UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT
TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 26, 2015
ALLIED NEVADA GOLD CORP.
(Exact name of Registrant as Specified in Its Charter)
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| Delaware |
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1-33119 |
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20-5597115 |
| (State or Other Jurisdiction
of Incorporation) |
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(Commission
File Number) |
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(IRS Employer
Identification No.) |
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| 9790 Gateway Drive, Suite 200
Reno, Nevada |
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89521 |
| (Address of principal executive offices) |
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(Zip Code) |
(775) 358-4455
(Registrant’s Telephone Number, Including Area Code)
n/a
(Former Name or
Former Address, if Changed Since Last Report)
Check the appropriate box below
if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 1.01. |
Entry into a Material Definitive Agreement. |
As previously disclosed, on March 10,
2015, Allied Nevada Gold Corp. (the “Company” or “Allied Nevada”), a Delaware corporation, and certain of its domestic direct and indirect subsidiaries (together with the Company, the “Debtors”) filed voluntary
petitions for relief (the “Chapter 11 Cases”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) with the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”).
During the pendency of the Chapter 11 Cases, the Debtors are operating their businesses as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code.
On July 23, 2015, the Debtors entered into an amended and restated restructuring support agreement (the “Amended RSA”) with
(i) certain holders of the Company’s CDN $400 million 8.75% senior unsecured notes due 2019, issued by Allied Nevada pursuant to that certain indenture dated as of May 25, 2012 by and between Allied Nevada and Computershare Trust
Company of Canada and (ii) the Company’s secured bank lenders.
As of August 26, 2015, the Debtors, the Requisite
Consenting Noteholders (as defined in the Amended RSA) and the Requisite Secured Lenders (as defined in the Amended RSA) entered into a waiver and amendment agreement (the “Waiver Agreement”) to provide for the Modified Plan (as defined in
Item 7.01 herein) and the Amended Disclosure Statement (as defined in Item 7.01 herein) in the Amended RSA. Pursuant to the Waiver Agreement, the Requisite Consenting Noteholders and the Requisite Secured Lenders grant all waivers and
consents that may be necessary or required under the Amended RSA to waive the Creditor Party Termination Events (as defined in the Amended RSA) that may arise under Section 5(a) of the Amended RSA as a result of (a) the breach in any
material respect by the Debtors of any of their covenants, obligations, representations or warranties contained in the Amended RSA (other than covenants set forth in Section 4(a)(iv) therein), (b) the Debtors’ failure to satisfy any
of the covenants set forth in Section 4(a)(iv)(A) of the Amended RSA, as it relates to the Modified Plan, the Amended Disclosure Statement, and the proposed order for approval of the Amended Disclosure Statement and associated solicitation
procedures, (c) the Debtors’ withdrawal of the Modified Plan or public announcement of their intention to withdraw the Modified Plan or to pursue an alternative transaction, and (d) the waiver, amendment or modification of the
Modified Plan or any of the other restructuring documents, in each case of the foregoing (a), (b), (c) and (d), solely with respect to the amendments to the Amended RSA, the Modified Plan and the Disclosure Statement granted pursuant to
Section 1 of the Waiver Agreement.
Pursuant to the Waiver Agreement, the Debtors grant all waivers and consents that may be necessary or required
under the Amended RSA to waive the Debtor Termination Event (as defined in the Waiver Agreement) arising under Section 5(b)(i) of the Amended RSA as a result of the breach in any material respect by one or more Consenting Noteholders of any of
their covenants, obligations, representations or warranties contained in the Amended RSA such that the non-breaching Consenting Noteholders own or control less than 66-2/3% in principal amount of the Notes, solely with respect to the amendments to
the Amended RSA, the Modified Plan and the Disclosure Statement granted pursuant to Section 1 of the Waiver Agreement.
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The foregoing description of the Waiver Agreement is a summary and is qualified in its entirety by reference to
the Waiver Agreement attached hereto as Exhibit 10.1 and incorporated herein by reference.
| Item 7.01. |
Regulation FD Disclosure. |
On April 24, 2015, the Debtors filed with the Bankruptcy
Court a proposed joint chapter 11 plan of reorganization and related disclosure statement. On July 23, 2015, the Debtors filed with the Bankruptcy Court a proposed amended joint chapter 11 Plan of Reorganization and related amended disclosure
statement.
On August 26, 2015, the Debtors filed with the Bankruptcy Court an additional proposed Amended Joint Chapter 11 Plan of
Reorganization (the “Modified Plan”) and related amended disclosure statement (the “Amended Disclosure Statement”). The Modified Plan is subject to acceptance by the Debtors’ creditors (as and to the extent required under
the Bankruptcy Code) and confirmation by the Bankruptcy Court. Information contained in the Modified Plan and the Amended Disclosure Statement is subject to change, whether as a result of further amendments to the Modified Plan, third-party actions,
or otherwise. A copy of the Modified Plan, as filed, is attached hereto as Exhibit 99.1 and is incorporated herein by reference. A copy of the Amended Disclosure Statement, as filed, is attached hereto as Exhibit 99.2 and is incorporated herein by
reference. The Bankruptcy Court entered an order approving the Amended Disclosure Statement on August 28, 2015.
On August 26, 2015,
the Debtors filed their monthly operating report for July 2015 (the “Monthly Operating Report”) with the Bankruptcy Court. The Monthly Operating Report is furnished as Exhibit 99.3 to this Current Report on Form 8-K and is incorporated
herein by reference.
This Current Report on Form 8-K is not intended to be, nor should it be construed as, a solicitation for a vote on
the Amended Plan.
The Modified Plan, the Amended Disclosure Statement and the Monthly Operating Report shall not be deemed
“filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is not otherwise subject to the liabilities of that section, and is not deemed incorporated by reference in any
filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Cautionary Statement Regarding Monthly Operating Report
The Company cautions investors and potential investors not to place undue reliance upon the information contained in the Monthly Operating
Report, which was not prepared for the purpose of providing the basis for an investment decision relating to any of the securities of the Company. The Monthly Operating Report is limited in scope, covers a limited time period and has been prepared
solely for the purpose of complying with the monthly reporting requirements applicable in the Chapter 11 Cases and is in a format acceptable to the U.S. Trustee. The forecasts contained in the Monthly Operating Report reflect estimates and
assumptions made by
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management of the Company. Consequently, it is likely that actual results will differ from those reflected in the Monthly Operating Report and such differences may be significant. The Company has
not made and does not make any representation to any person regarding the Company’s future results. Furthermore, the Company is not required to publicly update the Monthly Operating Report to reflect more current facts or estimates or the
occurrence of future events, including if the facts, estimates and assumptions upon which the Monthly Operating Report is based are erroneous. The Monthly Operating Report was not audited or reviewed by independent accountants, was not prepared in
accordance with generally accepted accounting principles in the United States, is in a format prescribed by applicable bankruptcy laws, and is subject to future adjustment (which may be material) and reconciliation. There can be no assurance that,
from the perspective of an investor or potential investor in the Company’s securities, the Monthly Operating Report is complete. The Monthly Operating Report also contains information for periods which are shorter or otherwise different from
those required in the Company’s reports pursuant to the Exchange Act and such information might not be indicative of the Company’s financial condition or operating results for the period that would be reflected in the Company’s
financial statements or in its reports pursuant to the Exchange Act. Results set forth in the Monthly Operating Report should not be viewed as indicative of future results.
Cautionary Statement Regarding Forward-Looking Statements
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act, the Exchange Act (and the equivalent under
Canadian securities laws) and the Private Securities Litigation Reform Act (the “PSLRA”) or in releases made by the U.S. Securities and Exchange Commission, all as may be amended from time to time. This cautionary statement is being made
pursuant to the Securities Act, the Exchange Act and the PSLRA with the intention of obtaining the benefit of the “safe harbor” provisions of such laws. All statements, other than statements of historical fact, included herein or
incorporated by reference, that address activities, events or developments that we expect or anticipate will or may occur in the future, are forward-looking statements. Generally, these forward-looking statements can be identified by the use of
forward-looking terminology such as “estimate”, “plan”, “anticipate”, “expect”, “intend”, “believe”, “project”, “target”, “budget”, “may”,
“can”, “will”, “would”, “could”, “should”, “seeks”, or “scheduled to”, or other similar words, or negatives of these terms or other variations of these terms or comparable
language or any discussion of strategy or intentions. Forward-looking statements address activities, events or developments that Allied Nevada expects or anticipates will or may occur in the future, and are based on current expectations and
assumptions. These statements involve known and unknown risks, uncertainties, assumptions and other factors which may cause our actual results, performance or achievements to be materially different from any results, performance or achievements
expressed or implied by such forward-looking statements, and include, but are not limited to the potential adverse effect of the Chapter 11 Cases on the Debtors’ business, financial condition or results of operations, including the
Debtors’ ability to maintain contracts and other business relationships that are critical to the Debtors’ business and the actions and decisions of the Debtors’ creditors and other third parties with interests in the Chapter 11 Cases;
the Debtors’ ability to conduct the Chapter 11 Cases on the terms set forth herein; the Debtors’ ability to maintain adequate liquidity to fund the Debtors’ operations during the Chapter 11 Cases and to fund a plan of reorganization
and thereafter, including obtaining sufficient debtor in possession financing and exit financing; whether the
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holders of the Debtors’ liabilities and/or securities receive any value for their interests; and the Debtors’ ability to obtain Bankruptcy Court approval with respect to motions in the
Chapter 11 Cases prosecuted from time to time; and other factors discussed in Allied Nevada’s filings with the SEC including Allied Nevada’s latest Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and its other recent SEC
filings (and Canadian filings). Although Allied Nevada has attempted to identify important factors that could cause actual results, performance or achievements to differ materially from those described in forward-looking statements, there may be
other factors that cause results, performance or achievements not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results, performance and achievements and future
events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not intend to publicly update any forward-looking statements, whether as a
result of new information, future events, or otherwise, except as may be required under applicable securities laws.
| Item 9.01. |
Financial Statements and Exhibits |
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| Exhibit
No. |
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Exhibit |
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| Exhibit 10.1 |
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Waiver and Amendment Agreement dated as of August 26, 2015 |
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| Exhibit 99.1 |
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Amended Debtors’ Joint Chapter 11 Plan of Reorganization filed August 26, 2015 |
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| Exhibit 99.2 |
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Amended Disclosure Statement for Debtors’ Joint Plan of Reorganization filed August 26, 2015 |
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| Exhibit 99.3 |
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Monthly Operating Report for July 2015 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
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| Dated: August 31, 2015 |
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Allied Nevada Gold Corp. |
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By: |
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/s/ Stephen M. Jones |
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Stephen M. Jones |
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Executive Vice President and Chief Financial Officer |
Exhibit Index
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| Exhibit
No. |
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Exhibit |
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| Exhibit 10.1 |
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Waiver and Amendment Agreement dated as of August 26, 2015 |
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| Exhibit 99.1 |
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Amended Debtors’ Joint Chapter 11 Plan of Reorganization filed August 26, 2015 |
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| Exhibit 99.2 |
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Amended Disclosure Statement for Debtors’ Joint Plan of Reorganization filed August 26, 2015 |
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| Exhibit 99.3 |
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Monthly Operating Report for July 2015 |
Exhibit 10.1
Execution Version
WAIVER AND AMENDMENT AGREEMENT
This WAIVER AND AMENDMENT AGREEMENT (this “Agreement”) is made as of August 26, 2015 (the “Waiver/Amendment Effective
Date”), by and among (a) Allied Nevada Gold Corp., a Delaware corporation (“ANV”), and its undersigned direct and indirect subsidiaries (together with ANV, the “Debtors”), (b) the Requisite
Consenting Noteholders (as defined in the Amended RSA (as defined below)), and (c) the Requisite Secured Lenders (as defined in the Amended RSA). Capitalized terms used but not otherwise defined herein have the meanings ascribed to such terms
in the Amended RSA.
PRELIMINARY STATEMENTS:
WHEREAS, on July 23, 2015, the Debtors entered into that certain Amended and Restated Restructuring Support Agreement (the
“Amended RSA”) with the entities party thereto as “Creditor Parties” thereunder, which amended and restated in its entirety that certain Restructuring Support Agreement, dated as of March 10, 2015, pursuant to which
the Debtors and such Creditor Parties agreed to implement a restructuring and reorganization as set forth in the Modified Plan;
WHEREAS,
the Debtors, the Ad Hoc Group of Senior Unsecured Noteholders (the “Ad Hoc Group”), and the Official Committee of Unsecured Creditors (the “Creditors Committee”) have reached an agreement in principle as to certain
modifications to the Modified Plan, as set forth in greater detail in the Notice of Agreements in Principle with Official Committee of Unsecured Creditors and Official Committee Of Equity Security Holders [Docket No. 864] (the
“Notice”);
WHEREAS the Debtors, the Ad Hoc Group, and the Official Committee of Equity Security Holders (the
“Equity Committee”) have reached an agreement in principle as to certain modifications to the Modified Plan (together with the agreements in principle reached with the Creditors Committee, the “Agreements in
Principle”), as set forth in greater detail in the Notice;
WHEREAS, as a result of the Agreements in Principle, the Parties have
agreed to modify the Restructuring Transaction as set forth herein;
WHEREAS, the Debtors have requested that the Requisite Consenting
Noteholders and the Requisite Secured Lenders grant certain waivers and consents under the Amended RSA and amend the Amended RSA in certain respects, all as set forth herein; and
WHEREAS, the Requisite Consenting Noteholders and the Requisite Secured Lenders are willing to grant such consents and waivers, and to amend
the Amended RSA, on the terms, subject to the conditions and in reliance on the representations and warranties set forth herein.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and
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sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:
1. Amendments to the Amended RSA.
(a) Effective as of the Waiver/Amendment Effective Date, Exhibit A to the Amended RSA is hereby amended and replaced with Exhibit A
attached hereto and, for the avoidance of doubt, Exhibit A attached hereto shall constitute the Modified Plan under the Amended RSA.
(b) Effective as of the Waiver/Amendment Effective Date, Section 2(m) of the Amended RSA is amended and restated in its entirety to read
as follows:
““Disclosure Statement” means the disclosure statement for the Modified Plan that is
prepared and distributed in accordance with, among other things, sections 1125, 1126(b), and 1145 of the Bankruptcy Code, Rule 3018 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) and other applicable law, and
all exhibits, schedules, supplements, modifications and amendments thereto, all of which shall be materially consistent with this Agreement and otherwise in form and substance reasonably acceptable to the Debtors, the Requisite Consenting
Noteholders and the Requisite Secured Lenders; provided, however, that any provisions therein that are, or that relate to, (i) the Reorganized Debtors’ organizational matters (including any certificates of formation, articles
of incorporation, bylaws, limited liability company agreements, partnership agreements, stockholders’ agreements, registration rights agreements, investor rights agreements, other organizational documents, and any other comparable documents or
agreements), (ii) the Reorganized Debtors’ corporate governance matters (including matters related to boards of directors and comparable governing bodies and appointment rights, indemnification and fiduciary duties, and procedural matters
with respect thereto), (iii) the New Common Stock, the New Warrants or any other equity or rights convertible into equity of the Reorganized Debtors, (iv) the Schedule of Assumed Executory Contracts and Unexpired Leases,
(v) employment agreements, employee benefit plans, compensation arrangements, severance arrangements and any other agreement, plan, arrangement, program, policy or other arrangement relating to employment-related matters, and/or (vi) any
other matters, agreements, or documents governing rights and obligations solely as between the Reorganized Debtors and the holders of any Securities in any of the Reorganized Debtors (in their capacity as such), in each case, unless
(A) materially adverse to the Secured Lenders or (B) related to (x) the Secured Lenders, the Credit Agreement, the Swaps, the treatment of the ABL Claims or the Swap Claims, or the documents listed in clause (viii) of the
definition of “Restructuring Documents”; (y) any documentation relating to the DIP Facility, the New First Lien Term Loan Credit Facility, New Intercreditor Agreement, or the Exit Facility; or (z) any other documentation relating
to the use of cash collateral or any exit financing (such matters, agreements and documents referred to in clauses (i)-(vi) above (unless excluded by the foregoing clauses (A) and (B)), collectively, the “Excluded
Matters”), shall not be required to be reasonably acceptable to the Requisite Secured Lenders.”
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(c) Effective as of the Waiver/Amendment Effective Date, Section 2(ff) of the Amended RSA is
amended and restated in its entirety to read as follows:
““Restructuring Documents” means all
agreements, instruments, pleadings, orders or other documents (including all exhibits, schedules, supplements, appendices, annexes and attachments thereto) that are utilized to implement or effectuate, or that otherwise relate to, this Agreement,
the Modified Plan and/or the Restructuring Transaction, including, but not limited to, (i) the Plan Supplement, (ii) the Disclosure Statement and any motion seeking the approval thereof, (iii) the Disclosure Statement Order,
(iv) the Confirmation Order, (v) the RSA Assumption Motion and the RSA Order, (vi) any “first day” motions (the “First Day Motions”), (vii) the ballots, the motion to approve the form of the ballots and
the Solicitation, and the order of the Bankruptcy Court approving the form of the ballots and the Solicitation, (viii) any documentation relating to the DIP Facility, the New First Lien Term Loan Credit Facility, the New Intercreditor
Agreement, the New Second Lien Convertible Notes Definitive Agreement, the New Warrant Agreement, the Exit Facility and the Exit Facility Commitment Letter, and (ix) any documentation relating to the use of cash collateral, distributions
provided to the holders of any Claims and Interests, any exit financing, organizational documents, shareholder-related agreements or other related documents, each of which shall contain terms and conditions materially consistent with this Agreement,
the Restructuring Term Sheet and the Modified Plan and shall otherwise be in form and substance acceptable to the Debtors, the Requisite Consenting Noteholders, the Requisite Exit Facility Lenders and, as and to the extent required pursuant to this
Agreement, the Requisite Secured Lenders.”
(d) Effective as of the Waiver/Amendment Effective Date, Section 4(a)(iv)(A) of the
Amended RSA is amended and restated in its entirety to read as follows:
“file the Modified Plan, the Disclosure
Statement, and the proposed order for approval of the Disclosure Statement and associated Solicitation procedures no later than 1 calendar day after the Waiver/Amendment Effective Date.”
2. Waiver of Creditor Party Termination Events. Effective as of the Waiver/Amendment Effective Date, the Requisite Consenting
Noteholders and the Requisite Secured Lenders grant all waivers and consents that may be necessary or required under the Amended RSA to waive the Creditor Party Termination Events arising under Sections 5(a)(i), 5(a)(ii), 5(a)(xi) and 5(a)(xii) of
the Amended RSA as a result of (a) with respect to Section 5(a)(i), the breach in any material respect (without giving effect to any “materiality” qualifiers therein) by the Debtors of any of their covenants, obligations,
representations or warranties contained in the Amended RSA (other than covenants set forth in Section 4(a)(iv) therein), (b) with respect to Section 5(a)(ii), the Debtors’ failure to satisfy any of the covenants set forth in
Section 4(a)(iv)(A) of the Amended RSA, as it relates to the Modified Plan, the Disclosure Statement, and the proposed order for approval of the Disclosure Statement and associated Solicitation procedures, (c) with respect to
Section 5(a)(xi), the Debtors’ withdrawal of the Modified Plan or public announcement of their intention to withdraw the Modified Plan or to pursue an Alternative Transaction, and (d) with respect to Section 5(a)(xii), the
waiver, amendment or modification of the Modified Plan or any of the other Restructuring Documents, in each case of the foregoing (a), (b), (c) and (d), solely with respect to the amendments to the Amended RSA, the Modified Plan and the
Disclosure Statement granted pursuant to Section 1 of this Agreement.
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3. Waiver of Debtor Termination Event. Effective as of the Waiver/Amendment Effective
Date, the Debtors grant all waivers and consents that may be necessary or required under the Amended RSA to waive the Debtor Termination Event arising under Section 5(b)(i) of the Amended RSA as a result of the breach in any material respect
(without giving effect to any “materiality” qualifiers set forth therein) by one or more Consenting Noteholders of any of their covenants, obligations, representations or warranties contained in the Amended RSA such that the non-breaching
Consenting Noteholders own or control less than 66-2/3% in principal amount of the Notes, solely with respect to the amendments to the Amended RSA, the Modified Plan and the Disclosure Statement granted pursuant to Section 1 of this Agreement.
4. Continued Effect of the Amended RSA. Except as expressly provided herein, this Agreement shall not, by implication or
otherwise, alter, modify, amend or in any way affect any of the obligations or covenants contained in the Amended RSA, all of which are ratified and confirmed in all respects by the parties hereto and shall continue in full force and effect.
5. Effectiveness.
This
Agreement shall become effective and binding upon:
(a) the Creditor Parties on the date when counterpart signature pages to this
Agreement have been executed and delivered by the Debtors and each of the Consenting Noteholders and the Secured Lenders; provided, however, that signature pages executed by the Creditor Parties shall be delivered to (i) other
Creditor Parties in a redacted form that removes the Creditor Parties’ holdings of Claims and Interests, and (ii) the Debtors in an unredacted form; and
(b) the Debtors on the later of the date upon which the Bankruptcy Court enters the Disclosure Statement Order and the RSA Order;
provided, however, that the Debtors shall execute and deliver to the Creditor Parties this Agreement concurrently with the execution by the Creditor Parties.
With respect to any Creditor Party that becomes or has become a party to the Amended RSA by executing and delivering a Joinder Agreement after
the Waiver/Amendment Effective Date, this Agreement shall become effective and binding as to such Creditor Party at the time such Joinder Agreement is delivered to the Debtors.
6. Entire Agreement. This Agreement, together with the Amended RSA, constitutes the entire agreement of the parties hereto, and
supersedes all other prior negotiations, with respect to the subject matter hereof. Except as modified by this Agreement, the Amended RSA shall continue in full force and effect. Each reference to the Amended RSA hereafter made in any document,
agreement, instrument, notice or communication shall mean and be a reference to the Amended RSA as modified hereby.
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7. Severability. If any provision of this Agreement, or the application of any such
provision to any Person or circumstance, shall be held invalid or unenforceable in whole or in part, such invalidity or unenforceability shall attach only to such provision or part thereof and the remaining part of such provision hereof shall
continue in full force and effect.
8. Counterparts. This Agreement may be executed in several counterparts, each of which shall be
deemed to be an original, and all of which together shall be deemed to be one and the same agreement. Execution copies of this Agreement may be delivered by facsimile or otherwise, which shall be deemed to be an original for the purposes of this
Section 8.
9. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAW PROVISIONS WHICH WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by
their respective duly authorized officers, solely in their respective capacity as officers of the undersigned and not in any other capacity, as of the Waiver/Amendment Effective Date.
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| Allied Nevada Gold Corp. |
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| By: |
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/s/ Stephen M. Jones |
| Name: |
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Stephen M. Jones |
| Title: |
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EVP & CFO |
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| Allied Nevada Gold Holdings LLC |
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| By: |
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/s/ Stephen M. Jones |
| Name: |
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Stephen M. Jones |
| Title: |
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CFO |
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| Allied VGH Inc. |
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| By: |
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/s/ Stephen M. Jones |
| Name: |
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Stephen M. Jones |
| Title: |
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CFO |
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| Allied VNC Inc. |
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| By: |
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/s/ Stephen M. Jones |
| Name: |
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Stephen M. Jones |
| Title: |
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CFO |
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| ANG Central LLC |
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| By: |
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/s/ Stephen M. Jones |
| Name: |
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Stephen M. Jones |
| Title: |
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CFO |
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| ANG Cortez LLC |
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| By: |
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/s/ Stephen M. Jones |
| Name: |
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Stephen M. Jones |
| Title: |
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CFO |
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| ANG Eureka LLC |
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| By: |
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/s/ Stephen M. Jones |
| Name: |
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Stephen M. Jones |
| Title: |
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CFO |
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| ANG North LLC |
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| By: |
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/s/ Stephen M. Jones |
| Name: |
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Stephen M. Jones |
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CFO |
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| ANG Northeast LLC |
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| By: |
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/s/ Stephen M. Jones |
| Name: |
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Stephen M. Jones |
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CFO |
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| ANG Pony LLC |
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| By: |
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/s/ Stephen M. Jones |
| Name: |
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Stephen M. Jones |
| Title: |
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CFO |
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| Hasbrouck Production Company LLC |
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| By: |
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/s/ Stephen M. Jones |
| Name: |
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Stephen M. Jones |
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CFO |
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| Hycroft Resources & Development, Inc. |
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| By: |
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/s/ Stephen M. Jones |
| Name: |
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Stephen M. Jones |
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CFO |
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| Victory Exploration Inc. |
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| By: |
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/s/ Stephen M. Jones |
| Name: |
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Stephen M. Jones |
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CFO |
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| Victory Gold Inc. |
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| By: |
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/s/ Stephen M. Jones |
| Name: |
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Stephen M. Jones |
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CFO |
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| CONSENTING NOTEHOLDER |
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| Attention: |
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| Principal Amount of Note Claims: |
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| Principal Amount of Other Claims: |
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| Equity Interests: |
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| SECURED LENDER |
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| Principal Amount of ABL Claims: |
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| Equity Interests: |
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Exhibit A
For the Amended Joint Chapter 11 Plan of Reorganization, see Exhibit 99.1 to the Nevada Gold Corp. Form 8-K for August 26, 2015.
Exhibit 99.1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
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| In re: |
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Chapter 11 |
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| Allied Nevada Gold Corp., et al.,1 |
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Case No. 15-10503 (MFW) |
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Debtors. |
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Jointly Administered |
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DEBTORS’ AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION
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| AKIN GUMP STRAUSS HAUER & FELD LLP |
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BLANK ROME LLP |
| Ira S. Dizengoff (admitted pro hac vice) |
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Stanley B. Tarr (No. 5535) |
| Philip C. Dublin (admitted pro hac vice) |
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Michael D. DeBaecke (No. 3186) |
| Alexis Freeman (admitted pro hac vice) |
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Victoria A. Guilfoyle (No. 5183) |
| Matthew C. Fagen (admitted pro hac vice) |
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1201 N. Market Street, Suite 800 |
| One Bryant Park |
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Wilmington, Delaware 19801 |
| New York, New York 10036-6745 |
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Telephone: (302) 425-6400 |
| Telephone: (212) 872-1000 |
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Facsimile: (302) 425-6464 |
| Facsimile: (212) 872-1002 |
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| Counsel to the Debtors and Debtors in Possession |
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| Dated: August 27, 2015 |
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| 1 |
The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification number, are: Allied Nevada Gold Corp. (7115); Allied Nevada Gold Holdings LLC (7115); Allied VGH Inc. (3601);
Allied VNC Inc. (3291); ANG Central LLC (7115); ANG Cortez LLC (7115); ANG Eureka LLC (7115); ANG North LLC (7115); ANG Northeast LLC (7115); ANG Pony LLC (7115); Hasbrouck Production Company LLC (3601); Hycroft Resources & Development,
Inc. (1989); Victory Exploration Inc. (8144); and Victory Gold Inc. (8139). The corporate headquarters for each of the above Debtors are located at, and the mailing address for each of the above Debtors, except Hycroft Resources &
Development, Inc., is 9790 Gateway Drive, Suite 200, Reno, NV 89521. The mailing address for Hycroft Resources & Development, Inc. is P.O. Box 3030, Winnemucca, NV 89446. |
TABLE OF CONTENTS
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Page |
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| ARTICLE I DEFINITIONS AND RULES OF INTERPRETATION |
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Rules of Interpretation and Governing Law |
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1 |
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Definitions |
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1 |
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| ARTICLE II CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS |
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| A. |
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Unclassified Claims |
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2.1 |
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Administrative Expense Claims |
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22 |
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2.2 |
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Professional Fee Claims |
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2.3 |
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Priority Claims |
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23 |
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2.4 |
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DIP Facility Claims |
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23 |
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General Rules |
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2.5 |
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Substantive Consolidation of the Debtors for Plan Purposes Only. |
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2.6 |
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Classification |
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Summary of Classification for the Debtors |
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23 |
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Classified Claims and Interests Against the Debtors |
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24 |
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2.7 |
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Class 1 – Secured ABL Claims |
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2.8 |
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Class 2 – Secured Swap Claims |
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24 |
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2.9 |
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Class 3 – Other Secured Claims |
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25 |
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2.10 |
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Class 4 – Unsecured Claims |
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2.11 |
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Class 5 – Intercompany Claims |
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2.12 |
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Class 6 – Subordinated Securities Claims |
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2.13 |
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Class 7 – Intercompany Interests |
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2.14 |
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Class 8 – Existing Equity Interests |
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26 |
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Additional Provisions Regarding Unimpaired Claims and Subordinated Claims |
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2.15 |
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Special Provision Regarding Unimpaired Claims |
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2.16 |
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Subordinated Claims |
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| ARTICLE III ACCEPTANCE |
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3.1 |
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Presumed Acceptance of the Plan |
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3.2 |
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Voting Classes |
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3.3 |
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Elimination of Vacant Classes |
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3.4 |
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Cramdown |
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| ARTICLE IV MEANS FOR IMPLEMENTATION OF PLAN |
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4.1 |
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Restructuring Transactions |
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4.2 |
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Substantive Consolidation for Plan Purposes Only |
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4.3 |
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New Securities |
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4.4 |
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Plan Funding |
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4.5 |
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Corporate Governance, Managers, Officers and Corporate Action |
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4.6 |
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Management Incentive Plan |
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4.7 |
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Cancellation of Notes, Instruments, and Interests |
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4.8 |
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Cancellation of Liens |
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4.9 |
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Corporate Action |
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4.10 |
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New First Lien Term Loan Credit Facility, New Intercreditor Agreement, Exit Facility and New Warrant Agreement. |
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4.11 |
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Effectuating Documents; Further Transactions |
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4.12 |
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Exemption from Certain Transfer Taxes and Recording Fees |
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4.13 |
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No Further Approvals |
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4.14 |
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Dissolution of Committees. |
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4.15 |
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Creditor Representative. |
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4.16 |
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Pre-Effective Date Injunctions or Stays |
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4.17 |
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Dissolution of Certain Debtors |
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| ARTICLE V EXECUTORY CONTRACTS AND UNEXPIRED LEASES |
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5.1 |
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Assumption and Rejection of Executory Contracts and Unexpired Leases |
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5.2 |
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Cure of Defaults for Assumed Executory Contracts and Unexpired Leases |
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5.3 |
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No Change in Control, Assignment or Violation |
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5.4 |
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Modifications, Amendments, Supplements, Restatements, or Other Agreements |
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Rejection and Repudiation of Executory Contracts and Unexpired Leases |
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Claims Based on Rejection or Repudiation of Executory Contracts and Unexpired Leases |
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Limited Extension of Time to Assume or Reject |
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5.8 |
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Employee Compensation and Benefit Programs; Deferred Compensation Programs |
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5.9 |
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Survival of Certain Indemnification and Reimbursement Obligations |
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Insurance Policies |
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| ARTICLE VI PROCEDURES FOR RESOLVING AND TREATING CONTESTED CLAIMS AND INTERESTS |
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6.1 |
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Objections to Claims |
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6.2 |
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Amendment to Claims |
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6.3 |
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Disputed Claims |
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6.4 |
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Estimation of Claims |
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6.5 |
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Expenses Incurred on or After the Effective Date. |
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| ARTICLE VII DISTRIBUTIONS |
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7.1 |
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Manner of Payment and Distributions under the Plan |
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7.2 |
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Interest and Penalties on Claims |
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7.3 |
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Record Date for Distributions |
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7.4 |
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Withholding and Reporting Requirements |
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7.5 |
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Setoffs |
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7.6 |
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Allocation of Plan Distributions Between Principal and Interest |
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7.7 |
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Surrender of Cancelled Instruments or Securities |
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7.8 |
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Undeliverable or Returned Distributions |
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7.9 |
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Fractional Distributions |
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7.10 |
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Distributions to Administrative Agent |
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7.11 |
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Distributions to Indenture Trustee |
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7.12 |
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Distributions to Holders of Existing Equity Interests |
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7.13 |
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Miscellaneous Distribution Provisions |
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| ARTICLE VIII CONDITIONS PRECEDENT TO EFFECTIVENESS OF THE PLAN |
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8.1 |
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Conditions to the Effective Date |
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8.2 |
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Waiver of Condition |
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8.3 |
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Notice of Effective Date |
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8.4 |
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Order Denying Confirmation |
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| ARTICLE IX EFFECT OF THE PLAN ON CLAIMS AND INTERESTS |
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9.1 |
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Compromise and Settlement of Claims, Interests and Controversies |
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9.2 |
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Discharge of Claims and Termination of Interests |
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9.3 |
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Injunction |
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9.4 |
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Releases |
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9.5 |
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Exculpation |
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9.6 |
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Preservation of Insurance |
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9.7 |
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Retention and Enforcement of Causes of Action |
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| ARTICLE X MISCELLANEOUS PROVISIONS |
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10.1 |
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Retention of Jurisdiction |
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10.2 |
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Terms Binding |
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48 |
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10.3 |
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Severability |
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10.4 |
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Computation of Time |
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48 |
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10.5 |
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Confirmation Order and Plan Control |
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48 |
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10.6 |
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Incorporation by Reference |
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48 |
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10.7 |
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Modifications to the Plan |
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48 |
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10.8 |
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Revocation, Withdrawal or Non-Consummation |
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49 |
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10.9 |
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Courts of Competent Jurisdiction |
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10.10 |
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Payment of Indenture Trustee Fees |
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10.11 |
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Payment of U.S. Trustee Quarterly Fees |
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10.12 |
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Notice |
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10.13 |
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Reservation of Rights |
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51 |
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10.14 |
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No Waiver |
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iii
INTRODUCTION
Allied Nevada Gold Corp. and certain of its direct and indirect subsidiaries, as debtors and debtors in possession in the above-captioned
cases, propose the following joint plan of reorganization for the resolution of the outstanding Claims against, and Interests in, the Debtors. Reference is made to the Disclosure Statement, distributed contemporaneously herewith, for a discussion of
(a) the Debtors’ history, business, properties and operations, and projections for those operations, (b) a summary and analysis of the Plan, (c) the debt instruments, securities and other entitlements to be issued under the Plan
and (d) certain matters related to the Confirmation and consummation of the Plan. Each of the Debtors is a proponent of the Plan within the meaning of Bankruptcy Code section 1129. Subject to certain restrictions and requirements set forth in
Bankruptcy Code section 1127 and Bankruptcy Rule 3019, the Debtors reserve the right to alter, amend, modify, revoke or withdraw the Plan, subject to the terms of the Amended and Restated Restructuring Support Agreement and the Exit Facility
Commitment Letter and the terms of the Plan.
ARTICLE I
DEFINITIONS AND RULES OF INTERPRETATION
A. Rules of Interpretation and Governing Law. For purposes of this document: (a) in the appropriate context, each term,
whether stated in the singular or the plural, shall include both the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, feminine and neuter gender; (b) any reference herein to a
contract, lease, instrument, release, indenture or other agreement or document being in a particular form or on particular terms and conditions means that the referenced document shall be substantially in that form or substantially on those terms
and conditions; (c) any reference herein to an existing document or exhibit having been filed or to be filed shall mean that document or exhibit, as it may thereafter be amended, modified or supplemented; (d) unless otherwise specified,
all references herein to “Articles” are references to Articles hereof or hereto; (e) unless otherwise stated, the words “herein,” “hereof” and “hereto” refer to the Plan in its entirety rather than to a
particular portion of the Plan; (f) captions and headings to Articles are inserted for convenience of reference only and are not intended to be a part of or to affect the interpretation hereof; (g) the rules of construction set forth in
Bankruptcy Code section 102 shall apply; and (h) any term used in capitalized form herein that is not otherwise defined, but that is used in the Bankruptcy Code or the Bankruptcy Rules, shall have the meaning assigned to that term in the
Bankruptcy Code or the Bankruptcy Rules, as the case may be.
Except to the extent that the Bankruptcy Code or Bankruptcy Rules apply, and
subject to the provisions of any contract, lease, instrument, release, indenture or other agreement or document entered into expressly in connection herewith, the rights and obligations arising hereunder shall be governed by, and construed and
enforced in accordance with, the laws of the state of Delaware, without giving effect to the principles of conflict of laws thereof.
B. Definitions. The following terms (which appear in the Plan as capitalized terms) shall have the meanings set forth below.
1.1 “3.0% Backstop Put Option Payment” means a Cash payment equal to $2,340,000, which shall be part of the DIP Facility
Consideration and payable only to the DIP Backstop Lenders pursuant to the terms of the DIP Facility Order.
1.2 “4.0% PIK Put
Option Payment” means a Cash payment equal to $3,120,000 which shall be part of the DIP Facility Consideration payable to all Holders of DIP Facility Claims pursuant to the terms of the DIP Facility Order.
1.3 “Accredited Investor” means an accredited investor as such term is defined in Rule 501 of the Securities Act.
1.4 “Additional Consenting Noteholders” means, if any, the beneficial owners (or investment managers or advisors for such
beneficial owners) of the Notes that become parties to the Amended and Restated Restructuring Support Agreement after the Restructuring Support Effective Date by executing a Joinder Agreement, together with their respective successors and permitted
assigns.
1.5 “Adjusted Equity Value” means, as of any time of exercise of the New
Warrants, the sum of (a) the product of (i) all of the Debtors’ outstanding unsecured debt immediately prior to the Effective Date (including, but not limited to, all principal and accrued and unpaid interest (including post-petition
interest at the default rate) on the Notes, and all other Unsecured Claims) and (ii) 1.10, plus (b) the aggregate amount of New Second Lien Convertible Notes (including all pay-in-kind interest and accrued and unpaid interest) that
were converted into shares of New Common Stock prior to the time of such exercise, plus (c) the aggregate amount of New Second Lien Convertible Notes (including all pay-in-kind interest and accrued and unpaid interest) that is
outstanding as of the time of such exercise.
1.6 “Administrative Agent” means Scotiabank, in its capacity as
administrative agent under the Credit Agreement.
1.7 “Administrative Bar Date” means the Business Day which is thirty
(30) days after the Effective Date, or such other date as approved by Final Order of the Bankruptcy Court.
1.8
“Administrative Expense Claim” means a Claim for costs and expenses of administration of the Chapter 11 Cases that is Allowed under Bankruptcy Code sections 503(b), 507(a), or 1114(e)(2) for the period from the Petition Date to the
Effective Date, including, without limitation, (a) any actual and necessary expenses of preserving the Estates; (b) any actual and necessary expenses of operating the Debtors’ business; (c) any actual indebtedness or obligations
incurred or assumed by the Debtors during the pendency of the Chapter 11 Cases in connection with the conduct of their business; (d) any actual expenses necessary or appropriate to facilitate or effectuate the Plan; (e) any amount required
to be paid under Bankruptcy Code section 365(b)(1) in connection with the assumption of executory contracts or unexpired leases; (f) all allowances of compensation or reimbursement of expenses to the extent Allowed by the Bankruptcy Court under
Bankruptcy Code sections 328, 330(a), 331 or 503(b)(2), (3), (4) or (5); (g) Claims arising under Bankruptcy Code section 503(b)(9); (h) all fees and charges payable pursuant to section 1930 of title 28 of the United States Code; and
(i) all claims for Transaction Expenses, without any requirement for the filing of retention applications or fee applications.
