
received by U.S. Holders should be allocated in some way other than as provided in the Plan. U.S. Holders of Allowed Claims should consult their own tax advisors regarding the proper allocation of the consideration received by them under the Plan
between principal and accrued but untaxed interest.
Under the market discount provisions of the Tax Code, some
or all of any gain recognized by a U.S. Holder upon the disposition of a debt instrument of an Allowed Claim may be treated as ordinary income (instead of capital gain), to the extent of the amount of market discount on the debt constituting the
exchanged Claim. In general, a debt instrument is considered to have been acquired with market discount if it is acquired other than on original issue and if the U.S. Holders adjusted tax basis in such instrument is less than (i) the sum
of all remaining payments to be made on the debt instrument, excluding qualified stated interest, or (ii) in the case of a debt instrument issued with OID, its adjusted issue price, in each case, by at least a de minimis
amount (equal to the product of 0.25% of the sum of all remaining payments to be made on the debt instrument, excluding qualified stated interest, and the number of remaining whole years to maturity).
Any gain recognized by a U.S. Holder on the taxable disposition of debt instruments that it acquired with market discount should be treated as
ordinary income to the extent of the market discount that accrued thereon while such debt instruments were considered to be held by the U.S. Holder (unless such U.S. Holder elected to include market discount in income as it accrued). To the extent
that debt instruments that were acquired with market discount are exchanged in a tax-free transaction for other property, any market discount that accrued on such debt instruments (i.e., up to the time of the exchange) but was not recognized
by the U.S. Holder is carried over to the property received therefor and any gain recognized on the subsequent sale, exchange, redemption or other disposition of such property is treated as ordinary income to the extent of such accrued, but not
recognized, market discount.
If the New Debt is not treated as a contingent payment debt
instrument (CPDI) and a U.S. Holders initial tax basis in its interest in the New Debt is less than or equal to the stated redemption price at maturity of such interest, but greater than the issue price of such interest, the
U.S. Holder will be treated as acquiring the New Debt at an acquisition premium. Unless an election is made, the U.S. Holder generally will reduce the amount of OID otherwise includible in gross income for an accrual period by an amount
equal to the amount of OID otherwise includible in gross income
56
multiplied by a fraction, the numerator of which is the excess of the U.S. Holders initial tax basis in its interest in the New Debt over such interests issue price and the
denominator of which is the excess of the sum of all amounts payable on such interest over the interests issue price.
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e. |
Limitation on Use of Capital Losses |
U.S. Holders who recognize capital losses will be
subject to limits on their use of capital losses. For U.S. Holders other than corporations, capital losses may be used to offset any capital gains (without regard to holding periods) plus ordinary income to the extent of the lesser of
(i) $3,000 ($1,500 for married individuals filing separate returns), or (ii) the excess of the capital losses over the capital gains. Non-corporate U.S. Holders may carry over unused capital losses and apply them to capital gains and a
portion of their ordinary income, though losses from the sale or exchange of capital assets may only be used to offset capital gains. For corporate U.S. Holders, capital losses may only be used to offset capital gains. U.S. Holders who have more
capital losses than can be used in a tax year may be allowed to carry over the excess capital losses for use in succeeding tax years. For corporate U.S. Holders, unused capital losses may be carried forward for the five years following the capital
loss year or carried back to the three years preceding the capital loss year. Non-corporate U.S. Holders may carry over unused capital losses for an unlimited number of years.
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f. |
Net Investment Income Tax |
Certain U.S. Holders that are individuals, estates or trusts
are required to pay an additional 3.8% Medicare tax on unearned net investment income (i.e., income received from, among other things, the sale or other disposition of certain capital assets). Holders that are individuals, estates or
trusts should consult their tax advisors regarding the effect, if any, of this tax provision on their ownership and disposition of any consideration to be received under the Plan.
