Tue 04/13/2021 18:10 PM
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Relevant Documents:
Voluntary Petition
Chapter 11 Plan
Disclosure Statement

Automotores Gildemeister SpA, a Santiago, Chile-based vehicle importer and distributor primarily operating in Chile and Peru as well as Uruguay, Costa Rica and Brazil, and several affiliates filed bankruptcy petitions and a prepackaged plan in the Southern District of New York yesterday, Monday, April 12. Creditors holding approximately 90.9% of the outstanding 7.5% senior secured notes due 2025 have signed onto a restructuring support agreement with the debtors, according to a motion filed this morning. That level of support represents an increase from 79.6%, as listed earlier in the disclosure statement.

In addition, the debtors say 69.3% of holders of claims in Class 5 (consisting of deficiency claims under the 7.5% notes due 2025, “unsecured notes legacy claims” remaining from a prior refinancing, and “related party claims,” meaning $1,943,500 in debt obligations owed to Gildemeister’s shareholder) have agreed to support the plan. However, this support appears to be driven by the deficiency claim component of the class, and, as discussed below, counsel to holders of a majority of the company’s approximately $23 million in stub 8.25% notes due 2021 (one tranche of the “legacy notes”) has indicated that the bulk of such holders are retail investors in South America who may not understand the plan process.

As of the petition date, certain of the existing holders of the 7.5% notes due 2025 have sold their ownership interest in the notes to certain of the joining consenting noteholders. The transfer of this ownership interest is expected to close soon after the petition date, the debtors say.

Certain of the consenting noteholders have agreed to provide DIP financing to the debtors in an aggregate principal amount of up to $23.6 million, including $15.1 million in principal amount of senior secured superpriority DIP delayed-draw term loans after entry of the interim DIP order.

Although some first day motions have been filed, the DIP financing motion, the first day declaration and other papers are yet to be filed. The debtors face an April 17 milestone deadline for obtaining an interim DIP order.

Under the debtors’ prepackaged plan, recovery for all classes is projected at 100%, with the exceptions of (i) Class 4, 7.5% notes due 2025 secured claims, with a projected recovery of 96.9% to 114.0%; (ii) Class 5, deficiency claims, unsecured notes and related party claims, with a projected recovery of 14.7% to 18.4%; and (iii) Class 9, existing equity interests in Gildemeister, which would be redeemed, canceled and released for no consideration. General unsecured claims other than Class 5 would be reinstated or paid in cash.

As detailed below, Class 4 would either (a) affirmatively cash out to receive cash equal to 16.6833% of their claims in a “Cash-Out Distribution,” or (b) for every $1 of claims receive $0.56046 in principal amount of new junior tranche secured notes, $0.19789 in principal amount of new subordinated notes and pro rata share of 100% of units of a newly formed limited liability holding company that would indirectly hold 100% of the equity interests in the reorganized business. Class 5 would receive $0.20070 in principal amount of new subordinated notes for each $1 of claims, with these claims allowed in certain amounts only. DIP lenders would either be paid with new senior tranche secured notes or in cash. The plan also contemplates an exit facility of up to $15.6 million to fund all cash-out distributions, with the exit lenders to receive new senior tranche secured notes.

The first day hearing has yet to be scheduled. Pursuant to the RSA milestones in the plan, the debtors will seek to confirm the plan by June 1, or within 50 days of filing the petition, with plan effectiveness to follow by June 16, or within 15 days of confirmation. The filings incorporate a voting record date of April 9, with a voting deadline of May 7 at 5 p.m. ET.

The company began solicitation of the prepackaged plan on April 9.

The company reports $500 million to $1 billion in both assets and liabilities, and its prepetition capital structure includes $566.7 million in prepetition debt.

A capital structure is shown below:



























































































Automotores Gildemeister


04/13/2021

EBITDA Multiple

(USD in Millions)

Amount

Maturity

Rate

Book


7.5% Secured Notes due 2025

509.8

2025

7.500%

Bank Loans

22.1



Total Secured Debt

531.9


8.25% Notes due 2021

22.5

2021

8.250%

7.5% Notes due 2021

9.6

2021

7.500%

6.75% Notes due 2023

2.6

2023

6.750%

Total Unsecured Debt

34.7


Total Debt

566.6


Net Debt

566.6



Notes:
Capital structure does not include $1.6 million related party debt, owed to shareholder Minvest S.A.