1.9
“Allowed” means, with reference to any Claim or Interest, or any portion thereof, in any Class or category specified: (a) a Claim or Interest that has been listed by the applicable Debtor in the Schedules, as such Schedules may
be amended by the Debtors from time to time in accordance with Bankruptcy Rule 1009, as liquidated in amount and not disputed or contingent and for which no contrary Proof of Claim or Proof of Interest has been filed; (b) a Claim or Interest
for which a Proof of Claim or a Proof of Interest has been timely filed in a liquidated amount and not contingent and as to which no objection to allowance, to alter priority, or request for estimation has been timely interposed and not withdrawn
within the applicable period of limitation fixed by the Plan or applicable law; (c) a Claim or Interest as to which any objection has been settled, waived, withdrawn or denied by a Final Order to the extent such Final Order provides for the
allowance of all or a portion of such Claim or Interest; or (d) a Claim or Interest that is expressly allowed (i) pursuant to a Final Order, (ii) pursuant to an agreement between the Holder of such Claim or Interest and the Debtors or
the Reorganized Debtors, as applicable or (iii) pursuant to the terms of the Plan. Unless otherwise specified in the Plan or in an order of the Bankruptcy Court allowing such Claim or Interest, “Allowed” in reference to a Claim or
Interest shall not include: (1) any interest on the amount of such Claim accruing from and after the Petition Date; (2) any punitive or exemplary damages; or (3) any fine, penalty or forfeiture. Any Claim or Interest listed in the
Schedules as disputed, contingent, or unliquidated, and for which no Proof of Claim or Proof of Interest has been timely filed, is not considered Allowed and shall be expunged without further action and without any further notice to or action,
order, or approval of the Bankruptcy Court.
1.10 “Allowed Claim” means a Claim or any portion thereof, without
duplication, that has been Allowed.
2
1.11 “Allowed Interest” means an Interest or any portion thereof, without
duplication, that has been Allowed.
1.12 “Amended and Restated Restructuring Support Agreement” means the Amended and
Restated Restructuring Support Agreement dated as of July 23, 2015 (including all exhibits, annexes and schedules attached thereto, including the Restructuring Term Sheet and the Plan), as it may be amended, supplemented or otherwise modified
from time to time in accordance with the terms thereof, both as to substance and parties thereto, which amends and restates the Original Restructuring Support Agreement, among the Debtors, the Initial Consenting Noteholders and the Initial Secured
Lenders, a copy of which is attached as Exhibit B to the Disclosure Statement.
1.13 “Anti-Dilution Protections” has the
meaning set forth in Article 4.3(b) of the Plan.
1.14 “ANV” means Allied Nevada Gold Corp., a Delaware corporation.
1.15 “Article” means any article of the Plan.
1.16 “Assets” means all of the right, title and interest of the Debtors in and to property of whatever type or nature (real,
personal, mixed, intellectual, tangible or intangible).
1.17 “Avoidance Actions” means any and all actual or potential
claims and causes of action to avoid a transfer of property or an obligation incurred by the Debtors pursuant to any applicable Bankruptcy Code section, including Bankruptcy Code sections 502, 510, 542, 544, 545, 547 through 553, and 724(a) or under
similar or related state or federal statutes and common law, including fraudulent transfer laws.
1.18 “Ballot” means the
form approved by the Bankruptcy Court pursuant to the Disclosure Statement Order and distributed to Holders of Impaired Claims and Interests entitled to vote on the Plan on which such Holders shall indicate the acceptance or rejection of the Plan.
1.19 “Bankruptcy Code” means title 11 of the United States Code, as now in effect or hereafter amended.
1.20 “Bankruptcy Court” means the United States Bankruptcy Court for the District of Delaware having jurisdiction over the
Chapter 11 Cases and, to the extent of any withdrawal of the reference made pursuant to section 157 of title 28 of the United States Code, the unit of such District Court pursuant to section 151 of title 28 of the United States Code.
1.21 “Bankruptcy Rules” means (a) the Federal Rules of Bankruptcy Procedure promulgated under section 2075 of title 28
of the United States Code and (b) the general and local rules of the Bankruptcy Court, as now in effect or hereafter amended.
1.22
“Bar Date” means the deadline for filing Proofs of Claim or Proofs of Interest in the Chapter 11 Cases against any Debtor, as established by or may be established by Final Order of the Bankruptcy Court or the Plan, including,
without limitation, the Administrative Bar Date and the General Bar Date.
1.23 “Bar Date Order” means the Order
Establishing Deadlines and Procedures for Filing Proofs of Claim and Approving the Form and Manner of Notice Thereof [Docket No. 396].
1.24 “Business Day” means any day other than a Saturday, Sunday, or “legal holiday” as such term is defined in
Bankruptcy Rule 9006(a).
3
1.25 “Capital Lease Deficiency Claims” means the portion of any Claims arising
from the Debtors’ rejection of Capital Leases that are not covered by the value of the collateral with respect to such Claims.
1.26
“Capital Leases” means capital leases entered into by the Debtors from time to time prior to the Petition Date.
1.27
“Cash” means cash and cash equivalents, in legal tender of the United States of America.
1.28 “Causes of
Action” means all actions, causes of action (including Avoidance Actions), liabilities, obligations, rights, suits, debts, damages, judgments, remedies, demands, setoffs, defenses, recoupments, crossclaims, counterclaims, third-party
claims, indemnity claims, contribution claims or any other claims whatsoever, in each case held by the Debtors, whether disputed or undisputed, suspected or unsuspected, foreseen or unforeseen, direct or indirect, choate or inchoate, existing or
hereafter arising, in law, equity or otherwise, based in whole or in part upon any act or omission or other event occurring prior to the Petition Date or during the course of the Chapter 11 Cases, including through the Effective Date.
1.29 “Chapter 11 Cases” means (a) when used with reference to a particular Debtor, the chapter 11 case filed for that
Debtor under chapter 11 of the Bankruptcy Code in the Bankruptcy Court and (b) when used with reference to all Debtors, the jointly administered chapter 11 cases (under Case No. 15-10503 (MFW)) for all of the Debtors under chapter 11 of
the Bankruptcy Code in the Bankruptcy Court.
1.30 “Claim” means “claim” as defined in Bankruptcy Code section
101(5), as supplemented by Bankruptcy Code section 102(2), against any of the Debtors, whether or not asserted.
1.31 “Claims and
Noticing Agent” means Prime Clerk LLC.
1.32 “Class” means each category of Holders of Claims or Interests
established under Article II of the Plan pursuant to Bankruptcy Code section 1122.
1.33 “Compensation Plan Payments”
means any payments provided for by the Order (I) Authorizing and Approving Debtors’ (A) Key Employee Incentive Plan, (B) Non-Insider Key Employee Retention Plan and (C) Severance Plan and (II) Granting Related Relief
[Docket No. 868].
1.34 “Confirmation” means the entry, within the meaning of Bankruptcy Rules 5003 and 9021, of the
Confirmation Order by the Bankruptcy Court.
1.35 “Confirmation Date” means the date upon which Confirmation occurs.
1.36 “Confirmation Hearing” means the hearing held by the Bankruptcy Court pursuant to Bankruptcy Code section 1128 to
consider Confirmation, as such hearing may be adjourned or continued from time to time.
1.37 “Confirmation Order” means
the order of the Bankruptcy Court confirming the Plan pursuant to Bankruptcy Code section 1129, which order shall be reasonably acceptable in form and substance to the Debtors and the Requisite Consenting Parties, in consultation with the Creditors
Committee.
1.38 “Consenting Noteholders” means, collectively, the Initial Consenting Noteholders and the Additional
Consenting Noteholders.
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1.39 “Consenting Noteholders’ Advisors” means (i) Stroock &
Stroock & Lavan LLP, as lead counsel for the Consenting Noteholders; (ii) Young Conaway Stargatt & Taylor LLP, as local counsel for the Consenting Noteholders; (iii) Goodmans LLP, as Canadian local counsel for the
Consenting Noteholders; (iv) one Nevada local counsel for the Consenting Noteholders (if applicable); and (v) Houlihan Lokey, Inc., as financial advisor to the Consenting Noteholders.
1.40 “Convenience Claim” means any Allowed Unsecured Claim (i) asserted in an amount less than or equal to $500,000,
unless the Claim Holder has properly made the New Common Stock Election on a properly cast Ballot or (ii) asserted in an amount greater than $500,000, for which the Claim Holder has properly made the Convenience Claim Election on a properly
cast Ballot.
1.41 “Convenience Claim Distribution” means Cash in the amount of $2,750,000, which amount shall be used to
make distributions to Holders of Allowed Unsecured Claims (i) asserted in an amounts less than or equal to $500,000, unless the Claim Holder has properly made the New Common Stock Election on a properly cast Ballot or (ii) asserted in an
amount greater than $500,000, for which the Claim Holder has properly made the Convenience Claim Election on a properly cast Ballot.
1.42
“Convenience Claim Election” means the election available to a Holder of an Allowed Unsecured Claim asserted in an amount greater than $500,000 to opt to receive its Pro Rata share of the Convenience Claim Distribution in full and
complete satisfaction, discharge and release of such Allowed Unsecured Claim; provided, that in making such election, the Holder of such Allowed Unsecured Claim has agreed, to the extent such Holder’s Allowed Unsecured Claim is for an
amount greater than $500,000, to reduce the amount of such Allowed Unsecured Claim for purposes of voting and distributions under the Plan to $500,000; provided, further, that each Holder of a Capital Lease Deficiency Claim shall
aggregate its Capital Lease Deficiency Claims and be deemed to have one Claim for purposes of making a Convenience Claim Election.
1.43
“Credit Agreement” means that certain Third Amended and Restated Credit Agreement, dated as of May 8, 2014 (as may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof), among
ANV, the Administrative Agent, the Initial Secured Lenders, as co-collateral agents, and the lenders party thereto.
1.44
“Creditors Committee” means the official committee of unsecured creditors appointed by the U.S. Trustee pursuant to Bankruptcy Code section 1102(a), as it may be reconstituted from time to time.
1.45 “Creditor Representative” means the creditor representative that shall be selected by the Creditors Committee and
identified in the Plan Supplement.
1.46 “Creditor Representative Reserve Account” means an account that shall be created
on the Effective Date and funded with $250,000 in Cash that shall be reserved and escrowed for the benefit of the Creditor Representative and his/her professionals pending completion of the Creditor Representative’s duties as set forth in
Article 4.15 of the Plan.
1.47 “Cross Currency Swap Claims” means all Allowed Claims arising under the Cross Currency
Swaps.
1.48 “Cross Currency Swaps” means, collectively, (i) the Scotiabank Cross Currency Swap; (ii) the NBC
Cross Currency Swap; and (iii) the SocGen Cross Currency Swap.
1.49 “Debtors” means, collectively, Allied Nevada
Gold Corp., Allied Nevada Gold Holdings LLC, Allied VGH Inc., Allied VNC Inc., ANG Central LLC, ANG Cortez LLC, ANG Eureka LLC, ANG North LLC, ANG Northeast LLC, ANG Pony LLC, Hasbrouck Production Company LLC, Hycroft Resources &
Development, Inc., Victory Exploration Inc., and Victory Gold Inc.
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1.50 “Diesel Swap Claims” means all Claims arising under the Diesel Swaps.
1.51 “Diesel Swaps” means all financial swaps between ANV and Scotiabank, other than the Scotiabank Cross Currency Swap (in
each case, as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof).
1.52 “DIP
Agent” means Wilmington Savings Fund Society, FSB, in its capacity as administrative agent and collateral agent under the DIP Facility.
1.53 “DIP Backstop Lenders” means affiliates of and/or related funds or other vehicles of Aristeia Capital LLC, CI
Investments, Guardian Capital, Mudrick Capital Management, LP, Newport Global Advisors, Third Avenue Management LLC, Whitebox Advisors LLC and Wolverine Asset Management, LLC.
1.54 “DIP Credit Agreement” means that certain Secured Multiple Draw Debtor-in-Possession Credit Agreement, dated as of
March 12, 2015, among the Debtors, the DIP Agent, and the DIP Lenders and any and all other loan documents evidencing obligations of the Debtors arising thereunder, including any and all guaranty, security and collateral documents, in each case
as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.
1.55 “DIP
Facility” means the $78,000,000.00 debtor in possession credit facility established pursuant to the DIP Credit Agreement and approved by the Bankruptcy Court pursuant to the DIP Facility Order.
1.56 “DIP Facility Claims” means the Claims of the DIP Agent and the DIP Lenders arising under the DIP Credit Agreement and
the DIP Facility Order (including all accrued and unpaid interest on the loans made under the DIP Facility).
1.57 “DIP Facility
Consideration” means Cash equal to the aggregate amount of all loans and other monetary obligations owed by the Debtors to the DIP Agent and/or the DIP Lenders under the DIP Credit Agreement and/or pursuant to the DIP Facility Order that
are unpaid as of the Effective Date, including, without limitation, (a) the aggregate outstanding principal amount of the outstanding loans under the DIP Facility at par (including any interest thereon that was previously paid-in-kind),
(b) all accrued and unpaid interest on the loans under the DIP Facility, (c) the 4.0% PIK Put Option Payment, and (d) the 3.0% Backstop Put Option Payment, provided that the DIP Facility Consideration shall be paid solely from the
proceeds of the New Second Lien Convertible Notes.
1.58 “DIP Facility Order” means, as applicable, the Interim Order:
(I) Pursuant to 11 U.S.C. §§ 105, 361, 362, 363 and 364 Authorizing the Debtors to (A) Obtain Postpetition Financing, (B) Grant Liens and Superpriority Administrative Expense Status, (C) Use Cash Collateral of
Prepetition Secured Parties, and (D) Grant Adequate Protection to Prepetition Secured Parties; (II) Scheduling a Final Hearing Pursuant to Bankruptcy Rules 4001(b) and 4001(c); and (III) Granting Related Relief [Docket No. 70] and the
Final Order: (I) Pursuant to 11 U.S.C. §§ 105, 361, 362, 363 and 364 Authorizing the Debtors to (A) Obtain Postpetition Financing, (B) Grant Liens and Superpriority Administrative Expense Status, (C) Use Cash
Collateral of Prepetition Secured Parties, and (D) Grant Adequate Protection to Prepetition Secured Parties; and (II) Granting Related Relief [Docket No. 218].
1.59 “DIP Lenders” means the lenders and financial institutions from time to time party to the DIP Facility and defined as
“Lenders” thereunder.
1.60 “Disclosure Statement” means the disclosure statement for the Plan (including,
without limitation, all exhibits and schedules thereto), as amended, supplemented or modified from time to time, that was approved by the Bankruptcy Court pursuant to the Disclosure Statement Order and prepared and distributed to those creditors
entitled to vote on the Plan in accordance with Bankruptcy Code section 1126(b), Bankruptcy Rule 3018, and other applicable law.
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1.61 “Disclosure Statement Order” means the order of the Bankruptcy Court
approving the Disclosure Statement and the Solicitation.
1.62 “Disputed” means, with respect to any Claim or Interest,
any: (a) Claim that is listed on the Schedules as unliquidated, disputed or contingent; (b) Claim or Interest as to which the Debtors or any other party in interest have interposed a timely objection or request for estimation in accordance
with the Bankruptcy Code, the Bankruptcy Rules and any orders of the Bankruptcy Court or which is otherwise disputed by the Debtors in accordance with applicable law, which objection, request for estimation or dispute has not been withdrawn or
determined by a Final Order; (c) Claim evidenced by a Proof of Claim which amends a Claim scheduled by the Debtors as contingent, unliquidated, or disputed, with respect to which the Debtors or any other party in interest have interposed a
timely objection or request for estimation in accordance with the Bankruptcy Code, the Bankruptcy Rules and any orders of the Bankruptcy Court or which is otherwise disputed by the Debtors in accordance with applicable law, which objection, request
for estimation or dispute has not been withdrawn or determined by a Final Order; (d) Claim for which a Proof of Claim has been filed in an unliquidated amount; or (e) Claim or Interest that is not an Allowed Claim or Allowed Interest.
1.63 “Distribution Agent” means the Reorganized Debtors or a distribution agent selected by the Reorganized Debtors, as
applicable, pursuant to Article 7.1 of the Plan.
1.64 “Distribution Date” means the date upon which the initial
distributions will be made to Holders of Allowed Claims and Allowed Interests pursuant to Article 7.1 of the Plan.
1.65
“Distribution Record Date” means, with respect to Notes Claims and Existing Equity Interests, the Effective Date or as soon thereafter as reasonably practicable and, with respect to all other Claims, the Confirmation Date.
1.66 “Effective Date” means the date on which the Plan shall take effect, which date shall be a Business Day on or after the
Confirmation Date on which (a) no stay of the Confirmation Order is in effect and (b) the conditions to the effectiveness of the Plan specified in Article 8.1 of the Plan have been satisfied, or if capable of being waived, waived in
accordance with the terms of the Plan.
1.67 “Eligible Holder” means a holder of New Warrants that is an Accredited
Investor.
1.68 “Equity Committee” means the official committee of equity security holders appointed by the U.S. Trustee
pursuant to Bankruptcy Code section 1102(a), as it may be reconstituted from time to time.
1.69 “Estate” means, as to
each Debtor, the estate created for that Debtor in its Chapter 11 Case pursuant to Bankruptcy Code section 541.
1.70 “Estimated
Amount” has the meaning set forth in Article 6.4 of the Plan.
1.71 “Excess Cash Flow” means, for any period and
without duplication, (a) the Debtors’ or Reorganized Debtors’, as applicable, net Cash provided by operating activities during such period (as determined in accordance with GAAP); minus (b) solely to the extent clause
(a) is not reduced thereby for such period, Cash capital expenditures during such period (as determined in accordance with GAAP) which are consistent with the Debtors’ “suspension plan” (other than capital expenditures related to
the development of the sulfide demonstration plant) in an amount not to exceed $100,000 in the aggregate in any fiscal month; minus (c) solely to the extent clause (a) is not reduced thereby for such period, the repayment of
obligations owed under the Jacobs Agreements during such period to the extent such payments are not prohibited by the New First Lien Term Loan Credit Facility, provided that such payments shall not exceed $4.0 million in April 2016 and
$1,189,706 in October 2016; minus (d) solely to the extent that any Specified Asset Sale made during such period increases clause (a) hereof for such
7
period, an amount equal to the net proceeds of such Specified Asset Sale which so increases clause (a) hereof and which are used to make mandatory prepayments of Secured ABL Claims, Secured
Swap Claims and/or New First Lien Term Loans during such period; minus (e) solely to the extent clause (a) is not reduced thereby for such period, (i) required or scheduled payments in respect of capital lease obligations
and/or equipment financings paid during such period not to exceed $400,000 in the aggregate for such period, (ii) any scheduled Cash fees (other than Fees) or Cash interest paid in respect of the Secured ABL Claims, Secured Swap Claims and any
New First Lien Term Loans during such period and (iii) any Fees during such period; provided that any such Fees, when taken together with all Fees paid to such persons on or after August 1, 2015, do not exceed $15.0 million in the
aggregate; plus (f) solely to the extent clause (a) is reduced thereby for such period, (i) payments in respect of capital lease obligations and/or equipment financings paid during such period to the extent such payments
(x) exceed $400,000 in the aggregate for such period or (y) are voluntary or otherwise paid prior to the date due and payable under the terms thereof as of the date of execution of the Amended and Restated Restructuring Support Agreement,
(ii) any Cash fees or Cash interest paid in respect of indebtedness during such period (other than indebtedness consisting of the Secured ABL Claims, Secured Swap Claims and/or any New First Lien Term Loans), and (iii) any Fees paid during
such period which, when taken together with all Fees paid on or after August 1, 2015, exceed $15.0 million in the aggregate.
1.72
“Excluded Benefits” means, with respect to any Officers’ Employment Agreement, any (i) equity, incentive or other bonus that may be payable under such Officers’ Employment Agreement, (ii) payments or benefits
that may be payable or provided following a “change in control,” “triggering event” or phrase of a similar nature, or (iii) severance or other benefits that may be payable or provided following a termination of the
applicable officer’s employment with any of the Debtors (other than unpaid base salary, expense reimbursements, vacation days accrued prior to termination, long term disability and life insurance), including, without limitation, any continued
payment of base salary or any multiple thereof, bonus for the year in which such officer is terminated, premiums for continuation of health coverage and vesting of equity.
1.73 “Excluded Matters” means (i) the Reorganized Debtors’ organizational matters (including any certificates of
formation, articles of incorporation, bylaws, limited liability company agreements, partnership agreements, stockholders’ agreements, registration rights agreements, investor rights agreements, other organizational documents, and any other
comparable documents or agreements), (ii) the Reorganized Debtors’ corporate governance matters (including matters related to boards of directors and comparable governing bodies and appointment rights, indemnification and fiduciary duties,
and procedural matters with respect thereto), (iii) the New Common Stock, the New Warrants or any other equity or rights convertible into equity of the Reorganized Debtors, (iv) the Schedule of Assumed Executory Contracts and Unexpired
Leases, (v) employment agreements, employee benefit plans, compensation arrangements, severance arrangements and any other agreement, plan, arrangement, program, policy or other arrangement relating to employment-related matters, and/or
(vi) any other matters, agreements, or documents governing rights and obligations solely as between the Reorganized Debtors and the holders of any Securities in any of the Reorganized Debtors (in their capacity as such), in each case, unless
(A) materially adverse to the Secured Lenders or (B) related to (x) the Secured Lenders, the Credit Agreement, the Swaps, the treatment of the Secured ABL Claims or the Secured Swap Claims; (y) any documentation relating to the
DIP Facility, the New First Lien Term Loan Credit Facility, New Intercreditor Agreement, or the Exit Facility; or (z) any other documentation relating to the use of cash collateral or any exit financing.
1.74 “Exculpated Parties” means each of the following solely in their capacity as such: (a) the Debtors; (b) the
Debtors’ officers, managers, directors, employees, financial advisors, attorneys, accountants, consultants, and other Professionals; (c) the Creditors Committee’s members, financial advisors, attorneys, accountants, consultants, and
other Professionals; and (d) the Equity Committee’s current members, financial advisors, attorneys, accountants, consultants, and other Professionals, excluding the Prior Equity Committee Advisors, in each case in their capacity as such,
and only if serving in such capacity, on or any time after the Petition Date and through the Effective Date.
1.75 “Exercise
Price” has the meaning set forth in Article 4.3(b) of the Plan.
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1.76 “Exhibit” means an exhibit annexed to the Plan, to any Plan Supplement, or
to the Disclosure Statement.
1.77 “Existing Equity Interests” means the existing common stock of ANV.
1.78 “Existing Equity Interests Treatment Term Sheet” means the term sheet attached as Exhibit A to the Notice of
Agreements in Principle with Official Committee of Unsecured Creditors and Official Committee of Equity Security Holders [Docket No. 864].
1.79 “Exit Facility” means the post-Effective Date exit financing for Reorganized ANV in the form of New Second Lien
Convertible Notes issued pursuant to the New Second Lien Convertible Notes Definitive Agreement.
1.80 “Exit Facility
Commitment” means the several (and not joint nor joint and several) commitments from the Exit Facility Lenders set forth in, and subject to the terms and conditions of, the Exit Facility Commitment Letter and the Restructuring Term Sheet to
purchase the New Second Lien Convertible Notes in an original aggregate principal amount equal to the greater of (a) an amount sufficient for Reorganized ANV to have at least $8.0 million of Cash on the Effective Date after giving pro forma
effect to, without duplication, (i) all Cash payments to be made under (A) the Plan or (B) an order of the Bankruptcy Court, in each case whether paid on or in connection with the Effective Date (excluding, for the avoidance of doubt,
New First Lien Term Loan Excess Cash Flow Payments), (ii) the payment of all Fees accrued through and including the Effective Date and (iii) the payment of any Compensation Plan Payments and (b) an amount such that the aggregate
amount of (i) the Cash proceeds of the DIP Facility received by the Debtors prior to the Effective Date plus (ii) the Cash proceeds of the Exit Facility not used to pay the DIP Facility Consideration equals $65.0 million;
provided, however, that in no event shall the Exit Facility Lenders be obligated to fund amounts under clause (a) above which would cause the aggregate principal amount of the New Second Lien Convertible Notes issued pursuant to
the Exit Facility on the Effective Date to exceed $80.0 million.
1.81 “Exit Facility Commitment Letter” means the letter
agreement, dated as of July 23, 2015, by and between the Debtors and the Exit Facility Lenders, as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and the Exit Facility Commitment Order.
1.82 “Exit Facility Commitment Order” means a Final Order of the Bankruptcy Court approving the terms of the Exit Facility
Commitment Letter, which order shall be in form and substance acceptable to the Debtors and the Requisite Exit Facility Lenders and may be the RSA Order, the Disclosure Statement Order or the Confirmation Order.
1.83 “Exit Facility Lenders” means affiliates of and/or related funds or other vehicles of Aristeia Capital LLC, Highbridge
Capital Management, LLC, Mudrick Capital Management, LP, USAA Asset Management, Whitebox Advisors LLC and Wolverine Asset Management LP.
1.84 “Exit Facility Lenders’ Advisors” means (i) Stroock & Stroock & Lavan LLP, as lead counsel
for the Exit Facility Lenders; (ii) Young Conaway Stargatt & Taylor LLP, as local counsel for the Exit Facility Lenders; (iii) Goodmans LLP, as Canadian local counsel for the Exit Facility Lenders; (iv) one Nevada local
counsel for the Exit Facility Lenders (if applicable); and (v) Houlihan Lokey, Inc., as financial advisor to the Exit Facility Lenders.
1.85 “Fees” means all fees or expenses paid by the Debtors or Reorganized Debtors to advisors, consultants, attorneys or
other professionals (whether of the Debtors or Reorganized Debtors or any stakeholder or otherwise).
1.86 “Final Order”
means (a) an order or judgment of the Bankruptcy Court or any other court or adjudicative body as to which the time to appeal, petition for certiorari, or move for
9
reargument or rehearing has expired and as to which no appeal, petition for certiorari, or other proceedings for reargument or rehearing shall then be pending, or (b) in the event that an
appeal, writ of certiorari, reargument, or rehearing thereof has been taken or sought, such order of the Bankruptcy Court or any other court or adjudicative body shall have been affirmed by the highest court to which such order was appealed, or
certiorari has been denied, or from which reargument or rehearing was sought, and the time to take any further appeal, petition for certiorari or move for reargument or rehearing shall have expired; provided, that no order shall fail to be a
Final Order solely because of the possibility that a motion pursuant to Bankruptcy Code section 502(j), Rule 59 or Rule 60 of the Federal Rules of Civil Procedure or Bankruptcy Rule 9024 may be filed with respect to such order.
1.87 “GAAP” means generally accepted accounting principles as in effect in the United States from time to time.
1.88 “General Bar Date” means the deadline to file an original, written Proof of Claim against a Debtor except as otherwise
provided in the Bar Date Order, or June 24, 2015 at 4:00 p.m. (Prevailing Eastern Time).
1.89 “General Unsecured
Claim” means any Claim that is not an Administrative Expense Claim, Professional Fee Claim, Priority Claim, DIP Facility Claim, Prepetition Secured Debt Claim, Other Secured Claim, Swap Deficiency Claim, Notes Claim, Capital Lease
Deficiency Claim, Intercompany Claim or Subordinated Securities Claim.
1.90 “Gordian” means Gordian Group LLC.
1.91 “Holder” means a holder of a Claim against or Interest in a Debtor.
1.92 “Hycroft” means Hycroft Resources & Development, Inc.
1.93 “Impaired” means impaired within the meaning of Bankruptcy Code section 1124.
1.94 “Indemnity Obligations” has the meaning set forth in Article 5.9 hereof.
1.95 “Indenture” means that certain indenture, dated as of May 25, 2012, between ANV and the Indenture Trustee, as may
be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.
1.96 “Indenture
Trustee” means Computershare Trust Company of Canada as trustee under the Indenture.
1.97 “Initial Consenting
Noteholders” means each of the beneficial owners (or investment managers or advisors for such beneficial owners) of the Notes identified on the signature pages to the Original Restructuring Support Agreement as of the Original Restructuring
Support Effective Date, together with any of their respective successors and permitted assigns under the Original Restructuring Support Agreement or the Amended and Restated Restructuring Support Agreement that are affiliates or related funds of
such Persons.
1.98 “Initial Secured Lenders” means Scotiabank and Wells Fargo.
1.99 “Intercompany Claim” means any Claim held by a Debtor or any Non-Debtor Affiliate against any Debtor.
1.100 “Intercompany Interests” means Interests in any Debtor held by another Debtor.
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1.101 “Interest” means the common stock, limited partnership interests, limited
liability company interests, and any other equity, ownership, or profits interests issued by any Debtor and options, warrants, rights, or other securities or agreements to acquire the common stock, limited partnership interests, limited liability
company interests, or other equity, ownership, or profits interests issued by any Debtor (whether or not arising under or in connection with any employment agreement).
1.102 “Jacobs Agreements” means, collectively, (i) Section 1 of that certain Release and Settlement Agreement,
dated October 15, 2014, between Jacobs Field Services and Hycroft; (ii) Section 1 of that certain Promissory Note, dated as of October 15, 2014, made by Hycroft in favor of Jacobs Field Services; and (iii) that certain
Guarantee, dated as of October 15, 2014, made by ANV for the benefit of Hycroft and Jacobs Filed Services.
1.103 “Jacobs
Field Services” means Jacobs Field Services North America Inc.
1.104 “Joinder Agreement” means a joinder
agreement substantially in the form attached to the Amended and Restated Restructuring Support Agreement as Exhibit B thereto, which may be executed after the Restructuring Support Effective Date.
1.105 “Lien” has the meaning set forth in Bankruptcy Code section 101(37).
1.106 “Liquidity Event” means the consummation of (i) a sale, conveyance or disposition of all or substantially all of
the assets of the Reorganized Debtors and any direct and/or indirect subsidiaries of Reorganized ANV taken as a whole (including by or through the sale or other disposition of the outstanding capital stock or other outstanding equity interests of,
or reorganization, merger, share exchange, consolidation or other business combination involving, any direct and/or indirect subsidiary or subsidiaries of Reorganized ANV, if (A) substantially all of the assets of the Reorganized Debtors and
any direct and/or indirect subsidiaries of Reorganized ANV, taken as a whole, are held by such subsidiary or subsidiaries and (B) immediately after any such transaction either (1) Reorganized ANV’s stockholders as of immediately prior
to such transaction and their Affiliates own, directly or indirectly (including by or through Reorganized ANV or any other entity), an aggregate of 10% or less of the total voting power of the Voting Securities of such subsidiary or subsidiaries, or
(2) an aggregate of 90% or more of the total voting power of the Voting Securities of such subsidiary or subsidiaries is owned, directly or indirectly, by Persons that owned in the aggregate 5% or less of the total voting power of the Voting
Securities of Reorganized ANV as of immediately prior to such transaction or Affiliates of such Persons, provided, however, that this clause (2) shall not apply if any of the Persons described in this clause (2) are Restricted Persons (as
defined below)), in any case under this clause (i), to or with an Eligible Party (as defined below), (ii) a reorganization, merger, share exchange, consolidation or other business combination of Reorganized ANV with or into any other entity in
which transaction either (a) Reorganized ANV’s stockholders as of immediately prior to such transaction and their Affiliates own, directly or indirectly, immediately after such transaction an aggregate of 10% or less of the total voting
power of the Voting Securities of Reorganized ANV or, if Reorganized ANV is not the acquiring, resulting or surviving entity in such transaction, such other entity, or (b) Persons that owned in the aggregate 5% or less of the total voting power
of the Voting Securities of Reorganized ANV as of immediately prior to such transaction, or Affiliates of such Persons, own immediately after such transaction an aggregate of 90% or more of the total voting power of the Voting Securities of
Reorganized ANV or, if Reorganized ANV is not the acquiring, resulting or surviving entity in such transaction, such other entity, provided, however, that this clause (b) shall not apply if any of the Persons described in this clause
(b) are Restricted Persons, or (iii) the sale or other disposition (in one transaction or a series of related transactions) of outstanding Voting Securities of Reorganized ANV representing in the aggregate 90% or more of the total voting
power of the Voting Securities of Reorganized ANV (after giving effect to such sale or other disposition) to any Person or “group” (as such term is used in Section 13(d)(3) of the Securities Exchange Act) of Persons, but only if as of
immediately following such sale or other disposition Reorganized ANV would constitute an Eligible Party as defined below. For purposes of determining Reorganized ANV’s stockholders as of immediately prior to any transaction that is described in
clause (i), (ii) or (iii) above, if any such transaction is consummated through a series of related
11
transactions (including a combination of different types or forms of transactions described in any of clauses (i), (ii) or (iii) above), then such determination shall be made as of
immediately prior to the first transaction in such series of related transactions. For purposes of this definition, “Eligible Party” means any entity in which, as of immediately after the corresponding Liquidity Event transaction,
either (1) Reorganized ANV’s stockholders as of immediately prior to such transaction and their Affiliates own, directly or indirectly (including by or through Reorganized ANV or any other entity), an aggregate of 10% or less of the total
voting power of the Voting Securities of such entity, or (2) an aggregate of 90% or more of the total voting power of the Voting Securities of such entity is owned, directly or indirectly, by Persons that owned in the aggregate 5% or less of
the total voting power of the Voting Securities of Reorganized ANV as of immediately prior to such transaction or Affiliates of such Persons, provided, however, that this clause (2) shall not apply if any of the Persons described
in this clause (2) are Restricted Persons. For purposes of this definition, “Restricted Person” means any Person who is (I) a member, or has the right to appoint or designate a member, of the board of directors (or similar
governing body) of the Reorganized Debtors or of any direct and/or indirect subsidiary of Reorganized ANV, (II) a member of management of the Reorganized Debtors or of any direct and/or indirect subsidiary of Reorganized ANV, (III) a Consenting
Noteholder who owned Notes as of immediately prior to the Effective Date, or (IV) any Affiliate of any Person described in (I), (II), or (III).
1.107 “Management Incentive Plan” means the post-Effective Date Cash management incentive plan that the New Board will be
authorized to, and shall, implement on the terms set forth in the Plan Supplement and consistent with the presentation dated July 2, 2015 prepared by the Debtors’ compensation consultant and provided to the Consenting Noteholders’
Advisors (unless otherwise agreed to by the Debtors, the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders).
1.108
“National Securities Exchange” means, if the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders elect to require Reorganized ANV to list the New Common Stock, any national securities exchange registered with
the Securities Exchange Commission under Section 6(a) of the Securities Exchange Act that is selected by the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders, with the consent of the Debtors or Reorganized Debtors (not
to be unreasonably withheld), as applicable.
1.109 “NBC Cross Currency Swap” means the cross currency swap transaction
subject to the ISDA 2012 Master Agreement, dated as of October 19, 2012, between ANV and National Bank of Canada, as amended, supplemented or otherwise modified from time to time, together with all schedules, exhibits and annexes thereto.
1.110 “New Board” means the board of directors of Reorganized ANV.
1.111 “New Board Member” means a member of the New Board appointed as of the Effective Date.
1.112 “New Common Stock” means the class or classes of common stock issued by Reorganized ANV on the Effective Date, which
shall be deemed validly issued, fully paid and non-assessable.
1.113 “New Common Stock Election” means the election
available to a Holder of an Allowed Unsecured Claim asserted in an amount less than or equal to $500,000 to opt to receive its Pro Rata share of the New Common Stock, subject to dilution on account of: (i) the conversion of the New Second Lien
Convertible Notes and (ii) the exercise of the New Warrants, in full and complete satisfaction, discharge and release of such Allowed Unsecured Claim.
1.114 “New First Lien Term Loan Asset Sales” means, on and after the Effective Date, the sale of (i) assets currently
identified as Held for Sale on the Balance Sheet (as defined in the Amended and Restated Restructuring Support Agreement) and (ii) other asset sales and dispositions (other than sales of gold and silver inventory in the ordinary course of
business).
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1.115 “New First Lien Term Loan Credit Agreement” means the credit agreement
that Reorganized ANV will enter into on the Effective Date, in form and substance consistent with the Amended and Restated Restructuring Support Agreement and Restructuring Term Sheet and otherwise as reasonably negotiated by the Debtors, the
Requisite Consenting Noteholders and the Requisite Secured Lenders, pursuant to which Reorganized ANV will incur, and all of the direct and indirect domestic subsidiaries of Reorganized ANV will guarantee, the New First Lien Term Loans.
1.116 “New First Lien Term Loan Credit Facility” means the credit facility for Reorganized ANV in the form of New First Lien
Term Loans incurred pursuant to the New First Lien Term Loan Credit Agreement.
1.117 “New First Lien Term Loan Excess Cash Flow
Payments” means the payments to be made within 21 days after the end of each New First Lien Term Loan Excess Cash Flow Period, until the maturity of the New First Lien Term Loan Credit Facility, pursuant to which the Reorganized Debtors
shall prepay the New First Lien Term Loans on a pro rata basis in an amount equal to the New First Lien Term Loan Excess Cash Flow Payment Amount for such New First Lien Term Loan Excess Cash Flow Period; provided, however, that
each New First Lien Term Loan Excess Cash Flow Payment is subject to reduction equal to the greater of the New First Lien Term Loan Excess Cash Flow Period-End Reduction and the New First Lien Term Loan Excess Cash Flow Payment Date Reduction (it
being understood and agreed, for the avoidance of doubt, that if both the New First Lien Term Loan Excess Cash Flow Period-End Reduction and the New First Lien Term Loan Excess Cash Flow Payment Date Reduction are applicable, then the amount
Reorganized ANV shall have to pay in respect of the New First Lien Term Loan Excess Cash Flow Payment Amount shall be equal to the lesser of (x) the amount calculated after taking into account the New First Lien Term Loan Excess Cash Flow
Period-End Reduction and (y) the amount calculated after taking into account the New First Lien Term Loan Excess Cash Flow Payment Date Reduction), provided, further, that the amount of any such reduction pursuant to the foregoing
proviso shall be automatically due and payable on the first day after the date of the applicable New First Lien Term Loan Excess Cash Flow Payment on which the Reorganized Debtors have greater than $7.5 million of Cash on hand (such that any Cash on
hand in excess of $7.5 million shall be used to repay New First Lien Term Loans on such day in an amount not to exceed the applicable reduction).
