Relevant Document:Motion to Extend Exclusivity
The CalPlant debtors are seeking to extend the exclusive periods to file a chapter 11 plan and solicit acceptances by 120 days, to June 2 and Aug. 1, respectively. Although the debtors are undertaking a marketing and sale process, they say they have spent the past four months focusing on transforming plant operations in collaboration with Siempelkamp, their chief equipment supplier, to potentially increase the plant’s value. In addition, the debtors say they encountered various operational challenges that delayed the sale process for their rice straw-based medium-density fiberboard plant in Willows, Calif., according to a motion filed Monday, Jan. 31.
The debtors say that their exclusivity extension request is supported by their consenting bondholders and both senior and subordinated bond trustees, and that they have begun discussions with the consenting bondholders about incremental DIP financing to fund the cases through the extended runway. Absent an extension, the filing and solicitation deadlines would be Feb. 2 and April 3, respectively. The motion is scheduled to be heard at an omnibus hearing on Feb. 16.
The debtors say that their request for an extension is not a negotiation tactic but “a reflection of the simple fact that the Debtors are working productively with their stakeholders” and that their “key area of focus has been on operations in order to increase the value of their main asset, the plant.” The CalPlant debtors have encountered challenges throughout the first four months of their chapter 11 cases, according to the motion. These include extended negotiations with Siempelkamp, delays related to Covid-19, employee attrition, intervening holidays, a loading crane failure halting plant operations, and an electrical issue causing a power shutdown. The motion states that as a result of these issues, the debtors determined that marketing the plant prematurely would not realize maximum value for all stakeholders.
Despite the operational challenges, the debtors emphasize their work with Siempelkamp to improve plant operations during the cases. They say that they “have spent countless hours diagnosing and resolving issues with the plant’s production process” and have redesigned the infeed system to the refiners. The redesign allowed the plant to operate at 65% to 70% “press line uptime” in January, an improvement over the fourth quarter of 2021 when the plant was operating at 40% to 50% press line uptime.
The debtors also say that with the operational improvements, they are “now on the precipice of commencing a sale process that will be the most advantageous for all stakeholders.” The consenting bondholders and both bond trustees approve the debtors’ decision to focus on operations instead of going forward with a sale, the motion states. To that end, the consenting holders have extended key milestones and the DIP budget period.