 

  • The company’s controlling shareholder, Minvest, is a sociedad anónima organized under the laws of Chile and owns 100% of Gildemeister’s common stock. Holders of 10% or more of Automotores Gildemeister’s equity are below:



A valuation analysis prepared by Rothschild, the debtors’ investment banker, puts the total enterprise value of the reorganized debtors on a consolidated basis at approximately $460 million to $530 million as of June 30, with a midpoint estimate of approximately $495 million. Based on estimated pro forma net debt of $359 million as of the assumed effective date (with the new subordinated notes pegged at a $91 million value), the reorganized debtors would have a plan equity value of $101 million to $171 million, with a midpoint estimate of approximately $136 million.

The debtors estimate that EBITDA in fiscal year 2024 will be $96 million, translating to a mid-case enterprise value to 2024 EBITDA multiple of about 5.2x, given the $495 million valuation. Mid-case EV to 2023 EBITDA is 6.1x.

The case has been assigned to Judge Lisa E. Beckerman (case No. 21-10685). The debtors are represented by Cleary Gottlieb as counsel and are also working with Rothschild and FTI. The company is also working with Cariola Diez Perez-Cotapos SpA, Bruzzone & Gonzalez Abogados, Rebaza Alcázar & De Las Cases, Hughes & Hughes, EY Law and Veirano Advogados. Prime Clerk is the claims agent.

8.25% Noteholder Opposition

In an excerpted statement sent to Reorg, counsel from Alston & Bird representing a majority of Automotores Gildemeister’s remaining 8.25% senior notes says that the debtors commenced solicitation of their plan of reorganization to “improperly strip unsecured noteholders of their rights and make improper payments to equity holders” (emphasis added). The statement indicates that most holders of the notes are Chilean retail investors who may not understand the process “before it is too late.”

Specifically, the noteholder group asserts:
“If successful, AG will avoid paying amounts due in mere weeks on its 8.25% Notes for up to 14 years. Similarly, holders of the 6.75% Notes due in 2023 and the 7.5% Notes due 2021 (together with the 8.25% Notes, the ‘Senior Notes’) will receive new subordinated notes that extend maturity for 14 years, allow AG to escape paying most of the interest obligations in cash to holders of the Notes, and reduce the amount due on the Senior Notes by almost 80%.”

“Holders of Senior Notes will have the opportunity to participate as a member of an Unsecured Creditors’ Committee at no cost to themselves. But they need to act swiftly or will forever lose the opportunity to participate. We believe that there are viable grounds to contest AG’s course of action and protect the rights of holders of Senior Notes, while still preserving the jobs of AG employees. AG’s plan has essentially been dictated to it by holders of their Secured Notes due 2025. We believe that there are viable grounds to oppose this plan that does not compromise AG’s ability to operate as a going concern, but it requires holders of Senior Notes to act now” (emphasis added).

Events Leading to the Bankruptcy

The company attributes the bankruptcy filing to (1) a complex and competitive operating environment, with the market suffering declines in Chile as a result of macroeconomic and other market conditions prior to the Covid-19 pandemic; and (2) the impact of Covid-19 on operations. Since the 7.5% notes due 2025 were issued in 2019, the debtors say that their cash flow did not grow enough to support their existing debt “on their current terms.”

In the months prior to the petition date, the debtors “engaged in extensive negotiations with the Holders of approximately US$369,585,322 in principal amount, or 72.5%, of the outstanding 7.5% Notes due 2025 by amount,” resulting in a negotiated RSA with the ad hoc group of consenting noteholders, which was executed on March 31, 2021. After the ad hoc group of consenting noteholders executed the RSA, the joining consenting noteholders - about $36.4 million in principal amount, or 7.1% of the 7.5% notes due 2025 - executed joinder agreements to the RSA. The debtors’ filings today state that “90.9% of Holders of Claims (as defined in the Plan) in Class 4 (the 7.5% Notes due 2025 Secured Claims (as defined in the Plan)), and 69.3% of Holders of Claims in Class 5 (consisting of the 7.5% Notes due 2025 Unsecured Deficiency Claims (as defined in the Plan), Unsecured Notes Legacy Claims and the Related Party Claims) have agreed to support the Plan.”

Background

Automotores Gildemeister SpA was founded in 1986. All of Gildemeister’s Chilean subsidiaries are debtors in the chapter 11 proceedings.