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8. |
Consequences of Ownership and Disposition of the New Debt |
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a. |
Treatment of OID and PIK Interest |
The stated interest on the New First Lien Term Loans
should be qualified stated interest. Thus if the New First Lien Term Loans are not treated for U.S. federal income tax purposes as traded on an established securities market (as discussed in Section XII.B.7.a), the New First Lien Term Loans should
not be treated as being issued with OID for federal income tax purposes. The stated interest on the New First Lien Term Loans generally will be taxable as ordinary interest income in accordance with the holders regular method of accounting at
the time such payments are accrued or received. It is possible that the New First Lien Term Loans will be treated for U.S. federal income tax purposes as traded on an established market (discussed above in Section XII.B.7.a). If so, they could have
an issue price with a discount or premium. If issued at a discount, OID must be accrued over the term of the New First Lien Term Loans; if the issue price is greater than the stated principal amount, the premium will be amortized over such term.
No stated interest on the New Second Lien Convertible Notes will be qualified stated interest for U.S. federal income tax purposes
because the New Second Lien Convertible Loans provide that the Debtors will be entitled to pay all of the interest on the notes in the form of PIK interest. As a result, the New Second Lien Convertible Notes will be treated as being issued with OID
for U.S. federal income tax purposes.
The New Second Lien Convertible Notes will be issued with OID in an aggregate amount equal to the
excess of all payments due under the New Second Lien Convertible Notes (initially taking into account the payment schedule as described below) over its issue price (as defined above in Section XII.B.7.a). U.S. Holders of the
New Second Lien Convertible Notes, whether on the cash or accrual method of accounting for U.S. federal income tax purposes, must include the OID in gross income (as ordinary income) as it accrues (on a constant yield to maturity basis), regardless
of whether cash attributable to such OID is received at such time.
The amount of OID includible in gross income by a U.S. Holder in any
taxable year generally is the sum of the daily portions of OID with respect to the note for each day during such taxable year on which the U.S. Holder holds the note. The daily portion is determined by allocating to each day
in any accrual period a pro rata portion of the OID allocable to that accrual period. The accrual period for a note may be of any length and may vary in length over the term of the note, provided that
each accrual period is no longer than one year and each scheduled payment of principal or interest occurs on the first day or the final day of an accrual period. The amount of OID allocable to any accrual period, subject to
57
the possible adjustments described below, will be an amount equal to the product of the notes adjusted issue price at the beginning of the accrual period and its
yield to maturity (determined on a constant yield method, compounded at the close of each accrual period and properly adjusted for the length of the accrual period). OID allocable to the final accrual period is the difference between the amount
payable at maturity and the adjusted issue price at the beginning of the final accrual period. The adjusted issue price of a note at the beginning of any accrual period is equal to its issue price increased by the accrued OID
for each prior accrual period and reduced by any payments made on the note during the accrual period. The yield to maturity of the New Second Lien Convertible Notes is the discount rate that, when used in computing the
present value (as of the issue date) of all principal and interest payments to be made on the Loan, produces an amount equal to the issue price of the New Second Lien Convertible Notes.
For purposes of this discussion, it is presumed that the PIK interest on the New Second Lien Convertible Notes will be paid in a single
payment at maturity and that this single payment will be reflected on the payment schedule used for determining the accrual of OID on the New Second Lien Convertible Notes. Accordingly, the Debtors do not expect to treat the New Debt as subject to
the rules applicable to CPDIs. If, contrary to this presumption, any PIK or cash interest (as applicable) is actually paid on the New Second Lien Convertible Notes, then solely for the purposes of recomputing the OID accruals on the Loan going
forward and establishing a new payment schedule, the New Second Lien Convertible Notes will be treated as retired and reissued on the date of such change in circumstances for an amount equal to its then adjusted issue price and the yield to maturity
on the Loans will be redetermined taking into account such change in circumstances.
Any PIK interest will generally not be treated as a
payment of interest on an original note for U.S. federal income tax purposes. Instead, any PIK interest together with the original note will be treated as a single debt instrument for U.S. federal income tax purposes.
Each payment of cash interest under the New Second Lien Convertible Notes will be treated first as a payment of any accrued OID on the note to
the extent such accrued OID has not been allocated to prior cash payments and second as payments of principal on the note. U.S. Holders generally will not be required to separately include cash interest on the New Second Lien Convertible Notes to
the extent such cash payments constitute payments of previously accrued OID or payments of principal.
The rules regarding OID are complex
and the rules described above may not apply in all cases. If other rules apply instead, U.S. Holders of the New Second Lien Convertible Notes could be treated differently than described above. Prospective investors in the New Second Lien Convertible
Notes are urged to consult their own tax advisors regarding the potential application of the OID and other rules to the New Second Lien Convertible Notes and the consequences thereof.