1.118 “New First Lien Term Loan Excess Cash Flow Payment Amount” means, for any New First Lien Term Loan Excess Cash Flow
Period, (x) 50% of Excess Cash Flow for such New First Lien Term Loan Excess Cash Flow Period minus (y) the amount of voluntary prepayments of the New First Lien Term Loans made during such New First Lien Term Loan Excess Cash Flow
Period (it being understood that the New First Lien Term Loans shall be incurred on the Effective Date in accordance with Article 4.10 of the Plan and, accordingly, no such voluntary prepayments of New First Lien Term Loans can occur prior to the
Effective Date).
1.119 “New First Lien Term Loan Excess Cash Flow Payment Date Reduction” means if on the date of such
New First Lien Term Loan Excess Cash Flow Payment Reorganized ANV will have less than $4.0 million of Cash on hand on such date after giving effect to such New First Lien Term Loan Excess Cash Flow Payment, a reduction of such New First Lien Term
Loan Excess Cash Flow Payment in an amount equal to the amount that will result in Reorganized ANV having at least $4.0 million of Cash on hand on such date.
1.120 “New First Lien Term Loan Excess Cash Flow Period” means each fiscal month ended after the end of the Secured ABL/Swap
Claims Excess Cash Flow Period, until the maturity of the New First Lien Term Loan Credit Facility.
1.121 “New First Lien Term
Loan Excess Cash Flow Period-End Reduction” means if on the last day of the applicable New First Lien Term Loan Excess Cash Flow Period Reorganized ANV would have had less than $7.5 million of Cash on hand on a pro forma basis after giving
effect to such New First Lien Term Loan Excess Cash Flow Payment had such payment been made on such date, a reduction of such New First Lien Term Loan Excess Cash Flow Payment in an amount
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equal to the maximum amount that would have resulted in the Reorganized ANV having at least $7.5 million of Cash on hand on such date, had such New First Lien Term Loan Excess Cash Flow Payment
been made on such date.
1.122 “New First Lien Term Loans” means the new loans incurred by Reorganized ANV pursuant to
the New First Lien Term Loan Credit Facility.
1.123 “New Intercreditor Agreement” means that certain Intercreditor
Agreement to be entered into on the Effective Date by and among the agent under the New First Lien Term Loan Credit Facility, and the trustee, agent or similar representative of the Exit Facility Lenders under the New Second Lien Convertible Notes
Definitive Agreement, governing, among other things, the respective rights, remedies, and priorities of Claims and Liens held by such parties, or any similar or related agreement (and as the same may have been modified, amended, or restated), which
shall be in form and substance consistent with the Amended and Restated Restructuring Support Agreement and Restructuring Term Sheet and otherwise in form and substance reasonably satisfactory to the Debtors, the Requisite Secured Lenders and the
Requisite Exit Facility Lenders and a substantially final form of which shall be included in the Plan Supplement.
1.124 “New
Organizational Documents” means any amended certificates of formation, bylaws, stockholders’ agreement, registration rights agreement or other operating agreements as may be necessary for the Reorganized Debtors, which shall be in form
and substance reasonably acceptable to the Debtors, the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders, in consultation with the Creditors Committee, and substantially final forms of which shall be included in the Plan
Supplement.
1.125 “New Second Lien Convertible Notes” means the second lien convertible notes issued by Reorganized ANV
pursuant to the New Second Lien Convertible Notes Definitive Agreement.
1.126 “New Second Lien Convertible Notes Definitive
Agreement” means (i) the Note Purchase Agreement and (ii) if the Indenture Election occurs, the New Second Lien Convertible Notes Indenture.
1.127 “New Second Lien Convertible Notes Indenture” means, if the Requisite Exit Facility Lenders make the Indenture
Election, the indenture pursuant to which Reorganized ANV will issue the New Second Lien Convertible Notes and all direct and indirect domestic subsidiaries of Reorganized ANV will guarantee the New Second Lien Convertible Notes, such indenture to
be consistent with the terms set forth in the Exit Facility Commitment Letter and otherwise in form and substance (including affirmative and negative covenants and events of default) reasonably acceptable to the Requisite Exit Facility Lenders, the
Requisite Consenting Noteholders and the Debtors.
1.128 “New Warrant Agreement” has the meaning set forth in Article
4.3(b) of the Plan.
1.129 “New Warrant Expiration Date” has the meaning set forth in Article 4.3(b) of the Plan.
1.130 “New Warrant Representative” has the meaning set forth in Article 4.3(b) of the Plan.
1.131 “New Warrant Representative Compensation” means the fees and expenses of the New Warrant Representative, which shall be
limited to (i) $50,000 minus (ii) the amount of fees and expenses that the Reorganized Debtors pay to Gordian in its capacity as investment banker to the Equity Committee.
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1.132 “New Warrants” has the meaning set forth in Article 4.3(b) of the Plan.
1.133 “Non-Debtor Affiliates” means Allied Nevada Delaware Holdings Inc. and Allied Nevada (Cayman) Corp.
1.134 “Non-Insider KEIP” means the Debtors’ key employee incentive program approved by the Bankruptcy Court in
connection with the Order (A) Authorizing and Approving the Debtors’ Key Employee Incentive Program and (B) Granting Related Relief [Docket No. 488].
1.135 “Note Purchase Agreement” means a note purchase agreement to be entered into on or prior to the Effective Date between
the Exit Facility Lenders and the Debtors providing for, among other things, the purchase by the Exit Facility Lenders from Reorganized ANV, and the issuance and sale by Reorganized ANV to the Exit Facility Lenders, of the New Second Lien
Convertible Notes contemplated by the Exit Facility Commitment Letter, and the guarantee of the New Second Lien Convertible Notes by all direct and indirect domestic subsidiaries of Reorganized ANV, such note purchase agreement to be consistent with
the terms set forth in the Exit Facility Commitment Letter and otherwise in form and substance (including with respect to closing conditions, representations and warranties of the Debtors and affirmative and negative covenants and events of default
applicable to the Debtors) acceptable to the Requisite Consenting Noteholders, the Requisite Exit Facility Lenders and the Debtors; provided, that, at the election of the Requisite Exit Facility Lenders (the “Indenture
Election”), the New Second Lien Convertible Notes shall instead be issued pursuant to, and the terms therefor (including affirmative and negative covenants and events of default) shall be governed by, the New Second Lien Convertible Notes
Indenture.
1.136 “Notes” means the 8.75% senior unsecured notes due 2019 issued by ANV pursuant to the Indenture.
1.137 “Notes Claims” means Claims arising under the Indenture or in respect of the Notes, which shall be Allowed Claims
pursuant to the Plan in the aggregate amount of $324,154,778.00, including $316,640,000.00 in principal and $7,514,778.00 in accrued and unpaid interest as of the Petition Date.
1.138 “Officers’ Employment Agreements” mean the employment agreements between the Debtors and the current officers of
the Debtors.
1.139 “Original Restructuring Support Agreement” means the restructuring support agreement, dated as of
March 10, 2015 (including all exhibits, annexes and schedules attached thereto), as it may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, both as to substance and parties thereto, among
the Debtors, the Initial Consenting Noteholders and the Initial Secured Lenders, a copy of which is attached as Exhibit 2 to the Declaration of Stephen M. Jones in Support of Chapter 11 Petitions and Various First Day Applications and Motions
[Docket No. 16].
1.140 “Original Restructuring Support Effective Date” means March 10, 2015.
1.141 “Other Secured Claim” means a Secured Claim, other than a Prepetition Secured Debt Claim.
1.142 “Person” means any person, including, without limitation, any individual, partnership, joint venture, venture capital
fund, association, corporation, union, limited liability company, limited liability partnership, unlimited liability company, trust, trustee, executor, administrator, legal personal representative, estate, group, unincorporated association or
organization or governmental unit.
1.143 “Petition Date” means March 10, 2015.
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1.144 “Plan” means this amended joint chapter 11 plan (including
the Plan Supplement), either in its present form or as it may be altered, amended, modified or supplemented from time to time in accordance herewith, the Bankruptcy Code, the Bankruptcy Rules, the Amended and Restated Restructuring Support Agreement
and the Exit Facility Commitment Letter and shall otherwise be in form and substance reasonably acceptable to the Requisite Consenting Parties.
1.145 “Plan Supplement” means one or more supplements to the Plan containing certain schedules, documents and/or forms of
documents relevant to the implementation of the Plan (including without limitation the New Organizational Documents (including the Stockholders Agreement and the Registration Rights Agreement, if any such agreement is agreed to by the Debtors, the
Requisite Consenting Noteholders and the Requisite Exit Facility Lenders), the Management Incentive Plan, Post-Emergence Key Employee Retention Plan, the New First Lien Term Loan Credit Agreement, the New Intercreditor Agreement, the New Second Lien
Convertible Notes Definitive Agreement, the New Warrant Agreement, the identity of the New Board Members, the identity of and compensation for the officers of the Reorganized Debtors, the identity of the Creditor Representative, the identity of the
New Warrant Representative, the Schedule of Assumed Executory Contracts and Unexpired Leases, and any other schedules, documents and/or forms of documents necessary to comply with Bankruptcy Code sections 1123(a)(7) and 1129(a)(5)), to be filed with
the Bankruptcy Court no later than nine (9) days prior to the Voting Deadline, as amended, supplemented, or modified from time to time in accordance with the terms of the Plan, the Amended and Restated Restructuring Support Agreement, the Exit
Facility Commitment Letter, the Bankruptcy Code and the Bankruptcy Rules and shall otherwise be in form and substance reasonably acceptable to the Debtors and the Requisite Consenting Parties in consultation with (i) the Creditors Committee,
but only to the extent any documents or provision thereof may be deemed to affect the treatment of or distributions to the Holders of Unsecured Claims, to the extent such Holders of Unsecured Claims are not Consenting Noteholders, and (ii) the
Equity Committee, but only to the extent any document or provision thereof may be deemed to affect the treatment of or distributions to Holders of Existing Equity Interests; provided, further, however, that any documents or
provisions of such documents that are, or relate to, any of the Excluded Matters shall not be required to be reasonably acceptable to the Requisite Secured Lenders.
1.146 “Plan Support Parties” means, collectively, the Consenting Noteholders and the Secured Lenders.
1.147 “Post-Emergence Key Employee Retention Plan” means the post-Effective Date key employee retention and severance program
that the New Board will be authorized to, and shall, implement on the terms set forth in the Plan Supplement and consistent with the presentation dated July 2, 2015 prepared by the Debtors’ compensation consultant and provided to the
Consenting Noteholders’ Advisors (unless otherwise agreed to by the Debtors, the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders).
1.148 “Prepetition Secured Debt Claims” means, collectively, the Secured ABL Claims and the Secured Swap Claims.
1.149 “Prior Equity Committee Advisors” means Susman Godfrey L.L.P., Ashby & Geddes, P.A., Peter J. Solomon Company,
and Behre Dolbear Group, Inc.
1.150 “Priority Claim” means any Claim to the extent that it is of the kind described in,
and entitled to priority under, Bankruptcy Code sections 507(a)(3), (4), (5), (6) or (8).
1.151 “Professional”
means (a) any professional employed in these Chapter 11 Cases pursuant to Bankruptcy Code sections 327, 328 or 1103 and (b) any professional or other entity seeking compensation or reimbursement of expenses in connection with the Chapter
11 Cases pursuant to Bankruptcy Code section 503(b)(4) excluding those entities entitled to compensation for services rendered after the Petition Date in the ordinary course of business pursuant to the Order Authorizing the Employment and
Compensation of Professionals Utilized in the Ordinary Course of Business, Effective Nunc Pro Tunc to the Effective Date [Docket No. 196], as may be amended, modified, or supplemented by the Bankruptcy Court from time to time.
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1.152 “Professional Fee Claims” means Administrative Expense Claims of a
Professional for compensation for services rendered or reimbursement of costs, expenses, or other charges incurred on or after the Petition Date through and including the Effective Date.
1.153 “Proof of Claim” means a proof of Claim filed by a Holder of a Claim against any Debtor (as may be amended and
supplemented from time to time pursuant to the Bankruptcy Code or Bankruptcy Rules) on or before the applicable Bar Date, or such other time as may be permitted by the Bankruptcy Court or agreed to by the Debtors with the consent of the Requisite
Consenting Parties, which consent shall not be unreasonably withheld, or the Reorganized Debtors.
1.154 “Proof of
Interest” means a proof of Interest filed by a Holder of an Interest in any Debtor (as may be amended and supplemented from time to time pursuant to the Bankruptcy Code or Bankruptcy Rules) on or before the applicable Bar Date, or such
other time as may be permitted by the Bankruptcy Court or agreed to by the Debtors with the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, or the Reorganized Debtors.
1.155 “Pro Rata” means the proportion by dollar amount (with respect to an Allowed Claim) or amount (with respect to an
Allowed Interest) that an Allowed Claim or Allowed Interest in a particular Class(es) bears to the aggregate dollar amount of Allowed Claims or aggregate amount of Allowed Interests in that Class(es), or the proportion by dollar amount (with respect
to an Allowed Claim) or amount (with respect to an Allowed Interest) that an Allowed Claim or Allowed Interest entitled to share in the same recovery as other Allowed Claims or Allowed Interests bears to the aggregate dollar amount of Allowed Claims
or aggregate amount of Allowed Interests entitled to share in that same recovery under the Plan. The definition of Pro Rata shall apply to Allowed DIP Facility Claims to the same extent and in the same manner as if DIP Facility Claims were
classified in a Class under the Plan.
1.156 “Purchase Right” has the meaning set forth in Article 4.3(b) of the Plan.
1.157 “Registration Rights Agreement” means one or more registration rights agreements that may be entered into on the
Effective Date between one or more of the Reorganized Debtors and certain holders of the New Common Stock and/or other securities of the Reorganized Debtors, such agreement(s) to be in form and substance reasonably acceptable to the Reorganized
Debtors and such holders.
1.158 “Reinstated” means (a) leaving unaltered the legal, equitable and contractual
rights to which a Claim or Interest entitles the Holder of such Claim or Interest so as to leave such Claim or Interest Unimpaired, or (b) notwithstanding any contractual provision or applicable law that entitles the Holder of such Claim or
Interest to demand or receive accelerated payment of such Claim or Interest after the occurrence of a default, (i) curing any such default that occurred before or after the Petition Date, other than a default of a kind specified in Bankruptcy
Code section 365(b)(2), (ii) reinstating the maturity of such Claim or Interest as such maturity existed before such default, (iii) compensating the Holder of a Claim or Interest for any damages incurred as a result of any reasonable
reliance by such Holder of a Claim or Interest on such contractual provision or such applicable law, and (iv) not otherwise altering the legal, equitable, or contractual rights to which such Claim or Interest entitles the Holder of such Claim
or Interest.
1.159 “Released Party” means each of the following solely in their capacity as such: (a) each Holder
of Notes Claims who is a Consenting Noteholder; (b) the Indenture Trustee; (c) Scotiabank; (d) Wells Fargo; (e) each Holder of the Secured Swap Claims or Secured ABL Claims; (f) the DIP Agent; (g) the DIP Lenders;
(h) the DIP Backstop Lenders; (i) the Exit Facility Lenders and any agent, trustee or similar representative of the Exit Facility Lenders under the Exit Facility; (j) the Creditors Committee and the members of the Creditors Committee;
(k) with respect to the foregoing
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entities in clauses (a) through (j), their respective current or former directors, managers, officers, affiliates, partners, consultants, financial advisors, subsidiaries, principals,
members, employees, agents, managed funds, representatives, attorneys and advisors, together with their successors and assigns; (l) the Equity Committee and the Equity Committee’s current members, financial advisors, attorneys, consultants
and other Professionals, excluding the Prior Equity Committee Advisors, in each case in their capacity as such, and only if serving in such capacity; and (m) the Debtors’ officers, managers, directors, employees, financial advisors,
attorneys, accountants, consultants, and other Professionals, in each case in their capacity as such, and only if serving in such capacity.
1.160 “Reorganized ANV” means, on and after the Effective Date, ANV reorganized under and pursuant to the Plan.
1.161 “Reorganized Debtors” means, on and after the Effective Date, collectively, all of the Debtors that are reorganized
under and pursuant to the Plan.
1.162 “Requisite Consenting Noteholders” means, as of any date of determination, the
Consenting Noteholders who own or control as of such date at least 50.01% in principal amount of the Notes owned or controlled by all of the Consenting Noteholders as of such date.
1.163 “Requisite Consenting Parties” means, collectively, the Requisite Consenting Noteholders, the Requisite Secured Lenders
and the Requisite Exit Facility Lenders.
1.164 “Requisite Exit Facility Lenders” means, as of any date of determination,
the Exit Facility Lenders who own or control as of such date at least 75% of the Exit Facility Commitment as of such date.
1.165
“Requisite Secured Lenders” means, as of any date of determination, the Secured Lenders who own or control as of such date at least 50.01% in principal amount of the Secured ABL Claims and Secured Swap Claims owned or controlled by
all of the Secured Lenders, as of such date.
1.166 “Restructuring Documents” means all agreements, instruments,
pleadings, orders or other documents (including all exhibits, schedules, supplements, appendices, annexes and attachments thereto) that are utilized to implement or effectuate, or that otherwise relate to, the Plan and/or the Restructuring
Transaction, including, but not limited to, (i) the Plan Supplement, (ii) the Disclosure Statement and any motion seeking the approval thereof, (iii) the Disclosure Statement Order, (iv) the Confirmation Order, (v) the
Ballots, the motion to approve the form of the Ballots and the Solicitation, and the order of the Bankruptcy Court approving the form of the Ballots and the Solicitation, (vi) any documentation relating to the DIP Facility, the New First Lien
Term Loan Credit Facility, the New Intercreditor Agreement, the New Second Lien Convertible Notes Definitive Agreement, the New Warrant Agreement, the Exit Facility and the Exit Facility Commitment Letter, and (vii) any documentation relating
to the use of cash collateral, distributions provided to the Holders of any Claims and Interests, any exit financing, organizational documents, shareholder-related agreements or other related documents, each of which shall contain terms and
conditions materially consistent with the Plan and the Amended and Restated Restructuring Support Agreement and shall otherwise be in form and substance acceptable to the Debtors, the Requisite Consenting Noteholders, the Requisite Exit Facility
Lenders and, as and to the extent required pursuant to the Amended and Restated Restructuring Support Agreement, the Requisite Secured Lenders.
1.167 “Restructuring Support Effective Date” means, as to each party to the Amended and Restated Restructuring Support
Agreement, the date on which the Amended and Restated Restructuring Support Agreement becomes effective and binding on such party in accordance with the terms thereof.
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1.168 “Restructuring Term Sheet” means that term sheet attached as Exhibit B to
the Amended and Restated Restructuring Support Agreement.
1.169 “Restructuring Transaction” means the restructuring
transactions for the Debtors in accordance with, and subject to the terms and conditions set forth in, the Plan.
1.170 “Retained
Causes of Action” has the meaning set forth in Article 9.7 of the Plan.
1.171 “RSA Order” means the Final Order
authorizing the Debtors’ assumption of the Amended and Restated Restructuring Support Agreement.
1.172 “Schedule of Assumed
Executory Contracts and Unexpired Leases” means the schedule listing those executory contracts and unexpired leases to be assumed by the Debtors pursuant to the Plan and the proposed cure amounts, if any, related thereto, in the form filed
as part of the Plan Supplement, as the same may be amended, modified, or supplemented from time to time, all of which shall be reasonably acceptable to the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders.
1.173 “Schedules” means the schedules of assets and liabilities, schedules of executory contracts, and statements of
financial affairs filed by the Debtors pursuant to Bankruptcy Code section 521, the Official Bankruptcy Forms and the Bankruptcy Rules, and any and all amendments thereto.
1.174 “Scotiabank” means The Bank of Nova Scotia.
1.175 “Scotiabank Cross Currency Swap” means the cross currency swap transaction subject to the ISDA 2012 Master Agreement,
dated as of May 15, 2012, between ANV and Scotiabank, as amended, supplemented or otherwise modified from time to time, together with all schedules, exhibits and annexes thereto.
1.176 “Scotiabank Cross Currency Swap Claim” means the Claim arising from the Scotiabank Cross Currency Swap.
1.177 “Secured” means when referring to a Claim: (a) secured by a Lien on property in which an Estate has an interest,
which Lien is valid, perfected and enforceable pursuant to applicable law or by reason of a Bankruptcy Court order, or that is subject to setoff pursuant to Bankruptcy Code section 553, to the extent of the value of the creditor’s interest in
an Estate’s interest in such property or to the extent of the amount subject to setoff, as applicable, as determined pursuant to Bankruptcy Code section 506(a) or (b) Allowed as such pursuant to the Plan.
1.178 “Secured ABL $10MM Cash Payment” means payments in cash aggregating $10,000,000.00, in respect of the outstanding
principal amount of the Secured ABL Claims as of the Petition Date that were made during the pendency of the Chapter 11 Cases.
1.179
“Secured ABL Claim” means a Claim arising under the Credit Agreement.
1.180 “Secured ABL/Swap Cash
Payments” means payments in Cash aggregating an amount equal to the greater of (i) $25,000,000.00 and (ii) an amount equal to 100% of the net cash proceeds from the sale of, without duplication, exploration properties and Secured
ABL/Swap Claims Asset Sales, in respect of the outstanding principal amount of the Secured ABL Claims and Secured Swap Claims as of the Petition Date that were made during the pendency of the Chapter 11 Cases or will be made on the Effective Date.
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1.181 “Secured ABL/Swap Claims Asset Sales” means any sale of (i) assets
currently identified as Held for Sale on the Balance Sheet (as defined in the Amended and Restated Restructuring Support Agreement) and (ii) other asset sales and dispositions (other than sales of gold and silver inventory in the ordinary
course of business).
1.182 “Secured ABL/Swap Claims Excess Cash Flow Payment” means the Cash payment to be made to
Holders of Secured ABL Claims and Secured Swap Claims on the Effective Date in an amount equal to 50% of the Excess Cash Flow in respect of the Secured ABL/Swap Claims Excess Cash Flow Payment Period.
1.183 “Secured ABL/Swap Claims Excess Cash Flow Payment Period” means the period beginning on August 1, 2015 and ending
on the last day of the last full fiscal month ended on or prior to the date that is 21 days prior to the Effective Date.
1.184
“Secured Lenders” means the Initial Secured Lenders and any Successor Secured Lenders.
1.185 “Secured
Lenders’ Advisors” means (i) Wachtell, Lipton, Rosen & Katz, as counsel to Scotiabank as administrative agent under the Credit Agreement; (ii) Morris, Nichols, Arsht & Tunnell LLP, as Delaware local counsel
for the Secured Lenders; (iii) Fennemore Craig, P.C.; (iv) RPA Advisors, LLC, as financial advisor to the Secured Lenders; (v) JDS Energy & Mining USA LLC, as technical advisor to the Secured Lenders; (vi) McMillan LLP;
and (vii) Fasken Martineau.
1.186 “Secured Swap Claims” means, collectively, the Scotiabank Cross Currency Swap
Claim and the Diesel Swap Claims.
1.187 “Securities” means any instruments that qualify under section 2(a)(1) of the
Securities Act, including the New Common Stock.
1.188 “Securities Act” means the Securities Act of 1933, 15 U.S.C.
§§ 77a-77aa, as now in effect or hereafter amended.
1.189 “Securities Exchange Act” means the Securities
Exchange Act of 1934, 15 U.S.C. §§ 78a – 78pp, as now in effect or hereafter amended.
1.190 “SocGen Cross Currency
Swap” means the cross currency swap transaction subject to the ISDA 2012 Master Agreement, dated as of October 31, 2012, between ANV and Societe Generale, as amended, supplemented or otherwise modified from time to time, together with
all schedules, exhibits and annexes thereto.
1.191 “Solicitation” means the solicitation of votes in connection with the
Plan pursuant to Bankruptcy Code sections 1125 and 1126.
1.192 “Specified Asset Sales” means, collectively, the New
First Lien Term Loan Asset Sales and the Secured ABL/Swap Claims Asset Sales.
1.193 “Specified Employee Benefits
Programs” has the meaning set forth in Article 5.8 of the Plan.
1.194 “Stockholders Agreement” means a
stockholders agreement for Reorganized ANV.
1.195 “Subordinated Securities Claims” means all Claims of the type
described in and subject to subordination pursuant to Bankruptcy Code section 510(b).
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1.196 “Successor Secured Lenders” means any successors and assigns of the
Initial Secured Lenders under the Amended and Restated Restructuring Support Agreement.
1.197 “Swap Claims” means,
collectively, the Cross Currency Swap Claims and the Diesel Swap Claims.
1.198 “Swap Deficiency Claims” means the
unsecured portion of the Claims arising under the NBC Cross Currency Swap and the SocGen Cross Currency Swap, which shall be Allowed Claims pursuant to the Plan in the aggregate principal amount of $890,603.67 as of the Petition Date.
1.199 “Swaps” means the Cross Currency Swaps and the Diesel Swaps.
1.200 “Taxes” means any federal, state, county or local taxes, charges, fees, levies, other assessments, or withholding taxes
or charges imposed by any governmental unit, and includes any interest and penalties (civil or criminal) on or additions to any such taxes and any expenses incurred in connection with the determination, settlement or litigation of any tax liability.
1.201 “Total Share Number” means, as of any time of exercise of the New Warrants, the sum of (without duplication)
(i) the number of shares of New Common Stock that were issued and outstanding as of the Effective Date to the Holders of Unsecured Claims, (ii) the number of shares of New Common Stock that were issued upon conversion of the New Second
Lien Convertible Notes prior to the time of such exercise and (iii) the number of shares of New Common Stock that are issuable upon full conversion of the amount of New Second Lien Convertible Notes outstanding as of the time of such exercise.
1.202 “Transaction Expenses” means all reasonable and documented fees, costs and expenses of the DIP Lenders and DIP
Agent (including, without limitation, such parties’ professional fees and expenses and the fees and expenses of Houlihan Lokey Capital, Inc. in accordance with the terms of that certain engagement letter dated February 23, 2015),
Consenting Noteholders’ Advisors, Secured Lenders’ Advisors, Exit Facility Lenders’ Advisors and the advisors to the trustee, agent or similar representative of the Exit Facility Lenders under the New Second Lien Convertible Notes
Definitive Agreement, in each case, (i) in connection with the negotiation, formulation, preparation, execution, delivery, implementation, consummation and enforcement of the Amended and Restated Restructuring Support Agreement, the Original
Restructuring Support Agreement, the Plan, the Disclosure Statement, the Exit Facility Commitment Letter, and any of the other Restructuring Documents, and the transactions contemplated thereby, or any amendments, waivers, consents, supplements or
other modifications to any of the foregoing and (ii)(A) consistent with any engagement letters entered into between the Debtors and the applicable Consenting Noteholders’ Advisors or Secured Lenders’ Advisors (as supplemented and/or
modified by the Amended and Restated Restructuring Support Agreement or the Original Restructuring Support Agreement), as applicable, or (B) as provided in the DIP Facility Order or the Exit Facility Commitment Letter.
1.203 “Transfer” means any sale, transfer, loan, issuance, pledge, hypothecation, assignment, grant or other disposition
(including a participation) by a Consenting Party, directly or indirectly, in whole or in part, of any Claims or Interests, or any option thereon or any right or interest therein (including grants of any proxies, deposits of any Claims or Interests
into a voting trust, or entry into a voting agreement with respect to any Claims or Interests).
1.204 “Unclassified
Claims” means Administrative Expense Claims, DIP Facility Claims and Priority Claims.
1.205 “Unimpaired” means,
with respect to a Claim, Interest, or Class of Claims or Class of Interests, not “impaired” within the meaning of Bankruptcy Code sections 1123(a)(4) and 1124.
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1.206 “Unsecured Claims” means Capital Lease Deficiency Claims, General
Unsecured Claims, Notes Claims and Swap Deficiency Claims.
1.207 “U.S. Trustee” means the United States Trustee for the
District of Delaware.
1.208 “Voting Deadline” means 4:00 p.m., Prevailing Eastern Time, on September 28, 2015.
1.209 “Voting Securities” means, with respect to any Person, the Securities of such Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person.
1.210 “Wells Fargo” means Wells Fargo Bank, National Association.
ARTICLE II
CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS
A. Unclassified Claims.
2.1 Administrative Expense Claims. In full and final satisfaction, settlement, release and discharge of each Administrative
Expense Claim, except to the extent that a Holder of an Allowed Administrative Expense Claim and the Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, or the Reorganized Debtors, agree
in writing to less favorable treatment for such Administrative Expense Claim, the Debtors (or the Reorganized Debtors, as the case may be) shall pay to each Holder of an Allowed Administrative Expense Claim, as applicable, Cash in an amount equal to
such Allowed Administrative Expense Claim on, or as soon thereafter as is reasonably practicable, (a) the Effective Date or, if payment is not then due, (b) on the due date of such Administrative Expense Claim. Except as otherwise provided
by the Plan, any request for the payment of an Administrative Expense Claim that is not filed and served within thirty (30) days after the Effective Date shall be discharged and forever barred and the Holder of such Administrative Expense Claim
shall be enjoined from commencing or continuing any action, process or act to collect, offset or recover on such Administrative Expense Claim against any of the Debtors or Reorganized Debtors.
The Transaction Expenses incurred, or estimated to be incurred, up to and including the Effective Date shall be paid in full in Cash on the
Effective Date (to the extent not previously paid during the course of the Chapter 11 Cases) without the requirement to file a fee application with the Bankruptcy Court or a formal request for payment prior to the Administrative Bar Date, and
without any requirement for Bankruptcy Court review; provided, however, that copies of invoices for payment of Transaction Expenses shall be provided contemporaneously to the Debtors or Reorganized Debtors, as applicable, the U.S.
Trustee, the Creditors Committee, and the Equity Committee.
2.2 Professional Fee Claims. All Professionals seeking
allowance by the Bankruptcy Court of Professional Fee Claims shall file their respective final applications for allowance of compensation for services rendered and reimbursement of expenses incurred by the date that is thirty (30) days after
the Effective Date. Allowed Professional Fee Claims shall be paid in full (i) upon the later of (A) the Effective Date and (B) the date upon which the order relating to any such Allowed Professional Fee Claim is entered by the
Bankruptcy Court or (ii) upon such other terms as may be mutually agreed upon between the Holder of such an Allowed Professional Fee Claim and the Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be
unreasonably withheld, or the Reorganized Debtors. The Reorganized Debtors are authorized to pay compensation for services rendered or reimbursement of expenses incurred after the Effective Date in the ordinary course and without the need for
Bankruptcy Court approval. All requests for the approval of retention applications and the allowance by the Bankruptcy Court of Professional Fee Claims asserted by the Prior Equity Committee Advisors shall be filed by the date that is thirty
(30) days after the Effective Date.
22
2.3 Priority Claims. In full and final satisfaction, settlement, release and
discharge of each Allowed Priority Claim, except to the extent that a Holder of an Allowed Priority Claim agrees to less favorable treatment, each Holder of an Allowed Priority Claim due and payable on or before the Effective Date shall, upon the
later of (A) the Effective Date or as soon thereafter as reasonably practicable and (B) the date upon which the Priority Claim comes due, be: (i) paid in full in Cash; (ii) Unimpaired and Reinstated; or (iii) treated on such
other terms as may be agreed upon by such Holder and the Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, or Reorganized Debtors, as applicable, or otherwise determined by an order of
the Bankruptcy Court.
2.4 DIP Facility Claims. In full and final satisfaction, settlement, release and discharge of each
Allowed DIP Facility Claim, each Holder of an Allowed DIP Facility Claim, on the Effective Date, shall be paid its Pro Rata share of the DIP Facility Consideration; provided, however, that only the DIP Backstop Lenders shall receive
their Pro Rata share (calculated based on the amount of Allowed DIP Facility Claims held by each of the DIP Backstop Lenders relative to each other) of the 3.0% Backstop Put Option Payment. For the avoidance of doubt, the DIP Facility Consideration
shall be paid in its entirety from the proceeds of the Exit Facility.
B. General Rules.
2.5 Substantive Consolidation of the Debtors for Plan Purposes Only. Pursuant to Article 4.2 of the Plan, the Plan provides for
the substantive consolidation of the Debtors’ Estates into a single Estate for Plan purposes only and matters associated with Confirmation and consummation of the Plan. As a result of the substantive consolidation of the Debtors’ Estates
for these limited purposes, each Class of Claims against and Interests in the Debtors will be treated as against a single consolidated Estate for Plan purposes without regard to the corporate separateness of the Debtors.
2.6 Classification. Pursuant to Bankruptcy Code sections 1122 and 1123, the following chart designates the Classes of Claims and
Interests under the Plan. A Claim or Interest is in a particular Class for purposes of voting on, and of receiving distributions pursuant to, the Plan only to the extent that such Claim or Interest is an Allowed Claim or Allowed Interest in that
Class and such Claim or Interest has not been paid, released or otherwise settled prior to the Effective Date. A Claim or Interest shall be deemed classified in a particular Class only to the extent that the Claim or Interest qualifies within the
description of that Class, and shall be deemed classified in a different Class to the extent that any remainder of such Claim or Interest qualifies within the description of such different Class.
C. Summary of Classification for the Debtors.
|
|
|
|
|
|
|
| Class |
|
Designation |
|
Impairment |
|
Entitled to Vote |
| Class 1 |
|
Secured ABL Claims |
|
Impaired |
|
Yes |
|
|
|
|
| Class 2 |
|
Secured Swap Claims |
|
Impaired |
|
Yes |
|
|
|
|
| Class 3 |
|
Other Secured Claims |
|
Unimpaired |
|
No
(deemed to accept) |
|
|
|
|
| Class 4 |
|
Unsecured Claims |
|
Impaired |
|
Yes |
|
|
|
|
| Class 5 |
|
Intercompany Claims |
|
Unimpaired |
|
No
(deemed to accept) |
|
|
|
|
| Class 6 |
|
Subordinated Securities Claims |
|
Impaired |
|
Yes |
|
|
|
|
| Class 7 |
|
Intercompany Interests |
|
Unimpaired |
|
No
(deemed to accept) |
|
|
|
|
| Class 8 |
|
Existing Equity Interests |
|
Impaired |
|
Yes |
23
D. Classified Claims and Interests Against the Debtors.
2.7 Class 1 – Secured ABL Claims.
(a) Classification. Class 1 consists of all Secured ABL Claims.
(b) Allowance. Class 1 Claims shall be Allowed Claims pursuant to the Plan in the aggregate amount of $75,411,229.34 (including
$74,950,000.00 in principal and $461,229.34 in accrued and unpaid interest and fees as of the Petition Date), less (i) the Secured ABL $10MM Cash Payment and (ii) the Secured ABL Claims’ Pro Rata (after giving effect to the Secured
ABL $10MM Cash Payment) share of the amount of Secured ABL/Swap Cash Payments made prior to the Effective Date.
(c) Treatment. In
full and complete satisfaction, discharge and release of each Class 1 Claim, each Holder of an Allowed Class 1 Claim shall receive, on the Effective Date: its Pro Rata (after giving effect to the Secured ABL $10MM Cash Payment) share of (i)(A) the
Secured ABL/Swap Cash Payments not made prior to the Effective Date and (B) the Secured ABL/Swap Claims Excess Cash Flow Payment, and (ii) New First Lien Term Loans in an aggregate principal amount equal to (A) the amount of Allowed
Claims pursuant to Article 2.7(b) above minus (B) the amount paid in cash in respect of the Secured ABL Claims pursuant to the foregoing clause (i) of this Article 2.7(c). In addition, for the avoidance of doubt, any unpaid amounts
owed to the holders of Secured ABL Claims pursuant to Section 11 of the DIP Facility Order (including accrued interest to and including the Effective Date pursuant to clause (a) thereof) shall be due and payable in cash on the Effective
Date.
(d) Impairment and Voting. Class 1 Claims are Impaired and the Holders thereof are entitled to vote on the Plan.
2.8 Class 2 – Secured Swap Claims.
(a) Classification. Class 2 consists of all Secured Swap Claims.
(b) Allowance. Class 2 Claims shall be Allowed Claims pursuant to the Plan in the aggregate principal amount of $86,306,619.00 less
the Secured Swap Claims’ Pro Rata share of the amount of Secured ABL/Swap Cash Payments made prior to the Effective Date.
(c)
Treatment. In full and complete satisfaction, discharge and release of each Class 2 Claim, each Holder of an Allowed Class 2 Claim shall receive, on the Effective Date: its Pro Rata share of (i)(A) the Secured ABL/Swap Cash Payments not made
prior to the Effective Date and (B) the Secured ABL/Swap Claims Excess Cash Flow Payment, and (ii) New First Lien Term Loans in an aggregate principal amount equal to (A) the amount of Allowed Claims pursuant to Article 2.8(b) above
minus (B) the amount paid in cash in respect of the Secured Swap Claims pursuant to the foregoing clause (i) of this Article 2.8(c). In addition, for the avoidance of doubt, any unpaid amounts owed to the holders of Secured Swap
Claims pursuant to Section 11 of the DIP Facility Order (including accrued interest to and including the Effective Date pursuant to clause (a) thereof ) shall be due and payable in cash on the Effective Date.
(d) Impairment and Voting. Class 2 Claims are Impaired and the Holders thereof are entitled to vote on the Plan.
24
2.9 Class 3 – Other Secured Claims.
(a) Classification. Class 3 consists of any and all Other Secured Claims.
(b) Treatment. In full and complete satisfaction, discharge and release of each Allowed Class 3 Claim, except to the extent a Holder
of an Allowed Class 3 Claim agrees to less favorable treatment with the Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, or Reorganized Debtors, as applicable, each Allowed Class 3
Claim, on the Effective Date shall be (i) paid in full in Cash, (ii) Unimpaired and Reinstated or (iii) treated on such other terms as the applicable Debtor, with the consent of the Requisite Consenting Parties, which consent shall
not be unreasonably withheld, or Reorganized Debtor, and the Holder thereof may agree.
(c) Impairment and Voting. Class 3 Claims
are Unimpaired and the Holders thereof are deemed to accept the Plan and are not entitled to vote on the Plan.
2.10 Class 4 –
Unsecured Claims.
(a) Classification. Class 4 consists of any and all Unsecured Claims.
(b) Treatment. In full and complete satisfaction, discharge and release of each Allowed Class 4 Claim, each Holder of an Allowed Class
4 Claim shall receive its Pro Rata share of either (i) 100% of the New Common Stock, subject to dilution on account of: (a) the conversion of the New Second Lien Convertible Notes and (b) the exercise of the New Warrants, or
(ii) the Convenience Claim Distribution.
(c) Impairment and Voting. Class 4 Claims are Impaired and the Holders thereof are
entitled to vote on the Plan.
2.11 Class 5 – Intercompany Claims.
(a) Classification. Class 5 consists of any and all Intercompany Claims.