A corporate chart is below:

(Click HERE to enlarge.)

The debtors’ operations are divided into two main business categories: (i) vehicle business, representing Gildemeister’s core activity, which mainly consists of importing, distributing and selling new vehicles (primarily Hyundai), as well as providing maintenance and repair services, selling associated parts, selling used vehicles, and brokering insurance and financial services; and (ii) third-party after-market accessories.

The second business line was wound down in 2020.

Gildemeister’s vehicles business involves importing vehicles from foreign original equipment manufacturers, or OEMs, and then distributing and selling those vehicles to customers, either through independently owned and franchise-operated dealerships or the debtors’ owned dealerships primarily in Chile and Peru.

“Since 1986, the Company has been the sole distributor of Hyundai passenger and light commercial vehicles in Chile and since 2002, the sole distributor of Hyundai passenger and light commercial vehicles in Peru,” the DS explains.

Further, the debtors are the sole distributor of Volvo and Jaguar Land Rover in Peru; Jaguar Land Rover and Mini in Uruguay; and Volvo in Costa Rica.

Gildemeister is also the only distributor of Chinese and Indian brands, such as Mahindra, Geely, Brilliance, Jinbei and BAIC, in Chile and Peru, as well as JMC in Peru, and Sinotruk, Yuejin, and Yutong in Chile.

The debtors provide services authorized by OEMs as well as OEM parts for the cars being sold, and brokers car loans through Amicar, an affiliate, for purchasers of Gildemeister’s new and used vehicles.

In addition, the group offers insurance brokerage services. Other ancillary businesses are carried out through joint ventures focused on developing and constructing malls in Chile and developing an integrated system for the collection and recycling of used portable batteries.

The debtors' largest unsecured creditors are listed below:










































































10 Largest Unsecured Creditors
Creditor Location Claim Type Amount
7.50% Senior Secured
Notes Due 2025
New York Deficiency
Claim
$   521,096,081
(409,300,000 secured)
8.250% Senior Unsecured
Notes Due 2021
New York Unsecured
Notes
23,205,373
7.50% Senior Unsecured
Notes Due 2021
New York Unsecured
Notes
9,858,106
6.750% Senior Unsecured
Notes Due 2023
New York Unsecured
Notes
2,664,771
Hyundai Corp. Santiago, Chile Inventory
Financing
2,510,626
China National Heavy
Duty Truck Corp.
Jinan, China Inventory
Financing
1,936,289
Guillermo Reyes Rozas Calama, Chile Contingent
Litigation
1,185,016
Finance Department of
Belo Horizonte
Belo Horizonte, Brazil Contingent
Litigation
1,037,631
Seguros Generales
Suramericana SA
Santiago, Chile Trade 633,258
Volvo Car Corp. Gothenburg, Sweden Inventory
Financing
382,333

The case representatives are as follows:

























































































Case Representatives
Role Name Firm Location
Debtors' Counsel Jane VanLare Cleary Gottlieb
Steen & Hamilton
New York
Adam Brenneman
Debtors' Financial Advisor/
Investment Banker
N/A Rothschild & Co N/A
Debtors' Financial Advisor N/A FTI N/A
Debtors' Claims Agent Alex Orchowski Prime Clerk New York
Co-Counsel to the
Ad Hoc Group of
Consenting Noteholders
Allan S. Brilliant Dechert New York
Stephen M. Wolpert
Eric O. Hilmo
Financial Advisor to the
Ad Hoc Group of
Consenting Noteholders
N/A Link Capital
Partners
Santiago,
Chile
Co-Counsel to the
Ad Hoc Group of
Consenting Noteholders
N/A Prieto Las Condes,
Chile
Co-Counsel to the
Ad Hoc Group of
Consenting Noteholders
N/A Pinheiro Neto São Paulo,
Brazil
Co-Counsel to the
Ad Hoc Group of
Consenting Noteholders
N/A Hernández y Cía Magdalena
del Mar,
Peru
Co-Counsel to the
Ad Hoc Group of
Consenting Noteholders
N/A Ferrere Montevideo,
Uruguay
Counsel to Holders of
8.25% Senior Notes
William S. Sugden Alston & Bird Atlanta

Plan RSA Milestones

According to the plan, milestones under the RSA are as follows:

  • April 2: Commencement of plan solicitation;

  • April 12 (or the petition date): File plan/DS and motion to approve DS;

  • April 15: Deadline for debtors to file chapter 11, along with a motion for a scheduling order for plan confirmation;

  • April 17 (or 5 days after the petition date): Entry of interim DIP order;

  • May 12 (or 30 days after the petition date): Completion of plan solicitation;

  • May 17 (or 35 days after the petition date): Entry of final DIP order;

  • June 1 (or 50 days after the petition date): Approval of DS/entry of plan confirmation order; and

  • June 16 (or 15 days after entry of the confirmation order): Plan effective date.


