Optima Specialty Steel plan confirmed, financing commitment approved

By Caroline Salls

Pittsburgh, June 29 – Optima Specialty Steel, Inc.’s second amended plan of reorganization was confirmed Thursday by the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the company entered a plan support agreement with Optima Acquisitions, LLC (OA), its sole common shareholder.

Last month, the company announced that OA had funded $10 million as the first installment of four milestone deposits totaling $25 million toward its required cash contribution, with a second $5 million deposit expected to be made soon after.

The plan support agreement calls for Optima to emerge from Chapter 11 by the end of July through a plan of reorganization that will pay all allowed claims of creditors in full, in cash.

Existing Optima equity interests will be reinstated.

The plan will be funded by a $200 million cash contribution by OA, plus about $140 million in debt financing.

In exchange for its contribution, OA will retain its existing 100% interest in Optima.

The company also received court approval Thursday to enter a commitment letter under which it will obtain an initial $115 million in exit financing.

Optima said the unitranche term loan facility will include an additional $15 million in the form of delayed-draw loans, which will be available until the earlier of Dec. 31, 2017 and the date the company enters into a revolving credit facility.

The commitment letter requires GSO Capital Partners LP, together with its affiliates and funds and accounts managed or sub-advised by them, to provide the financing.

The company said the financing will provide the liquidity required to fund Chapter 11 plan transactions and ensure Optima’s emergency from bankruptcy.

Virtus Group, LP is the exit financing agent.

The facility will mature six years after the closing date.

Interest will accrue at a rate of Libor plus 875 basis points, subject to a 1% Libor floor.

Optima is a Miami-based specialty steel manufacturer. The company filed bankruptcy on Dec. 15, 2016 under Chapter 11 case number 16-12789.

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