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b. |
Sale, Retirement or Other Taxable Disposition of the New Debt |
A U.S. Holder of the New
Debt will recognize gain or loss upon the sale, redemption, retirement or other taxable disposition of such New Debt equal to the difference between the amount realized upon the disposition (less any portion allocable to accrued interest that has
not yet been included in income by the U.S. Holder, which generally will be taxable as ordinary income) and the U.S. Holders adjusted tax basis in such New Debt.
If the New Debt is not treated as a CPDI then, subject to certain exceptions, any gain or loss on the sale, redemption, retirement or other
taxable disposition of interests in the New Debt generally will be capital gain or loss, and will be long-term capital gain or loss if the U.S. Holder has held its interest in the New Debt for more than one year as of the date of disposition. U.S.
Holders should consult their tax advisors regarding the applicable tax rates and netting rules for capital gains and losses. There are limitations on the deduction of capital losses by both corporate and non-corporate taxpayers.
An exchange of convertible debt securities for the issuing corporations stock generally will be treated as a nontaxable event.
Accordingly, a U.S. Holder that exercises the conversion feature of the New Second Lien Convertible Notes and receives New Common Stock of Reorganized ANV should not realize gain or loss on the conversion. A U.S. Holders basis and holding
period for its New Second Lien Convertible Notes will carry over to the New Common Stock into which such interest is converted.
58
|
9. |
Consequences of Ownership and Disposition of the New Common Stock |
|
a. |
Distributions on New Common Stock |
Cash distributions made by Reorganized ANV in respect
of New Common Stock will constitute a taxable dividend when such distribution is actually or constructively received, to the extent such distribution is paid out of the current or accumulated earnings and profits of Reorganized ANV (as determined
under U.S. federal income tax principles). To the extent the amount of any distribution received by a U.S. Holder in respect of New Common Stock exceeds the current or accumulated earnings and profits of Reorganized ANV, the distribution
(1) will be treated as a non-taxable return of the U.S. Holders adjusted tax basis in that New Common Stock and (2) thereafter will be treated as capital gain.
|
b. |
Dispositions of New Common Stock |
Sales or other taxable dispositions by U.S. Holders of
New Common Stock generally will give rise to gain or loss equal to the difference between the amount realized on the disposition and the U.S. Holders tax basis in such New Common Stock. In general, gain or loss recognized on the sale or
exchange of New Common Stock will be capital gain or loss and, if the U.S. Holders holding period for such New Common Stock exceeds one year, will be long-term capital gain or loss. Certain U.S. Holders, including individuals, are eligible for
preferential rates of U.S. federal income tax in respect of long-term capital gains realized. The deduction of capital losses against ordinary income is subject to limitations under the Tax Code.
|
C. |
Information Reporting and Backup Withholding |
All distributions to Holders of Claims and
Interests under the Plan are subject to any applicable tax withholding, including employment tax withholding. Under U.S. federal income tax law, interest, dividends and other reportable payments may be, under certain circumstances, subject to
backup withholding at the then-applicable withholding rate (currently 28%). Backup withholding generally applies if a Holder (i) fails to furnish its social security number or other taxpayer identification number
(TIN), (ii) furnishes an incorrect TIN, (iii) fails properly to report interest or dividends, or (iv) under certain circumstances, fails to provide a certified statement, signed under penalty of perjury, that the
TIN provided is its correct TIN and that it is a U.S. person not subject to backup withholding. Backup withholding is not an additional tax but merely an advance payment, which may be refunded to the extent it results in an overpayment of tax and if
the appropriate information is supplied to the IRS. Certain Persons are exempt from backup withholding, including, in certain circumstances, corporations and financial institutions.
|
D. |
U.S. Federal Income Tax Considerations for Non-U.S. Holders |
The rules governing U.S.
federal income taxation of a Non-U.S. Holder are complex. The following discussion includes only certain U.S. federal income tax consequences of the Restructuring Transaction to Non-U.S. Holders. The discussion does not include any non-U.S. tax
considerations. Non-U.S. Holders should consult with their own tax advisors to determine the effect of U.S. federal, state, and local tax laws, as well as any other applicable non-U.S. tax laws and/or treaties, with regard to their participation in
the transactions contemplated by the Plan, their ownership of Claims or Interests, and the ownership and disposition of the New Debt, New Common Stock, and other consideration, as applicable.
