Valence Technology gets letter of intent for $10 million DIP facility

By Caroline Salls

Pittsburgh, Aug. 17 - Valence Technology, Inc. requested court approval to enter into a non-binding letter of intent under which GemCap Lending I, LLC expressed interest in providing $10 million of debtor-in-possession financing, according to a Friday filing with the U.S. Bankruptcy Court for the Western District of Texas.

A hearing is scheduled for Aug. 23.

Before it can provide the DIP financing, the company said GemCap has indicated that it must complete due diligence on the collateral that would secure the proposed loan and, if satisfied, prepare a loan agreement and related definitive documentation.

As a result, Valence is also seeking court approval to pay a $25,000 due diligence deposit and a $35,000 legal expenses deposit.

According to the proposal letter, the financing would be comprised of a $10 million senior revolving loan facility.

Interest would be 14.5%.

The facility would mature on the earlier of 24 months from closing and confirmation of Valence's plan of reorganization.

On Aug. 15, Valence withdrew a previous motion to enter into a debtor-in-possession financing proposal letter with Wells Fargo Bank, NA.

As previously reported, Wells Fargo expressed interest through the proposal letter in providing $20 million of DIP financing to Valence.

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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