(b) Treatment. Class 5 Claims shall be adjusted, continued, contributed to capital or discharged to the extent determined by the
Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, or the Reorganized Debtors.
(c) Impairment and Voting. Class 5 Claims are Unimpaired and the Holders thereof are deemed to accept the Plan and are not entitled to
vote on the Plan.
2.12 Class 6 – Subordinated Securities Claims.
(a) Classification. Class 6 consists of any and all Subordinated Securities Claims.
(b) Treatment. In full and complete satisfaction, discharge and release of each Allowed Class 6 Claim, each Holder of an Allowed Class
6 Claim shall receive its Pro Rata share of the New Warrants.
(c) Impairment and Voting. Class 6 Claims are Impaired and the
Holders thereof are entitled to vote on the Plan.
2.13 Class 7 – Intercompany Interests.
(b) Classification. Class 7 consists of any and all Intercompany Interests.
25
(c) Treatment. Class 7 Interests shall be Reinstated and the legal, equitable and
contractual rights to which Holders of such Allowed Interests are entitled shall remain unaltered so as to maintain the organizational structure of the Debtors as such structure existed on the Petition Date.
(d) Impairment and Voting. Class 7 Interests are Unimpaired and the Holders thereof are deemed to accept the Plan and are not entitled
to vote on the Plan.
2.14 Class 8 – Existing Equity Interests
(a) Classification. Class 8 consists of any and all Existing Equity Interests in the Debtors.
(b) Treatment. In full and complete satisfaction, discharge and release of each Allowed Class 8 Interest, each Holder of an Allowed
Class 8 Interest shall receive its Pro Rata share of the New Warrants.
(c) Impairment and Voting. Class 8 Interests are Impaired
and the Holders of Class 8 Interests are entitled to vote on the Plan.
E. Additional Provisions Regarding Unimpaired Claims and
Subordinated Claims.
2.15 Special Provision Regarding Unimpaired Claims. Except as otherwise explicitly provided in
the Plan, nothing shall affect the Debtors’ or the Reorganized Debtors’ rights and defenses, both legal and equitable, with respect to any Unimpaired Claims, including, but not limited to, all rights with respect to legal and equitable
defenses to setoffs or recoupments asserted against Unimpaired Claims.
2.16 Subordinated Claims. The allowance,
classification and treatment of all Allowed Claims and Allowed Interests and the respective distributions and treatments under the Plan take into account and conform to the relative priority and rights of the Claims and Interests in each Class in
connection with any contractual, legal, and equitable subordination rights relating thereto, whether arising under general principles of equitable subordination, Bankruptcy Code section 510(b), or otherwise. The Debtors or Reorganized Debtors, as
applicable, reserve the right to re-classify any Allowed Claim (or portion thereof) as a Subordinated Claim upon entry of a Final Order ruling that such Allowed Claim (or portion thereof) is a Subordinated Claim.
ARTICLE III
ACCEPTANCE
3.1
Presumed Acceptance of the Plan. Classes 3, 5 and 7 are Unimpaired under the Plan, and are therefore conclusively presumed to have accepted the Plan pursuant to Bankruptcy Code section 1126(f).
3.2 Voting Classes. Classes 1, 2, 4, 6, and 8 are Impaired under the Plan, and Holders of Claims or Interests in Classes 1, 2,
4, 6 and 8 shall be entitled to vote to accept or reject the Plan.
3.3 Elimination of Vacant Classes. Any Class of Claims
that does not have a Holder of an Allowed Claim or a Claim temporarily Allowed by the Bankruptcy Court as of the date of the Confirmation Hearing shall be deemed eliminated from the Plan for purposes of voting to accept or reject the Plan and for
purposes of determining acceptance or rejection of the Plan by such Class pursuant to Bankruptcy Code section 1129(a)(8). In the event that a Class of Claims or Interests contains at least one party that is entitled to vote and no members of such
Class vote on the Plan, such Class shall be deemed to accept the Plan.
26
3.4 Cramdown. The Debtors shall request Confirmation of the Plan, as it may be
modified from time to time, under Bankruptcy Code section 1129(b) with respect to any Impaired Class that votes to reject the Plan, if any. The Debtors reserve the right to modify the Plan subject to the terms of the Amended and Restated
Restructuring Support Agreement and the Exit Facility Commitment Letter to the extent, if any, that Confirmation pursuant to Bankruptcy Code section 1129(b) requires modification to the Plan.
ARTICLE IV
MEANS FOR
IMPLEMENTATION OF PLAN
4.1 Restructuring Transactions.
(a) Transactions. The Plan contemplates, among other things: (i) the Reorganized Debtors entering into (x) the New First Lien
Term Loan Credit Facility, (y) the Exit Facility and (z) the New Warrant Agreement; (ii) the issuance of New Common Stock; (iii) the issuance of the New Warrants; and (iv) the adoption of the New Organizational Documents and
(where required by applicable law) the filing of the New Organizational Documents with the applicable authorities of the relevant jurisdictions of organization.
(b) Continued Corporate Existence; Vesting of Assets in the Reorganized Debtors. Subject to Article 4.17 of the Plan, on and after the
Effective Date, each of the Reorganized Debtors shall continue to exist as a separate entity in accordance with applicable law in the respective jurisdiction in which it is organized and pursuant to the New Organizational Documents. Notwithstanding
anything to the contrary in the Plan, the Unimpaired Claims against a Debtor shall remain the obligations solely of such Debtor or such Reorganized Debtor and shall not become obligations of any other Debtor or Reorganized Debtor by virtue of the
Plan, the Chapter 11 Cases, or otherwise. Except as otherwise provided in the Plan, on and after the Effective Date, all Assets of the Estates or the Debtors, including all claims, rights and Causes of Action and any property acquired by the Debtors
or the Reorganized Debtors under or in connection with the Plan, shall vest in the Reorganized Debtors free and clear of all Claims, Liens, charges, other encumbrances and Interests other than any Claims, Liens, charges or encumbrances arising or
created under the New First Lien Term Loan Credit Facility and the Exit Facility. On and after the Effective Date, the Reorganized Debtors may operate their business and may use, acquire and dispose of Assets and compromise or settle any Claims and
Causes of Action without supervision of or approval by the Bankruptcy Court and free and clear of any restrictions of the Bankruptcy Code or the Bankruptcy Rules, other than restrictions expressly imposed by the Plan or the Confirmation Order,
provided, however, the Reorganized Debtors will use commercially reasonable efforts to utilize existing vendors after the Effective Date.
4.2 Substantive Consolidation for Plan Purposes Only. The Plan shall serve as a motion by the Debtors seeking entry of a
Bankruptcy Court order substantively consolidating the Debtors’ Estates into a single consolidated Estate, solely for all purposes associated with Confirmation and consummation of the Plan. On the Effective Date, for Plan purposes only, the
Debtors shall be deemed merged into ANV, and (a) all assets and liabilities of the Debtors shall be deemed merged into ANV, (b) all guaranties of any Debtor of the payment, performance, or collection of the obligations of another Debtor
shall be eliminated and cancelled, (c) any obligation of any Debtor and all guaranties thereof executed by one or more of the other Debtors shall be treated as a single obligation, and such guaranties shall be deemed a single Claim against the
consolidated Debtors, (d) all joint obligations of two or more Debtors, and all multiple Claims against such entities on account of such joint obligations shall be treated and Allowed only as a single Claim against the consolidated Debtors and
(e) each Claim filed in the Chapter 11 Cases of any Debtor shall be deemed filed against the consolidated Debtors and a single obligation of the Debtors on and after the Effective Date. Entry of the Confirmation Order will constitute the
approval, pursuant to Bankruptcy Code section 105(a), effective as of the Effective Date, of the deemed substantive consolidation of the Chapter 11 Cases of the Debtors for purposes of voting on, Confirmation of, and distributions under the Plan.
Notwithstanding the foregoing, the deemed consolidation and substantive consolidation (each for Plan purposes only) shall not (other than
for purposes related to funding distributions under the Plan) affect (a) the legal and organizational structure of the Debtors or the Reorganized Debtors, (b) pre- and
27
post-Petition Date guaranties, Liens and security interests that were required to be maintained (i) in connection with any executory contracts or unexpired leases that were entered into
during the Chapter 11 Cases or that have been or will be assumed by the Debtors or (ii) pursuant to the Plan, (c) distributions out of any insurance policies or proceeds of such policies, and (d) the tax treatment of the Debtors.
Furthermore, notwithstanding the foregoing, the deemed consolidation and substantive consolidation (each for Plan purposes only), shall not affect the statutory obligation of each and every Debtor to pay quarterly fees to the U.S. Trustee pursuant
to 28 U.S.C. §1903(a)(6) and Article 10.11 herein.
In the event that the Bankruptcy Court does not order such deemed substantive
consolidation of the Debtors, then except as specifically set forth in the Plan (a) nothing in the Plan or the Disclosure Statement may constitute or be deemed to constitute an admission that one of the Debtors is subject to or liable for any
Claim against any other Debtor, (b) Claims against multiple Debtors may be treated as separate Claims against each applicable Debtor for all purposes (including, without limitation, distributions and voting) and such Claims may be administered
as provided in the Plan, (c) the Debtors may not, nor may they be required to, resolicit votes with respect to the Plan and (d) the Debtors may seek Confirmation of the Plan as if the Plan is a separate Plan for each of the Debtors.
The substantive consolidation effected pursuant to this Article shall not affect, without limitation: (i) the Debtors’ or the
Estates’ (x) defenses to any Claim or Cause of Action, including, without limitation, the ability to assert any counterclaim, (y) setoff or recoupment rights, or (z) requirements for any third party to establish mutuality prior
to substantive consolidation in order to assert a right of setoff against the Debtors or the Estates; or (ii) distributions to the Debtors and/or the Estates out of any insurance policies or the proceeds of such policies.
4.3 New Securities.
(a) New Common Stock. On the Effective Date, Reorganized ANV shall issue the New Common Stock to Holders of Unsecured Claims in
accordance with Article 2.10 of the Plan, subject to dilution on account of: (i) the conversion of the New Second Lien Convertible Notes and (ii) the exercise of the New Warrants. Distribution of New Common Stock hereunder shall together
constitute the issuance of 100% of the New Common Stock that will be issued and outstanding as of the Effective Date. All shares of New Common Stock issued on the Effective Date shall be deemed to have been duly authorized, validly issued, fully
paid and nonassessable, and not to have been issued in violation of any preemptive rights, rights of first refusal or similar rights or any applicable law.
To the extent that Reorganized ANV is required to register the New Common Stock and/or the New Warrants under the Securities Exchange Act or
if the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders shall elect, the Debtors or Reorganized Debtors, as applicable, shall use commercially reasonable efforts to make all such filings and take all such other actions as may
be necessary to register the New Common Stock and/or the New Warrants under the Securities Exchange Act without the need for any further Bankruptcy Court approval. If the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders shall
elect, the Debtors shall use commercially reasonable efforts to make all such filings and take all such other actions as may be necessary to comply with the requirements of each National Securities Exchange for purposes of listing the shares of New
Common Stock and New Warrants on such National Securities Exchange, subject to official notice of issuance.
To the extent that
Reorganized ANV is not required and/or does not elect to register the New Common Stock under the Securities Exchange Act and if the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders shall so elect, the Debtors or Reorganized
Debtors, as applicable, shall use commercially reasonable efforts to make all such filings and take all such other actions as may be necessary to deregister the Existing Equity Interests under the Securities Exchange Act without the need for any
further Bankruptcy Court approval.
28
(b) New Warrants. On the Effective Date, in accordance with Articles 2.12 and 2.14 of the
Plan, Reorganized ANV shall issue to Holders of Allowed Subordinated Securities Claims and Holders of Existing Equity Interests as of the Distribution Record Date, on a Pro Rata basis, warrants to purchase shares of New Common Stock (the
“New Warrants”). The terms, conditions and other provisions of the New Warrants shall be set forth in a new warrant agreement (the “New Warrant Agreement”) that will be entered into by Reorganized ANV on the
Effective Date. The New Warrant Agreement shall contain terms materially consistent with the Existing Equity Interests Treatment Term Sheet and shall otherwise be in form and substance reasonably acceptable to the Debtors, the Requisite Consenting
Noteholders, the Requisite Exit Facility Lenders and the Equity Committee. The New Warrants shall have the following provisions, and such other provisions as are set forth in the New Warrant Agreement:
(1) Warrant Shares. The New Warrants shall be exercisable at any time and from time to time after the Effective Date and prior to the
New Warrant Expiration Date. The New Warrants shall be exercisable into a total number of shares of New Common Stock that is equal to 17.5% of the sum of the Total Share Number plus the number of shares of New Common Stock issued upon
exercise of the New Warrants. The New Warrants must be exercised by payment of the Exercise Price in Cash, except that the New Warrants may be exercised on a cashless basis (i) in connection with (and subject to the consummation of) a Liquidity
Event or (ii) if the New Common Stock is listed for trading on a national securities exchange registered with the Securities Exchange Commission under Section 6(a) of the Securities Exchange Act. Any holder of New Warrants shall, as an
express condition to the exercise thereof, execute a counterpart to the Stockholders Agreement (if the Stockholders Agreement is in effect at the time of such exercise). The New Warrants shall be subject to anti-dilution adjustments consistent with
the Existing Equity Interests Treatment Term Sheet and set forth in the New Warrant Agreement (such adjustments, the “Anti-Dilution Protections”).
(2) Exercise Price. Subject to adjustment consistent with the Anti-Dilution Protections, at any time of exercise, the exercise price
per share of New Common Stock for the New Warrants (the “Exercise Price”) shall be equal to the quotient obtained by dividing (i) the Adjusted Equity Value by (ii) the Total Share Number.
(3) New Warrant Expiration Date. The expiration date of the New Warrants shall occur upon the earlier of (i) the date that is
seven (7) years after the Effective Date and (ii) the date of consummation of a Liquidity Event (such earlier date, the “New Warrant Expiration Date”). The Reorganized Debtors shall use commercially reasonable efforts to
provide to the holders of the New Warrants reasonable prior written notice of any Liquidity Event. The New Warrants shall not receive any payment upon their expiration (i.e., there shall be no Black Scholes protection).
(4) Restrictions on Transfer. If the Reorganized Debtors are not required to register their securities under the Securities Exchange
Act, the New Warrant Agreement and the other documents or certificates evidencing or governing the New Warrants shall include appropriate restrictions such that the sale of the New Warrants would not require the Reorganized Debtors to register any
of their securities under the Securities Exchange Act. If the New Common Stock is listed for trading on a national securities exchange registered with the Securities Exchange Commission under Section 6(a) of the Securities Exchange Act, then
Reorganized ANV will use commercially reasonable efforts to list the New Warrants for trading on such national securities exchange (subject to the listing requirements of such national securities exchange).
(5) No Stockholder Rights. The New Warrants shall not entitle the holder thereof to vote or receive dividends or to be deemed the
holder of capital stock or any other securities of Reorganized ANV, nor shall the New Warrants confer upon the holder thereof (in its capacity as a holder of the New Warrants) any of the rights of a stockholder of Reorganized ANV (including
appraisal rights, any right to vote for the election of directors or upon any matter submitted to stockholders of Reorganized ANV at any meeting thereof, or to receive notice of meetings, or to receive dividends or, except as otherwise provided
pursuant to Purchase Rights, subscription rights or otherwise).
29
(6) Purchase Rights. If, after the Effective Date, Reorganized ANV issues or sells any
equity securities to any Person who was a stockholder of Reorganized ANV on the Effective Date for consideration per share that is greater than the Exercise Price, then each Eligible Holder shall have the right (such right, the “Purchase
Right”) to participate in such issuance or sale on a pro rata basis (based on such Eligible Holder’s percentage ownership of shares of New Common Stock assuming full conversion, exercise or exchange of the New Warrants, the New
Second Lien Convertible Notes (and all indebtedness, debt securities or equity securities issued pursuant to any initial or successive refinancing of the New Second Lien Convertible Notes), and all other outstanding options, warrants, or convertible
securities that also have a pro rata right to participate in such issuance or sale). A holder of New Warrants shall be permitted to transfer such holder’s Purchase Rights to any affiliate or family member of such holder so long as
(i) such affiliate or family member is an Accredited Investor, (ii) such transfer does not violate any securities laws, and (iii) such transfer and/or the exercise of the Purchase Right by such transferee does not result in
Reorganized ANV having more than 400 holders of any class of equity securities or otherwise result in Reorganized ANV being required to register any class of equity securities under the Securities Exchange Act. Eligible Holders shall not be entitled
to Purchase Rights with respect to any of the following exempted issuances: (a) issuances of the New Second Lien Convertible Notes and issuances of equity securities upon conversion of the New Second Lien Convertible Notes, (b) issuances
of equity securities in connection with the refinancing or repayment of any indebtedness or debt securities of any of the Reorganized Debtors, (c) issuances of equity securities to employees, directors, consultants and other service providers
pursuant to an equity compensation plan approved by the New Board, (d) issuances of equity securities by means of a pro rata distribution to all holders of New Common Stock, (e) issuances of equity securities in a public offering,
and (f) issuances of equity securities upon exercise, conversion or exchange of any equity securities that were issued in any issuance described in any of the foregoing exempted issuances. In the event that the sale of equity securities by
Reorganized ANV triggers Purchase Rights, Reorganized ANV shall be permitted to sell all of such equity securities to one or more stockholders of Reorganized ANV without first offering to sell such equity securities to the Eligible Holders pursuant
to their respective Purchase Rights so long as, within a reasonable period of time following the sale of such equity securities to such stockholder(s), Reorganized ANV offers to sell to the Eligible Holders their respective pro rata shares
(as determined in the first sentence of Article 4.3(b)(6) of the Plan) of such equity securities pursuant to their respective Purchase Rights.
(7) Piggyback Registration Rights. If any holder of shares of New Common Stock is granted piggy-back registration rights, the holders
of New Common Stock issued upon exercise of the New Warrants will also be granted piggyback registration rights on substantially the same terms as such other holder.
(8) New Warrant Representative. The Equity Committee shall be entitled to appoint a representative for the holders of the New
Warrants, which representative shall be acceptable to the Debtors, the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders (such representative, the “New Warrant Representative”). The New Warrant Representative
shall have the right to monitor any sale process the Reorganized Debtors may commence in seeking to sell substantially all of their business and operations after the Effective Date solely in an observer capacity (it being understood that the New
Warrant Representative (i) may monitor, observe, attend, and, if requested by the New Board, participate in any discussions or meetings of the New Board or stockholders relating to, any aspect of such sale process or any terms or conditions of
any related sale, but shall have no right to vote on any matter relating to any such sale process or such related sale, and (ii) shall not have any right to monitor, observe, vote on, participate in any discussions or meetings of the New Board
or stockholders relating to, or otherwise be involved with, any other transaction, decision or other matter relating to any of the Reorganized Debtors). The New Warrant Representative shall be required to enter into a confidentiality and non-use
agreement that is acceptable to the Debtors or Reorganized Debtors, the Requisite Consenting Noteholders, the Requisite Exit Facility Lenders and, with respect to any confidentiality and non-use agreement that will be entered into by the New Warrant
Representative on the Effective Date, the Equity Committee. The Reorganized Debtors shall pay the New Warrant Representative the New Warrant Representative Compensation.
30
(c) Section 1145 Exemption. Pursuant to Bankruptcy Code section 1145, the offering,
issuance and distribution of (i) any New Common Stock to the Holders of Unsecured Claims, (ii) any New Warrants to the Holders of Allowed Subordinated Securities Claims and Holders of Existing Equity Interests and (iii) any New Common
Stock or other Securities upon exercise of the New Warrants by the holders thereof, in each such case, shall be exempt from, among other things, the registration and prospectus delivery requirements of Section 5 of the Securities Act and any
other applicable law requiring registration and/or delivery of prospectuses prior to the offering, issuance, distribution, or sale of securities. In addition, any and all (x) New Common Stock issued to the Holders of Unsecured Claims under the
Plan, (y) New Warrants issued to the Holders of Allowed Subordinated Securities Claims and Holders of Existing Equity Interests under the Plan and (z) shares of New Common Stock or other Securities issued upon exercise of the New Warrants
issued under the Plan, in each such case, will be freely tradable by the recipients thereof, subject to: (A) the provisions of Bankruptcy Code section 1145(b)(1) relating to the definition of an underwriter in section 2(a)(11) of the Securities
Act, and compliance with any rules and regulations of the United States Securities and Exchange Commission, if any, applicable at the time of any future transfer of such Securities or instruments; (B) applicable regulatory approval, if any;
(C) in the case of the New Common Stock, the provisions of the New Organizational Documents (including the Stockholders Agreement); and (D) in the case of the New Warrants, the provisions of the New Warrant Agreement.
(d) Section 4(a)(2) Exemption. Pursuant to Section 4(a)(2) of the Securities Act, the offering, issuance, distribution and
sale of New Second Lien Convertible Notes (and the guarantees thereof) and the shares of New Common Stock or other Securities to be received upon conversion thereof shall be exempt from, among other things, the registration and prospectus delivery
requirements of Section 5 of the Securities Act and any other applicable law requiring registration and/or delivery of prospectuses prior to the offering, issuance, distribution or sale of securities. The New Second Lien Convertible Notes (and
the guarantees thereof) and the shares of New Common Stock or other Securities to be received upon conversion thereof may not be transferred or resold absent registration or exemption under the Securities Act or any applicable state securities law.
All New Second Lien Convertible Notes (and the guarantees thereof) issued on the Effective Date and, upon issuance thereof, all shares of New Common Stock or other Securities to be received upon conversion of any New Second Lien Convertible Notes
shall be deemed to have been duly authorized, validly issued, fully paid and nonassessable, and not to have been issued in violation of any preemptive rights, rights of first refusal or similar rights or any applicable law.
4.4 Plan Funding.
(a) New First Lien Term Loan Credit Facility. On the Effective Date, Reorganized ANV will enter into the New First Lien Term Loan
Credit Facility in the form of the New First Lien Term Loan Credit Agreement pursuant to which the New First Lien Term Loans will be incurred in an original aggregate principal amount equal to (i) the total amount of (A) the Secured Swap
Claims plus (B) the Secured ABL Claims less (ii) the aggregate amount of (A) the Secured ABL/Swap Cash Payments, (B) the Secured ABL $10MM Cash Payment and (C) the Secured ABL/Swap Claims Excess Cash Flow Payment. The
payment of the New First Lien Term Loans and other obligations under the New First Lien Term Loan Credit Facility will be guaranteed by all of the direct and indirect domestic subsidiaries of Reorganized ANV. The New First Lien Term Loan Credit
Facility will be secured by liens on substantially all assets of Reorganized ANV and its direct and indirect domestic subsidiaries, subject to exceptions consistent with the Amended and Restated Restructuring Support Agreement and Restructuring Term
Sheet.
(b) Exit Facility. On the Effective Date, Reorganized ANV will enter into the Exit Facility in the form of the New Second
Lien Convertible Notes Definitive Agreement pursuant to which the New Second Lien Convertible Notes will be issued in an original aggregate principal amount equal to the greater of (a) an amount sufficient for Reorganized ANV to have at least
$8.0 million of Cash on the Effective Date after giving pro forma effect to, without duplication, (i) all Cash payments to be made under (A) the Plan or (B) an order of the Bankruptcy Court, in each case whether paid on or in
connection with the Effective Date (excluding, for the avoidance of doubt, New First Lien Term Loan Excess Cash Flow Payments), (ii) the payment of all Fees accrued through and including the Effective Date and (iii) the payment of any
Compensation Plan Payments and (b) an amount such that the aggregate amount of (i) the
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Cash proceeds of the DIP Facility received by the Debtors prior to the Effective Date plus (ii) the Cash proceeds of the Exit Facility not used to pay the DIP Facility Consideration
equals $65.0 million; provided, however, that in no event shall the Exit Facility Lenders be obligated to fund amounts under clause (a) above which would cause the aggregate principal amount of the New Second Lien Convertible
Notes issued pursuant to the Exit Facility on the Effective Date to exceed $80.0 million. The payment of the New Second Lien Convertible Notes will be guaranteed by all of the direct and indirect domestic subsidiaries of Reorganized ANV. The New
Second Lien Convertible Notes, the guarantees by the guarantors in respect thereof and all obligations under the New Second Lien Convertible Notes and such guarantees shall be secured by liens on substantially all assets of the Reorganized Debtors,
subject to limited exceptions that are acceptable to the Requisite Exit Facility Lenders and the Debtors or Reorganized Debtors, as applicable.
(c) Other Plan Funding. Other than as set forth in Articles 4.4(a) and (b) of the Plan, all Cash necessary for the Reorganized
Debtors to make payments required by the Plan shall be obtained from the Debtors’ Cash balances then on hand, after giving effect to the transactions contemplated herein or that occur during the pendency of the Chapter 11 Cases.
4.5 Corporate Governance, Managers, Officers and Corporate Action.
(a) New Organizational Documents. On the Effective Date, the New Organizational Documents, including, upon agreement by the Debtors,
the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders, the Stockholders Agreement, substantially in forms to be filed with the Plan Supplement, shall be deemed to be valid, binding, and enforceable in accordance with their
terms and provisions, such terms and provisions being satisfactory to the Requisite Consenting Noteholders, the Requisite Exit Facility Lenders and the Reorganized Debtors. Any shareholder protections in the Stockholders Agreement shall apply
equally to all Holders of New Common Stock; provided, however, that (i) any such protections may vary based on levels of ownership of New Common Stock, (ii) protections relating to rights to purchase Securities shall be
subject to any such holder being an Accredited Investor and (iii) certain holders of New Common Stock (and not all holders of New Common Stock) may have rights to designate members of the New Board. Any Holder of a Claim that is to be
distributed shares of New Common Stock pursuant to the Plan shall be deemed to have duly executed and delivered to Reorganized ANV a counterpart to the Stockholders Agreement, and the Stockholders Agreement shall be deemed to be a valid, binding and
enforceable obligation of such Holder (including any obligation set forth therein to waive or refrain from exercising any appraisal, dissenters’ or similar rights) even if such Holder has not actually executed and delivered a counterpart
thereof. On the Effective Date, the applicable Reorganized Debtors may enter into and deliver the Registration Rights Agreement, which shall be deemed to be valid, binding, and enforceable in accordance with its terms on those parties set forth in
such agreement.
(b) New Board. Subject to any requirement of Bankruptcy Court approval pursuant to Bankruptcy Code section
1129(a)(5), as of the Effective Date, the New Board shall be the persons identified in the Plan Supplement. On the Effective Date, the directors on the New Board will be comprised of the Chief Executive Officer of the Reorganized Debtors and such
other individuals selected by the Requisite Consenting Noteholders with the consent of the Requisite Exit Facility Lenders, which consent shall not be unreasonably withheld. Pursuant to Bankruptcy Code section 1129(a)(5), the Debtors shall disclose
the identity and affiliations of any person proposed to serve on the New Board after the Confirmation Date and prior to the Effective Date, and to the extent such person is an insider other than by virtue of being a New Board Member, the nature of
any compensation for such person.
(c) Officers of the Reorganized Debtors. On and after the Effective Date, the current officers
of the Debtors shall continue to serve in their same capacity with the Reorganized Debtors in accordance with the Officers’ Employment Agreements, to be assumed under the Plan to the extent set forth in the Schedule of Assumed Executory
Contracts and Unexpired Leases; provided, however, that the assumption of the Officers’ Employment Agreements for the Debtors’ Chief Executive Officer and Chief Financial Officer shall be subject to the consent of the
Requisite Consenting Noteholders and the Requisite Exit Facility Lenders, which consent shall not be unreasonably withheld; provided, further that no Officers’ Employment Agreement shall be assumed or deemed assumed by any of the
Debtors unless the officer party thereto agrees in writing (in the form of an amendment to such Officers’ Employment Agreement) that, from
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and after the date such Officers’ Employment Agreement is assumed, any provision in such Officers’ Employment Agreement that grants or provides such officer with any right to any
Excluded Benefits shall no longer be effective and shall be deleted in its entirety from such Officers’ Employment Agreement and such officer shall no longer be entitled to any benefits, entitlements or rights thereto, such amendment to be in
form and substance acceptable to the applicable officer, the Debtors, the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders.
4.6 Management Incentive Plan/Post-Emergence Key Employee Retention Program. Subject only to the occurrence of the Effective
Date, the Management Incentive Plan and Post-Emergence Key Employee Retention Program shall be effective without any further action by the Reorganized Debtors. For the avoidance of doubt, the Management Incentive Plan and Post-Emergence Key Employee
Retention Program are entirely post-Effective Date compensation plans and awards thereunder, to the extent earned, shall be paid by the Reorganized Debtors. For the avoidance of doubt, the Bankruptcy Court’s Confirmation of the Plan shall not
be deemed to be an approval or authorization of the specific terms of the Management Incentive Plan or the Post-Emergence Key Employee Retention Program.
4.7 Cancellation of Notes, Instruments, and Interests. On the Effective Date, except as otherwise provided for in the Plan or
any agreement, instrument or other document incorporated in the Plan or the Plan Supplement, (i) the promissory notes, share certificates (including treasury stock), the Notes, the Indenture, the Swaps, the Credit Agreement, the Existing Equity
Interests and other instruments or agreements evidencing any Claims or Interests (other than Intercompany Interests), (ii) all options, warrants, calls, rights, puts, awards, commitments or any other agreements of any character to acquire
Claims or Interests and (iii) all registration rights, preemptive rights, rights of first refusal, rights of first offer, co-sale rights and other investor rights governing or relating to any Interests, in any such case shall be deemed
automatically extinguished, cancelled and of no further force and effect, without any further act or action under any applicable agreement, law, regulation, order or rule, and the obligations of the Debtors under the notes, share certificates, the
Notes, the Indenture, the Swaps, the Credit Agreement, the Existing Equity Interests and other instruments evidencing any Claims or Interests (other than Intercompany Interests) shall be automatically discharged. The Holders of or parties to such
cancelled notes, share certificates, Notes, the Indenture, the Swaps, the Credit Agreement, the Existing Equity Interests and other agreements and instruments shall have no rights arising from or relating to such notes, share certificates, Notes,
Indenture, Swaps, Credit Agreement, Existing Equity Interests and other agreements and instruments or the cancellation thereof, except the rights provided pursuant to the Plan. Notwithstanding the foregoing, (a) (i) the Notes and Indenture
shall continue in effect solely for the purpose of (x) allowing the Indenture Trustee or its agents to make distributions to Holders of Notes in accordance with the terms of the Plan and the Confirmation Order and to enforce its rights and
those of the Holders of Notes under the Plan and the Confirmation Order in the Chapter 11 Cases and any appeals; (y) allowing Holders of Notes to receive distributions hereunder; and (z) preserving the rights and liens of the Indenture
Trustee arising under Sections 6.11 and 7.08 of the Indenture with respect to actions taken to perform its obligations under the Plan and the Confirmation Order, and (ii) the Indenture shall terminate completely upon the completion of all
distributions to the Holders of the Notes and the satisfaction in full of any and all obligations to the Indenture Trustee under Section 7.08 of the Indenture and (b) (i) the Credit Agreement shall continue in effect solely for the
purpose of (x) allowing the Administrative Agent or its agents to make distributions to Holders of Secured ABL Claims and Secured Swap Claims and (y) allowing Holders of Secured ABL Claims and Secured Swap Claims to receive distributions
hereunder and (ii) the Credit Agreement shall terminate completely upon the completion of all distributions to the Holders of the Secured ABL Claims. At such time as the Indenture Trustee has completed performance of all of its duties set forth
in the Plan and the Confirmation Order, if any, the Indenture Trustee, and its successors and assigns, shall be relieved of all obligations under the Indenture.
4.8 Cancellation of Liens. On the Effective Date, except as set forth in the Plan, any Lien securing any Claim shall be deemed
released, and the Holder of such Claim shall be authorized and directed to release any collateral or other property of any Debtor (including any cash collateral) held by such Holder and to take such actions as may be requested by the Debtors (or the
Reorganized Debtors, as the case may be) to evidence the release of such Lien, including the execution, delivery and filing or recording of such releases as may be requested by the Debtors (or the Reorganized Debtors, as the case may be).
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4.9 Corporate Action. On and after the Effective Date, the Debtors or the
Reorganized Debtors may take all actions as may be necessary or appropriate to effect any transactions described in, approved by, contemplated by, or necessary to effectuate the Restructuring Transaction under and in connection with the Plan,
including: (a) the execution, delivery and/or filing, as applicable, of appropriate agreements or other documents of merger, consolidation, restructuring, conversion, disposition, transfer, dissolution or liquidation containing terms that are
consistent with the terms of the Plan and that satisfy the applicable requirements of applicable law and any other terms to which the applicable entities may agree; (b) the execution, delivery and/or filing, as applicable, of appropriate
instruments of transfer, assignment, assumption or delegation of any asset, property, right, liability, debt or obligation on terms consistent with the terms of the Plan and having other terms for which the applicable parties agree; (c) the
execution, delivery and/or filing, as applicable, of appropriate certificates or articles of incorporation, reincorporation, merger, consolidation, conversion or dissolution and the New Organizational Documents pursuant to applicable state law;
(d) the issuance and distribution of the shares of New Common Stock as provided for herein; (e) the adoption of the Management Incentive Plan; (f) the issuance and sale of the New Second Lien Convertible Notes (and the guarantees
thereof) as provided for herein and in the New Second Lien Convertible Definitive Agreement, and the issuance and distribution of the shares of New Common Stock or other Securities upon conversion of the New Second Lien Convertible Notes;
(g) the issuance and distribution of the New Warrants as provided for herein, and the issuance and sale of the shares of New Common Stock or other Securities upon exercise of the New Warrants; and (h) all other actions that may be required
by applicable law, subject, in each case, to the New Organizational Documents. All matters provided for in the Plan involving the corporate structure of the Debtors, and any corporate action required by the Debtors in connection therewith, shall be
deemed to have occurred on, and shall be in effect as of, the Effective Date, without any requirement of further action by the security holders, directors, managers, authorized persons or officers of the Debtors. The authorizations and approvals
contemplated by Article 4.9 of the Plan shall be effective notwithstanding any requirements under nonbankruptcy law.
4.10 New First
Lien Term Loan Credit Facility, New Intercreditor Agreement, Exit Facility and New Warrant Agreement. On the Effective Date, without any requirement of further action by the security holders, directors, managers, authorized persons or
officers of the Debtors, the Reorganized Debtors shall be authorized to enter into, perform their obligations under, and consummate the transactions contemplated by, the New First Lien Term Loan Credit Facility, the New Intercreditor Agreement, the
Exit Facility, the New Warrant Agreement and any notes, documents, instruments, certificates or agreements in connection therewith, including, without limitation, any documents required in connection with the creation, perfection or priority of the
Liens on any collateral securing the New First Lien Term Loan Credit Facility and/or the Exit Facility.
4.11 Effectuating
Documents; Further Transactions. On and after the Effective Date, the Reorganized Debtors and the officers and members of the boards of managers or directors thereof, are authorized to and may issue, execute, deliver, file or record such
contracts, securities, instruments, releases and other agreements or documents and take such actions as may be necessary or appropriate to effectuate, implement and further evidence the terms and conditions of the Plan and the securities issued
pursuant to the Plan in the name of and on behalf of the Reorganized Debtors, without the need for any approvals, authorization, or consents except for those expressly required pursuant to the Plan.
4.12 Exemption from Certain Transfer Taxes and Recording Fees. To the fullest extent permitted by Bankruptcy Code
section 1146(a), any transfer from a Debtor to a Reorganized Debtor or to any entity pursuant to, in contemplation of, or in connection with the Plan or pursuant to: (a) the issuance, distribution, transfer, or exchange of any debt, securities,
or other interest in the Debtors or the Reorganized Debtors; (b) the creation, modification, consolidation, or recording of any mortgage, deed of trust or other security interest, or the securing of additional indebtedness by such or other
means; (c) the making, assignment, or recording of any lease or sublease; or (d) the making, delivery, or recording of any deed or other instrument of transfer under, in furtherance of, or in connection with, the Plan, including any deeds,
bills of sale, assignments, or other instrument of transfer executed in connection with any transaction arising out of, contemplated by, or in any way related to the Plan, shall not be subject to any document recording tax, stamp tax, conveyance
fee, intangibles, or similar tax, mortgage tax, real estate transfer tax, mortgage recording tax, sales or use tax, Uniform Commercial Code filing or recording fee, regulatory filing or
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recording fee, or other similar tax or governmental assessment, and the appropriate state or local governmental officials or agents shall forego the collection of any such tax or governmental
assessment and to accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax or governmental assessment.
4.13 No Further Approvals. The transactions contemplated by the Plan shall be approved and effective as of the Effective Date
without the need for any further state or local regulatory approvals or, unless otherwise required by the Plan, approvals by any non-Debtor parties, and without any requirement for further action by the Debtors, Reorganized Debtors, or any entity
created to effectuate the provisions of the Plan.
4.14 Dissolution of Committees. The Creditors Committee and the Equity
Committee shall continue in existence until the Effective Date to exercise those powers and perform those duties specified in Bankruptcy Code section 1103 and shall perform such other duties as they may have been assigned by the Bankruptcy Court
prior to the Effective Date. On the Effective Date, the Creditors Committee and the Equity Committee shall be dissolved and the Creditors Committee’s and Equity Committee’s members shall be deemed released of all their duties,
responsibilities, and obligations arising from or related to the Chapter 11 Cases, and the retention or employment of the Creditors Committee’s and Equity Committee’s Professionals shall terminate, except with respect to any Professional
Fee Claim. After the Effective Date, the Creditors Committee, the Creditors Committee’s Professionals, the Equity Committee and the Equity Committee’s Professionals shall not be entitled to compensation or reimbursement of expenses from
the Reorganized Debtors for any services incurred after the Effective Date, except for services rendered or expenses incurred with respect to any Professional Fee Claim.
4.15 Creditor Representative.
(a) On or before the filing of the Plan Supplement, the Creditor Representative shall be selected by the Creditors Committee. Prior to the
Confirmation Date, the Person designated as Creditor Representative shall file an affidavit demonstrating that such Person is disinterested. If approved by the Bankruptcy Court in the Confirmation Order, the Person so designated shall become the
Creditor Representative on the Effective Date. Notwithstanding anything contained in the Plan to the contrary, as of the Effective Date and thereafter and to the fullest extent permitted by applicable law, the Creditor Representative and its
professionals shall not have nor incur any liability for any claim, cause of action, or other assertion of liability solely for any act taken or omitted in connection with, related to, or arising out of the performance of any act, duty,
responsibility or omission arising under the Plan; provided, however, that the foregoing shall not affect the liability of the Creditor Representative or its professionals that otherwise would result from any act or omission to the
extent that such act or omission is determined by a Final Order to have constituted actual fraud, willful misconduct, or gross negligence.
