GT Advanced gets nod to pay put-option premium; objections overruled

By Caroline Salls

Pittsburgh, March 20 – GT Advanced Technologies Inc. received court approval to pay a put-option premium and expenses to some unaffiliated GT convertible noteholders in connection with a $95 million debtor-in-possession financing commitment, according to a Friday filing with the U.S. Bankruptcy Court for the District of New Hampshire.

Specifically, holders of GT’s 3% senior convertible notes due 2017 and 3% senior convertible notes due 2020 have agreed to backstop the financing.

The put-option premium is equal to 3% of the DIP financing commitment and is payable in cash upon the earlier of the initial funding of the DIP loans and the termination of the commitment letter other than as a result of a breach by any of the backstop lenders to fund their commitments.

The proposed DIP facility will mature on the earliest of the 12-month anniversary of the closing date, the effective date of a Chapter 11 plan of reorganization and the acceleration of the DIP loans.

Interest will be 9½% payable monthly in cash and 3% payable in kind.

The facility includes a 97% original issue discount.

GT said it will issue warrants on the plan effective date to the lenders, which will allow them to acquire 1.5% of the fully diluted capital stock of the reorganized company. The warrants will be exercisable immediately.

No warrants will be issued upon a sale of the company or all or substantially all of its assets before the plan effective date, provided that the DIP loans will be paid in full subject to a 2.5% prepayment penalty if the company or assets are sold before the effective date.

The DIP facility can be converted into exit financing on the plan effective date.

Committee objection

As previously reported, GT Advanced’s official committee of unsecured creditors objected to the put-option premium payment.

The committee said the company’s most recent monthly operating report showed that it still has more than $76 million in unencumbered cash.

As a result, the creditor group said “the debtors find themselves in the fortunate position of not needing to rush into DIP financing and have an opportunity few debtors have – to take a measured approach to financing to ensure that it is necessary, on the best possible terms and minimizes the impact on recoveries for general unsecured creditors.”

“There is no compelling business justification to rush the process and subject the estates to substantial administrative claims in the absence of a fully negotiated financing agreement upon the best possible terms,” the committee said in the objection.

“Yet, that is precisely the outcome here if the noteholders fee motion is approved. The noteholders will immediately and irrevocably be granted a $2.85 million administrative claim on account of the put-option premium without the benefit of a fully negotiated financing package,” the creditor group added.

The committee said that GT Advanced was also asking the court to approve unquantified and uncapped noteholder fees and expenses as administrative claims, including 50% of fees and expenses incurred by the noteholders since the company’s bankruptcy filing that are unrelated to the negotiation of the commitment letter and proposed financing.

“The proposed administrative claims will only serve to deprive the estates and the debtors’ creditors of millions of dollars in value if a third-party provides a superior financing package that is ultimately approved by the court,” the objection said.

Friday’s order overruled all objections to the put-option premium payment motion.

Merrimack, N.H.-based GT Advanced Technologies is a provider of equipment and services that support the growth of the solar and LED industries. The company filed for bankruptcy on Oct. 6 under Chapter 11 case number 14-11916.

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