Whether a Non-U.S. Holder realizes gain or loss on the exchange and the amount of such gain or loss is determined in the same manner as set
forth above in connection with U.S. Holders.
Any gain realized by a Non-U.S. Holder on the
exchange of its Claim or Interest generally will not be subject to U.S. federal income taxation unless (a) the Non-U.S. Holder is an individual who was present in the U.S. for 183 days or more during the taxable year in which the Restructuring
Transactions occur and certain other conditions are met or (b) such gain is effectively connected with the conduct by such Non-U.S. Holder of a trade or business in the U.S. (and if an income tax treaty applies, such gain is attributable to a
permanent establishment maintained by such Non-U.S. Holder in the U.S.).
59
If the first exception applies, to the extent that any gain is taxable and does not qualify for
deferral as described in Section XII.B above, the Non-U.S. Holder generally will be subject to U.S. federal income tax at a rate of 30% (or at a reduced rate or exemption from tax under an applicable income tax treaty) on the amount by which such
Non-U.S. Holders capital gains allocable to U.S. sources exceed capital losses allocable to U.S. sources during the taxable year of the exchange. If the second exception applies, the Non-U.S. Holder generally will be subject to U.S. federal
income tax with respect to any gain realized on the exchange if such gain is effectively connected with the Non-U.S. Holders conduct of a trade or business in the U.S. in the same manner as a U.S. Holder. In order to claim an exemption from
withholding tax, such Non-U.S. Holder will be required to provide a properly executed IRS Form W-8ECI (or such successor form as the IRS designates). In addition, if such Non-U.S. Holder is a corporation, it may be subject to a branch profits tax
equal to 30% (or such lower rate provided by an applicable income tax treaty) of its effectively connected earnings and profits for the taxable year, subject to certain adjustments.
Payments to a Non-U.S. Holder that are attributable to
interest (including OID), or to accrued but untaxed interest, generally will not be subject to U.S. federal income or withholding tax, provided that the withholding agent has received or receives, prior to payment, appropriate documentation
(generally, IRS Form W-8BEN or W-8BEN-E) establishing that the Non-U.S. Holder is not a U.S. person. Interest income will also include any gain from the sale, redemption, retirement or other taxable disposition of the New Debt that is treated as
interest income (discussed above in Section XII.B.7.b). Interest income, however, may be subject to U.S. income or withholding tax if:
(i) the Non-U.S. Holder actually or constructively owns 10% or more of the total combined voting power of all classes of Reorganized
ANVs stock entitled to vote (taking into account the conversion feature of the New Second Lien Convertible Notes);
(ii) the
Non-U.S. Holder is a controlled foreign corporation that is a related person with respect to Reorganized ANV (each, within the meaning of the Tax Code);
(iii) the Non-U.S. Holder is a bank receiving interest described in Tax Code section 881(c)(3)(A); or
(iv) such interest is effectively connected with the conduct by the Non-U.S. Holder of a trade or business within the U.S. (in which case,
provided the Non-U.S. Holder provides a properly executed IRS Form W-8ECI (or successor form) to the withholding agent, the Non-U.S. Holder (x) generally will not be subject to withholding tax, but (y) will be subject to U.S. federal
income tax in the same manner as a U.S. Holder (unless an applicable income tax treaty provides otherwise), and a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes may also be subject to a branch profits tax with respect to
such Non-U.S. Holders effectively connected earnings and profits that are attributable to the accrued but untaxed interest at a rate of 30% (or at a reduced rate or exemption from tax under an applicable income tax treaty)).
