SeraCare equity holders object to proposed $25 million DIP financing

By Jennifer Lanning Drey

Eugene, Ore., Sept. 29 - SeraCare Life Sciences, Inc.'s ad hoc committee of equity security holders objected to the company's proposed up to $25 million unsecured debtor-in-possession financing from Allegient Investors, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of California.

According to the objection, the company is asking the court to authorize the immediate issuance of $15 million of tranche A notes, plus another $10 million by the plan confirmation date to pay off its current bank debt. The investor group would receive the notes in exchange for the loan.

The committee said the financing will significantly dilute current stockholders and give a massive windfall to outside investors.

The committee also said there is no need to refinance the bank lenders prior to confirmation of a plan of reorganization since they are oversecured by actual cash on hand.

Members of the committee have offered to buy out the bank lenders at par with an assurance to SeraCare of a minimum 19 months of cash collateral, according to the objection.

Under the terms of the tranche A notes, Allegiant Investors would have the ability to veto the plan reorganization process because any plan proposed by SeraCare must include the provisions of the loan, and any other plan must pay the investors at a make-whole premium that is undefined, the committee said in the filing.

The Allegiant Investors would also be able to appoint one person to the board of directors without election by stockholders under the terms of the notes, according to the objection.

The proposed notes have a term of five years.

In addition, a return on sale provision entitles the investors to equity-like returns during the bankruptcy case.

The investors have a first right of refusal on any other exit financing or restructuring proposed during the plan confirmation process.

SeraCare would pay a $200,000 facility fee be paid to Allegiant Investors.

In the objection, the committee said SeraCare claims it is trying to raise exit financing; however, exit financing should be approved in a plan of reorganization.

A hearing has been scheduled for Oct. 18.

SeraCare, an Oceanside, Calif., manufacturer and provider of biological products and services to diagnostic, therapeutic, drug discovery and research organizations, filed for bankruptcy on March 22. Its Chapter 11 case number is 06-00510.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.