Gorham Paper seeks OK of bid procedures, stalking horse agreement

By Sarah Lizee

Olympia, Wash., Nov. 10 – Gorham Paper and Tissue, LLC is seeking court approval of the bidding procedures for the potential sale of substantially all of its assets, according to a motion filed Saturday in the U.S. Bankruptcy Court for the District of Delaware.

The company is also seeking court approval to enter into a stalking horse agreement with Gorham Acquisition, LLC, an affiliate of Behrens Investment Group LLC.

The purchase price under the stalking horse agreement includes (a) $8.75 million in cash payable by means of a completed Federal Funds wire transfer, less the deposit of $1 million, a portion of which shall be funded upon approval of the bid procedures, (b) a credit bid of all the debtor-in-possession financing held by the purchaser, and (c) the assumed liabilities, which includes the debt owed by subsidiary White Mountain to the Bank of New Hampshire.

The agreement provides for a break-up fee of $300,000, expense reimbursement of up to $100,000, and an initial overbid of $75,000.

If the hearing regarding the debtors’ DIP financing is contested, the expense reimbursement will increase to $125,000.

Competing bids would be due by 4 p.m. ET on Dec. 11. Any minimum bids over the baseline bid must be made in increments of at least $50,000.

An auction would be held on Dec. 15, if needed.

A sale hearing would be held on Dec. 18.

Gorham, N.H.-based Gorham Paper and Tissue manufactures towel and tissue rolls for at-home and away-from-home markets. The company filed bankruptcy on Nov. 4 under Chapter 11 case number 20-12814.

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