A Non-U.S. Holder that does not qualify for exemption from withholding tax with respect to interest (including OID) or accrued but untaxed
interest that is not effectively connected income generally will be subject to withholding of U.S. federal income tax at a 30% rate (or at a reduced rate or exemption from tax under an applicable income tax treaty) on payments that are attributable
to such interest or accrued but untaxed interest. For purposes of providing a properly executed IRS Form W-8BEN or W-8BEN-E, special procedures are provided under applicable Treasury regulations for payments through qualified foreign intermediaries
or certain financial institutions that hold customers securities in the ordinary course of their trade or business.
|
a. |
Taxation of United States Real Property Interests |
Under the Foreign Investment in Real
Property Tax Act of 1980 (FIRPTA), gain or loss of a foreign person on a disposition of a United States real property interest (USRPI) is deemed to be effectively connected with a trade or business carried on in
the United States. A USRPI includes any interest (other than solely as a creditor) in a domestic corporation if the domestic corporation is a United States real property holding corporation (USRPHC). Under the
60
regulations, an interest will be treated as an interest in real property other than solely as a creditor if it is a right to share in the appreciation in value of stock of a corporation or a
right, whether or not presently exercisable, directly or indirectly to share in the appreciation of value of or to acquire, by purchase, conversion, exchange, or in any other manner, stock of a corporation. Contingent and conversion rights, such as
options, rights of first refusal, and similar interests whereby the lender may receive partial ownership of the property or entities, are non-creditor interests for FIRPTA purposes. Under FIRPTA, payments of interest and principal under a debt
instrument do not constitute gain subject to FIRPTA withholding.
The Debtors believe that ANV is, and Reorganized ANV will be, a USRPHC.
Accordingly, under the rules discussed in the preceding paragraph, Debtors Common Stock, the New Common Stock and the New Second Lien Convertible Notes will be treated as USRPIs, except to the extent that a Non-U.S. Holder qualifies for the
5% Public Shareholder Exception discussed below. Alternatively, a disposition of the New Common Stock and the New Second Lien Convertible Notes will not, in general, be subject to tax or withholding under FIRPTA if the disposition
is pursuant to a liquidating distribution by the Debtors following a taxable sale of the Debtors USRPIs.
|
b. |
Regularly Traded Stock Exception |
Tax Code section 897(c)(3) sets forth the 5% Public
Shareholder Exception, which excepts a holders regularly traded stock in a corporation from treatment as a USRPI if any class of stock of the corporation is regularly traded on an established securities exchange and the holder of such interest
does not, at any time during an applicable measuring period, own more than 5% of that class of stock. For purposes of determining whether any person holds more than 5% of any class of stock under the 5% Public Shareholder Exception, the constructive
ownership rules of Tax Code section 318(a) apply, with certain adjustments. Under the regulations, interests regularly traded on an established securities market located in the United States qualify as publicly traded for purposes of the 5% Public
Shareholder Exception.
The Regulations implement the 5% Public Shareholder Exception by providing that if any non-regularly traded class
of interests in a corporation is convertible into a regularly traded class of interests in the corporation, an interest in such non-regularly traded class will be treated as a USRPI if it had a fair market value greater than the fair market value of
5% of the regularly traded class of the corporations stock into which it is convertible, determined as of the date such interest was acquired by its present holder (including other holdings in the corporation that would qualify as a USRPI).
Although these regulations set forth the rules for determining the fair market value of property for purposes of Tax Code section 897, they do not address the proper treatment for valuation of convertible interests. In particular, it is unclear
whether, in order to determine the value of a holders interest in convertible debt, the conversion feature should be treated as exercised only by the particular holder or by the entire class of holders of such interests.
Whether the New Common Stock and/or the New Second Lien Convertible Notes qualify for the 5% Public Shareholder Exception (and, thus, whether
they will be treated as USRPIs) will depend upon application of the above rules at the time of a Non-U.S. Holders acquisition and disposition of such shares and interests. Following the Effective Date, the Debtors may take steps to create a
market for the New Common Stock for purposes of qualifying the New Common Stock as regularly traded on an established securities market, although no assurances can be given that the Debtors will take such steps or, that if they do, the Debtors
actions will result in the New Common Stock so qualifying or that such actions will permit certain Non-U.S. Holders to rely on the 5% Public Shareholder Exception with respect to their New Common Stock or New Second Lien Convertible Notes. In this
regard, and in any event, since the New Common Stock will be issued prior to the Effective Date, it cannot be regularly traded on an established securities market prior to such time, and the New Common Stock might not be regularly traded on an
established securities market until a later date. Non-U.S. Holders should consult their independent tax advisors to determine whether the New Common Stock and/or the New Second Lien Convertible Notes are subject to FIRPTA.
