Relevant Documents:Motion to Obtain Additional DIP FinancingDeclaration in Support
The CalPlant debtors are seeking to issue a $15 million supplemental DIP bond, on top of the
existing $37.4 million DIP bond issuance, to holders of the existing DIP bonds. According to the motion, the supplemental financing will fund operations until late September, which is the debtors’ anticipated bid deadline. The supplemental DIP bond will be on “substantially the same terms as the original DIP Bonds” with respect to covenants, events of default, priority and collateral. The motion also requests expedited procedures to obtain future supplemental financing on materially similar terms.
A hearing on the motion is scheduled for March 29 at 2 p.m. ET.
The debtors say that they will use the extra time “to fine-tune the plant, operate the business, and market the company.” The debtors say that they decided, in consultation with the majority of their senior bondholders, to
again delay their marketing process until after they repair both of their two refiners, make “additional operational improvements” and stabilize plant operations. According to the motion, in mid-February the debtors were forced to shut down one of their two refiners because a “major component” - almost 40 feet in length and weighing over nine tons - was damaged and needed to be rebuilt. The debtors say that the same repair will need to be completed on their second refiner in the upcoming weeks.
The motion says that the original $37.4 million in financing was intended to fund operations through early March, which the debtors have been able to extend by several additional weeks “through cost savings associated with their limited operations (and, therefore, limited use of raw materials) and the delayed incurrence of estate professionals’ fees relating to the sale of their business and plan confirmation.” The debtors will, however, require access to additional working capital starting “as soon as next month.”
This is not the first delay in the sale process for CalPlant’s rice straw-based medium-density fiberboard plant in Willows, Calif. In early February, the debtors sought an exclusivity extension, noting then that they were facing challenges that delayed their marketing process, including negotiations with Siempelkamp, their chief equipment supplier, Covid-19 delays, employee attrition, intervening holidays and one-time events such as a loading crane failure and an unexpected power shutdown.