(b) The Creditor Representative shall have the power to take the actions granted herein and any powers reasonably incidental thereto which
the Creditor Representative, as an agent of the Reorganized Debtors and in its reasonable discretion, deems necessary or appropriate to fulfill the purpose of Article 4.15 of the Plan, including: (i) filing, prosecuting, settling or otherwise
resolving any objection to Convenience Claims or, after consultation with the Reorganized Debtors, any other Unsecured Claims (other than Notes Claims); (ii) monitoring and consulting with the Reorganized Debtors with respect to any sale
process the Reorganized Debtors may commence in seeking to sell substantially all of their business and operations after the Effective Date; and (iii) retaining and paying professionals as necessary to fulfill the purpose of Article 4.15 of the
Plan.
(c) The fees and expenses of the Creditor Representative, including but not limited to the Creditor Representative’s
attorneys and financial advisors, shall be satisfied and paid solely from the Creditor Representative Reserve Account.
(d) On the
Effective Date, the Creditor Representative Reserve Account will be funded by the Debtors with Cash in the amount of $250,000. The Creditor Representative Reserve Account shall be held in trust solely for the post-Effective Date fees and expenses of
the Creditor Representative and its professionals.
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(e) Upon the completion of the Creditor Representative’s duties outlined in Article 4.15(b)
of the Plan and payment of all fees and expenses of the Creditor Representative and its professionals, all remaining funds in the Creditor Representative Reserve Account shall be released and distributed to Holders of Convenience Claims as of the
Distribution Record Date pursuant to Article 2.10 of the Plan.
4.16 Pre-Effective Date Injunctions or Stays. All
injunctions or stays, whether by operation of law or by order of the Bankruptcy Court, provided for in the Chapter 11 Cases pursuant to Bankruptcy Code sections 105 or 362 or otherwise that are in effect on the Confirmation Date shall remain in full
force and effect until the Effective Date.
4.17 Dissolution of Certain Debtors. On the Effective Date, each of the Debtors
identified in the Plan Supplement to be dissolved shall be deemed dissolved and their obligations under Article 5.9 of the Plan assumed by the Reorganized Debtors. On, or as soon as practicable after, the Effective Date, such Debtors shall, and the
officers, directors, members, managers or other similar representatives of such Debtors shall be authorized and directed to: (a) execute, acknowledge and/or file for each such Debtor a certificate of dissolution, articles of dissolution or
similar document, together with all other necessary corporate and company documents, to effect the dissolution of such Debtor under the applicable laws of its state of incorporation or formation (as applicable); (b) complete, execute and file
all final or otherwise required federal, state and local tax returns for each such Debtor, and pursuant to Bankruptcy Code section 505(b), request an expedited determination of any unpaid tax liability of such Debtor or its Estate for any tax
incurred during the administration of such Debtor’s Chapter 11 Case, as determined under applicable tax laws; and (c) take such other actions as the Debtors may determine to be necessary or desirable to carry out this provision, in each
case (other than any relief sought under Bankruptcy Code section 505(b)) without the need for any further Bankruptcy Court approval. All actions necessary to effectuate such dissolutions shall be deemed authorized and approved in all respects
without further action under applicable law, regulation, order or rule, including, without limitation, any action by the stockholders, members, board of directors, board of managers or other governing body of each such Debtor. Upon the dissolution
of any such Debtor, the Reorganized Debtors shall be entitled to seek to obtain a final decree closing the Chapter 11 Case of such Debtor.
ARTICLE V
EXECUTORY
CONTRACTS AND UNEXPIRED LEASES
5.1 Assumption and Rejection of Executory Contracts and Unexpired
Leases. Except as otherwise set forth herein, all executory contracts or unexpired leases of the Debtors shall be deemed rejected in accordance with the provisions and requirements of Bankruptcy Code sections 365 and 1123 as of the Effective
Date, unless such executory contract or unexpired lease: (a) was previously assumed or rejected by the Debtors; (b) previously expired or terminated pursuant to its terms; (c) is the subject, as mutually agreed to by the Debtors, the
Requisite Consenting Noteholders and the Requisite Exit Facility Lenders, of a motion to assume or reject filed by the Debtors under Bankruptcy Code section 365 pending as of the Effective Date; or (d) is designated specifically or by category
on the Schedule of Assumed Executory Contracts and Unexpired Leases, as reasonably agreed to by the Debtors, the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders. Entry of the Confirmation Order by the Bankruptcy Court shall
constitute approval of such respective assumptions and rejections pursuant to Bankruptcy Code sections 365(a) and 1123.
5.2
Cure of Defaults for Assumed Executory Contracts and Unexpired Leases. The proposed cure amount for an executory contract or unexpired lease that is assumed pursuant to this Plan shall be zero dollars unless otherwise indicated in a
Schedule of Assumed Executory Contracts and Unexpired Leases. Cure obligations, if any, shall be satisfied, pursuant to Bankruptcy Code section 365(b)(1), by payment of the cure amount in Cash on the Effective Date or on such other terms as the
parties to such executory contract or unexpired lease may otherwise agree. In the event of a dispute regarding (a) the
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amount of any cure payments, (b) the ability of the Reorganized Debtors to provide “adequate assurance of future performance” (within the meaning of Bankruptcy Code section 365)
under the executory contract or unexpired lease to be assumed or (c) any other matter pertaining to assumption, any cure payments required by Bankruptcy Code section 365(b)(1) shall be made following entry of a Final Order resolving the dispute
and approving the assumption; provided, however, that following the resolution of any such dispute, the Debtors or Reorganized Debtors shall have the right to reject such executory contract or unexpired lease, with any such rejection
by the Debtors to be subject to the consent of the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders, such consent not to be unreasonably withheld.
5.3 No Change in Control, Assignment or Violation. To the extent applicable, any executory contracts or unexpired leases,
including related instruments and agreements, assumed during the Chapter 11 Cases, including those assumed pursuant to Article V of the Plan, shall be deemed modified such that the transactions contemplated by the Plan shall not constitute a
“change of control” or “assignment” (or terms with similar effect) under, or any other transaction or matter that would result in a violation, breach or default under, or increase, accelerate or otherwise alter any obligations or
liabilities of the Debtors or the Reorganized Debtors under, or result in the creation or imposition of a Lien upon any property or asset of the Debtors or the Reorganized Debtors pursuant to, the applicable executory contract or unexpired lease,
and any consent or advance notice required under such executory contract or unexpired lease shall be deemed satisfied by Confirmation. For the avoidance of doubt, the transactions contemplated by the Plan shall not result in the payment or provision
of, and no officer party to any Officers’ Employment Agreement shall be entitled or have any right to receive, any Excluded Benefits.
5.4 Modifications, Amendments, Supplements, Restatements, or Other Agreements. Unless otherwise provided in the Plan, each
executory contract or unexpired lease that is assumed shall include all modifications, amendments, supplements, restatements, or other agreements that in any manner affect such executory contract or unexpired lease, and all executory contracts and
unexpired leases related thereto, if any, including all easements, licenses, permits, rights, privileges, immunities, options, rights of first refusal, and any other interests, unless any of the foregoing agreements has been previously rejected or
repudiated or is rejected or repudiated under the Plan. Except to the extent a Final Order provides otherwise, modifications, amendments, supplements and restatements to prepetition executory contracts and unexpired leases that have been executed by
the Debtors during the Chapter 11 Cases shall not be deemed to alter the prepetition nature of the executory contract or unexpired lease, or the validity, priority, or amount of any Claims that may arise in connection therewith.
5.5 Rejection and Repudiation of Executory Contracts and Unexpired Leases. On the Effective Date, each executory contract and
unexpired lease that is not listed on the Schedule of Assumed Executory Contracts and Unexpired Leases shall be deemed rejected or repudiated pursuant to Bankruptcy Code section 365. Each contract or lease not listed on the Schedule of Assumed
Executory Contracts and Unexpired Leases shall be rejected only to the extent that such contract or lease constitutes an executory contract or unexpired lease. Until the Effective Date, the Debtors, with the consent of the Requisite Consenting
Noteholders and the Requisite Exit Facility Lenders, which consent shall not be unreasonably withheld, expressly reserve their right to amend the Schedule of Assumed Executory Contracts and Unexpired Leases to delete any executory contract or
unexpired lease therefrom or to add any executory contract or unexpired lease thereto. Listing a contract or lease on the Schedule of Assumed Executory Contracts and Unexpired Leases shall not constitute an admission by the Debtors or Reorganized
Debtors that such contract or lease is an executory contract or unexpired lease or that such Debtor or Reorganized Debtor has any liability thereunder. The Debtors, with the consent of the Requisite Consenting Noteholders and the Requisite Exit
Facility Lenders, which consent shall not be unreasonably withheld, or Reorganized Debtors, as applicable, may abandon any personal property that may be located at any premises that are subject to any rejected unexpired lease.
5.6 Claims Based on Rejection or Repudiation of Executory Contracts and Unexpired Leases. If the rejection or repudiation of an
executory contract or unexpired lease pursuant to the Plan results in a Claim, then such Claim shall be forever barred and shall not be enforceable against the Debtors or Reorganized Debtors or their properties, or any of their interests in
properties as agent, successor or assign, unless a Proof of Claim is filed with the Claims and Noticing Agent and served upon counsel to the
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Reorganized Debtors within thirty (30) days after the later of (i) service of the Confirmation Order and (ii) service of notice of the effective date of rejection or repudiation of
the executory contract or unexpired lease. Each Holder of a Capital Lease Deficiency Claim shall aggregate its Capital Lease Deficiency Claims and be deemed to have one Claim for purposes of voting, making a Convenience Claim Election, and
distributions under the Plan.
5.7 Limited Extension of Time to Assume or Reject. In the event of a dispute as to whether a
contract or lease is executory or unexpired, the right of the Debtors or Reorganized Debtors, as applicable, to move to assume or reject such contract or lease shall be extended until the date that is thirty (30) days after the entry of a Final
Order by the Bankruptcy Court determining that the contract or lease is executory or unexpired. The deemed assumptions and rejections provided for in Article V of the Plan shall not apply to such contract or lease.
5.8 Employee Compensation and Benefit Programs; Deferred Compensation Programs. The Debtors’ ordinary course employee
benefit programs (including, without limitation, its savings plans, retirement plans (including the supplemental executive retirement program), healthcare plans, disability plans, life, accidental death and dismemberment insurance plans, and
short-term cash-based bonus program applicable to hourly employees of the Debtors and paid on a quarterly basis) that are reasonably agreed to by the Debtors, the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders and which are
(i) entered into before the Petition Date and (ii)(a) not since terminated or (b) not expressly rejected under the Plan (such employee benefit programs, collectively, the “Specified Employee Benefits Programs”), shall
survive Confirmation and will be fulfilled in the ordinary course of business; provided, however, that Specified Employee Benefits Programs shall in no event include (v) any equity based (including any phantom equity) compensation
plan, (w) any Excluded Benefits, (x) any Excluded Indemnification Agreements (as defined in Article 5.9 of the Plan), (y) the Non-Insider KEIP and (z) any and all incentive plans available to the Debtors’ employees that
existed prior to the Petition Date other than the Debtors’ short-term cash-based bonus program applicable to hourly employees of the Debtors, which is paid on a quarterly basis, or the Debtors’ supplemental executive retirement program.
From and after the Effective Date, the Reorganized Debtors shall have the right to terminate, amend or modify any of the Specified Employee Benefits Programs without approval of the Bankruptcy Court.
5.9 Survival of Certain Indemnification and Reimbursement Obligations. Except as otherwise provided by the Plan, any and all
respective obligations, whether pursuant to indemnification agreements, certificates of incorporation, codes of regulation, by-laws, limited liability company agreements, operating agreements, limited liability partnership agreements, or any
combination of the foregoing, of the Debtors for indemnification, reimbursement and advancement of expenses and other similar payments customarily found in such agreements in place for persons who are current or former directors, officers, employees
and agents of any of the Debtors as of the Petition Date (collectively, the “Indemnity Obligations”) shall survive Confirmation and shall be Reinstated, shall remain unaffected by the Plan, and shall not be discharged or Impaired by
the Plan, irrespective of whether the indemnification, reimbursement or advancement obligation is owed in connection with any event occurring before, on or after the Petition Date, it being understood that all indemnification provisions in place on
and prior to both the Petition Date and the Effective Date for directors, officers, members, managers or employees and agents of the Debtors as of the Petition Date shall survive the effectiveness of the Plan for claims related to or in connection
with any actions, omissions or transactions prior to the Effective Date (including prior to the Petition Date); provided, however, that the assumption by the Debtors of any of the Indemnity Obligations shall not be deemed an assumption
by the Debtors of any contract, agreement, resolution, instrument or document in which such Indemnity Obligations are contained, memorialized, agreed to, embodied or created (or any of the terms or provisions thereof) if such contract, agreement,
resolution, instrument or document requires the Debtors or the Reorganized Debtors to make any payments or provide any arrangements (including any severance payments) to any such director, officer, employee or agent other than indemnification
payments, reimbursement and advancement of expenses and other similar payments (such contracts, agreements, resolutions, instruments and documents, collectively, the “Excluded Indemnification Agreements”). For the avoidance of
doubt, nothing in this Article 5.9 shall be a determination of the allowance, disallowance or priority of the Claims, if any, of any directors, officers, members, managers, managing members, employees or agents of any of the Debtors that served in
such capacity only prior to the Petition Date.
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5.10 Insurance Policies. All insurance policies pursuant to which the Debtors have
any obligations in effect as of the date of the Confirmation Order shall be deemed and treated as executory contracts pursuant to the Plan and shall be assumed by the respective Debtors and shall continue in full force and effect. In addition, the
Debtors or Reorganized Debtors, as applicable, shall obtain and maintain tail coverage for current and former directors and officers for a period of at least six (6) years after the Effective Date.
ARTICLE VI
PROCEDURES FOR RESOLVING AND TREATING CONTESTED CLAIMS AND INTERESTS
6.1 Objections to Claims and Interests. Prior to the Effective Date, the Debtors or any other party in interest may object to
the allowance of any Claim or Interest (unless previously Allowed by an order of the Bankruptcy Court or expressly Allowed pursuant to the terms of the Plan) or Professional Fee Claim. After the Effective Date, only the Reorganized Debtors may
object to the allowance of any Claim or Interest (unless previously Allowed by an order of the Bankruptcy Court or expressly Allowed pursuant to the terms of the Plan) or Professional Fee Claim; provided, however, that the U.S.
Trustee, the Creditors Committee and the Equity Committee may object to the allowance of any Professional Fee Claim. Any objections to those Claims (other than Administrative Expense Claims) or Interests shall be served and filed on or before the
later of: (a) the date that is 180 days after the Effective Date; and (b) such other date as may be fixed by the Bankruptcy Court, whether fixed before or after the date specified in clause (a) hereof. Any Claims or Interests filed
after the applicable Bar Date, shall be deemed disallowed and expunged in their entirety without further order of the Bankruptcy Court or any action being required on the part of the Debtors or the Reorganized Debtors, unless the Person wishing to
file such untimely Claim or Interest has received the Bankruptcy Court’s authorization to do so. Notwithstanding any authority to the contrary, an objection to a Claim or Interest shall be deemed properly served on the claimant or interest
holder, as applicable, if the objecting party effects service in any of the following manners: (i) in accordance with Federal Rule of Civil Procedure 4, as modified and made applicable by Bankruptcy Rule 7004; (ii) by first class mail,
postage prepaid, on the signatory on the Proof of Claim or Proof of Interest as well as all other representatives identified in the Proof of Claim or Proof of Interest or any attachment thereto; or (iii) if counsel has agreed to accept service,
by first class mail, postage prepaid, on any counsel that has appeared on the claimant’s or interest holder’s behalf in the Chapter 11 Cases (so long as such appearance has not been subsequently withdrawn). From and after the Effective
Date, the Reorganized Debtors may settle or compromise any Disputed Claim or Disputed Interest without approval of the Bankruptcy Court. For the avoidance of doubt, the Reorganized Debtors shall reconcile Unsecured Claims (other than Notes Claims)
in cooperation with the Creditor Representative as set forth in Article 4.15 of the Plan.
6.2 Amendment to Claims and
Interests. From and after the Effective Date, no Proof of Claim or Proof of Interest may be amended to increase or assert additional claims or interests not reflected in a previously timely filed Claim (or Claim scheduled on the applicable
Debtor’s Schedules, unless superseded by a filed Claim) or Interest (or Interest scheduled on the applicable Debtor’s Schedules, unless superseded by a filed Interest), and any such Claim or Interest shall be deemed disallowed and expunged
in its entirety without further order of the Bankruptcy Court or any action being required on the part of the Debtors or the Reorganized Debtors unless the claimant or interest holder has obtained the Bankruptcy Court’s prior approval to file
such amended or increased claim or interest.
6.3 Disputed Claims and Disputed Interests. Disputed Claims and Disputed
Interests shall not be entitled to any Plan distributions unless and until they become Allowed Claims or Allowed Interests.
6.4
Estimation of Claims. The Debtors and/or Reorganized Debtors, in consultation with the Creditors Committee or the Creditor Representative, as applicable, with respect to Unsecured Claims (other than Notes Claims), may request that the
Bankruptcy Court enter an order estimating any Claim, pursuant to Bankruptcy Code section 502(c), for purposes of determining the Allowed amount of such
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Claim (the “Estimated Amount”) regardless of whether any Person has previously objected to such Claim or whether the Bankruptcy Court has ruled on any such objection;
provided, however, that the Debtors and/or Reorganized Debtors may not request estimation of a non-contingent, liquidated Claim if the Debtors’ and/or Reorganized Debtors’ objection to such Claim was previously overruled. The
Bankruptcy Court shall retain jurisdiction to estimate any Claim at any time (including during the pendency of any appeal with respect to the allowance or disallowance of such Claims). In the event that the Bankruptcy Court estimates any contingent
or unliquidated Claim for allowance purposes, that estimated amount will constitute either the Allowed amount of such Claim or a maximum limitation on such Claim, as determined by the Bankruptcy Court. If the estimated amount constitutes a maximum
limitation on such Claim, the objecting party may elect to pursue any supplemental proceedings to object to any ultimate allowance of such Claim. All of the objection, estimation, settlement, and resolution procedures set forth in the Plan are
cumulative and not exclusive of one another. Claims may be estimated and subsequently compromised, settled, resolved or withdrawn by any mechanism approved by the Bankruptcy Court. For the avoidance of doubt, the Reorganized Debtors shall reconcile
Unsecured Claims (other than Notes Claims) in cooperation with the Creditor Representative as set forth in Article 4.15 of the Plan.
6.5
Expenses Incurred on or After the Effective Date. Except as otherwise ordered by the Bankruptcy Court, and subject to the written agreement of the Reorganized Debtors, the amount of any reasonable fees and expenses incurred by any
Professional or the Claims and Noticing Agent on or after the Effective Date in connection with implementation of the Plan, including without limitation, reconciliation of, objection to, and settlement of Claims and Interests, shall be paid in Cash
by the Reorganized Debtors.
ARTICLE VII
DISTRIBUTIONS
7.1
Manner of Payment and Distributions under the Plan. Except as otherwise provided herein, all distributions under the Plan with respect to Allowed Claims and Allowed Interests shall be made by the Reorganized Debtors or a Distribution
Agent selected by the Reorganized Debtors. The Reorganized Debtors or the Distribution Agent will make initial distributions on account of Allowed Claims and Allowed Interests as of the Distribution Date. If a Claim or Interest is not Allowed as of
the Distribution Date, the Reorganized Debtors or the Distribution Agent will make a distribution to the Holder of such Claim or Interest within a reasonable period of time after such Claim or Interest becomes Allowed. Payments of Cash by the
Reorganized Debtors or the Distribution Agent pursuant to the Plan may be by check drawn on a domestic bank and shall be made to the address of the Holder of such Allowed Claim as most recently indicated on or prior to the Effective Date on the
Debtors’ records. At the option of the Reorganized Debtors or the Distribution Agent, payments may be made in Cash by wire transfer of immediately available funds from a bank.
7.2 Interest and Penalties on Claims. Unless otherwise specifically provided for in the Plan or the Confirmation Order or the
DIP Facility Order, required by applicable bankruptcy law or necessary to render a Claim Unimpaired, postpetition interest and penalties shall not accrue or be paid on any Claims (other than DIP Facility Claims and other than Secured Swap Claims and
Secured ABL Claims as provided in the DIP Facility Order, as applicable), and no Holder of a Claim (other than a DIP Facility Claim, Secured Swap Claim or Secured ABL Claim, as provided in the DIP Facility Order, as applicable) shall be entitled to
interest and penalties accruing on or after the Petition Date through the date such Claim is satisfied in accordance with the terms of the Plan.
7.3 Record Date for Distributions. Under the terms of the Plan, the Distribution Record Date shall be the Confirmation Date,
except with respect to Notes Claims and Existing Equity Interests, in which case, the Distribution Record Date shall be the Effective Date or as soon as reasonably practicable thereafter. None of the Debtors or the Reorganized Debtors will have any
obligation to recognize the transfer of, or the sale of any participation in, any Allowed Claim or Allowed Interest that occurs after the close of business on the Distribution Record Date, and will be entitled for all purposes herein to recognize
and make distributions only to those Holders of Allowed Claims and Allowed Interests that are Holders of such Claims and Interests as of the close of business on the Distribution Record Date. To the extent possible,
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distributions of New Common Stock or Cash to Holders of Allowed Notes Claims, as applicable, and distributions of New Warrants to Holders of Existing Equity Interests, shall be made through the
relevant depository in coordination with the Debtors, the Indenture Trustee and the stock transfer agent, as applicable. The Debtors and the Reorganized Debtors shall be entitled to recognize and deal for all purposes under the Plan with only those
record holders stated on the official claims and interests register as of the close of business on the Distribution Record Date.
7.4
Withholding and Reporting Requirements. In connection with the Plan, the Reorganized Debtors shall comply with all withholding and reporting requirements imposed by federal, state, local and foreign taxing authorities and all
distributions hereunder shall be subject to such withholding and reporting requirements. The Reorganized Debtors shall be authorized to take any and all actions that may be necessary or appropriate to comply with such withholding and reporting
requirements. Notwithstanding the foregoing, each Holder of an Allowed Claim or Allowed Interest that is to receive a distribution hereunder shall have the sole and exclusive responsibility for the satisfaction and payment of any tax obligations
imposed by any government unit, including income, withholding and other tax obligations, on account of such distribution. The Reorganized Debtors have the right, but not the obligation, not to make a distribution until such Holder has made
arrangements satisfactory to the Reorganized Debtors for payment of any such tax obligations. The Reorganized Debtors may require, as a condition to the receipt of a distribution, that the Holder of an Allowed Claim or Allowed Interest complete the
appropriate Form W-8 or Form W-9, as applicable to each Holder. If such Holder fails to comply with such request within one year, such distribution shall be deemed an unclaimed distribution, shall revert to the Reorganized Debtors and such Holder
shall be forever barred from asserting any such Allowed Claim or Allowed Interest against the Debtors or their Assets, the Reorganized Debtors or their Assets or other Assets transferred pursuant to the Plan.
7.5 Setoffs. Except as provided under the Plan, the Debtors and/or Reorganized Debtors may, but shall not be required to, set
off against any Claim or Interest and the payments to be made pursuant to the Plan in respect of such Claim or Interest, any claims of any nature whatsoever that the Debtors may have against the Holder of a Claim or Interest, but neither the
Debtors’ or Reorganized Debtors’ failure to do so nor the allowance of any Claim or Interest hereunder shall constitute a waiver or release by the Debtors or Reorganized Debtors of any such claim the Debtors or Reorganized Debtors may have
against such Holder of a Claim or Interest; provided, however, that such Holder of a Claim or Interest may contest such a set off by the Debtors or Reorganized Debtors, in the Bankruptcy Court or any other court of competent
jurisdiction.
7.6 Allocation of Plan Distributions Between Principal and Interest. To the extent that any Allowed Claim
entitled to distribution under the Plan consists of indebtedness and accrued but unpaid interest thereon, such distributions shall, for all income tax purposes, be allocated first to the principal amount of the Claim (as determined for federal
income tax purposes) and then, to the extent the consideration exceeds the principal amount of the Claim, to the portion of such Claim representing accrued but unpaid interest.
7.7 Surrender of Cancelled Instruments or Securities. Except as otherwise provided herein, as a condition precedent to receiving
any distribution on account of its Allowed Claim or Allowed Interest, each Holder of an Allowed Claim or Allowed Interest based upon an instrument or other security shall be deemed to have surrendered such instrument, security or other documentation
underlying such Claim or Interest and all such surrendered instruments, securities and other documentation shall be deemed cancelled pursuant to Articles 4.7 and 7.7 of the Plan.
7.8 Undeliverable or Returned Distributions. If any Allowed Claim or Allowed Interest distribution is returned to the
Reorganized Debtors or other Distribution Agent as undeliverable, the Reorganized Debtors or other Distribution Agent shall use reasonable efforts to determine the correct address of the Holder of such Claim or Interest. If such reasonable efforts
are unsuccessful, no further distributions shall be made to the Holder of such Claim or Interest unless and until the Reorganized Debtors or other Distribution Agent are notified in writing of such Holder’s then current address. Upon receipt by
the Reorganized Debtors or other Distribution Agent, returned Cash shall not earn any interest or be entitled to any dividends or other accruals of any kind. Any Holder of an Allowed Claim or Allowed Interest that does
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not assert a Claim or Interest pursuant to Article 7.8 of the Plan for a returned distribution within one (1) year after such returned distribution shall be forever barred from asserting any
such Claim or Interest against the Debtors or their property, the Reorganized Debtors or their property or other property transferred pursuant to the Plan. In such cases, any Cash held for distribution on account of such Allowed Claim or Allowed
Interest shall revert to the Reorganized Debtors. Except as provided herein, nothing contained in the Plan shall require the Debtors, the Reorganized Debtors or any other Distribution Agent to attempt to locate any Holder of an Allowed Claim or
Allowed Interest.
7.9 Fractional Distributions. No fractional shares of New Common Stock or fractions of New Warrants or
fractional dollars in Cash of New First Lien Term Loans or New Second Lien Convertible Notes shall be distributed. Where a fractional share of New Common Stock or fraction of a New Warrant would otherwise be called for, the actual issuance shall
reflect a rounding up (in the case of more than .50) of such fraction to the nearest whole share of New Common Stock or whole New Warrant or a rounding down of such fraction (in the case of .50 or less than .50) to the nearest whole share of New
Common Stock or whole New Warrant. Where fractional dollars in Cash of New First Lien Term Loans or New Second Lien Convertible Notes would otherwise be called for, the actual issuance shall reflect a rounding up (in the case of more than .50) of
such fraction to the nearest whole dollar or a rounding down of such fraction (in the case of .50 or less than .50) to the nearest whole dollar.
7.10 Distributions to Administrative Agent. Distributions under the Plan to Holders of Secured ABL Claims shall be made by the
Reorganized Debtors to the Administrative Agent, which, in turn, shall make the distributions to such Holders. The Reorganized Debtors shall reimburse the Administrative Agent for the reasonable fees and expenses incurred by the Administrative Agent
in connection with making distributions to the Holders of Secured ABL Claims.
7.11 Distributions to Indenture Trustee.
Unless otherwise agreed by the Indenture Trustee and the Reorganized Debtors, distributions under the Plan to Holders of Notes Claims shall be made by the Reorganized Debtors to the Indenture Trustee, which, in turn, shall make the distributions to
such Holders. Subject to the Debtors’ receipt of invoices in customary form in connection therewith and without the requirement to file a fee application with the Bankruptcy Court, the Reorganized Debtors shall promptly reimburse the Indenture
Trustee for the reasonable fees and expenses incurred by the Indenture Trustee on and after the Effective Date in connection with the performance of its duties and the exercise of rights and those of the Holders of Notes Claims under the Plan and
Confirmation Order.
7.12 Distributions to Holders of Existing Equity Interests. Holders of Existing Equity Interests shall
not be required to file a Proof of Interest on account of such Interests. The Debtors, through The Depository Trust Company, as depository, will make the distribution of New Warrants to Holders of Existing Equity Interests under Article 2.14 of the
Plan to holders of the existing common stock of ANV as of the Distribution Record Date.
7.13 Miscellaneous Distribution
Provisions.
(a) Foreign Currency Exchange Rate. Except as specifically provided for in the Plan or an order of the
Bankruptcy Court, as of the Effective Date, any Claim asserted in currency other than U.S. dollars automatically shall be deemed converted to the equivalent U.S. dollar value using Bank of America’s noon spot rate as of the Petition Date for
all purposes under the Plan, including voting, allowance and distribution.
(b) Distributions on Non-Business Days. Any payment or
distribution due on a day other than a Business Day shall be made, without interest, on the next Business Day.
(c) Partial
Distributions on Disputed Claims/Interests. The Debtors or the Reorganized Debtors as applicable may, but are not required to, make partial distributions to Holders of Disputed Claims or Disputed Interests for the amount of the undisputed
portion of such Holder’s Disputed Claim or Disputed Interest.
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(d) Disputed Payments. If any dispute arises as to the identity of the Holder of an
Allowed Claim or Allowed Interest entitled to receive any distribution under the Plan, the Reorganized Debtors may retain such distribution until its disposition is determined by a Final Order or written agreement among the interested parties to
such dispute.
(e) Post-Consummation Effect of Evidence of Claims or Interests. Except as otherwise provided herein, notes, stock
certificates, membership certificates, unit certificates, and other evidence of Claims against or Interests in the Debtors shall, effective on the Effective Date, represent only the right to participate in the distributions contemplated by the Plan
and shall not be valid or effective for any other purpose.
(f) Disgorgement. To the extent that any property, including Cash, is
distributed to a Person on account of a Claim that is not an Allowed Claim or Allowed Interest, such property shall be held in trust for and shall promptly be returned to the Reorganized Debtors.
ARTICLE VIII
CONDITIONS PRECEDENT TO EFFECTIVENESS OF THE PLAN
8.1 Conditions to the Effective Date. Consummation of the Plan and the occurrence of the Effective Date are subject to
satisfaction of the following conditions:
(a) The Confirmation Order shall have been entered and not have been stayed or vacated on
appeal.
(b) The Exit Facility Commitment Letter shall not have been terminated and shall be in full force and effect.
(c) The Exit Facility Commitment Order shall have been entered and not have been stayed or vacated on appeal.
(d) The Exit Facility in the form of the New Second Lien Convertible Notes Definitive Agreement shall have been executed, the New Second Lien
Convertible Notes shall have been issued to the Exit Facility Lenders pursuant to the terms of the New Second Lien Convertible Notes Definitive Agreement and all conditions precedent to the consummation of the Exit Facility shall have been waived or
satisfied in accordance with the terms of the Exit Facility Commitment Letter and/or the New Second Lien Convertible Notes Definitive Agreement and the Exit Facility Commitment Order.
(e) The New Warrant Agreement shall have been executed.
(f) The RSA Order shall have been entered and not have been stayed or vacated on appeal.
(g) The Amended and Restated Restructuring Support Agreement shall not have been terminated as to all parties thereto.
(h) All of the schedules, documents, supplements, and exhibits to the Plan shall be in form and substance as required by the Amended and
Restated Restructuring Support Agreement and the Exit Facility Commitment Letter.
(i) The aggregate amount of Administrative Expense
Claims (excluding (x) Professional Fee Claims, (y) post-petition trade payables incurred in the ordinary course of business and (z) claims allowed under Bankruptcy Code section 503(b)(9)) shall not
exceed $5,000,000.00 in the aggregate.
(j) All the Transaction Expenses shall have been paid in full in Cash, as required by the DIP
Facility Order, the Exit Facility Commitment Letter, the Amended and Restated Restructuring Support Agreement and the Restructuring Term Sheet, pursuant to Bankruptcy Code section 1129(a)(4) or otherwise.
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(k) All statutory fees and obligations then due and payable to the Office of the U.S. Trustee
shall have been paid and satisfied.
(l) All governmental and material third party approvals and consents necessary in connection with
the transactions contemplated by the Plan shall have been obtained, not be subject to unfulfilled conditions and be in full force and effect.
8.2 Waiver of Condition. The conditions set forth in Article 8.1 of the Plan may be waived in whole or in part by the
Debtors, subject to the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, and in consultation with the Creditors Committee; provided, that the condition requiring that the Confirmation Order shall
have been entered by the Bankruptcy Court may not be waived.
8.3 Notice of Effective Date. The Debtors shall file with the
Bankruptcy Court a notice of the occurrence of the Effective Date within a reasonable period of time after the conditions in Article 8.1 of the Plan have been satisfied or waived pursuant to Article 8.2 of the Plan.
8.4 Order Denying Confirmation. If the Plan is not consummated, then nothing contained in the Plan shall: (a) constitute a
waiver or release of any Claims against or Interests in the Debtors; (b) prejudice in any manner the rights of the Holder of any Claim against, or Interest in, the Debtors; (c) prejudice in any manner any right, remedy, defense or claim of
the Debtors; (d) be deemed an admission against interest by the Debtors; or (e) constitute a settlement, implicit or otherwise, of any kind whatsoever.
ARTICLE IX
EFFECT OF
THE PLAN ON CLAIMS AND INTERESTS
9.1 Compromise and Settlement of Claims, Interests and Controversies. Pursuant to
Bankruptcy Rule 9019 and in consideration for the distributions and other benefits provided pursuant to the Plan, the provisions of the Plan shall constitute a good faith compromise of all Claims, Interests, and controversies relating to the
contractual, legal, and subordination rights that a Holder of a Claim or Interest may have with respect to any Allowed Claim or Interest, or any distribution to be made on account of such Allowed Claim or Interest. The entry of the Confirmation
Order shall constitute the Bankruptcy Court’s approval of the compromise or settlement of all such Claims, Interests, and controversies, as well as a finding by the Bankruptcy Court that such compromise or settlement is in the best interests of
the Debtors, their Estates, and Holders of Claims and Interests and is fair, equitable, and reasonable.
9.2 Discharge of Claims and
Termination of Interests.
(a) As of the Effective Date, except as otherwise provided in the Plan or the Confirmation Order,
the rights afforded under the Plan and the treatment of Claims and Interests under the Plan shall be in exchange for and in complete satisfaction, discharge and release of all Claims and satisfaction or termination of all Interests. Except as
otherwise provided in the Plan or the Confirmation Order, Confirmation shall, as of the Effective Date: (i) discharge the Debtors and the Reorganized Debtors from all Claims or other debts that arose before the Effective Date, whether
liquidated or unliquidated, fixed or contingent, matured or unmatured, and all debts of the kind specified in Bankruptcy Code sections 502(g), 502(h) or 502(i), in each case whether or not (w) a Proof of Claim is filed or deemed filed pursuant
to Bankruptcy Code section 501, (x) a Claim based on such debt is Allowed pursuant to Bankruptcy Code section 502, (y) the Holder of a Claim based on such debt has accepted the Plan or (z) such Claim is listed in the Schedules; and
(ii) satisfy, terminate or cancel all Interests and other rights of equity security holders in the Debtors other than the Intercompany Interests.
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(b) As of the Effective Date, except as otherwise provided in the Plan or the Confirmation
Order, all Persons shall be precluded from asserting against the Debtors or the Reorganized Debtors, or their respective successors or property, any other or further Claims, demands, debts, rights, causes of action, liabilities or equity interests
based upon any act, omission, transaction or other activity of any kind or nature that occurred prior to the Effective Date. In accordance with the foregoing, except as provided in the Plan or the Confirmation Order, the Confirmation Order will be a
judicial determination, as of the Effective Date, of a discharge of all such Claims and other debts and liabilities against the Debtors and satisfaction, termination or cancellation of all Interests and other rights of equity security holders in the
Debtors, pursuant to Bankruptcy Code sections 524 and 1141, and such discharge will void any judgment obtained against the Debtors or the Reorganized Debtors at any time, to the extent that such judgment relates to a discharged Claim.
9.3 Injunction. Except as otherwise provided in the Plan or the Confirmation Order, as of the Effective Date, all Persons that have
held, currently hold or may hold a Claim or other debt or liability that is discharged or an Interest or other right of an equity security holder that is terminated pursuant to the terms of the Plan are permanently enjoined from taking any of the
following actions on account of any such discharged Claims, debts or liabilities or terminated Interests or rights: (i) commencing or continuing in any manner any action or other proceeding against the Debtors or the Reorganized Debtors or
their respective property; (ii) enforcing, attaching, collecting or recovering in any manner any judgment, award, decree or order against the Debtors or the Reorganized Debtors or their respective property; (iii) creating, perfecting or
enforcing any lien or encumbrance against the Debtors or the Reorganized Debtors or their respective property; (iv) asserting a setoff, right of subrogation or recoupment of any kind against any debt, liability or obligation due to the Debtors
or the Reorganized Debtors or their respective property; and (v) commencing or continuing any action, in any manner, in any place that does not comply with or is inconsistent with the provisions of the Plan. Notwithstanding anything contained
in the Confirmation Order or the Plan to the contrary, any rights of Holders of Claims under Bankruptcy Code section 553(a) or other applicable law to assert any counterclaims, cross claims, setoff and/or recoupment rights that they may have under
applicable law shall not be impaired by the Confirmation Order or the Plan, and subject to applicable law may be asserted and/or exercised after the Effective Date.
9.4 Releases.
(a) Debtor Releases. Notwithstanding anything contained herein to the contrary, on the Confirmation Date and effective as of the
Effective Date and to the fullest extent permitted by applicable law, for good and valuable consideration provided by each of the Released Parties, the adequacy of which is hereby confirmed, the Released Parties are deemed released and discharged by
the Debtors and their Estates from any and all claims, interests, obligations, rights, suits, damages, causes of action, remedies, and liabilities whatsoever, including any derivative claims, whether known or unknown, foreseen or unforeseen,
existing or hereinafter arising, in law, equity, or otherwise, based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the Debtors’ restructuring, the Restructuring Transaction, the Chapter 11 Cases, the DIP
Facility, the Exit Facility, the purchase, sale, or rescission of the purchase or sale of any security of the Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the
business or contractual arrangements between any Debtor and any Released Party, the restructuring of Claims and Interests prior to or during the Chapter 11 Cases, the negotiation, formulation, or preparation of the Plan, the Disclosure Statement,
the Plan Supplement, the Original Restructuring Support Agreement, the Amended and Restated Restructuring Support Agreement, the Restructuring Documents, or any related agreements, instruments, or other documents, upon any other act or omission,
transaction, agreement, event, or other occurrence taking place on or before the Effective Date, other than claims or liabilities arising out of or relating to any act or omission of a Released Party that constitutes actual fraud, willful misconduct
or gross negligence.