Plan / Disclosure Statement

Below is a chart of the plan’s classes along with their impairment status and voting rights:



Treatment of Claims and Interests

The debtors’ plan sets forth the following classification of and proposed distributions to holders of allowed claims and interests:

  • Class 1 - Other secured claims: Each holder of such claim would receive, at the election of the reorganized debtors, subject to the consent of the required consenting noteholders: (i) cash; (ii) the property of the debtors that constitutes the collateral securing such holder’s claim; (iii) reinstatement; or (iv) such other treatment rendering such holder’s claim unimpaired in accordance with section 1124 of the Bankruptcy Code.

  • Class 2 - Other priority claims: On the plan effective date, each holder of such claim would receive treatment in a manner consistent with section 1129(a)(9) of the Bankruptcy Code.

  • Class 3 - Prepetition bank financing claims: On the plan effective date, each holder of such claim would be reinstated.

  • Class 4 - 7.5% notes due 2025 secured claims: (Allowed amount: $409.3 million.) On the plan effective date (or as soon as practicable thereafter), each holder of such claim would receive:

    • If such holder is not a “Cash Out Electing Holder”: (i) $0.56046 in principal amount of “New Junior Tranche Secured Notes,” which would be a junior tranche of secured notes to be issued by the reorganized debtors as part of their issuance of new notes, for each $1 of such holder’s claims; (ii) $0.19789 in principal amount of “New Subordinated Notes,” which would be a subordinated tranche of unsecured notes to be issued by the reorganized debtors as part of their issuance of new notes, for each $1 of such holder’s claims; and (iii) such holder’s pro rata share (based on the proportion that such non-cashout electing holder’s claims bear to the sum of all allowed 7.5% notes due 2025 secured claims held by all non-cashout electing holders) of 100% of the USA Holdco LLC units. The USA Holdco LLC units would be issued by USA Holdco as a single class of limited liability company units with 100% economic and voting rights. USA Holdco, in turn, would be a newly formed holding company structured as a limited liability company under Delaware law, which, because of its ownership of Chile Holdco, would indirectly hold 100% of the equity interests in the reorganized business.

    • If such holder has affirmatively made a plan election on its letter of transmittal to receive a cash out distribution: Cash equal to 16.6833% of such holder’s claim, or the “Cash-Out Distribution,” and such holder would be deemed to have waived any distribution under the plan on account of its deficiency claims.



  • Class 5 - Unsecured notes and related party claims:

    • Allowance: The unsecured notes claims would be allowed in the following amounts: (i) $111.8 million of 7.5% notes due 2025 unsecured deficiency claims, (ii) $9.9 million of 7.5% notes due 2021 claims, (iii) $23.2 million of 8.25% notes due 2021 claims, (iv) $2.7 million of 6.75% notes due 2023 claims, which includes the aggregate principal amount of such claims and any accrued and unpaid interest through the petition date. The Minvest loan claim would be allowed in the amount of $1.6 million, and the share purchase agreement claim would be allowed in the amount of $300,000.

    • Treatment: Each holder of such claim would receive $0.20070 in principal amount of the new subordinated notes for each $1 of such holder’s claims.



  • Class 6 - General unsecured claims: On the plan effective date, each holder of such claim would receive, at the election of the applicable debtor or reorganized debtor, (i) reinstatement or (ii) cash.

  • Class 7 - Intercompany claims: On the plan effective date, each holder of such claim would be either (i) reinstated; or (ii) canceled, released and extinguished without any distribution, in each case at the debtors’ election with the consent of the required consenting noteholders.

  • Class 8 - Existing equity interest other than in Gildemeister: On the plan effective date, each holder of such claim would be either (i) reinstated; or (ii) canceled, released and extinguished without any distribution, in each case at the debtors’ election with the consent of the required consenting noteholders and to the extent permitted under local law.

