Briggs & Stratton is preparing to file a prepackaged or prearranged chapter 11 as soon as next week with a stalking horse bidder in place to support a 363 sale process for substantially all of its assets, according to sources. The sale process will be funded by DIP financing provided by the company’s existing ABL revolving lenders, including JPMorgan, the sources said.
Briggs & Stratton is required to meet a
July 15 deadline to obtain approval from the ABL lenders on a capital raise of at least $100 million and close the transaction to avoid an event of default under the facility. The company skipped a $6.7 million interest payment due on June 15 on the $195.5 million 6.875% unsecured notes due December 2020 and entered a 30-day grace period.
As of June 12, the company
had $305.1 million of borrowings and $53 million of letters of credit outstanding on the ABL, with $61.9 million of availability.
Certain unsecured noteholders
signed nondisclosure agreements last month to begin negotiating a potential liability management transaction, Reorg reported. The notes last traded in size at 33 on June 25, according to TRACE.
On the company’s third-quarter earnings call on May 7, CEO Todd Teske
said the company expects more than $200 million in proceeds from the monetization of its mower, pressure washer and generator businesses. However, amid weak M&A markets, “we're not just going to take any price, we're going to make sure we're very thoughtful about how we progress with the divestiture,” Teske said.
The company included going-concern language in its first-quarter
10-Q filed in May, citing uncertainty around Covid-19 including shutdowns at the company’s OEM customers and projected negative cash flow for fiscal 2020.
The company is
working with Weil Gotshal and Foley & Lardner as legal advisors and Houlihan Lokey and Ernst & Young as financial advisors, Reorg reported. An ad hoc group of bondholders is working with Gibson Dunn as legal advisor and Imperial Capital as financial advisor.
Briggs & Stratton did not immediately respond to a request for comment. A representative for JPMorgan declined to comment.
--Harvard Zhang