(b) Released Parties Releases. Notwithstanding anything contained herein to the contrary, on the
Confirmation Date and effective as of the Effective Date and to the
45
fullest extent permitted by applicable law, the Released Parties and any Holders of Claims of or Interests in the Debtors who vote to accept the Plan or who vote to reject the Plan and
do not elect to opt-out of the releases are deemed to have released and discharged the other Released Parties, the Debtors and their Estates from any and all claims, interests, obligations, rights, suits, damages, causes of action, remedies, and
liabilities whatsoever, including any derivative claims, asserted on behalf of any Debtor, whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity, or otherwise, that any such Released Party or any such
Holder of Claims of or Interests in the Debtors would have been legally entitled to assert (whether individually or collectively), based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the Debtors’
restructuring, the Restructuring Transaction, the Chapter 11 Cases, the DIP Facility, the Exit Facility, the purchase, sale, or rescission of the purchase or sale of any security of the Debtors, the subject matter of, or the transactions or events
giving rise to, any Claim or Interest that is treated in the Plan, the business or contractual arrangements between any Debtor and (i) any Released Party or (ii) any Holder of Claims of or Interests in the Debtors who votes to accept the
Plan or who votes to reject the Plan and does not elect to opt-out of the releases, the restructuring of Claims and Interests prior to or in the Chapter 11 Cases, the negotiation, formulation, or preparation of the Plan, the Disclosure Statement,
the Plan Supplement, the Original Restructuring Support Agreement, the Amended and Restated Restructuring Support Agreement, the Restructuring Documents, or any related agreements, instruments, or other documents, upon any other act or omission,
transaction, agreement, event, or other occurrence taking place on or before the Effective Date, other than claims or liabilities arising out of or relating to any act or omission of a Released Party that constitutes actual fraud, willful
misconduct, or gross negligence.
9.5 Exculpation. Notwithstanding anything contained herein to the contrary, on the
Confirmation Date and effective as of the Effective Date and to the fullest extent permitted by applicable law, the Exculpated Parties shall not have nor incur any liability for any claim, cause of action, or other assertion of liability solely for
any act taken or omitted during the Chapter 11 Cases in or in connection with, related to, or arising out of the Restructuring Transaction, the Chapter 11 Cases, the DIP Facility, the Exit Facility, the Original Restructuring Support Agreement, the
Amended and Restated Restructuring Support Agreement, the negotiation, formulation, preparation, administration, consummation and/or implementation of the Plan or any contract, instrument, document, or other agreement entered into in connection with
the Plan (including the Restructuring Documents) or any other matter relating to the Debtors or their operations; provided, however, that the foregoing exculpation shall not affect the liability of any Exculpated Party that otherwise
would result from any act or omission to the extent that such act or omission is determined by a Final Order to have constituted actual fraud, willful misconduct, or gross negligence.
9.6 Preservation of Insurance. The Debtors’ discharge, exculpation and release, and the exculpation and release in favor of
the Released Parties and Exculpated Parties, as provided herein, shall not diminish or impair any rights that a Holder of Claims or Interests may have against existing insurance maintained by the Debtors for (a) themselves, (b) their
current and former directors and officers, or (c) any other Person.
9.7 Retention and Enforcement of Causes of Action.
Except as otherwise provided in the Plan, or in any document, instrument, release or other agreement entered into in connection with the Plan, in accordance with Bankruptcy Code section 1123(b), the Debtors and their Estates shall retain the Causes
of Action, including, without limitation, the Causes of Action identified in the Plan Supplement (the “Retained Causes of Action”). The Reorganized Debtors, as the successors in interest to the Debtors and their Estates, may
enforce, sue on, settle or compromise (or decline to do any of the foregoing) any or all Causes of Action, including the Retained Causes of Action. The Debtors or the Reorganized Debtors expressly reserve all rights to prosecute any and all Causes
of Action, including the Retained Causes of Action against any Person, except as otherwise expressly provided in the Plan, and no preclusion doctrine, including the doctrines of res judicata, collateral estoppel, issue preclusion, claim preclusion,
estoppel (judicial, equitable or otherwise), or laches, shall apply to such Cause of Action or Retained Cause of Action upon, after, or as a consequence of Confirmation or the occurrence of the Effective Date.
46
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Retention of Jurisdiction. Following the Effective Date, the Bankruptcy Court shall retain jurisdiction over all matters
arising from or relating to the Chapter 11 Cases to the fullest extent of applicable law, including, without limitation:
(a) To
determine the validity under any applicable law, allowability, classification and priority of Claims and Interests upon objection, or to estimate, pursuant to Bankruptcy Code section 502(c) or as provided for in the Plan, the amount of any Claim
that is, or is anticipated to be, contingent or unliquidated as of the Effective Date;
(b) To construe and to take any action authorized
by the Bankruptcy Code and requested by the Reorganized Debtors or any other party in interest to enforce all orders previously entered by the Bankruptcy Court, the Plan and the documents and agreements filed and/or executed in connection with the
Plan, issue such orders (including those which may relate to injunctive relief) as may be necessary for the implementation, execution and consummation of the Plan, and to ensure conformity with the terms and conditions of the Plan, such documents
and agreements and other orders of the Bankruptcy Court, notwithstanding any otherwise applicable non-bankruptcy law;
(c) To determine
any and all applications for allowance of Professional Fee Claims, and to determine any other request for payment of Administrative Expense Claims;
(d) To determine all matters that may be pending before the Bankruptcy Court on or before the Effective Date;
(e) To resolve any dispute regarding the implementation or interpretation of the Plan, or any related agreement or document that arises at
any time before the Chapter 11 Cases are closed, including the determination, to the extent a dispute arises, of the entities entitled to a distribution within any particular Class of Claims and of the scope and nature of the Reorganized
Debtors’ obligations to cure defaults under assumed contracts, leases and permits;
(f) To determine any and all matters relating to
the rejection, assumption or assignment of executory contracts or unexpired leases entered into prior to the Petition Date, the nature and amount of any cure required for the assumption of any executory contract or unexpired lease, and the allowance
of any Claim resulting therefrom;
(g) To determine all applications, adversary proceedings, contested matters and other litigated
matters, that were brought or that could have been brought in the Bankruptcy Court on or before the Effective Date over which this Bankruptcy Court otherwise has jurisdiction;
(h) To determine matters concerning local, state and federal taxes in accordance with Bankruptcy Code sections 346, 505 and 1146, and to
determine any tax claims that may arise against the Debtors or the Reorganized Debtors as a result of the transactions contemplated by the Plan;
(i) To modify the Plan pursuant to Bankruptcy Code section 1127 or to remedy any apparent nonmaterial defect or omission in the Plan, or to
reconcile any nonmaterial inconsistency in the Plan so as to carry out its intent and purposes;
(j) To issue and enforce injunctions,
enter and implement other orders or take such other actions as may be necessary or appropriate to restrain interference by any entity with consummation or enforcement of this Plan, except as otherwise provided in the Plan;
(k) To hear, determine and resolve any cases, controversies, suits or disputes with respect to the releases, exculpations, indemnifications
and other provisions contained in Article IX of the Plan and enter such orders or take such others actions as may be necessary or appropriate to implement or enforce all such provisions;
47
(l) To enter an order concluding or closing the Chapter 11 Cases; and
(m) To hear any other matter not inconsistent with the Bankruptcy Code.
10.2 Terms Binding. Upon the occurrence of the Effective Date, all provisions of the Plan, including all agreements, instruments
and other documents filed in connection with the Plan and executed by the Debtors or the Reorganized Debtors in connection with the Plan, shall be binding upon the Debtors, the Reorganized Debtors, all Holders of Claims and Interests and all other
Persons that are affected in any manner by the Plan. All agreements, instruments and other documents filed in connection with the Plan shall have full force and effect, and shall bind all parties thereto, subject to the occurrence of the Effective
Date, upon the entry of the Confirmation Order, whether or not such agreements, instruments or other documents actually shall be executed by parties other than the Debtors or the Reorganized Debtors, or shall be issued, delivered or recorded on the
Effective Date or thereafter. The rights, benefits and obligations of any Person named or referred to in the Plan shall be binding on, and shall inure to the benefit of, any heir, executor, administrator, successor, or assign of such Person.
10.3 Severability. If, before Confirmation, any term or provision of the Plan is held by the Bankruptcy Court to be invalid,
void or unenforceable, the Bankruptcy Court shall have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to
be invalid, void or unenforceable, and such term or provision shall then be applicable as altered or interpreted. Notwithstanding any such holding, alteration or interpretation, but subject to the consent of the Requisite Consenting Parties, which
consent shall not be unreasonably withheld, the remainder of the terms and provisions of the Plan will remain in full force and effect and will in no way be affected, impaired or invalidated by such holding, alteration or interpretation. The
Confirmation Order shall constitute a judicial determination and shall provide that each term and provision of the Plan, as it may have been altered or interpreted in accordance with the foregoing, is: (a) valid and enforceable pursuant to its
terms; (b) integral to the Plan and may not be deleted or modified without the Debtors’ consent (and any modification or deletion made before the Effective Date to be made only with the consent of the Requisite Consenting Parties, which
consent shall not be unreasonably withheld); and (c) non-severable and mutually dependent.
10.4 Computation of Time.
In computing any period of time prescribed or allowed by the Plan, the provisions of Bankruptcy Rule 9006(a) will apply.
10.5
Confirmation Order and Plan Control. Except as otherwise provided in the Plan, in the event of any inconsistency between the Plan and the Amended and Restated Restructuring Support Agreement, Disclosure Statement, any exhibit to the
Plan or any other instrument or document created or executed pursuant to the Plan, the Plan shall control. In the event of any inconsistency between the Plan and the Confirmation Order, the Confirmation Order shall control.
10.6 Incorporation by Reference. The Plan Supplement is incorporated herein by reference.
10.7 Modifications to the Plan. Subject to the terms of the Amended and Restated Restructuring Support Agreement and the Exit
Facility Commitment Letter, the Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, and in consultation with the Creditors Committee may amend or modify the Plan, the Plan Supplement, and
any schedule or supplement hereto, at any time prior to the Effective Date in accordance with the Bankruptcy Code, Bankruptcy Rules and any applicable court order, provided, however, that no consent of the Requisite Secured Lenders
shall be required with respect to any such amendment or modification to any such document or any provision to any such document that is, or relates to, any of the Excluded Matters; provided, further that the Debtors may make technical
amendments or modifications upon two (2) Business Days advance
48
notice to the Plan Support Parties and the Creditors Committee. Subject to certain restrictions and requirements set forth in Bankruptcy Code section 1127 and Bankruptcy Rule 3019 and those
restrictions on modification set forth in the Plan, the Amended and Restated Restructuring Support Agreement and the Exit Facility Commitment Letter, the Debtors, subject to the reasonable consent of the Requisite Consenting Parties (but the consent
of the Requisite Secured Lenders shall not be required with respect to documents or provisions in documents that are, or relate to, any of the Excluded Matters), expressly reserve their rights to alter, amend or modify materially the Plan with
respect to the Debtors, one or more times, after Confirmation, and, to the extent necessary, may initiate proceedings in the Bankruptcy Court to so alter, amend, or modify the Plan, or remedy any defect or omission, or reconcile any inconsistencies
in the Plan, the Disclosure Statement, or the Confirmation Order, in such matters as may be necessary to carry out the purposes and intent of the Plan. A Holder of a Claim or Interest that has accepted the Plan shall be deemed to have accepted the
Plan, as altered, amended, modified or supplemented, if the proposed alteration, amendment, modification or supplement does not materially and adversely change the treatment of the Claim or Interest of such Holder.
10.8 Revocation, Withdrawal or Non-Consummation. The Debtors reserve the right to revoke or withdraw the Plan at any time prior
to the Effective Date. If the Debtors revoke or withdraw the Plan prior to the Effective Date, or if the Confirmation Date or the Effective Date does not occur, then the Plan (including the fixing or limiting to an amount certain any Claim or Class
of Claims), the assumption or rejection of executory contracts or leases effected by the Plan, and any document or agreement executed pursuant to the Plan, shall be null and void; provided, however, that all orders of the Bankruptcy
Court and all documents executed pursuant thereto, except the Confirmation Order, shall remain in full force and effect. In such event, nothing contained herein, and no acts taken in preparation for consummation of the Plan, shall be deemed to
constitute a waiver or release of any Claims by or against any of the Debtors or any other Person, to prejudice in any manner the rights of any of the Debtors or any Person in any further proceedings or to constitute an admission of any sort by any
of the Debtors or any other Person.
10.9 Courts of Competent Jurisdiction. If the Bankruptcy Court abstains from
exercising, or declines to exercise, jurisdiction or is otherwise without jurisdiction over any matter arising out of the Plan or in the Chapter 11 Cases, such abstention, refusal or failure of jurisdiction shall have no effect upon and shall not
control, prohibit, or limit the exercise of jurisdiction by any other court having competent jurisdiction with respect to such matter.
10.10 Payment of Indenture Trustee Fees. On the Effective Date, all reasonable fees and expenses of the Indenture Trustee
incurred before the Effective Date (and their counsel) shall be paid in full by the Debtors in Cash without a reduction to the recoveries of applicable Holders of Allowed Notes Claims as of the Effective Date (subject to the Debtors’ receipt of
invoices in customary form in connection therewith and without the requirement to file a fee application with the Bankruptcy Court); provided, however, that the Indenture Trustee shall provide a copy of such invoices to the U.S.
Trustee. To the extent invoices are submitted after the Effective Date, such invoices shall be paid as soon as reasonably practicable. Notwithstanding the foregoing, to the extent that any fees or expenses of the Indenture Trustee are not paid in
accordance with the provisions of the Plan, the Indenture Trustee may assert its charging lien against any recoveries received on account of Allowed Notes Claims for payment of such unpaid amounts. All disputes related to the fees and expenses of
the Indenture Trustee shall be subject to the jurisdiction of and decided by the Bankruptcy Court.
10.11 Payment of U.S. Trustee
Quarterly Fees. All fees due and payable pursuant to section 1930 of title 28 of the United States Code prior to the Effective Date shall be paid by the Debtors. On and after the Effective Date, the Reorganized Debtors shall pay any and all
such fees when due and payable, and shall file with the Bankruptcy Court quarterly reports in a form reasonably acceptable to the U.S. Trustee. Each and every one of the Debtors shall remain obligated to pay quarterly fees to the Office of the U.S.
Trustee until the earliest of that particular Debtor’s case being closed, dismissed, or converted to a case under chapter 7 of the Bankruptcy Code.
10.12 Notice. All notices, requests and demands to or upon the Debtors, the Creditors Committee, and the Plan Support Parties,
to be effective shall be in writing and, unless otherwise expressly
49
provided herein, shall be deemed to have been duly given or made when actually delivered or, in the case of notice by facsimile transmission, when received, addressed as follows:
If to the Debtors, or to any one of them:
Akin Gump Strauss Hauer & Feld LLP
One Bryant Park
New York, New
York 10036-6745
Telephone: (212) 872-1000
Facsimile: (212) 872-1002
Attention: Ira S. Dizengoff, Esq.
Philip C. Dublin, Esq.
Alexis Freeman, Esq.
Matthew C. Fagen, Esq.
- and -
Blank Rome LLP
1201 N. Market
Street, Suite 800
Wilmington, Delaware 19801
Telephone: (302) 425-6400
Facsimile: (302) 425-6464
Attention: Stanley B. Tarr, Esq.
Michael D. DeBaecke, Esq.
Victoria A. Guilfoyle, Esq.
If to the DIP Lenders, DIP Agent, the Consenting Noteholders or the Exit Facility Lenders:
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New
York 10038
Telephone: (212) 806-5400
Facsimile: (212) 806-6006
Attention: Kristopher M. Hansen, Esq.
Jayme T. Goldstein, Esq.
- and -
Young Conaway Stargatt & Taylor, LLP
1000 North King Street
Wilmington, Delaware 19801
Telephone: (302) 571-6600
Facsimile: (302) 571-1253
Attention: Matthew B. Lunn, Esq.
If to Scotiabank:
Wachtell,
Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telephone: (212) 403-1000
Facsimile: (212) 403-2000
Attention: Richard G. Mason, Esq.
John R. Sobolewski,
Esq.
Alisha J.
Turak, Esq.
50
- and -
Morris, Nichols, Arsht & Tunnell, LLP
1201 N. Market Street, 16th Floor
Wilmington, Delaware 19801
Telephone: (302) 658-9200
Facsimile: (302) 658-3989
Attention: Derek C. Abbott, Esq.
If to the Creditors Committee:
Arent Fox LLP
1675 Broadway
New York, New York 10019
Telephone: (212) 484-3900
Facsimile: (212) 484-3990
Attention: Robert M. Hirsh, Esq.
Jeffrey N. Rothleder,
Esq.
- and -
Polsinelli PC
222 Delaware
Avenue, Suite 1101
Wilmington, Delaware 19801
Telephone: (302) 252-0920
Facsimile: (302) 252-0921
Attention: Christopher A. Ward, Esq.
If to the Equity Committee:
LeClairRyan, A Professional Corporation
70 Linden Oaks, Suite 210
Rochester, New York 14625
Telephone: (585) 270-2106
Facsimile: (585) 270-2166
Attention: Gregory J. Mascitti, Esq.
Janice B. Grubin, Esq.
- and -
Cole Schotz P.C.
500 Delaware
Avenue, Suite 1410
Wilmington, Delaware 19801
Telephone: (302) 651-2004
Facsimile: (302) 574-2104
Attention: Patrick J. Reilley, Esq.
10.13 Reservation of Rights. The filing of the Plan, the Disclosure Statement, any statement or provision contained in the Plan
or Disclosure Statement, or the taking of any action by the Debtors or Reorganized Debtors with respect to the Plan or Disclosure Statement, shall not be deemed to be an admission or waiver of any rights of the Debtors or Reorganized Debtors with
respect to any Holders of Claims against or Interests in the Debtors.
51
10.14 No Waiver. Neither the failure of a Debtor to list a Claim or Interest in the
Debtors’ Schedules, the failure of a Debtor to object to any Claim or Interest for purposes of voting, the failure of a Debtor to object to a Claim (including, without limitation, an Administrative Expense Claim) or Interest prior to the
Confirmation Date or the Effective Date, nor the failure of a Debtor to assert a Retained Cause of Action prior to the Confirmation Date or the Effective Date shall, in the absence of a legally-effective express waiver or release executed by the
Debtor with the approval of the Bankruptcy Court, if required, and with any other consents or approvals required under the Plan, be deemed a waiver or release of the right of a Debtor or a Reorganized Debtor or their respective successors, either
before or after solicitation of votes on the Plan, the Confirmation Date or the Effective Date, to (a) object to or examine such Claim (including, without limitation, an Administrative Expense Claim) or Interest, in whole or in part, or
(b) retain or either assign or exclusively assert, pursue, prosecute, utilize, or otherwise act or enforce any Retained Cause of Action against the Holder of such Claim (including, without limitation, an Administrative Expense Claim) or
Interest.
52
Dated: , 2015
|
|
|
| Allied Nevada Gold Corp. |
|
|
| By: |
|
/s/ |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Executive Vice President, Secretary and Chief Financial Officer |
|
| Allied Nevada Gold Holdings LLC |
|
|
| By: |
|
/s/ |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
|
| Allied VGH Inc. |
|
|
| By: |
|
/s/ |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
|
| Allied VNC Inc. |
|
|
| By: |
|
/s/ |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
|
| ANG Central LLC |
|
|
| By: |
|
/s/ |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
53
|
|
|
| ANG Cortez LLC |
|
|
| By: |
|
/s/ |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
|
| ANG Eureka LLC |
|
|
| By: |
|
/s/ |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
|
| ANG North LLC |
|
|
| By: |
|
/s/ |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
|
| ANG Northeast LLC |
|
|
| By: |
|
/s/ |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
|
| ANG Pony LLC |
|
|
| By: |
|
/s/ |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
|
| Hasbrouck Production Company LLC |
|
|
| By: |
|
/s/ |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
54
|
|
|
| Hycroft Resources & Development, Inc. |
|
|
| By: |
|
/s/ |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
|
| Victory Exploration Inc. |
|
|
| By: |
|
/s/ |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
|
| Victory Gold Inc. |
|
|
| By: |
|
/s/ |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
|
|
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
55
Exhibit 99.2
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
|
|
|
| |
|
) |
| In re: |
|
) Chapter 11 |
|
|
) |
| Allied Nevada Gold Corp., et al.,1 |
|
) Case No. 15-10503 (MFW) |
|
|
) |
| Debtors. |
|
) Jointly Administered |
| |
|
) |
AMENDED DISCLOSURE STATEMENT FOR THE
DEBTORS’ AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION
|
|
|
| AKIN GUMP STRAUSS HAUER & FELD LLP |
|
BLANK ROME LLP |
| Ira S. Dizengoff (admitted pro hac vice) |
|
Stanley B. Tarr (No. 5535) |
| Philip C. Dublin (admitted pro hac vice) |
|
Michael D. DeBaecke (No. 3186) |
| Alexis Freeman (admitted pro hac vice) |
|
Victoria A. Guilfoyle (No. 5183) |
| Matthew C. Fagen (admitted pro hac vice) |
|
1201 N. Market Street, Suite 800 |
| One Bryant Park |
|
Wilmington, Delaware 19801 |
| New York, New York 10036-6745 |
|
Telephone: (302) 425-6400 |
| Telephone: (212) 872-1000 |
|
Facsimile: (302) 425-6464 |
| Facsimile: (212) 872-1002 |
|
|
Counsel to the Debtors and Debtors in Possession
Dated: August 28, 2015
| 1 |
The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification number, are: Allied Nevada Gold Corp. (7115); Allied Nevada Gold Holdings LLC (7115); Allied VGH Inc. (3601);
Allied VNC Inc. (3291); ANG Central LLC (7115); ANG Cortez LLC (7115); ANG Eureka LLC (7115); ANG North LLC (7115); ANG Northeast LLC (7115); ANG Pony LLC (7115); Hasbrouck Production Company LLC (3601); Hycroft Resources & Development,
Inc. (1989); Victory Exploration Inc. (8144); and Victory Gold Inc. (8139). The corporate headquarters for each of the above Debtors are located at, and the mailing address for each of the above Debtors, except Hycroft Resources &
Development, Inc., is 9790 Gateway Drive, Suite 200, Reno, NV 89521. The mailing address for Hycroft Resources & Development, Inc. is P.O. Box 3030, Winnemucca, NV 89446. |
IMPORTANT NOTICE
ALLIED NEVADA GOLD CORP. (“ANV”) AND CERTAIN OF ITS DIRECT AND INDIRECT SUBSIDIARIES, AS CHAPTER 11 DEBTORS AND DEBTORS IN POSSESSION
(COLLECTIVELY, THE “DEBTORS”), ARE SENDING YOU THIS DOCUMENT AND THE ACCOMPANYING MATERIALS (THE “DISCLOSURE STATEMENT”) BECAUSE YOU MAY BE A HOLDER OF CLAIMS AGAINST OR INTERESTS IN THE DEBTORS AND ENTITLED TO VOTE
ON THE DEBTORS’ AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION, AS THE SAME MAY BE AMENDED FROM TIME TO TIME (THE
“PLAN”).2
THIS DISCLOSURE STATEMENT PROVIDES INFORMATION REGARDING THE PLAN. THIS
DISCLOSURE STATEMENT AND ITS RELATED DOCUMENTS ARE THE ONLY DOCUMENTS AUTHORIZED BY THE BANKRUPTCY COURT TO BE USED IN CONNECTION WITH THE SOLICITATION OF VOTES TO ACCEPT THE PLAN. NO REPRESENTATIONS HAVE BEEN AUTHORIZED BY THE BANKRUPTCY COURT
CONCERNING THE DEBTORS, THEIR BUSINESS OPERATIONS OR THE VALUE OF THEIR ASSETS, EXCEPT AS EXPLICITLY SET FORTH IN THIS DISCLOSURE STATEMENT.
THE DEBTORS
URGE YOU TO READ THIS DISCLOSURE STATEMENT CAREFULLY FOR A DISCUSSION OF VOTING INSTRUCTIONS, RECOVERY INFORMATION, CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS, THE HISTORY OF THE DEBTORS AND THE CHAPTER 11 CASES, THE DEBTORS’
BUSINESS, PROPERTIES AND RESULTS OF OPERATIONS, HISTORICAL AND PROJECTED FINANCIAL RESULTS AND A SUMMARY AND ANALYSIS OF THE PLAN. IF YOU ARE ENTITLED TO VOTE ON THE PLAN, YOU ARE ENCOURAGED TO READ THIS DISCLOSURE STATEMENT IN ITS ENTIRETY,
INCLUDING WITHOUT LIMITATION, THE PLAN, AND THE SECTION ENTITLED “RISK FACTORS,” BEFORE SUBMITTING YOUR BALLOT TO VOTE ON THE PLAN.
INFORMATION
CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. THE DEBTORS RESERVE THE RIGHT, WITH THE CONSENT OF THE REQUISITE CONSENTING PARTIES, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD, AND IN CONSULTATION WITH THE CREDITORS COMMITTEE AND THE
EQUITY COMMITTEE (AS FURTHER SET FORTH IN THE PLAN), TO FILE A FURTHER AMENDED PLAN AND RELATED DISCLOSURE STATEMENT FROM TIME TO TIME, SUBJECT TO THE TERMS OF THE PLAN.
THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH BANKRUPTCY CODE SECTION 1125 AND BANKRUPTCY RULE 3016(b). THE PLAN AND THIS DISCLOSURE
STATEMENT WERE NOT REQUIRED TO BE PREPARED IN ACCORDANCE WITH FEDERAL OR STATE SECURITIES LAWS OR OTHER APPLICABLE NONBANKRUPTCY LAW. DISSEMINATION OF THIS DISCLOSURE STATEMENT IS CONTROLLED BY BANKRUPTCY RULE 3017. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
| 2 |
Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to such terms in the Plan. |
i
THIS DISCLOSURE STATEMENT WAS PREPARED TO PROVIDE PARTIES IN INTEREST IN THESE CASES WITH “ADEQUATE
INFORMATION” (AS DEFINED IN BANKRUPTCY CODE SECTION 1125) SO THAT THOSE HOLDERS OF CLAIMS AND INTERESTS WHO ARE ENTITLED TO VOTE ON THE PLAN CAN MAKE AN INFORMED JUDGMENT REGARDING SUCH VOTE.
THIS DISCLOSURE STATEMENT CONTAINS ONLY A SUMMARY OF THE PLAN. THIS DISCLOSURE STATEMENT IS NOT INTENDED TO REPLACE A CAREFUL AND DETAILED REVIEW AND ANALYSIS
OF THE PLAN; RATHER, THIS DISCLOSURE STATEMENT IS INTENDED ONLY TO AID AND SUPPLEMENT SUCH REVIEW. THIS DISCLOSURE STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE PLAN, THE PLAN SUPPLEMENT (WHICH WILL BE FILED NO LATER THAN 9 DAYS PRIOR
TO THE DEADLINE FOR OBJECTIONS TO THE PLAN), AND THE EXHIBITS ATTACHED THERETO AND THE AGREEMENTS AND DOCUMENTS DESCRIBED THEREIN. IF THERE IS A CONFLICT BETWEEN THE PLAN AND THIS DISCLOSURE STATEMENT, THE PROVISIONS OF THE PLAN WILL GOVERN. YOU ARE
ENCOURAGED TO REVIEW THE FULL TEXT OF THE PLAN AND PLAN SUPPLEMENT AND TO READ CAREFULLY THE ENTIRE DISCLOSURE STATEMENT, INCLUDING ALL EXHIBITS, BEFORE DECIDING HOW TO VOTE WITH RESPECT TO THE PLAN.
THE VOTING DEADLINE TO ACCEPT OR REJECT THE PLAN IS 4:00 P.M. (PREVAILING EASTERN TIME) ON SEPTEMBER 28, 2015, UNLESS EXTENDED BY
THE DEBTORS (THE “VOTING DEADLINE”). TO BE COUNTED, BALLOTS INDICATING ACCEPTANCE OR REJECTION OF THE PLAN MUST BE ACTUALLY RECEIVED BY PRIME CLERK LLC, THE DEBTORS’ NOTICE, CLAIMS, AND BALLOTING AGENT (THE “BALLOTING
AGENT”) NO LATER THAN THE VOTING DEADLINE.
THE EFFECTIVENESS OF THE PLAN IS SUBJECT TO MATERIAL CONDITIONS PRECEDENT. THERE IS NO ASSURANCE THAT
THESE CONDITIONS WILL BE SATISFIED OR WAIVED.
IF THE PLAN IS CONFIRMED BY THE BANKRUPTCY COURT AND THE EFFECTIVE DATE OCCURS, ALL HOLDERS OF CLAIMS
AGAINST, AND HOLDERS OF INTERESTS IN, THE DEBTORS (INCLUDING, WITHOUT LIMITATION, THOSE HOLDERS OF CLAIMS AND INTERESTS WHO DO NOT SUBMIT BALLOTS TO ACCEPT OR REJECT THE PLAN OR WHO ARE NOT ENTITLED TO VOTE ON THE PLAN) WILL BE BOUND BY THE TERMS OF
THE PLAN AND THE TRANSACTIONS CONTEMPLATED THEREBY.
THIS DISCLOSURE STATEMENT HAS NOT BEEN FILED WITH OR REVIEWED BY THE SECURITIES AND EXCHANGE
COMMISSION (THE “SEC”) UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR WITH ANY OTHER SECURITIES REGULATORY AUTHORITY OF ANY STATE UNDER ANY STATE
ii
SECURITIES OR “BLUE SKY” LAWS. ADDITIONALLY, THE SECURITIES TO BE ISSUED ON OR AFTER THE EFFECTIVE DATE
WILL NOT HAVE BEEN THE SUBJECT OF, OR REGISTERED PURSUANT TO, A REGISTRATION STATEMENT FILED WITH THE SEC. THE PLAN HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY OTHER SECURITIES REGULATORY AUTHORITY, OR ANY STATE SECURITIES COMMISSION, AND
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED HEREIN. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS DISCLOSURE STATEMENT DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION IN ANY STATE OR OTHER JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED.
THE DEBTORS BELIEVE THAT THE SOLICITATION OF VOTES
ON THE PLAN MADE BY THIS DISCLOSURE STATEMENT, AND THE OFFER OF CERTAIN NEW SECURITIES THAT MAY BE DEEMED TO BE MADE PURSUANT TO THE SOLICITATION, ARE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND RELATED STATE STATUTES BY REASON OF THE
EXEMPTION PROVIDED BY BANKRUPTCY CODE SECTION 1145(a)(1), AND EXPECT THAT THE OFFER, ISSUANCE AND DISTRIBUTION OF THE SECURITIES UNDER THE PLAN WILL BE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND RELATED STATE STATUTES BY REASON OF THE
APPLICABILITY OF BANKRUPTCY CODE SECTION 1145(a)(1), IN EACH CASE TO THE EXTENT SET FORTH HEREIN.
EXCEPT AS OTHERWISE SET FORTH HEREIN, THE STATEMENTS
CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE BY THE DEBTORS AS OF THE DATE HEREOF, AND THE DELIVERY OF THIS DISCLOSURE STATEMENT WILL NOT, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AT ANY
TIME SUBSEQUENT TO THE DATE HEREOF OR CREATE ANY DUTY TO UPDATE SUCH INFORMATION.
NO PERSON HAS BEEN AUTHORIZED BY THE DEBTORS IN CONNECTION WITH THE
PLAN OR THE SOLICITATION THEREOF TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS DISCLOSURE STATEMENT, THE PLAN AND THE EXHIBITS, NOTICES AND SCHEDULES ATTACHED TO OR INCORPORATED BY REFERENCE OR REFERRED TO IN
THIS DISCLOSURE STATEMENT AND/OR THE PLAN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE DEBTORS.
IT IS THE DEBTORS’ POSITION THAT THIS DISCLOSURE STATEMENT MAY NOT BE RELIED ON FOR ANY PURPOSE OTHER THAN TO DETERMINE WHETHER TO VOTE TO ACCEPT OR
REJECT THE PLAN, AND NOTHING STATED HEREIN SHALL CONSTITUTE AN ADMISSION OF ANY FACT OR LIABILITY BY ANY PERSON, OR BE ADMISSIBLE IN ANY PROCEEDING INVOLVING THE DEBTORS OR ANY OTHER PERSON, OR BE DEEMED CONCLUSIVE EVIDENCE OF THE TAX OR OTHER LEGAL
EFFECTS OF THE PLAN ON THE DEBTORS OR HOLDERS OF CLAIMS OR INTERESTS.
iii
EXCEPT WHERE SPECIFICALLY NOTED, THE FINANCIAL INFORMATION CONTAINED HEREIN HAS NOT BEEN AUDITED BY A CERTIFIED
PUBLIC ACCOUNTANT AND HAS NOT BEEN PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
HOLDERS OF CLAIMS OR INTERESTS SHOULD NOT
CONSTRUE THE CONTENTS OF THIS DISCLOSURE STATEMENT AS PROVIDING ANY LEGAL, BUSINESS, FINANCIAL OR TAX ADVICE. EACH HOLDER SHOULD CONSULT WITH ITS OWN LEGAL, BUSINESS, FINANCIAL AND TAX ADVISOR(S) WITH RESPECT TO ANY SUCH MATTERS CONCERNING THIS
DISCLOSURE STATEMENT, THE SOLICITATION OF VOTES TO ACCEPT THE PLAN, THE PLAN, THE PLAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.
FORWARD-LOOKING STATEMENTS:
THIS DISCLOSURE STATEMENT
CONTAINS FORWARD-LOOKING STATEMENTS BASED PRIMARILY ON THE CURRENT EXPECTATIONS OF THE DEBTORS AND PROJECTIONS ABOUT FUTURE EVENTS AND FINANCIAL TRENDS AFFECTING THE FINANCIAL CONDITION OF THE DEBTORS’ AND THE REORGANIZED DEBTORS’
BUSINESSES. IN PARTICULAR, STATEMENTS USING WORDS SUCH AS “BELIEVE,” “MAY,” “ESTIMATE,” “CONTINUE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS IDENTIFY THESE
FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO A NUMBER OF RISKS, UNCERTAINTIES AND ASSUMPTIONS, INCLUDING THOSE DESCRIBED BELOW UNDER SECTION VIII. IN LIGHT OF THESE RISKS AND UNCERTAINTIES, THE FORWARD-LOOKING EVENTS
AND CIRCUMSTANCES DISCUSSED IN THE DISCLOSURE STATEMENT MAY NOT OCCUR, AND ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THE FORWARD-LOOKING STATEMENTS. CONSEQUENTLY, THE PROJECTED FINANCIAL INFORMATION AND OTHER FORWARD-LOOKING
STATEMENTS CONTAINED HEREIN SHOULD NOT BE REGARDED AS REPRESENTATIONS BY ANY OF THE DEBTORS, THE REORGANIZED DEBTORS, THEIR ADVISORS OR ANY OTHER PERSON THAT THE PROJECTED FINANCIAL CONDITIONS OR RESULTS OF OPERATIONS CAN OR WILL BE ACHIEVED. EXCEPT
AS OTHERWISE REQUIRED BY LAW, NEITHER THE DEBTORS NOR THE REORGANIZED DEBTORS UNDERTAKE ANY OBLIGATION TO UPDATE OR REVISE PUBLICLY ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE FOLLOWING APPROVAL
OF THIS DISCLOSURE STATEMENT BY THE BANKRUPTCY COURT.
THE DEBTORS SUPPORT CONFIRMATION OF THE PLAN, AND URGE ALL HOLDERS OF CLAIMS AND INTERESTS
WHOSE VOTES ARE BEING SOLICITED TO ACCEPT THE PLAN.
THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS SUPPORTS CONFIRMATION OF THE PLAN AND
URGES ALL HOLDERS OF CLAIMS WHOSE VOTES ARE BEING SOLICITED TO ACCEPT THE PLAN. THE CREDITORS COMMITTEE HAS DRAFTED A LETTER ENCOURAGING HOLDERS OF CLAIMS
iv
IN CLASS 4 TO ACCEPT THE PLAN, WHICH LETTER SHALL BE INCLUDED IN THE SOLICITATION PACKAGES SENT TO HOLDERS
OF CLAIMS IN CLASS 4 PURSUANT TO THE DISCLOSURE STATEMENT ORDER.