  • Class 9 - Existing equity interests in Gildemeister: On the plan effective date, each allowed existing equity interest in Gildemeister, including, without limitation, each existing preferred equity interest in Gildemeister, existing common equity interest in Gildemeister and existing Series A warrant and existing Series B warrant in Gildemeister, would be redeemed, canceled and released for no consideration.


The plan also contains a special provision governing unimpaired claims, which provides that nothing under the plan would affect the debtors’ or the reorganized debtors’ rights regarding any unimpaired claim, including all rights regarding legal and equitable defense to or setoffs or recoupments against any such unimpaired claims.

On or prior to the plan effective date, a newly formed holdco would be formed under Chilean law.

Upon implementation of the restructuring transactions, Chile Holdco would hold all of the equity interest in reorganized Gildemeister. On plan effective date, Chile Holdco would issue: (i) a single class of common equity interests with 100% economic and voting rights with a $44.3 million paid in capital value, and (ii) $132.8 million of Chile Holdco bonds.

The bonds would be issued pursuant to a New York law indenture and are set to mature on the 30th anniversary of the plan effective date. Cash interest would accrue semiannually at a 15% rate with the option, in Chile Holdco’s sole discretion, to defer payment of interest. Any unpaid deferred interest shall also accrue interest at the applicable interest rate plus 2% default interest.

In addition, a newly formed Delaware holdco - USA Holdco - would be formed, and issue a single class of LLC units to the 7.5% 2025 secured noteholders. USA Holdco would conduct no operations other than those incidental to its holding of the Chile Holdco securities described above.

DIP Claims

DIP claims would be paid, at the reorganized debtors’ option (a) dollar for dollar with new senior tranche secured notes or (b) payment in full in cash.

New Secured Notes and New Subordinated Notes

The RSA includes a term sheet providing that the new senior tranche secured noteholders are the DIP lenders, the new junior tranche secured noteholders are the holders of 7.5% notes due 2025 and the new subordinated noteholders are the holders of the 7.5% notes due 2025 and the holders of the unsecured notes claims. The new senior tranche secured notes would be in the aggregate principal amount of all outstanding DIP claims on the plan effective date (and mature six years from the plan effective date), the new junior tranche secured notes would be in the amount of $229.4 million (and mature six years from the plan effective date) and the new subordinated notes would be in the amount of $111 million (and mature 14 years from the plan effective date).

According to the term sheet, the new senior tranche secured notes and the new junior tranche secured notes would bear interest at 7.5% cash or, at the company’s option, the ability to PIK for 3.5 years at 9%. The new subordinated notes bear interest, for the first 3.5 years from the plan effective date, 10% with the ability to PIK at the company’s option, and thereafter, 2.5% or 7.5% with the ability to PIK at the company’s option.

The trustee is The Bank of New York Mellon, and the collateral agent is TMF Group New York LLC.

The term sheet also provides that new secured notes would be secured by first and second priority security interests, as applicable, over the same assets that secured the 7.5% notes due 2025,plus (i) Chile Holdco would grant first and second priority security interests, as applicable, over all equity interests in Gildemeister or reorganized Gildemeister, and (ii) first and second priority security interests, as applicable, would be granted over all equity interests in each other debtor or reorganized debtor. The new senior tranche secured notes would be distributed to the DIP lenders and the exit financing parties, in an amount equal to the “(i) the amount of all New Senior Tranche Secured Notes used to repay DIP Claims not repaid in Cash on the Plan Effective Date, plus (ii) the amount of all funds advanced by the Exit Financing Parties to pay all Cash-Out Distributions on the Plan Effective Date.”

The new subordinated notes would be unsecured but would benefit from the same guarantees that support the new secured notes. The guarantors are reorganized Gildemeister and the guarantors of the 7.5% notes due 2025.

Exit Financing

The plan contemplates exit financing up to $15.6 million to “fund all Cash-Out Distributions,” with the exit financing parties to receive new senior tranche secured notes in an aggregate principal amount equal to all amounts advanced to fund the cashout distributions.

