Hussey Copper receives $88.7 million stalking horse bid; DIP approved

By Jim Witters

Wilmington, Del., Oct. 19 - Hussey Copper Corp. emerged on Wednesday from two days of hearings and negotiations with an $88.7 million stalking horse bid from Katman Metals LLC for substantially all of the company's assets.

During a hearing in the U.S. Bankruptcy Court for the District of Delaware, judge Brendan L. Shannon approved the bid procedures, effective immediately, although the debtors have until Oct. 20 to submit to the court the final asset purchase agreement.

Katman outdueled Halkos Holdings LLC, an affiliate of KPS Capital Parters, LP, to become the stalking horse bidder. Katman raised its initial purchase price by $4 million after Halkos submitted an $87.5 million offer late Oct. 17.

On Oct. 19, the debtors listened to presentations from each bidder before recommending Katman to the court. There were no objections to the recommendation.

Shannon also said he plans to grant final approval of the debtors' $50 million debtor-in-possession financing, once the final documents are submitted on Oct. 20.

Regina Kelbon, representing DIP agent PNC Bank, NA, told the court the lenders would extend the DIP agreement through Oct. 20 to facilitate the filing of final documents and an official ruling by the judge.

Asset purchase agreement

Debtors attorney Mark Minuti outlined some of the details of the stalking horse bid in court, but the final asset purchase agreement was not available.

In addition to the $88.7 million purchase price, the Katman bid includes a $500,000 working capital holdback, $3 million of assumed liabilities and payment of all transition services.

The agreement includes no breakup fee. But if the debtors close a deal with anyone other than Katman, Katman will receive reimbursement for documented expenses through Oct. 19, with a cap of $1.375 million.

Katman is to make a $6.5 million deposit.

Sale procedures

Minuti said the initial overbid must be $2.625 million more than the $88.7 million stalking horse bid. That figure includes a bid of $1.25 million, plus the $1.375 million of reimbursable expenses to the stalking horse bidder.

Subsequent bids at the auction must be in $100,000 increments.

The bid deadline is Nov. 11. The auction is scheduled for Nov. 14. The sale hearing is scheduled for 10 a.m. ET on Nov. 16.

DIP facility

Kelbon said negotiations during the two days had resolved all objections to the DIP agreement.

PNC Bank, NA is the DIP loan agent; PNC, Wells Fargo Capital Finance, LLC and Bank of America, NA are the lenders.

The $50 million facility will mature on the earliest of Nov. 28, the effective date of a plan of reorganization, the closing of the sale of substantially all company assets and conversion or dismissal of the bankruptcy case.

Interest will accrue at the alternate base rate plus 500 basis points.

Hussey is a Leetsdale, Pa.-based copper products manufacturer. Its Chapter 11 case number is 11-13010.

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