THE OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS SUPPORTS CONFIRMATION
OF THE PLAN AND URGES ALL HOLDERS OF INTERESTS WHOSE VOTES ARE BEING SOLICITED TO ACCEPT THE PLAN. THE EQUITY COMMITTEE HAS DRAFTED A LETTER ENCOURAGING HOLDERS OF INTERESTS IN CLASS 8 TO ACCEPT THE PLAN, WHICH LETTER SHALL BE INCLUDED IN THE
SOLICITATION PACKAGES SENT TO HOLDERS OF INTERESTS IN CLASS 8 PURSUANT TO THE DISCLOSURE STATEMENT ORDER.
v
TABLE OF CONTENTS
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Page |
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| I. |
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EXECUTIVE SUMMARY |
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1 |
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| II. |
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QUESTIONS AND ANSWERS REGARDING THIS DISCLOSURE STATEMENT AND THE PLAN |
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3 |
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A. |
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What is chapter 11? |
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3 |
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B. |
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Why are the Debtors sending me this Disclosure Statement? |
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3 |
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C. |
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Am I entitled to vote on the Plan? |
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3 |
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D. |
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What will I receive from the Debtors if the Plan is consummated? |
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4 |
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E. |
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What will Holders of Class 1 Secured ABL Claims receive under the Plan? |
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5 |
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F. |
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What will Holders of Class 2 Secured Swap Claims receive under the Plan? |
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5 |
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G. |
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What will Holders of Class 4 Unsecured Claims receive under the Plan? |
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6 |
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H. |
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What will Holders of Class 6 Subordinated Securities Claims receive under the Plan? |
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6 |
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I. |
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What will Holders of Class 8 Existing Equity Interests receive under the Plan? |
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6 |
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J. |
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How do I vote on the Plan and what is the Voting Deadline? |
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6 |
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K. |
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What will I receive from the Debtors if I hold an Administrative Expense Claim, a Professional Fee Claim, a Priority Claim or a DIP Facility Claim? |
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6 |
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L. |
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What happens to my recovery if the Plan is not confirmed or the confirmed Plan does not go effective? |
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6 |
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M. |
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If the Plan provides that I get a distribution, do I get it upon Confirmation or when the Plan goes effective, and what is meant by “Confirmation,” “Effective Date” and “Consummation?” |
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7 |
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N. |
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What are the Debtors’ Intercompany Claims and Intercompany Interests? |
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7 |
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O. |
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Are there risks to owning the New Common Stock upon emergence from chapter 11? |
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7 |
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P. |
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Will there be releases granted to parties in interest as part of the Plan? |
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7 |
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Q. |
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Why is the Bankruptcy Court holding a Confirmation Hearing and when is the Confirmation Hearing set to occur? |
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8 |
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R. |
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What is the purpose of the Confirmation Hearing? |
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8 |
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S. |
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What is the effect of the Plan on the Debtors’ ongoing business? |
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8 |
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T. |
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Who do I contact if I have additional questions with respect to this Disclosure Statement or the Plan? |
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8 |
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U. |
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Do the Debtors recommend voting in favor of the Plan? |
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8 |
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| III. |
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THE DEBTORS’ BACKGROUND |
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9 |
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A. |
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Debtors’ Corporate Structure |
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9 |
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B. |
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Overview of the Debtors’ Mineral Reserves and Development Projects |
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10 |
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C. |
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Regulatory Matters |
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10 |
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D. |
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Summary of the Debtors’ Prepetition Capital Structure and Liabilities under Derivative Instruments |
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11 |
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| IV. |
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EVENTS LEADING TO THE COMMENCEMENT OF THE CHAPTER 11 CASES AND ENTRY INTO THE ORIGINAL RESTRUCTURING SUPPORT AGREEMENT |
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14 |
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A. |
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Events Leading to the Commencement of the Chapter 11 Cases |
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14 |
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B. |
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Prepetition Restructuring Initiatives and the Original Restructuring Support Agreement |
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15 |
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| V. |
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EVENTS DURING THE CHAPTER 11 CASES |
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15 |
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A. |
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The First and Second Day Pleadings and Other Case Matters |
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15 |
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B. |
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Debtor in Possession Financing |
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17 |
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C. |
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Mining Suspension Plan and Proposed Compensation Plans |
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17 |
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D. |
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Events Leading up to the Debtors’ Entry into the Amended and Restated Restructuring |
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Support Agreement |
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20 |
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| VI. |
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SUMMARY OF THE PLAN |
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20 |
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A. |
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General Basis for the Plan |
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20 |
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B. |
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Treatment of Unclassified Claims |
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21 |
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C. |
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Classification and Treatment of Claims and Interests |
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22 |
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D. |
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Means for Implementation of the Plan |
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24 |
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E. |
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Discharge, Release, Injunction and Related Provisions |
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33 |
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| VII. |
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PROJECTED FINANCIAL INFORMATION |
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36 |
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| VIII. |
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RISK FACTORS |
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36 |
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A. |
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Risks Related to Bankruptcy |
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36 |
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B. |
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Risks Related to the Debtors’ or the Reorganized Debtors’ Business |
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38 |
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C. |
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Risks Related to Environmental Issues |
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44 |
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D. |
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Risks Related to the Debtors’ Indebtedness and Plan Securities |
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46 |
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E. |
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Risks Associated with Financial Information and Projections |
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47 |
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| IX. |
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SOLICITATION AND VOTING PROCEDURES |
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48 |
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| X. |
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CONFIRMATION OF THE PLAN |
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49 |
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A. |
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Requirements for Confirmation of the Plan |
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49 |
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B. |
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Best Interests of Creditors/Liquidation Analysis |
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49 |
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C. |
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Feasibility |
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49 |
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D. |
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Acceptance by Impaired Classes |
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49 |
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E. |
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Confirmation without Acceptance by All Impaired Classes |
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50 |
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F. |
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Valuation of the Debtors |
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51 |
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| XI. |
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APPLICABILITY OF FEDERAL AND OTHER SECURITIES LAWS |
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51 |
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A. |
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Plan Securities |
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51 |
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B. |
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Issuance and Resale of Plan Securities Under the Plan |
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51 |
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C. |
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Listing of New Common Stock |
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53 |
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| XII. |
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CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN |
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53 |
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A. |
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U.S. Federal Income Tax Consequences to the Debtors Under the Plan |
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54 |
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B. |
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U.S. Federal Income Tax Consequences to U.S. Holders Under the Plan |
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58 |
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C. |
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Information Reporting and Backup Withholding |
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65 |
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D. |
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U.S. Federal Income Tax Considerations for Non-U.S. Holders |
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65 |
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| XIII. |
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CONCLUSION AND RECOMMENDATION |
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69 |
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ii
EXHIBITS
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| Exhibit A |
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Plan of Reorganization |
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| Exhibit B |
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Amended and Restated Restructuring Support Agreement |
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| Exhibit C |
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Financial Projections |
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| Exhibit D |
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Liquidation Analysis |
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| Exhibit E |
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Valuation Analysis |
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| Exhibit F |
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Debtors’ Corporate Structure |
THE DEBTORS HEREBY ADOPT AND INCORPORATE EACH
EXHIBIT ATTACHED TO THIS DISCLOSURE STATEMENT BY
REFERENCE AS THOUGH FULLY SET FORTH HEREIN
The Debtors submit this Disclosure Statement pursuant to Bankruptcy
Code section 1125 to certain Holders of Claims against, and Interests in, the Debtors in connection with the solicitation of acceptances with respect to the Plan. A copy of the Plan is attached hereto as Exhibit A and incorporated herein by
reference. This Disclosure Statement describes certain aspects of the Plan, including the treatment of Claims and Interests, and also describes certain aspects of the Debtors’ operations, financial projections, and other related matters.
As of March 10, 2015, the Debtors had principal outstanding funded indebtedness of (a) approximately $74.95 million under the Credit
Agreement, (b) approximately $58.3 million under the Term and Security Deposit Loan Agreement, (c) $5,189,706 on account of the Jacobs Promissory Note, (d) approximately $97.6 million of capital lease obligations, and (e) CDN
$400.0 million in respect of the Notes. In addition, as a result of the applicable counterparties’ exercise of early termination rights with respect to the Debtors’ Cross Currency Swaps and Diesel Swaps, the Debtors had outstanding funded
indebtedness of (a) approximately $86.3 million with respect to close-out amounts under the Secured Swaps (as defined below), (b) approximately $371,666.67 with respect to the close-out amounts under a Cross Currency Swap (the “NBC
Cross Currency Swap”) with National Bank of Canada (“NBC”) after realization of collateral and (c) approximately $518,937.00 with respect to the close-out amounts under a Cross Currency Swap (the “SocGen Cross
Currency Swap”) with Société Générale (Canada Branch) (“SocGen”) after realization of collateral.
The Debtors are pleased to report that after extensive, good-faith and arm’s-length negotiations with the Plan Support Parties, the
Creditors Committee, and the Equity Committee, the Plan embodies a settlement among the Debtors and all of their key stakeholders on a consensual restructuring transaction (the “Restructuring Transaction”) that will de-lever the
Debtors’ balance sheet and enable the Debtors to implement a financial and operational restructuring. To evidence their support of the Debtors’ restructuring plan, Holders of 76.24% of the aggregate outstanding principal amount of the
Notes Claims, 100% of the Holders of Secured ABL Claims and 100% of the Holders of Secured Swap Claims, executed the Amended and Restated Restructuring Support Agreement, dated July 23, 2015, attached hereto as Exhibit B, which provides
for the implementation of the Restructuring Transaction through the Plan.
After giving effect to the following transactions contemplated
by the Amended and Restated Restructuring Support Agreement and the Plan, the Debtors will emerge from chapter 11 appropriately capitalized with access to favorable financing to support their emergence and go-forward business needs:
| |
• |
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each Holder of an Allowed Secured ABL Claim shall receive, on the Effective Date: its Pro Rata (after giving effect to the Secured ABL $10MM Cash Payment) share of (i)(A) the Secured ABL/Swap Cash Payments not made
prior to the Effective Date and (B) the Secured ABL/Swap Claims Excess Cash Flow Payment, and (ii) New First Lien Term Loans in an aggregate principal amount equal to (A) the amount of Allowed Claims pursuant to Article 2.7(b) of the
Plan minus (B) the amount paid in cash in respect of the Secured ABL Claims pursuant to clause (i) of Article 2.7(c) of the Plan. In addition, for the avoidance of doubt, any unpaid amounts owed to the holders of Secured ABL Claims
pursuant to Section 11 of the DIP Facility Order (including accrued interest to and including the Effective Date pursuant to clause (a) thereof) shall be due and payable in cash on the Effective Date; |
| |
• |
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each Holder of an Allowed Secured Swap Claim shall receive, on the Effective Date: its Pro Rata share of (i)(A) the Secured ABL/Swap Cash Payments not made prior to the Effective Date and (B) the Secured ABL/Swap
Claims Excess Cash Flow Payment, and (ii) New First Lien Term Loans in an aggregate principal amount equal to (A) the amount of Allowed Claims pursuant to Article 2.8(b) of the Plan minus (B) the amount paid in cash in respect of the
Secured Swap Claims pursuant to clause (i) of Article 2.8(c) of the Plan. In addition, for the avoidance of doubt, any unpaid amounts owed to the holders of Secured Swap Claims pursuant to Section 11 of the DIP Facility Order (including
accrued interest to and including the Effective Date pursuant to clause (a) thereof ) shall be due and payable in cash on the Effective Date; |
| |
• |
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each Holder of an Allowed DIP Facility Claim shall receive, on the Effective Date: its Pro Rata share of the DIP Facility Consideration; provided, however, that only the DIP Backstop Lenders shall receive
their Pro Rata share (calculated based on the amount of Allowed DIP Facility Claims held by each of the DIP Backstop Lenders relative to each other) of the 3.0% Backstop Put Option Payment (for the avoidance of doubt, the DIP Facility Consideration
shall be paid in its entirety from the proceeds of the Exit Facility); |
| |
• |
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each Holder of an Allowed Unsecured Claim shall receive its Pro Rata share of either (i) 100% of the New Common Stock, subject to dilution on account of: (a) the conversion of the New Second Lien Convertible
Notes and (b) the exercise of the New Warrants or (ii) the Convenience Claim Distribution. A Holder of an Allowed Unsecured Claim that is asserted in an amount equal to or less than $500,000 shall receive the distribution contemplated by
the preceding clause (ii), unless such Holder, on a properly cast Ballot, elects to receive the distribution contemplated by the preceding clause (i). A Holder of an Allowed Unsecured Claim that is asserted in an amount that is greater than
$500,000, shall receive the distribution contemplated by the preceding clause (i), unless such Holder, on a properly cast Ballot, elects to receive the distribution contemplated under the preceding clause (ii); provided, that in making such
election, such Holder agrees, to the extent such Holder’s Allowed Unsecured Claim is for an amount greater than $500,000, to reduce the amount of such Allowed Unsecured Claim for purposes of voting and distributions under the Plan to $500,000;
provided, further, that each Holder of a Capital Lease Deficiency Claim shall aggregate its Capital Lease Deficiency Claims and be deemed to have one Claim for purposes of such election. Holders of Unsecured Claims are advised to read
the Ballots carefully; |
| |
• |
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each Holder of an Allowed Subordinated Securities Claim shall receive its Pro Rata share of the New Warrants; |
| |
• |
|
all Allowed Intercompany Claims between the Debtors shall be adjusted, continued, contributed to capital or discharged to the extent determined by the Debtors, with the consent of the Requisite Consenting Parties, which
consent shall not be unreasonably withheld, or the Reorganized Debtors; and |
| |
• |
|
each Holder of an Allowed Existing Equity Interest shall receive its Pro Rata share of the New Warrants Holders of Existing Equity Interests shall not be required to file a Proof of Interest on account of such
Interests. The Debtors, through The Depository Trust Company, as depository, will make the distribution of New Warrants to Holders of Existing Equity Interests under Article 2.14 of the Plan to holders of the existing common stock of ANV on The
Depository Trust Company’s records as of the Distribution Record Date. |
As provided by Article IV of the Plan, the Debtors may also
undertake certain other restructuring transactions to implement the Plan.
THE DEBTORS, CREDITORS COMMITTEE AND EQUITY COMMITTEE
BELIEVE THAT THE COMPROMISE CONTEMPLATED UNDER THE PLAN IS FAIR AND EQUITABLE, MAXIMIZES THE VALUE OF THE ESTATES AND PROVIDES THE BEST RECOVERY TO HOLDERS OF CLAIMS AND INTERESTS. AT THIS TIME, THE DEBTORS BELIEVE THIS IS THE BEST AVAILABLE
ALTERNATIVE FOR COMPLETING THE CHAPTER 11 CASES. FOR THESE REASONS AND OTHERS DESCRIBED HEREIN, THE DEBTORS, CREDITORS COMMITTEE AND EQUITY COMMITTEE STRONGLY RECOMMEND THAT CREDITORS AND INTEREST HOLDERS ENTITLED TO VOTE ON THE PLAN VOTE TO ACCEPT
THE PLAN.
2
| II. |
QUESTIONS AND ANSWERS REGARDING THIS DISCLOSURE STATEMENT AND THE PLAN |
Chapter 11 is the principal business reorganization chapter of the
Bankruptcy Code. In addition to permitting debtor rehabilitation, chapter 11 promotes equality of treatment for similarly situated creditors and similarly situated equity interest holders, subject to the priority of distributions prescribed by the
Bankruptcy Code.
The commencement of a chapter 11 case creates an estate that comprises all of the legal and equitable interests of the
debtor as of the bankruptcy commencement date. The Bankruptcy Code provides that the debtor may continue to operate its business and remain in possession of its property as a “debtor in possession.”
Consummating a plan is the principal objective of a chapter 11 case. The Bankruptcy Court’s confirmation of a plan binds the debtor, any
person acquiring property under the plan, any creditor or equity interest holder of a debtor, and any other person or entity as may be ordered by the Bankruptcy Court, in accordance with the applicable provisions of the Bankruptcy Code. Subject to
certain limited exceptions, the order issued by the Bankruptcy Court confirming a plan provides for the treatment of the debtor’s debt in accordance with the terms of the confirmed plan.
| |
B. |
Why are the Debtors sending me this Disclosure Statement? |
The Debtors will be seeking
Bankruptcy Court approval of the Plan. In connection with soliciting acceptances of the Plan, Bankruptcy Code section 1125 requires the Debtors to prepare a disclosure statement containing adequate information of a kind, and in sufficient detail, to
enable a hypothetical reasonable investor to make an informed judgment regarding acceptance of the Plan. This Disclosure Statement has been prepared in accordance with these requirements.
| |
C. |
Am I entitled to vote on the Plan? |
Your ability to vote on, and your distribution
under, the Plan, if any, depends on what type of Claim or Interest you hold. Each category of Holders of Claims or Interests, as set forth in Article II of the Plan pursuant to Bankruptcy Code section 1122(a), is referred to as a “Class.”
Each Class’ respective voting status is set forth below.
The tables below designate the Classes of Claims against, and Interests in,
each of the Debtors and specify which of those Classes are Impaired or Unimpaired by the Plan. FOR A COMPLETE DESCRIPTION OF THE DEBTORS’ CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS, REFERENCE SHOULD BE MADE TO ARTICLE II OF THE PLAN.
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| Class |
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Designation |
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Impairment |
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Entitled to Vote |
| Class 1 |
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Secured ABL Claims |
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Impaired |
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Yes |
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| Class 2 |
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Secured Swap Claims |
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Impaired |
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Yes |
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| Class 3 |
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Other Secured Claims |
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Unimpaired |
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No |
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(deemed to accept) |
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| Class 4 |
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Unsecured Claims |
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Impaired |
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Yes |
3
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| Class |
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Designation |
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Impairment |
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Entitled to Vote |
| Class 5 |
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Intercompany Claims |
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Unimpaired |
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No |
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(deemed to accept) |
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| Class 6 |
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Subordinated Securities Claims |
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Impaired |
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Yes |
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| Class 7 |
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Intercompany Interests |
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Unimpaired |
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No |
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(deemed to accept) |
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| Class 8 |
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Existing Equity Interests |
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Impaired |
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Yes |
| |
D. |
What will I receive from the Debtors if the Plan is consummated? |
The following table
summarizes the anticipated recoveries for Holders of Allowed Claims and Holders of Allowed Interests under the Plan. THE EXPECTED RECOVERIES SET FORTH BELOW ARE FOR ILLUSTRATIVE PURPOSES ONLY AND
ARE SUBJECT TO MATERIAL CHANGE.3
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| Class |
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Designation |
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Plan Treatment |
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Estimated Size |
|
Estimated Recovery Under the
Plan |
| Class 1 |
|
Secured ABL Claims |
|
Impaired |
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$57.9 million |
|
100% |
|
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|
| Class 2 |
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Secured Swap Claims |
|
Impaired |
|
$76.4 million |
|
100% |
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|
| Class 3 |
|
Other Secured Claims |
|
Unimpaired |
|
$30.1 million |
|
100% |
|
|
|
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|
| Class 4 |
|
Unsecured Claims |
|
Impaired |
|
$348.5 million to $396.4 million |
|
Unsecured Claims that Receive New Common Stock: 3.3% to 3.8%4 |
| 3 |
The recoveries set forth herein may change based upon changes in the amount of Claims that are “Allowed” as well as other factors related to the Debtors’ business operations and general economic
conditions. “Allowed” means, with reference to any Claim or Interest, or any portion thereof, in any Class or category specified, against or of a Debtor, (a) a Claim or Interest that has been listed by such Debtor in the Schedules, as
such Schedules may be amended by the Debtors from time to time in accordance with Bankruptcy Rule 1009, as liquidated in amount and not disputed or contingent and for which no contrary Proof of Claim has been filed; (b) a Claim for which a
Proof of Claim has been timely filed in a liquidated amount and not contingent and as to which no objection to allowance, to alter priority, or request for estimation has been timely interposed and not withdrawn within the applicable period of
limitation fixed by the Plan or applicable law; (c) a Claim or Interest as to which any objection has been settled, waived, withdrawn or denied by a Final Order to the extent such Final Order provides for the allowance of all or a portion of
such Claim or Interest; or (d) a Claim or Interest that is expressly allowed (i) pursuant to a Final Order, (ii) pursuant to an agreement between the Holder of such Claim or Interest and the Debtors (with the consent of the Requisite
Consenting Parties) or the Reorganized Debtors, as applicable or (iii) pursuant to the terms of the Plan. Unless otherwise specified in the Plan or in an order of the Bankruptcy Court allowing such Claim or Interest, “Allowed” in
reference to a Claim shall not include (a) any interest on the amount of such Claim accruing from and after the Petition Date; (b) any punitive or exemplary damages; or (c) any fine, penalty or forfeiture. Any Claim listed in the
Schedules as disputed, contingent, or unliquidated, and for which no Proof of Claim has been timely filed, is not considered Allowed and shall be expunged without further action and without any further notice to or action, order, or approval of the Bankruptcy Court. |
| 4 |
The recovery range for Unsecured Claims that receive New Common Stock is based on a $250 million enterprise value of the Reorganized Debtors, the mid-point of Moelis’s range of the enterprise value of the
Reorganized Debtors of $200 million to $300 million as set forth in Exhibit E, and assumes that no Holder of an Allowed Unsecured Claim opts to share in the Convenience Claim Distribution. At a $200 million enterprise value, the estimated
recovery for such Unsecured Claims would be 0%. At a $300 million enterprise value, the estimated recovery for such Unsecured Claims would be 15.9% to 18.1%. |
4
|
|
|
|
|
|
|
|
|
| Class |
|
Designation |
|
Plan Treatment |
|
Estimated Size |
|
Estimated Recovery
Under the Plan |
|
|
|
|
|
|
|
|
Unsecured Claims that
share in the Convenience Claim Distribution: Unknown5 |
|
|
|
|
|
| Class 5 |
|
Intercompany Claims |
|
Unimpaired |
|
NA |
|
100% |
|
|
|
|
|
| Class 6 |
|
Subordinated Securities |
|
Impaired |
|
$06 |
|
NA |
|
|
Claims |
|
|
|
|
|
|
|
|
|
|
|
| Class 7 |
|
Intercompany Interests |
|
Unimpaired |
|
NA |
|
100% |
|
|
|
|
|
| Class 8 |
|
Existing Equity Interests |
|
Impaired |
|
126.1 million shares |
|
NA |
| |
E. |
What will Holders of Class 1 Secured ABL Claims receive under the Plan? |
In full and
complete satisfaction, discharge and release of each Class 1 Claim, each Holder of an Allowed Secured ABL Claim shall receive, on the Effective Date: its Pro Rata (after giving effect to the Secured ABL $10MM Cash Payment) share of (i)(A) the
Secured ABL/Swap Cash Payments not made prior to the Effective Date and (B) the Secured ABL/Swap Claims Excess Cash Flow Payment, and (ii) New First Lien Term Loans in an aggregate principal amount equal to (A) the amount of Allowed
Claims pursuant to Article 2.7(b) of the Plan minus (B) the amount paid in cash in respect of the Secured ABL Claims pursuant to clause (i) of Article 2.7(c) of the Plan. In addition, for the avoidance of doubt, any unpaid amounts owed to
the holders of Secured ABL Claims pursuant to Section 11 of the DIP Facility Order (including accrued interest to and including the Effective Date pursuant to clause (a) thereof) shall be due and payable in cash on the Effective Date.
| |
F. |
What will Holders of Class 2 Secured Swap Claims receive under the Plan? |
In full and
complete satisfaction, discharge and release of each Allowed Class 2 Claim, each Holder of an Allowed Secured Swap Claim shall receive, on the Effective Date: its Pro Rata share of (i)(A) the Secured ABL/Swap Cash Payments not made prior to the
Effective Date and (B) the Secured ABL/Swap Claims Excess Cash Flow Payment, and (ii) New First Lien Term Loans in an aggregate principal amount equal to (A) the amount of Allowed Claims pursuant to Article 2.8(b) of the Plan minus
(B) the amount paid in cash in respect of the Secured Swap Claims pursuant to clause (i) of Article 2.8(c) of the Plan. In addition, for the avoidance of doubt, any unpaid amounts owed to the holders of Secured Swap Claims pursuant to
Section 11 of the DIP Facility Order (including accrued interest to and including the Effective Date pursuant to clause (a) thereof ) shall be due and payable in cash on the Effective Date.
| 5 |
The Debtors are unable to provide an estimated recovery for Holders of Unsecured Claims that opt to share in the Convenience Claim Distribution, as such recovery is driven by the amount of Unsecured Claims that share in
such distribution. The Creditors Committee’s advisors, based on their assumptions and calculations, believe that the estimated recovery for Holders of Unsecured Claims with Allowed Claims less than $500,000 that opt to share the Convenience
Claim Distribution can range from approximately 10% to 26%. This estimated range is based on the Debtors’ current projection of Allowed Unsecured Claims and is based on the assumptions that (i) all Holders of General Unsecured Claims opt
to share in the Convenience Claim Distribution, (ii) all Holders of Notes Claims receive New Common Stock and do not opt to share in the Convenience Claim Distribution, (iii) Holders of Capital Lease Deficiency Claims may or may not elect
to opt to share in the Convenience Claim Distribution, and (iv) Holders of other Unsecured Claims receive New Common Stock and do not opt to share in the Convenience Claim Distribution. Accordingly, actual recoveries may be higher or lower than
the Creditors Committee’s advisors’ estimated recovery range, depending on the amount of Unsecured Claims that share in the Convenience Claim Distribution. A Holder of an Unsecured Claim that opts to share in the Convenience Claim
Distribution will not receive any further distributions under the Plan. |
| 6 |
The Debtors do not anticipate that there will be any Allowed Subordinated Securities Claims. |
5
| |
G. |
What will Holders of Class 4 Unsecured Claims receive under the Plan? |
In full and
complete satisfaction, discharge and release of each Allowed Class 4 Claim, each Holder of an Allowed Class 4 Claim shall receive its Pro Rata share of either (i) 100% of the New Common Stock, subject to dilution on account of: (a) the
conversion of the New Second Lien Convertible Notes and (b) the exercise of the New Warrants or (ii) the Convenience Claim Distribution. A Holder of an Allowed Unsecured Claim that is asserted in an amount equal to or less than $500,000
shall receive the distribution contemplated by the preceding clause (ii), unless such Holder, on a properly cast Ballot, elects to receive the distribution contemplated by the preceding clause (i). A Holder of an Allowed Unsecured Claim that is
asserted in an amount that is greater than $500,000, shall receive the distribution contemplated by the preceding clause (i), unless such Holder, on a properly cast ballot, elects to receive the distribution contemplated under the preceding clause
(ii); provided, that in making such election, such Holder agrees, to the extent such Holder’s Allowed Unsecured Claim is for an amount greater than $500,000, to reduce the amount of such Allowed Unsecured Claim for purposes of voting and
distributions under the Plan to $500,000; provided, further, that each Holder of a Capital Lease Deficiency Claim shall aggregate its Capital Lease Deficiency Claims and be deemed to have one Claim for purposes of such election.
Holders of Unsecured Claims are advised to read the Ballots carefully.
| |
H. |
What will Holders of Class 6 Subordinated Securities Claims receive under the Plan? |
In
full and complete satisfaction, discharge and release of each Allowed Class 6 Claim, each Holder of an Allowed Class 6 Claim shall receive its Pro Rata share of the New Warrants.
| |
I. |
What will Holders of Class 8 Existing Equity Interests receive under the Plan? |
In full
and complete satisfaction, discharge and release of each Allowed Class 8 Interest, each Holder of an Allowed Class 8 Interest shall receive its Pro Rata share of the New Warrants. Holders of Existing Equity Interests shall not be required to file a
Proof of Interest on account of such Interests. The Debtors, through The Depository Trust Company, as depository, will make the distribution of New Warrants to Holders of Existing Equity Interests under Article 2.14 of the Plan to holders of the
existing common stock of ANV on The Depository Trust Company’s records as of the Distribution Record Date.
| |
J. |
How do I vote on the Plan and what is the Voting Deadline? |
Detailed instructions
regarding how to vote on the Plan are contained on the applicable Ballots distributed to Holders of Claims and Interests that are entitled to vote on the Plan. For your vote to be counted, your Ballot must be completed, signed and submitted so that
it is actually received by the Balloting Agent by 4:00 p.m. (Prevailing Eastern Time) on September 28, 2015.
| |
K. |
What will I receive from the Debtors if I hold an Administrative Expense Claim, a Professional Fee Claim, a Priority Claim or a DIP Facility Claim? |
In accordance with Bankruptcy Code section 1123(a)(1), Administrative Expense Claims, Professional Fee Claims, Priority Claims and DIP Facility
Claims have not been classified and, thus, are excluded from the Classes of Claims and Interests set forth in Article II of the Plan. These Claims will be satisfied as set forth in Articles 2.1, 2.2, 2.3 and 2.4 of the Plan, respectively.
| |
L. |
What happens to my recovery if the Plan is not confirmed or the confirmed Plan does not go effective? |
In the event that the Plan is not confirmed, there is no assurance that the Debtors will be able to reorganize their business. It is possible
that any alternative may provide Holders of Claims and Interests with less than they would have received pursuant to the Plan. For a more detailed description of the consequences of an extended chapter 11 case, or of a liquidation scenario,
see “Confirmation of the Plan—Best Interests of Creditors/Liquidation Analysis,” which begins on page 48 of this Disclosure Statment, and the Liquidation Analysis attached as Exhibit D to this Disclosure Statement.
6
| |
M. |
If the Plan provides that I get a distribution, do I get it upon Confirmation or when the Plan goes effective, and what is meant by “Confirmation,” “Effective Date” and “Consummation?”
|
“Confirmation” of the Plan refers to the approval of the Plan by the Bankruptcy Court. Confirmation of the
Plan does not guarantee that you will receive the distribution indicated under the Plan. After Confirmation of the Plan by the Bankruptcy Court, there are conditions that need to be satisfied or waived so that the Plan can go effective. See
“Confirmation of the Plan,” which begins on page 48 of this Disclosure Statement, for a discussion of the conditions to confirmation and consummation of the Plan.
All distributions under the Plan with respect to Allowed Claims or Allowed Interests shall be made by the Reorganized Debtors or a
Distribution Agent selected by the Debtors. The Reorganized Debtors or the Distribution Agent will make distributions on account of Allowed Claims or Allowed Interests as of the Effective Date or as soon as reasonably practicable after the Effective
Date. The Reorganized Debtors or the Distribution Agent will make distributions to a Holder of such Allowed Claim or Allowed Interests within a reasonable period of time after such Claim or Interest becomes Allowed; provided, however,
that unless otherwise agreed by the Indenture Trustee and the Reorganized Debtors, distributions under the Plan to Holders of Notes Claims shall be made by the Reorganized Debtors to the Indenture Trustee, which, in turn, shall make the
distributions to such Holders. Subject to the Debtors’ receipt of invoices in customary form in connection therewith and without the requirement to file a fee application with the Bankruptcy Court, the Reorganized Debtors shall promptly
reimburse the Indenture Trustee for the reasonable fees and expenses incurred by the Indenture Trustee on and after the Effective Date in connection with the performance of its duties and the exercise of its rights and those of the Holders of Notes
Claims under the Plan and Confirmation Order.
| |
N. |
What are the Debtors’ Intercompany Claims and Intercompany Interests? |
In the
ordinary course of business and as a result of their corporate structure, certain of the Debtor entities hold equity of other Debtor entities and maintain business relationships with each other, resulting in Intercompany Claims and Intercompany
Interests. The Intercompany Claims reflect costs and revenues, which are allocated among the appropriate Debtor entities, resulting in Intercompany Claims.
Specifically, ANV holds an Intercompany Claim against Hycroft Resources & Development, Inc., in the amount of $948 million for the
use of proceeds from the various equity raises, the Notes offering and the drawing on the Credit Agreement by ANV. Additionally, ANV has an Intercompany Claim against the exploration entities in the amount of $68 million for payment of the annual
claims fees made for the benefit of each of the various exploration properties that such entities held until they were sold on June 29, 2015.
The Plan’s treatment of Intercompany Claims and Intercompany Interests represents a common component of a chapter 11 plan involving
multiple debtors in which the value of the going-concern enterprise may be replicated upon emergence for the benefit of creditor constituents receiving distributions under a plan. The Plan provides that the Reorganized Debtors shall reinstate
Intercompany Interests so as to preserve the Reorganized Debtors’ corporate structure as such structure existed on the Petition Date. The Plan further provides that Intercompany Claims will be adjusted, continued or discharged to the extent
determined appropriate by the Debtors, subject to the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, or, after the Effective Date, by the Reorganized Debtors in their sole discretion.
| |
O. |
Are there risks to owning the New Common Stock upon emergence from chapter 11? |
Yes.
See “Risk Factors,” which begins on page 35.
| |
P. |
Will there be releases granted to parties in interest as part of the Plan? |
Yes.
See Article IX of the Plan, which is incorporated herein by reference.
7
| |
Q. |
Why is the Bankruptcy Court holding a Confirmation Hearing and when is the Confirmation Hearing set to occur? |
Bankruptcy Code section 1128(a) requires the Bankruptcy Court to hold a hearing on Confirmation of the Plan and recognizes that any party in
interest may object to Confirmation of the Plan.
In connection with the approval of solicitation of votes to accept the Plan, the Debtors
will request that the Bankruptcy Court schedule a Confirmation Hearing and will provide notice of such hearing to all necessary parties. The Confirmation Hearing may be adjourned or continued from time to time without further notice except for an
announcement of the adjourned date made at the Confirmation Hearing or any adjournment thereof.
Objections to Confirmation of the Plan
must be filed and served on the Debtors and certain other parties prior to the Confirmation Hearing in accordance with the notice of the Confirmation Hearing.
The Debtors will publish the notice of the Confirmation Hearing, which will contain, among other things, the deadline for objections to the
Plan and the date and time of the Confirmation Hearing, in the Reno Gazette Journal, Elko Daily Free Press, Humboldt Sun and the national edition of The Wall Street Journal.
| |
R. |
What is the purpose of the Confirmation Hearing? |
The confirmation of a plan of
reorganization by a bankruptcy court binds the debtor, any issuer of securities under the plan of reorganization, any person acquiring property under the plan of reorganization, any creditor or equity interest holder of a debtor and any other person
or entity as may be ordered by a bankruptcy court in accordance with the applicable provisions of the Bankruptcy Code. Subject to certain limited exceptions, an order issued by a bankruptcy court confirming a plan of reorganization discharges a
debtor from any debt that arose before the confirmation of the plan of reorganization upon the occurrence of the effective date and provides for the treatment of such debt in accordance with the terms of the confirmed plan of reorganization.
| |
S. |
What is the effect of the Plan on the Debtors’ ongoing business? |
The Debtors are
reorganizing under chapter 11 of the Bankruptcy Code. As a result, subject to the occurrence of the Effective Date, Confirmation means that the Debtors will not be liquidated or forced to go out of business. Following Confirmation, the Plan will be
consummated on the Effective Date, which is a date that is a Business Day on or after the Confirmation Date on which (i) no stay of the Confirmation Order is in effect and (ii) the conditions to the effectiveness of the Plan specified in
Article 8.1 of the Plan have been satisfied, or if capable of being waived, waived.
On or after the Effective Date, and unless otherwise
provided in the Plan or the Confirmation Order, the Reorganized Debtors may operate their business and, except as otherwise provided by the Plan, may use, acquire or dispose of property and compromise or settle any Claims, Interests or Causes of
Action without supervision or approval by the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules.
| |
T. |
Who do I contact if I have additional questions with respect to this Disclosure Statement or the Plan? |
If you have any questions regarding this Disclosure Statement or the Plan, you may contact the Debtors’ co-counsel at the addresses and
phone numbers listed on the cover page of this Disclosure Statement. Copies of the Plan and this Disclosure Statement may be obtained by contacting the Balloting Agent, located at 830 Third Avenue, 9th Floor, New York, NY 10022, by calling
(855) 936-2883 or by emailing angballots@PrimeClerk.com.
| |
U. |
Do the Debtors recommend voting in favor of the Plan? |
Yes. The Debtors believe the Plan
provides for a larger distribution to the Holders of Claims and Interests than would otherwise result from any other available alternative. The Debtors believe the Plan, which contemplates a significant deleveraging of their balance sheet, is in the
best interests of all Holders of Claims and Interests.
8
| III. |
THE DEBTORS’ BACKGROUND |
Debtor Allied Nevada Gold Corp. (“ANV”),
a Delaware corporation, together with its Debtor and non-Debtor subsidiaries, is a U.S.-based gold and silver producer engaged in mining,7
developing and, from time to time, exploring properties in the State of Nevada. ANV’s stock has been trading on the NYSE MKT, LLC (the
“NYSE”) and the Toronto Stock Exchange (the “TSX”) since May 2007 under the symbol “ANV”.8
ANV was spun off from Vista Gold Corp. (“Vista”) in 2006 and began operations in May 2007. In connection with that certain
Arrangement and Merger Agreement between ANV, Vista and Carl and Janet Pescio (the “Pescios”), ANV acquired Vista’s Nevada-based mining properties and related assets,
including the Hycroft Mine9 and a portfolio of gold and silver exploration properties located throughout Nevada, all of which exploration properties have since been sold or released back to the
BLM (as defined below). In addition, ANV acquired the mineral property interests previously held by the Pescios, including royalty and/or other interests in a number of the properties, all of which have since been sold or released back to the BLM.
| |
A. |
Debtors’ Corporate Structure |
A diagram presenting the corporate structure of ANV
and each of its direct and indirect subsidiaries, including each Debtor and each non-Debtor entity, is attached hereto as Exhibit F. As demonstrated on Exhibit F, ANV, directly or indirectly, holds 100% of the equity interests in each
of the following (i) Debtors: Allied Nevada Gold Holdings LLC, Allied VGH Inc., Allied VNC Inc., ANG Central LLC, ANG Cortez LLC, ANG Eureka LLC, ANG North LLC, ANG Northeast LLC, ANG Pony LLC, Hycroft Resources & Development, Inc.
(“HRDI”), Victory Exploration Inc., Victory Gold Inc. and Hasbrouck Production Company LLC and (ii) non-Debtors: Allied Nevada Delaware Holdings Inc. and Allied Nevada (Cayman) Corp.
The Debtors primarily operate through ANV and its wholly-owned subsidiary HRDI. ANV is the corporate center of the Debtors and is, among other
things, responsible for all of the Debtors’ general corporate functions. HRDI owns the Hycroft Mine, which is currently, and historically has been, the Debtors’ sole operating and/or
producing mine.10 The remaining Debtors held, as of the Petition Date, interests in various exploration properties that have since been sold or released back to the BLM or are legacy entities with
no material assets or operations.
| 7 |
As described in more detail in Section V.C. below, the Debtors have recently suspended their mining operations. |
| 8 |
On March 10, 2015, ANV received notice from the NYSE that the NYSE had suspended its common stock from trading immediately and determined to commence proceedings to delist its common stock pursuant to
Section 1003(c)(iii) of the NYSE Company Guide. The NYSE’s determination was based on the filings in the Chapter 11 Cases, which contemplate that the Debtors’ existing common stock will be extinguished pursuant to the Plan. The last
day that ANV’s common stock traded on the NYSE was March 9, 2015. ANV’s common stock was delisted by the NYSE on May 12, 2015. In addition, on March 10, 2015, the TSX suspended ANV’s common stock from trading
immediately while the TSX reviewed ANV’s continued eligibility for listing under the TSX’s Expedited Review Process. On March 17, 2015, the TSX determined to delist ANV’s common stock at the close of business on April 16,
2015. The last day that ANV’s common stock traded on the TSX was March 9, 2015. On March 10, 2015, ANV’s common stock began being traded in the over-the-counter market under
the symbol “ANVGQ”. |
| 9 |
Vista acquired the deed to the Hycroft “ Mine from Henry C. Crofoot and Daniel M. Crofoot (the Crofoots”), who retained certain patented and unpatented mining claims that are leased to the Debtors in
exchange for a 4% net profit royalty payment. This mining lease also requires an annual advance payment of $120,000 every year mining occurs on the leased claims. All advance annual payments are credited against the future payments due under the 4%
net profit royalty. The total payments due under the mining lease are capped at $7.6 million, of which the Debtors have paid approximately $2.1 million through December 31, 2014. The Debtors currently estimate the remaining payments due under
the mining lease will approximate $0.1 million in 2015 and $0.2 million in each year 2016 to 2021. Patented mining claims are rights covering private land that is owned by the Crofoots. Unpatented mining claims are rights covering public land on
which the Crofoots own restricted rights to extract and develop certain mineral deposits, including gold and silver. |
| 10 |
As described in more detail in Section V.C. below, the Debtors have recently suspended their mining operations. |
9
| |
B. |
Overview of the Debtors’ Mineral Reserves and Development Projects |
| |
1. |
Hycroft Mine and Mill Expansion |
The Hycroft Mine is an open-pit
heap leach mine11 located 54 miles west of Winnemucca, Nevada. As of December 31, 2014, there were estimated proven and probable mineral reserves at the Hycroft Mine of 10.6 million
ounces of gold and 465.3 million ounces of silver, which are contained in oxide (heap leach) and sulfide (mill) ores. Additionally, the Hycroft Mine remains open to the south with the potential for further expansion which could provide
additional heap leach mineralized material. In 2014, the Hycroft Mine produced approximately 216,900 ounces of gold and 1.8 million ounces of silver from its heap leach operations.12
In September 2011, the Debtors announced and began a plan for a mill expansion project
(the “Hycroft Mill”), which would allow the Debtors to process sulfide (mill) ores and extend the operating life of the Hycroft Mine. However, due to declining metal prices and the resultant lower than expected cash flows generated
by the Debtors’ oxide mining operations, in the second quarter of 2013, the Debtors deferred the construction of the Hycroft Mill and other expansion plans. The Debtors are implementing a sulfide demonstration plant to test their ability to
process their sulfide reserves on a larger scale than previous sulfide pilot plants, the data from which the Debtors expect any potential financing source or potential purchaser of the Debtors’ assets to want to review prior to making a
decision with respect to providing the financing necessary to implement the sulfide mining operations or to considering purchasing the Debtors’ assets. The demonstration plant is expected to begin running in September 2015 and a final report
with respect to the demonstration plant should be available by the end of October 2015.
| |
2. |
Principal Products and Revenues |
The Debtors’ principal
products consist of unrefined gold bars (doré) and in-process inventories (metal-laden carbon), both of which are sent to third party refineries before being sold, generally at prevailing spot prices, to precious metals traders or financial
institutions. Doré bars and metal-laden carbon are sent to refineries to produce bullion that meets the required market standards of 99.95% pure gold and 99.90% pure silver. Under the terms of the Debtors’ refining agreements,
doré bars and metal-laden carbon are refined for a fee, and the Debtors’ share of the refined gold and the separately- recovered silver are credited to the Debtors’ account or delivered to its buyers. Although the Debtors reported
operating revenues of approximately $310.4 million for the 2014 fiscal year, the Debtors incurred a gross loss of approximately $518.9 million.