Hyundai Distributorship Agreements

Conditions precedent to restructuring include executed letter agreements between Hyundai, Gildemeister and Automores Persu SA, which would include:

  • “Hyundai’s agreement to extend its existing distributorship agreements with Gildemeister and AGP (together, the ‘Hyundai Distributorship Agreements’) for two years from the Plan Effective Date;

  • “Hyundai’s acknowledgement and agreement that, after the Plan Effective Date, certain financial creditors of Gildemeister will become the indirect shareholders of Gildemeister and a new chief executive officer for Gildemeister will be selected, and

  • “An executed copy of the Agreement for Undertaking and Release between Hyundai and AGP containing Hyundai’s agreement allowing AGP to purchase up to 1854 EURO-4 H-1 vehicles from Hyundai with a discount rate of 30% (‘Hyundai Undertaking Agreement’), which Hyundai Letters and Hyundai Undertaking Agreement shall be on terms that are acceptable to the Required Consenting Noteholders in their sole and absolute discretion.”


On March 22, Hyundai agreed to extend the distributorship agreement for a period of two years.

Valuation Analysis

The debtors’ valuation analysis, performed by Rothschild, shows total enterprise value of approximately $460 million to $530 million, with a midpoint of $495 million, with respect to the reorganized debtors on a consolidated basis as of the assumed effective date of June 30. Plan equity value is $101 million to $171 million, with a midpoint of $136 million, based on estimated pro forma net debt of $359 million as of the assumed effective date of June 30.

Rothschild’s analysis, as disclosed, is based on information as of March 26, provided by the debtors, including the financial projections, as well as a number of assumptions including a successful reorganization in a timely manner, the achievement of the debtors’ financial projections (including contemplated asset sales), continuity of a qualified management team and capital market conditions consistent with those as of March 26. The analysis also notes that neither Rothschild nor the debtors intend to update, revise or otherwise reaffirm the analysis.

Financial Projections

The debtors said they expect the market to recover to pre-Covid-19 levels in Chile and Peru by 2022. Long-term estimates are driven by GDP growth, with Chile forecast to grow in line with GDP and the market in Peru expected to grow at a higher rate than GDP because current vehicle penetration level is low.

Chile and Peru new vehicle markets are shown below:

After 2021, headcount is expected to increase in order to deliver top-line growth. Further, as the market recovers, the debtors expect to launch larger marketing and advertising campaigns in order to increase market share.

SG&A is shown below:

Pro forma capital structure is shown below:

As shown below, the debtors expect to generate about $1.017 billion of incremental revenue, with $944 million of total incremental operating costs.

EBITDA margin is expected to peak at about 7.7% in 2027.

Regarding working capital, the debtors expect inventory to normalize from 2021 onwards, at a lower level than the historical average, due to tight working capital controls and vehicle mix. Days of accounts receivables is forecast to be lower than 2020 but higher than 2019, while payables are expected to remain consistent with long-term levels in 2019.

The debtors expect to sell $218 million of assets in 2021, 2022 and 2023. Automotores Gildemeister has initiated a divestiture program of noncore real estate and other assets.

(Click HERE to enlarge.)

Liquidation Analysis

The debtors’ claims recovery summary based on hypothetical liquidation analysis forecasts 7.6% to 10.2% recoveries for unsecured creditors, who are slated to recover about 14.7% to 18.4% under the plan:

Hypothetical liquidation analysis shows $144.8 million to $180 million of distributable value:

Proceeds are distributed as follows:

Other Plan Provisions

The plan provides for releases of (a) the debtors; (b) Chile Holdco, USA Holdco and the reorganized debtors; (c) the DIP agent and DIP lenders; (d) the senior secured notes trustee and the senior secured notes collateral agent; (e) the unsecured legacy notes trustees; (f) the consenting noteholders, the ad hoc group of consenting noteholders and its members; and (g) the exit financing parties, provided that any holder of a claim or interest that opts out of the releases would not be a released party. In addition, the plan includes an exculpation provision in favor of (a) the debtors; (b) any official committees; (c) to the maximum extent permitted by law, the consenting noteholders, the ad hoc group of consenting noteholders and its members; and (d) to the maximum extent permitted by law, the senior secured notes trustee and the senior secured notes collateral agent.

Under the plan, the new board of USA Holdco would initially consist of seven directors including: (a) Ricardo Lessmann, who would serve as chairman of USA Holdco, and (b) six directors selected by the required consenting noteholders in their sole and absolute discretion. The directors of reorganized Gildemeister and the other reorganized debtors would be selected by the required consenting noteholders prior to the plan effective date and thereafter established by the new board. According to the plan, the officers and directors of the new board will be identified in a plan supplement.

Other Motions

The debtors also filed various standard first day motions, including the following:

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