In order to ensure that a foreign investor will pay taxes on gain realized
on the sale or disposition of a U.S. real property interest, the transferee is generally required to withhold and deduct a tax equal to 10 percent of the amount realized on the disposition. This is separate from the general withholding rules
applicable to withholding on dividends paid to Non-U.S. Holders, discussed below.
As discussed above, if any class of stock of a
corporation is regularly traded on an established securities market, its stock (including any class of stock that is not publicly traded) will not be a USRPI except with respect to any holder owning more than 5% of such class of stock. Regulations
under Tax Code section 1445 provide that no withholding is
61
required upon the acquisition of an interest in a corporation if any class of stock of the corporation is regularly traded on an established securities market, although different rules apply in
the case of an acquisition from a single transferor of substantial non-regularly traded interests in a publicly traded corporation. Treasury Regulations section 1.897-9T(b). The Tax Code section 1445 withholding rules apply the same principles
discussed above regarding aggregation of related acquisitions and the presumption that stock will be presumed to be regularly traded on an established securities market for a calendar quarter if those interests were regularly traded during the
preceding calendar quarter.
|
4. |
U.S. Federal Income Tax Consequences to Non-U.S. Holders of Owning and Disposing of New Common Stock |
|
a. |
Dividends on New Common Stock |
Any distributions made with respect to New Common Stock
will constitute dividends for U.S. federal income tax purposes to the extent of Reorganized ANVs current or accumulated earnings and profits as determined under U.S. federal income tax principles. Except as described below, dividends paid with
respect to New Common Stock held by a Non-U.S. Holder that are not effectively connected with a Non-U.S. Holders conduct of a U.S. trade or business (or if an income tax treaty applies, are not attributable to a permanent establishment
maintained by such Non-U.S. Holder in the U.S.) will be subject to U.S. federal withholding tax at a rate of 30% (or lower treaty rate or exemption from tax, if applicable). A Non-U.S. Holder generally will be required to satisfy certain IRS
certification requirements in order to claim a reduction of or exemption from withholding under a tax treaty by filing IRS Form W-8BEN or W-8BEN-E (or a successor form) upon which the Non-U.S. Holder certifies, under penalties of perjury, its status
as a non-U.S. person and its entitlement to the lower treaty rate or exemption from tax with respect to such payments.
Dividends paid
with respect to New Common Stock held by a Non-U.S. Holder that are effectively connected with a Non-U.S. Holders conduct of a U.S. trade or business (and if an income tax treaty applies, are attributable to a permanent establishment
maintained by such Non-U.S. Holder in the U.S.) generally will be subject to U.S. federal income tax in the same manner as a U.S. Holder, and a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes may also be subject to a
branch profits tax with respect to such Non-U.S. Holders effectively connected earnings and profits that are attributable to the dividends at a rate of 30% (or at a reduced rate or exemption from tax under an applicable income tax treaty).
|
b. |
Sale, Redemption, or Repurchase of New Common Stock |
A Non-U.S. Holder generally will
not be subject to U.S. federal income tax with respect to any gain realized on the sale or other taxable disposition (including a cash redemption) of New Common Stock, unless:
(i) such Non-U.S. Holder is an individual who is present in the U.S. for 183 days or more in the taxable year of disposition
or who is subject to special rules applicable to former citizens and residents of the U.S.;
(ii) such gain is effectively
connected with such Non-U.S. Holders conduct of a U.S. trade or business (and if an income tax treaty applies, such gain is attributable to a permanent establishment maintained by such Non-U.S. Holder in the U.S.); or
(iii) Reorganized ANV is or has been during a specified testing period a USRPHC.
If the first exception applies, the Non-U.S. Holder generally will be subject to U.S. federal income tax at a rate of 30% (or at a reduced
rate or exemption from tax under an applicable income tax treaty) on the amount by which such Non-U.S. Holders capital gains allocable to U.S. sources exceed capital losses allocable to U.S. sources during the taxable year of disposition of
New Common Stock. If the second exception applies, the Non-U.S. Holder generally will be subject to U.S. federal income tax with respect to such gain in the same manner as a U.S. Holder, and a Non-U.S. Holder that is a corporation for U.S. federal
income tax purposes may also be subject to a branch profits tax with respect to earnings and profits effectively connected with a U.S. trade or business that are attributable to such gains at a rate of 30% (or at a reduced rate or exemption from tax
under an applicable income tax treaty). The consequences of Reorganized ANV being a USRPHC are discussed in the preceding section.
