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Valence requests approval to pay fees tied to possible DIP financing
By Caroline Salls
Pittsburgh, Aug. 7 - Valence Technology, Inc. requested court approval to enter into a proposal letter under which Wells Fargo Bank, NA expressed interest in providing $20 million in debtor-in-possession financing, according to a Monday filing with the U.S. Bankruptcy Court for the Western District of Texas.
Wells Fargo specified in the proposal letter that it was not making a binding commitment to provide the DIP financing.
Before it can provide the DIP financing, the company said Wells Fargo has indicated that it must make financial, legal and collateral investigations and decisions and it must complete due diligence on the collateral that would secure the proposed loan.
As a result, Valence is also seeking court approval to pay a $150,000 "good faith and documentation deposit" and a $100,000 work fee to Wells Fargo as an advance against the expenses the potential lender will incur in completing due diligence and drafting and negotiating the loan agreement and binding documentation.
"The debtor is hopeful that after Wells Fargo completes its due diligence, it will provide the debtor-in-possession financing to enhance the debtor's ability to finance its operations," Valence said in the motion.
According to the proposal letter, the financing would be comprised of a $20 million secured revolving line of credit, with up to $2 million available as a letter-of-credit subfacility.
Interest would be Libor plus 550 basis points.
The loan would carry a one-year term.
Austin, Texas-based Valence Technology, a developer of lithium-ion batteries, filed for bankruptcy on July 12. The Chapter 11 case number is 12-11580.
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