Easy Gardener files Chapter 11 bankruptcy; agrees to $57 million asset sale

By Caroline Salls

Pittsburgh, April 20 - Easy Gardener Products, Ltd. filed for Chapter 11 bankruptcy Wednesday in the U.S. Bankruptcy Court for the District of Delaware and entered into a stalking horse agreement to sell substantially all of its assets to Green Thumb Acquisition Corp., an affiliate of Bayside Capital, for $57 million, according to a company news release.

The purchase price consists of $15.32 million plus the principal and interest owed to the company's senior secured revolving and term lenders, minus fees.

The Chapter 11 filing was a requirement of the sale agreement.

If Green Thumb is not the high bidder for the assets, Easy Gardener will pay a $2 million break-up fee and expense reimbursement.

The company said it intends to use the sale proceeds to repay 100% of the outstanding principal and unpaid interest due on its senior secured revolving and term loans, with the balance to be used to pay amounts owed to holders of $4.28 million in subordinated promissory notes, plus about $1 million in accrued interest.

After paying between $2.5 million and $3.4 million in transaction and other fees, Easy Gardener expects to have $6.7 million to $7.5 million remaining for distribution to holders of its 9.4% cumulative preferred trust securities due April 15, 2028.

Common equity holders will receive no distribution under the company's reorganization.

DIP terms

The company obtained a commitment letter from LaSalle Business Credit, LLC, the lender under its existing senior secured revolving credit facility, to provide up to $33 million in debtor-in-possession financing for its ongoing operational needs during its bankruptcy case.

The company requested interim use of $30 million of the proposed DIP financing.

DIP maturity will be the earliest of 150 days, upon consummation of a plan or reorganization or upon completion of a sale of substantially all of the company's assets.

Interest on revolving loans will be Prime plus 75 basis points, and interest on overadvances will be an additional 200 bps.

Easy Gardener will pay a $150,000 closing fee, a $165,000 administrative fee, a $2,000 per month collateral management fee, a $750 per day audit fee and 400 bps letter-of-credit fee.

The existing senior secured revolving credit agreement will be amended to provide for an increase in the line of credit to $33 million from $25 million, subject to a customary borrowing base.

The amendment provides for up to $5 million of overadvance availability.

The company also amended its existing senior secured term debt agreement to modify and extend the provisions relating to the payment of a $2 million performance fee, which will now be payable in three installments of $100,000, $200,000 and $1.7 million.

The first installment will be payable upon entry of the final DIP order, the second installment will be payable June 30, and the third installment will be payable July 31.

If Easy Gardener pays the performance fee installments as they come due, and if its obligations to its senior secured term lender are paid in full before the due date of the second and third installments, the company will not be required to pay the remaining portion of the performance fee.

Easy Gardener said it expects that the proposed sale transaction will close before June 30, so it will not be required to pay $1.9 million of the $2.0 million performance fee.

Green Thumb has agreed to assume the first $100,000 installment of the performance fee as a part of the purchase transaction.

Debt details

According to court documents, the company had $103.45 million in assets and $107.52 million in debt as of Dec. 31, including $53.82 million in outstanding subordinated debt securities.

Easy Gardener's largest unsecured creditors include:

• Wilmington Trust Co. of Wilmington, Del., as trustee, with a $76.63 million trust preferred debt claim;

• Central Garden & Pet Co. of Walnut Creek, Calif., with a $3.32 million subordinated note claim; and

• EG Broad Street Partners, LLC of Stamford, Conn., with a $2 million subordinated note claim.

Easy Gardener is a Waco, Texas-based manufacturer and marketer of consumer lawn and garden products. Its Chapter 11 case number is 06-10396.

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