Global Power seeks approval of rights offering backstop agreement

By Caroline Salls

Pittsburgh, Oct. 5 - Global Power Equipment Group, Inc. requested court approval to enter into a rights offering backstop agreement with holders of the company's common stock, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, Global Power's plan of reorganization includes a rights offering and private placement of up to $90 million of common stock in the reorganized company.

Under the backstop agreement, participating stockholders will purchase any shares of new common stock not subscribed to under the rights offering and private placement.

The backstop commitment expires on Jan. 4.

If Global Power enters into an alternate plan-funding transaction, the company will pay each backstop purchaser a breakup fee of $2.5 million multiplied by the purchaser's commitment percentage.

In addition, Global Power will issue closing warrants to the backstop purchasers equal to 5.5% of the total offering amount.

However, if the commitment termination date is extended to Feb. 28 from Jan. 4, the closing warrants percentage will be increased to 6.5% of the total offering amount.

The termination date will be extended to Feb. 28 if Global Power's debtor-in-possession financing is extended beyond the current Dec. 7 maturity date and the company and equity committee are still seeking confirmation of the plan of reorganization.

A hearing is scheduled for Oct. 24.

Global Power, a Tulsa, Okla., maker of gas turbine power plants and power-related equipment for industrial operations, filed for bankruptcy on Sept. 28, 2006. The Chapter 11 case number is 06-11045.

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