62
|
c. |
Conversion of New Second Lien Convertible Notes |
In general, it is expected that
conversion of New Second Lien Convertible Notes into New Common Stock will not cause a Non-U.S. Holder to recognize gain or loss under the Tax Code. However, each Non-U.S. Holder is urged to consult its own tax advisor prior to conversion of the New
Second Lien Convertible Notes into New Common Stock and prior to a sale or disposition of New Common Stock acquired by such a conversion regarding recognition of gain or loss and any FIRPTA reporting requirements to the IRS relating to such
conversion, sale or disposition.
Under the Foreign Account Tax Compliance Act
(FATCA), foreign financial institutions and certain other foreign entities must report certain information with respect to their U.S. account holders and investors or be subject to withholding on the receipt of withholdable
payments. For this purpose, withholdable payments are generally U.S.-source payments of fixed or determinable, annual or periodical income (including dividends, if any, on New Common Stock and interest on the New Debt), and also
include gross proceeds from the sale of any property of a type which can produce U.S. source interest or dividends (which would include New Common Stock and the New Debt). FATCA withholding will apply even if the applicable payment would not
otherwise be subject to U.S. federal nonresident withholding tax.
FATCA withholding rules apply to U.S.-source payments on obligations
issued after July 1, 2014, and to payments of gross proceeds from the sale or other disposition of property of a type that can produce U.S.-source interest or dividends that occurs after December 31, 2016. Although administrative guidance
and Treasury regulations have been issued, the exact scope of these rules remains unclear and potentially subject to material changes.
Each Non-U.S. Holder should consult its own tax advisor regarding the possible impact of these rules on such Non-U.S. Holders ownership
of New Common Stock.
The foregoing summary has been provided for informational purposes only and does not discuss all aspects of
U.S. federal income taxation that may be relevant to a particular Holder of a Claim or Interest in light of such Holders circumstances and income tax situation. All Holders of Claims and Interests should consult with their tax advisors as to
the particular tax consequences to them under the Plan, including the applicability and effect of any state, local, non-U.S. or other applicable tax laws.
XIII. |
CONCLUSION AND RECOMMENDATION |
All Holders of Claims entitled to vote are urged to vote
to accept the Plan and to evidence such acceptance by returning their Ballots so that they will actually be received by the Voting Deadline.
63
Dated: , 2015
|
|
|
Allied Nevada Gold Corp. |
|
|
By: |
|
/s/ |
|
|
Name: |
|
Stephen M. Jones |
Title: |
|
Executive Vice President, Secretary and Chief Financial Officer |
|
Allied Nevada Gold Holdings LLC |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
|
Allied VGH Inc. |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
|
Allied VNC Inc. |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
|
ANG Central LLC |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
64
|
|
|
ANG Cortez LLC |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
|
ANG Eureka LLC |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
|
ANG North LLC |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
|
ANG Northeast LLC |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
|
ANG Pony LLC |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
|
Hasbrouck Production Company LLC |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
65
|
|
|
Hycroft Resources & Development, Inc. |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
|
Victory Exploration Inc. |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
|
Victory Gold Inc. |
|
|
By: |
|
/s/ |
Name: |
|
Stephen M. Jones |
Title: |
|
Chief Financial Officer |
66
EXHIBIT A
PLAN OF REORGANIZATION
[Attached as Exhibit 99.1 to this Form 8-K]
EXHIBIT B
AMENDED AND RESTATED RESTRUCTURING SUPPORT AGREEMENT
[Attached as Exhibit 10.1 to this Form 8-K]
EXHIBIT C
FINANCIAL PROJECTIONS
[To Come]
EXHIBIT D
LIQUIDATION ANALYSIS
[To Come]
EXHIBIT E
VALUATION ANALYSIS
[To
Come]
EXHIBIT F
DEBTORS CORPORATE STRUCTURE
Allied Nevada Gold Corp.
Corporate Structure Chart
|
|
|
|
|
1 |
|
Shares of common stock traded on NYSE MKT LLC and Toronto Stock Exchange. Suspended from trading on March 10, 2015. |
|
Entities are 100% owned unless indicated otherwise.
Jurisdiction of formation noted in parentheses. |