Mining operations and exploration activities are subject to various
federal, state and local laws and regulations in the U.S., which govern prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous
substances and other matters.The Debtors have obtained or have pending applications for those licenses, permits or other authorizations currently required to conduct mining, exploration and other programs. The Debtors believe that they are in
compliance in all material respects with applicable mining, health, safety and environmental statutes and the regulations passed thereunder in Nevada and the U.S. Although the Debtors are not aware of any current claims, orders or directions
relating to their business with respect to the foregoing laws and regulations, changes to, or more stringent application or interpretation of, such laws and regulations in Nevada, or in jurisdictions where the Debtors may operate in the future,
could require additional capital expenditures and increased operating and/or reclamation costs, which could adversely impact the profitability levels of the Debtors’ projects.
In addition, the Debtors are subject to regulation by the Federal Mine Safety and Health Administration (“MSHA”) under the
Federal Mine Safety and Health Act of 1977 (the “Mine Act”). MSHA inspects the Debtors’ mines on a regular basis and issues various citations and orders when it believes a violation has occurred under the Mine Act. The number
of citations and orders charged against mining operations, and the dollar penalties assessed for such citations, have generally increased in recent years.
| 11 |
Open-pit mining is a process whereby ore is reached by digging or blasting from the ground level. Heap leaching is a process by which gold or silver is extracted from ore by “heaping” the ore on impermeable
leach pads and continually applying a weak cyanide solution that dissolves the gold and silver from the ore. The gold- or silver-laden solution is then collected for gold or silver recovery.
|
| 12 |
As described in more detail in Section V.C. below, the Debtors have recently suspended their mining operations. |
10
Finally, the Debtors’ production, mining and exploration activities, to the extent
undertaken, are subject to various federal and state laws and regulations governing the protection of the environment. The Debtors’ asset retirement obligation (“ARO”), consisting of estimated future mine reclamation and
closure costs, may increase or decrease significantly in the future as a result of changes in regulations, mine plans, estimates, or other factors. The Debtors’ ARO relates to the Hycroft Mine and was recognized as a liability at fair value in
the period incurred. An ARO, which is initially estimated based on discounted cash flow estimates, is accreted to full value over time through charges to accretion expense. Resultant ARO cost assets are depreciated on a units of production method
over the related long-lived asset’s useful life. The Debtors’ ARO is adjusted annually, or more frequently at interim periods if necessary, to reflect changes in the estimated present value resulting from revisions to the timing or amount
of reclamation and closure costs.
| |
D. |
Summary of the Debtors’ Prepetition Capital Structure and Liabilities under Derivative Instruments |
| |
1. |
Prepetition Funded Indebtedness |
Credit Agreement
ANV is the borrower under the Credit Agreement, among ANV, the lender parties thereto, the Administrative Agent, and Wells Fargo and the
Administrative Agent as co-collateral agents. The obligations under the Credit Agreement are collateralized by substantially all of the Debtors’ assets and are guaranteed by all of the other Debtors. Borrowings under the Credit Agreement bear
interest per annum at either LIBOR plus 4.5% or at an Alternate Base Rate Canada (as defined in the Credit Agreement) plus 3.5%. As of the Petition Date, the total principal amount of borrowings outstanding under the Credit Agreement was
approximately $56.5 million, the total face amount of the letters of credit issued under the Credit Agreement was approximately $18.5 million (corresponding to the letters of credit posted in connection with the NBC Cross Currency Swap and SocGen
Cross Currency Swap discussed in Section III.D.2 below) and approximately $0.5 million of accrued interest was outstanding.
In addition,
as discussed below, as a result of the applicable counterparties’ exercise of early termination rights with respect to the Debtors’ Cross Currency Swaps and Diesel Swaps, the Debtors had outstanding funded indebtedness of
(a) $86,306,619.00 with respect to close-out amounts under the Secured Swaps, (b) $371,666.67 with respect to the close-out amounts under the NBC Cross Currency Swap, after realization of collateral and (c) $518,937.00 with respect to
the close-out amounts under the SocGen Cross Currency Swap, after realization of collateral.
Term and Security Deposit Loan
Agreement
On March 27, 2013, HRDI entered into a term and security deposit loan agreement (as amended, amended and restated,
supplemented or otherwise modified from time to time, the “Term and Security Deposit Loan Agreement”), with Caterpillar Financial Services Corporation (“Caterpillar”) as lender in connection with the purchase of
three electric rope shovels. Pursuant to the Term and Security Deposit Loan Agreement, up to $60.0 million (75% of the total equipment cost) was made available to HRDI for scheduled progress payments pursuant to purchase agreements for the electric
rope shovels, and up to $90.0 million was made available to HRDI in term loan financing to fund the purchase of the electric rope shovels once commissioned at the Hycroft Mine.
Under the Term and Security Deposit Loan Agreement, as electric rope shovels were commissioned, amounts previously advanced to HRDI for
security deposits, together with the remaining purchase price of each electric rope shovel, were converted to term loan obligations. Caterpillar has a first lien security interest on the electric rope shovels under the Term and Security Deposit Loan
Agreement and HRDI’s obligations thereunder are guaranteed by ANV. As of the Petition Date, $40.3 million remained outstanding on the two executed term loan obligations, which are due by 2020 and bear interest at a fixed rate of approximately
5.7%, and $18.0 million, plus $1.6 million of accrued interest, remained outstanding as advances for security deposits under the Term and Security Deposit Loan Agreement, which bear interest at an applicable rate plus three-month LIBOR, which
approximated 4.8% as of the Petition Date.
11
Jacobs Promissory Note
On October 15, 2014, HRDI issued a $7,189,706.00 promissory note (the “Jacobs Promissory Note”) to Jacobs Field Services
North America Inc. pursuant to a Release and Settlement Agreement between HRDI and Jacobs settling the action captioned Jacobs Field Services North America, Inc. v. Hycroft Resources & Development, Inc., United States District Court
for the District of Nevada Case No. 3:14-cv-00289. The Jacobs Promissory Note is secured, through a deed of trust, by a security interest in certain of HRDI’s real property, namely the Merrill Crowe Facility – Hycroft Mine, located in
Humboldt County, Nevada, which security interest is second in priority and subordinate to the security interests securing the obligations under the Credit Agreement, and HRDI’s obligations thereunder are guaranteed by ANV.As of the Petition
Date, the aggregate outstanding principal amount of the Jacobs Promissory Note was $5,189,706.
Notes
ANV has issued CDN $400.0 million of Notes pursuant to that certain indenture, dated as of May 25, 2012, by and between ANV and
Computershare Trust Company of Canada, as Indenture Trustee. The Notes are denominated in Canadian dollars, pay interest semi-annually at a rate of 8.75% per annum and mature in June 2019. The obligations under the Notes are guaranteed by all
of the Debtors except for Hasbrouck Production Company LLC. As of the Petition Date, the aggregate outstanding principal amount of the Notes was CDN $400.0 million.
| |
2. |
Liabilities Under Derivative Instruments |
Swaps with
Scotiabank
In connection with the issuance of the Notes, ANV entered into a cross currency swap with Scotiabank, a portion of which
was subsequently novated to NBC and SocGen (collectively, the “Cross Currency Swaps”), based upon a notional amount of US $400.4 million, which fixed the interest rate under the Notes to an effective rate of 8.375%. In addition, as
of December 31, 2014, the Debtors had five outstanding diesel swaps (the “Diesel Swaps” and, together with the Cross Currency Swap with Scotiabank, the “Secured Swaps”) with Scotiabank covering the year 2015
for 7.2 million gallons of diesel at an average price of approximately $2.62 per gallon, which represented approximately 60% of the Debtors’ forecasted 2015 diesel consumption. The obligations remaining under the Secured Swaps are secured
by a lien on the same assets that secure the Debtors’ obligations under the Credit Agreement on a pari passu basis. On the Petition Date, ANV received a notice of early termination from Scotiabank, which notice had the effect of
terminating each such swap with Scotiabank causing the close-out amount under each such swap to immediately become due and payable. As of March 11, 2015, which is the designated early termination date thereunder, the close-out amount under the
Secured Swaps was $86,306,619.00.
Swaps with NBC and SocGen
As described above, a portion of the Cross Currency Swaps was novated to NBC and SocGen. ANV was required to collateralize any mark-to-market
liability position of the NBC Cross Currency Swap and SocGen Cross Currency Swap in the form of either letters of credit or Cash. On the Petition Date, ANV received notices of early termination from NBC and SocGen, which notices had the effect of
immediately terminating each such swap and causing the close-out amount under each such swap to become due and payable.
As of
March 10, 2015, which is the designated early termination date with respect to the NBC Cross Currency Swap, the close-out amount owed by ANV relating to such swap was approximately $12.6 million. NBC exercised its right against letters of
credit and cash collateral granted in its favor. After realization of NBC’s collateral, the remaining unsecured deficiency Claims of NBC aggregated to $371,666.67.
As of March 11, 2015, which is the designated early termination date with respect to the SocGen Cross Currency Swap, the close-out amount
owed by ANV relating to such swap was approximately $10.37 million. SocGen exercised its right against letters of credit and cash collateral. After realization of SocGen’s collateral, the remaining unsecured deficiency Claims of SocGen are in
the amount of $518,937.00.
12
| |
3. |
Capital Lease Obligations. |
The Debtors’ capital lease
obligations (the “Capital Lease Obligations”), which are for the purchase of mining equipment, bear interest at rates between 4% and 7% and carry 60 month terms. As of the Petition Date, the Debtors owed $97.6 million in Capital
Lease Obligations. The Debtors estimate that as a result of the surrender or anticipated surrender of such equipment, there will be approximately $10.2 million to $58.1 million of Capital Lease Deficiency Claims.
As a gold and silver producer, the Debtors purchased
mining equipment, processing commodities and other inputs from numerous vendors. As of the Petition Date, the Debtors estimate that they owed approximately $33.1 million in prepetition trade debt claims, which includes amounts owed to, among others,
critical vendor claimants, shippers, warehousemen, miscellaneous lien claimants and claimants who may assert claims arising under Bankruptcy Code section 503(b)(9). As of the date of this Disclosure Statement, the Debtors have paid approximately
$10,492,586.45 to critical vendors and creditors asserting claims under Bankruptcy Code section 503(b)(9).
As of the Petition Date, 126,193,336 shares of
common stock of the Debtors were outstanding.13 As discussed above, the Debtors’ common stock was traded on the NYSE and the TSX. The Debtors’ market capitalization was approximately
$107.9 million as of the Petition Date, though the Debtors do not believe that the market capitalization was indicative of the Debtors’ value and the Debtors were insolvent as of the Petition Date.
| |
6. |
Creditor Committee and Equity Committee Investigation and Potential Claims Analysis |
Pursuant to the provisions of the Final DIP Order, the Creditors Committee was permitted to investigate, among other things, the extent and
validity of the liens and security interests asserted by the parties under the Credit Agreement. The Creditors Committee was permitted to use certain proceeds of the DIP Facility to conduct such investigations. The Creditors Committee did not find
any issues with respect to the liens and security interests asserted under the Credit Agreement. The Equity Committee reviewed and relied upon the Creditors Committee’s investigation with respect to the extent and validity of the liens and
security interests asserted by the parties under the Credit Agreement.
Further, the Creditors Committee conducted an investigation
regarding whether the estates may have claims or causes of action against the Debtors’ directors and officers resulting from the Debtors’ decision to implement the Mining Suspension Plan. The Creditors Committee’s investigation to
date has not revealed any viable estate claims against the Debtors’ directors and officers.
The Equity Committee analyzed potential
claims against the Debtors, the Debtors’ directors and officers, and certain non-debtor third parties. Based upon the Equity Committee’s analysis, the Equity Committee determined that certain potential claims were not viable. The Equity
Committee further determined that certain claims, although potentially viable, were claims that belonged to individuals (i.e., claims that the Equity Committee would not have standing to prosecute). The Equity Committee considered these
determinations and certain other remaining potential claims as a factor in its negotiation of the Existing Equity Interests Term Sheet. The Debtors do not believe any such potentially viable claims exist.
| |
7. |
Prior and Pending Litigation Proceedings |
In the ordinary course of
business, the Debtors are, from time to time, the subject of complaints or litigation in the ordinary course of the Debtors’ business. Below is a brief summary of the Debtors’ pending litigation proceedings.
The Debtors and certain of their Officers are subject to a class action securities litigation brought by certain shareholders (the
“Securities Litigation”). The plaintiffs in the Securities Litigation seek unspecified damages as a result of purported violations of federal securities laws, which violations allegedly arose out of misrepresentations and omissions
concerning the Debtors’ gold and silver mining operations at the Hycroft Mine. The Securities Litigation is ongoing. In
| 13 |
The Debtors also have 10 million shares of authorized but not issued preferred stock. |
13
addition, two shareholders filed a statement of claim in the Ontario Superior Court in Canada (the
“Canadian Litigation”) asserting substantially the same allegations as the U.S. class action complaints and seeking $80 million in damages for violations of Canadian securities laws. The Canadian Litigation is ongoing. In addition,
the Debtors and certain of their Officers are subject to a derivative action (the “Derivative Action”) seeking unspecified damages and asserting breaches of fiduciary duties by the defendants. The allegations in the Derivative
Action are substantially similar to the allegations contained in the Securities Litigation.
The costs of the Securities Litigation,
Canadian Litigation and Derivative Action are covered by the Debtors’ insurance policies, which have a total cap of $40 million with respect to indemnified claims and $50 million with respect to non-indemnified claims, with a $1.5 million
retention.
| IV. |
EVENTS LEADING TO THE COMMENCEMENT OF THE CHAPTER 11 CASES AND ENTRY INTO THE ORIGINAL RESTRUCTURING SUPPORT AGREEMENT |
| |
A. |
Events Leading to the Commencement of the Chapter 11 Cases |
A number of factors
contributed to the Debtors’ decision to pursue a restructuring through the chapter 11 process. Over the two years prior to the Petition Date, despite a nearly doubling of gold and silver ounces sold, revenue increased only modestly, mainly due
to declining gold and silver prices. Gold and silver sales represent 100% of the Debtors’ revenues and, accordingly, the market prices of gold and silver significantly impact the Debtors’ financial position, operating results, and cash
flows. The market price of gold peaked at $1,895 per ounce in August 2011. As of March 9, 2015, gold closed at $1,168.50 per ounce, down approximately 38% from the 2011 peak and down 16% from the last twelve-month high of $1,385 per ounce.
Similarly, the market price per silver ounce decreased approximately 46.8% over the two years prior to the Petition Date, from $29.95 per ounce as of December 31, 2012 to $15.92 per ounce as of March 9, 2015.
Despite the Debtors’ prepetition efforts to increase revenue, decrease costs, sell non-core assets, reduce or delay capital expenditures
and raise capital to address the Debtors’ liquidity constraints, the Debtors’ liquidity continued to deteriorate. In an effort to meet their liquidity needs, during 2014 the Debtors increased their borrowing capacity under the Credit
Agreement by $35.0 million, sold a mineral property for $20.0 million and completed a public offering of common stock and warrants for $21.8 million. Despite these efforts, the Debtors’ cash and cash equivalents decreased from $81.5 million at
December 31, 2013 to $7.6 million at December 31, 2014. The continuing loss of liquidity was largely due to (a) the drop in gold and silver prices in the years leading up to the Petition Date, (b) an overleveraged capital
structure, the servicing of which requires significant capital resources, (c) the significant contractual capital requirements and delay of the Hycroft Mill expansion project and (d) exposure under the Cross Currency Swaps. Each of these
factors is discussed in greater detail below.
| |
1. |
Decreased Gold and Silver Prices |
As discussed above, the market
prices for gold and silver declined substantially from previous highs, which had a direct negative impact on earnings and cash flows derived from the Debtors’ operations. The Debtors’ average operating margin per gold ounce sold decreased
approximately 66% to $295 in 2014 from $854 in 2012, thereby straining the Debtors’ ability to fund their operations, service their debt and fund capital requirements.
| |
2. |
Overleveraged Capital Structure |
The Debtors’ prepetition
capital structure placed a significant burden on free cash flow and contributed to the depletion of existing cash balances. As discussed above, prior to the Petition Date, the Debtors had, among other things, substantial (a) Capital Lease
Obligations related to the purchase of expensive equipment for their planned use in the Hycroft Mill expansion project, which bear interest at rates between 4% and 7%, (b) semi-annual interest payment obligations under the Notes and (c) an
almost fully-drawn $75.0 million revolving loan under the Credit Agreement.
14
| |
3. |
Exposure under the Cross Currency Swaps |
As discussed above, the
Debtors had significant exposure under the Cross Currency Swaps and were required to collateralize any mark-to-market liability position under the Cross Currency Swaps with NBC and SocGen with either letters of credit or cash. Pursuant to the Cross
Currency Swaps with NBC and SocGen, the Debtors had posted approximately $18.5 million in letters of credit, which were issued under the Credit Agreement, and approximately $3.6 million in cash, contributing to the Debtors’ prepetition
liquidity position.
| |
4. |
Capital Requirements and Delay of the Hycroft Mill Expansion Project |
From 2012 to 2014, the Debtors incurred approximately $668.9 million of capital expenditures for plant and equipment in connection with the
expansion efforts of the Hycroft Mine, the majority of which related to the Hycroft Mill, including mills and mill-related components, a crushing system, and engineering and infrastructure costs. During that same time period, the Debtors repaid an
additional $113.2 million in principal of financed capital expenditures for the Hycroft Mine’s expanded mobile mine equipment fleet. The Debtors’ cash and cash equivalents, sources of liquidity and capital resources were depleted as the
Debtors sought to satisfy the Hycroft Mine’s capital requirements.
During 2013 and 2014, the Debtors were unable to raise the
remaining capital required to complete the construction of the Hycroft Mill, which, as of November 2014, was estimated at $1.39 billion. Specifically, in May 2014, the Debtors undertook a strategic process to finance the expansion of the Hycroft
Mine. Over 60 parties were approached to provide financing, acquire a stake in the Debtors or acquire the Debtors. Not a single buyer expressed interest in a sale or financing at a price that would enable the Debtors to finance the construction of
the Hycroft Mill. The Debtors’ inability to fund the construction of the Hycroft Mill prevented the Debtors from increasing annual mine production to approximately 450,000 ounces of gold and 23.0 million ounces of silver per year – quantities which would increase revenues and total cash flows from operations using current metal prices.14 Although the Debtors
invested significant capital in the expansion of the Hycroft Mine, in particular for the Hycroft mills and motors, they will not be able to realize any significant operational benefits until the Hycroft Mill is constructed, commissioned and
operational. However, due to the lack of liquidity and over-levered balance sheet, the Debtors were unable to raise the $1.39 billion necessary to commence and implement the Hycroft Mill expansion project
| |
B. |
Prepetition Restructuring Initiatives and the Original Restructuring Support Agreement |
Faced with the foregoing issues, the Debtors proactively sought to right-size their capital structure and to position themselves for ongoing
success in the current industry and economic environment. To this end, beginning in December 2014, the Debtors engaged legal advisors and, in January 2015, financial advisors to explore various restructuring alternatives. The Debtors and their
advisors commenced negotiations with certain of their lenders under the Credit Agreement as well as the Consenting Noteholders, and their respective advisors, regarding terms of a potential restructuring that would de-lever the Debtors’ balance
sheet and enable the Debtors to implement a financial and operational restructuring. After extensive, good faith and arm’s-length negotiations, the Debtors ultimately reached an agreement with the Initial Consenting Noteholders (as defined in
the Original Restructuring Support Agreement) and the Initial Secured Lenders, which was formalized by the Original Restructuring Support Agreement. As discussed in Section V.D. below, on July 23, 2015, the Original Restructuring Support
Agreement was amended and restated pursuant to the terms thereof by the Amended and Restated Restructuring Support Agreement.
| V. |
EVENTS DURING THE CHAPTER 11 CASES |
| |
A. |
The First and Second Day Pleadings and Other Case Matters |
| |
1. |
The First and Second Day Pleadings |
To facilitate the
administration of the Chapter 11 Cases and minimize disruption to the Debtors’ operations, the Debtors filed certain “first day” and “second day” motions and applications with the Bankruptcy Court on the Petition Date and
thereafter seeking certain relief. The relief sought in the “first day” and “second day” pleadings facilitated the Debtors’ seamless transition into chapter 11 and aided in the preservation of the Debtors’ going-concern
value. Specifically, the
| 14 |
As of March 9, 2015, gold closed at $1,168.50 per ounce and silver closed at $15.92 per ounce. |
15
Debtors, among other things, sought authority to: (i) obtain secured postpetition financing (as discussed
below); (ii) pay certain employee, insurance and tax obligations; (iii) pay claims of certain critical vendors, shippers, warehousemen, miscellaneous lien claimants and claimants who may assert claims arising under Bankruptcy Code section
503(b)(9); (iv) provide adequate assurance of payment to certain utility providers; and (v) maintain their cash management system. In addition, the Debtors sought to (a) establish procedures for the sale of certain de minimis
assets; (b) retain various professionals of the Debtors; and (c) establish procedures for the retention of ordinary course professionals and compensation of various other professionals.
| |
2. |
The Sale of the Debtors’ Exploration Properties |
On
March 31, 2015, the Debtors filed the Debtors’ Motion for Orders (I)(A) Authorizing Selling Debtors’ Entry into the Stalking Horse Purchase Agreement for the Sale of the Selling Debtors’ Exploration Properties and Related
Assets, (B) Approving Bidding Procedures and Bid Protections, (C) Scheduling a Hearing to Consider Approval of the Sale of Assets, (D) Approving Form and Manner of Notice of Sale, and (E) Granting Related Relief; and (II)(A)
Authorizing and Approving the Sale of the Selling Debtors’ Assets Free and Clear of Liens, Claims, Interests and Encumbrances, (B) Authorizing the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases, and
(C) Granting Related Relief [Docket No. 133] (the “Sale Motion”) seeking authority to enter into a stalking horse purchase agreement with Clover Nevada LLC for the sale of certain of the Debtors’ exploration
properties and related assets and seeking approval of bidding procedures in connection therewith. On April 24, 2015, the Bankruptcy Court entered an order approving the bidding procedures with respect to the Sale Motion. On June 18, 2015,
the Bankruptcy Court entered an order approving the sale of the exploration properties to Clover Nevada LLC. On June 29, 2015, the Debtors and Clover Nevada LLC closed on the sale of the exploration properties.
On May 11, 2015, the Debtors
filed the Debtors’ Motion for Entry of an Order (A) Authorizing and Approving the Debtors’ Key Employee Incentive Program and (B) Granting Related Relief [Docket No. 362] seeking to
implement a key employee incentive program (the “Non-Insider KEIP”) for 95 non-insider employees (the “Non-Insider KEIP Participants”) for Q2 and Q3 2015 based on the attainment of certain operational
and/or strategic goals. On May 29, 2015, the Bankruptcy Court entered an order authorizing and approving the Debtors’ implementation of the Non-Insider KEIP. The Non-Insider KEIP Participants earned $208,092 in the aggregate for Q2 2015 on
account of the Non-Insider KEIP. The Debtors paid the awards earned under the Non-Insider KEIP for Q2 2015 but discontinued the Non-Insider KEIP for Q3 2015.
On April 28, 2015, each of the Debtors filed a
schedule of assets and liabilities, schedule of executory contracts and unexpired leases, and statement of financial affairs pursuant to Bankruptcy Code section 521, the Official Bankruptcy Forms and the Bankruptcy Rules (collectively, the
“Schedules”). On May 15, 2015, the Bankruptcy Court entered an order (the “Bar Date Order”) establishing June 24, 2015 at 4:00 p.m. (Prevailing Eastern Time) as the deadline for each entity to file Proofs
of Claim based on prepetition Claims. Additionally, the Bar Date Order established separate deadlines for the filing of Claims arising from the Debtors’ rejection of executory contracts and unexpired leases, claims filed by governmental units
(as defined in Bankruptcy Code section 101(27)) and Claims that the Debtors have amended in the Debtors’ Schedules. As of August 6, 2015, approximately 1,022 Proofs of Claim had been filed against the Debtors, asserting approximately
$8,364,563,029.96 in aggregate Claims.
| |
5. |
The Appointment of the Creditors Committee |
On March 19, 2015,
the US Trustee appointed a statutory committee of unsecured creditors in the Chapter 11 Cases (the “Creditors Committee”) pursuant to Bankruptcy Code section 1102. The Creditors Committee consists of three members:
(i) Computershare Trust Company of Canada, as Indenture Trustee to the Notes (the “Indenture Trustee”); (ii) FLSmidth US Inc.; and (iii) International Lining Technology. The Creditors Committee engaged Arent Fox LLP
and Polsinelli PC as its counsel, Zolfo Cooper, LLC as its financial advisor and SRK Consulting as its mining expert.
16
| |
6. |
The Appointment of the Equity Committee |
On April 10, 2015,
the US Trustee appointed a statutory committee of equity security holders in the Chapter 11 Cases (the “Equity Committee”) pursuant to Bankruptcy Code section 1102. The Equity Committee originally consisted of five members:
(i) James Anderson; (ii) John Connor; (iii) Ajay Maskar; (iv) George Murphy; and (v) Michael Richey. Since the appointment of the Equity Committee, the composition of the Equity Committee has been reconstituted from time to
time. The Equity Committee currently consists of three members: (i) John Connor; (ii) Ajay Maskar; and (iii) Michael Richey. The Equity Committee originally sought to engage Susman Godfrey L.L.P. and Ashby & Geddes, P.A. as
its counsel, Peter J. Solomon Company as its financial advisor and Behre Dolbear Group, Inc.as its mining consultant (collectively, the “Prior Equity Committee Advisors”). The Prior Equity Committee Advisors are no longer
representing the Equity Committee. The Equity Committee subsequently engaged LeClairRyan, A Professional Corporation and Cole Schotz P.C. as its counsel, Navigant Consulting as its financial advisor and Runge, Inc. d/b/a RungePincockMinarco as its
technical mining expert. The Equity Committee has sought to retain Gordian Group, LLC as its investment banker.
| |
B. |
Debtor in Possession Financing |
On the Petition Date, the Debtors filed a motion seeking
authority to (i) obtain a $78 million DIP Facility, (ii) grant liens and superpriority claims to the DIP Lenders, (iii) utilize cash collateral of Prepetition Secured Parties and (iv) grant adequate protection to the Prepetition
Secured Parties. On March 12, 2015, the Bankruptcy Court entered an order authorizing the Debtors to borrow up to $35 million of principal amount of the total $78 million on an interim basis (the “Interim DIP Order”). On
April 17, 2015, the Bankruptcy Court entered an order authorizing the Debtors to borrow the full $78 million DIP Facility on a final basis (the “Final DIP Order”).
The DIP Facility (x) is junior to (i) the Carve-Out (as defined in the Final DIP Order) and (ii) the Prepetition Liens,
Permitted Liens and Prepetition Lender Replacement Liens (each as defined in the Interim DIP Order), and (y) pays interest on a monthly basis at the rate of 12% per annum, 6% to be paid in cash and 6% to be paid in kind; provided,
however, that upon occurrence of certain trigger events set forth in the Final DIP Order, all interest under the DIP Facility shall be paid in Cash. Such trigger events occur if: (1) the loans under the DIP Facility are repaid in their
entirety in cash or (2) the loans under the DIP Facility are repaid, or are required to be repaid, prior to the scheduled maturity date under the DIP Facility (including by voluntary prepayment, mandatory prepayment, upon acceleration or
otherwise).
The proceeds of the DIP Facility shall be used in a manner consistent with the DIP Credit Agreement and the Approved Budget
(as defined in the DIP Credit Agreement). The DIP Facility will mature one year from the execution of the DIP Credit Agreement, on March 12, 2016, unless terminated earlier upon the occurrence of certain events set forth in the DIP Credit
Agreement.
The Debtors believe that the DIP Facility provides the Debtors with the necessary financing to meet their needs through
consummation of the Plan. As of the date hereof, the total amount due and owing under the DIP Facility is $60 million (exclusive of pay-in-kind interest).
| |
C. |
Mining Suspension Plan and Compensation Plans |
Since the Petition Date, a number of
factors have severely impeded the Debtors’ mining operations. First, the Debtors have experienced high employee turnover which has resulted in reduced productivity, a lower amount of ore being placed on the pads and a reduction in the
effectiveness and timeliness of getting the ore under leach. Second, the leach kinetics (i.e., the rate and timing at which ounces of gold and silver are recovered from the ore) of the ore placed on the leach pads in Q4 2014 and Q1 2015 have been
slower than projected, resulting in a reduction of 17,000 ounces of gold production versus forecast. Third, the Debtors have experienced several issues with vendors due to the pendency of the Chapter 11 Cases. Finally, the market price of gold
remains below the forecasted price, thereby curtailing operating margins. Each of these challenges is discussed in more detail below.
| |
1. |
Reduced Employee Productivity |
The Hycroft Mine is located outside
of Winnemucca, Nevada. There are a number of other mining operations in the region, two of which—Barrick Gold Corporation and Newmont Mining Corporation—are among the world’s largest mining companies. The Debtors compete for
employees, including, and especially, senior employees, with these nearby
17
mining operations. Since the Petition Date, certain of the local mining companies have held job fairs in
Winnemucca and have capitalized on the Debtors’ bankruptcy to attract the Debtors’ most experienced employees. In addition, the Debtors have lost employees to local construction companies, some of whom offer higher compensation than the
Debtors and more stable employment opportunities.
The combination of competitors poaching the Debtors’ employees by providing more
desirable compensation and benefits packages and the surge in construction hiring has resulted in extremely high employee turnover during the Debtors’ time in bankruptcy. Specifically, as of July 8, 2015, the Debtors had lost 105 employees
as a result of voluntary resignations since the Petition Date, 23 of whom were in key supervisory and/or managerial roles. The Debtors entered bankruptcy with 420 employees and only had 368 employees prior to July 8, 2015, with many of the
replacements for the 105 departed employees having little to no mining experience prior to their employment by the Debtors.
In order to
continue operations through July 8, 2015, the Debtors had to find new employees to fill these vital roles. However, despite hiring several highly regarded recruitment firms, the Debtors had difficulty finding experienced employees to replace
the loss of experienced employees. Experienced candidates with training and expertise are often able to choose among multiple employment options, including mining facilities in more favorable locations than Winnemucca, Nevada or with companies that,
unlike the Debtors, are not in bankruptcy. Consequently, in order to fill pivotal roles, the Debtors had to hire employees with substantially less than optimal mining experience, which contributed toward (i) reduced productivity, (ii) a
lower amount of ore being placed on the pads, and (iii) a lower volume of gold and silver being recovered from the processing plant. Overall, the net effect of the productivity decline arising from the Debtors’ employee issues was a 40%
reduction in tons mined/hour.
The Debtors have also experienced slower
than projected leach kinetics, largely because the material placed on the leach pads since late 2014 has been significantly more hydrophobic15
than expected. Consequently, the material has not been absorbing the cyanide solution as quickly as anticipated, which has required the Debtors to use a higher concentration of cyanide and delayed the Debtors’ ability to mobilize the gold and
silver from the leach pads.
From the Petition Date through June 30, 2015, the Debtors produced 37,000 fewer ounces of gold than
projected in the Debtors’ February 2015 business plan (the “February Business Plan”). Revenues for the same period, using the budgeted $1,200 price of gold, were approximately $44.4 million lower than projected in the February
Business Plan and $42.8 million lower than projected in the February Business Plan based on gold prices as of July 8, 2015. 17,000 ounces of the 37,000 ounce shortfall (accounting for approximately 46% of the decline in revenue versus forecast)
is attributable to the slower leach kinetics. The reduced production coupled with the associated fixed costs and other challenges has caused the Debtors’ mining operations to operate at a loss.
In addition, the Debtors have struggled in their
negotiations with several important vendors as a result of the pendency of the Chapter 11 Cases. Many of the Debtors’ key vendors refused to meet the Debtors’ supply requirements, largely because of the fact that the Debtors are in
bankruptcy. In fact, in several instances, vendors that do not have contracts with the Debtors refused to do business altogether with the Debtors. As a result, the Debtors were unable to commission the construction of a new leach pad, in accordance
with their original operational plans, because no vendor was willing to timely construct the leach pad on commercially reasonable terms. Other vendors chose to allocate their resources elsewhere
and only delivered a portion of their contractual commitments to the Debtors.16 Indeed, the trucking company that transports the Debtors’ lime, a key ingredient in the leaching process, was
only delivering 80% of the contractually committed lime deliveries to the Debtors, and the Debtors were unable to fill this shortfall from other vendors. This directly contributed to the delay in the tonnage of ore that was placed on the leach pads.
| 15 |
“Hydrophobic” refers to material that is so dry that it does not absorb water-based solutions adequately. |
| 16 |
The Debtors are assessing potential breach of contract claims against such vendors. |
18
| |
4. |
Low Gold Prices and Low Operating Margins |
In addition to the reduced
employee productivity, slower leach kinetics and vendor issues, the Debtors have also experienced adverse conditions in the gold market against which the Debtors operate. The February Business Plan was built on a gold price of $1,200 per ounce.
Since the Petition Date, however, gold prices have averaged less than $1,190 per ounce, and gold was trading at approximately $1,158 per ounce as of July 8, 2015, a significant decrease from the peak market price of $1,895 per ounce in August
2011. As a result of the depressed gold prices, the Debtors’ mining operations generated lower than forecasted revenue.
The
Debtors’ productivity issues are further exacerbated by the low-grade nature of their ore reserves. As of December 31, 2014, the Debtors’ proven and probable heap leach reserves contained 0.009 and 0.007 gold ounces per ton,
respectively, and 0.24 and 0.20 silver ounces per ton, respectively. This is significantly below industry average. In order to recover sufficient gold and silver to be profitable, the Debtors would be required to mine substantially more ore than if
their reserves contained higher-grade ore. As a result, the productivity issues described above are exponentially more harmful to the profitability of the Debtors’ mining operations than they would be to a mine with higher-grade ore. At low
productivity levels and low gold prices, mining the ore is not profitable.
| |
5. |
Implementation of the Mining Suspension Plan and Compensation Plans |
The employee attrition, vendor difficulties and slower leach kinetics appear to be long-term problems, and there is no indication that market
gold prices will rebound in the near term. The Debtors’ low-grade ore and the limited resulting margins make these issues even more problematic as they magnify the negative impact of these problems.Accordingly, as these challenges are likely to
continue or increase further as the Debtors progress through chapter 11, to maximize estate value and reduce costs, on July 8, 2015, the Debtors initiated a mining suspension plan (the
“Mining Suspension Plan”).17 Pursuant to the Mining Suspension Plan, the Debtors suspended mining operations and terminated approximately 230 of 368 employees. However, the
Debtors continue to, among other things, produce and sell the approximately 260,000 ounces of gold (and additional silver) that were on the heap leach pads as of July 8, 2015, complete and run (at least on an initial provisional basis) a
sulfide demonstration plant and collect data related thereto, and comply with environmental and other regulatory requirements related to the Mining Suspension Plan, including continuing controls related to flows to and from the pads (collectively,
the “Ongoing Operations”). The Debtors are implementing a sulfide demonstration plant to test their ability to process their sulfide reserves on a larger scale than previous sulfide pilot plants. The demonstration plant is expected
to begin running in September 2015 and a final report with respect to the demonstration plant should be available by the end of October 2015. The Debtors expect that any potential financing source or potential purchaser of the Debtors’ assets
will want to review the data from the sulfide demonstration plant prior to making a decision with respect to providing the financing necessary to implement the sulfide mining operations or to considering purchasing the Debtors’ assets. The
Mining Suspension Plan will allow the Reorganized Debtors the flexibility to determine post-emergence the best way to maximize value, whether through recommencing operations or through a sale of the Debtors’ assets.
As a result of the Mining Suspension Plan, the Debtors determined that they no longer required certain equipment for their Ongoing Operations.
On July 30, 2015, Caterpillar Financial Services Corporation (“CAT Financial”) and Bank of America Leasing and Capital (“BAL”) filed motions to lift the automatic stay to take possession of certain equipment
under their capital leases [Docket Nos. 782 and 786]. On August 3, 2015, Atlas Copco Customer Finance LLC (“Atlas Copco”) noticed a hearing on its motion to lift the stay to take possession of certain equipment. The Debtors
reached consensual resolutions with CAT Financial, BAL and Atlas Copco regarding the return of certain equipment and the retention of certain other equipment. On August 19, 2015, the Bankruptcy Court entered orders modifying the automatic stay
to allow CAT Financial, BAL and Atlas Copco to take possession of certain equipment under their capital leases. The Debtors are currently discussing with other lessors the return of certain additional equipment that they no longer require for their
Ongoing Operations.
| 17 |
The Debtors and their key constituents considered alternatives to the Mining Suspension Plan, including shutting down the Debtors’ operations completely, but ultimately determined that suspending operations
presented the best opportunity to maximize value for the Debtors’ estates and their stakeholders. |
19
On July 8, 2015, the Debtors filed the Debtors’ Motion for Entry of an Order
(I) Authorizing and Approving Debtors’ (A) Key Employee Incentive Plan, (B) Non-Insider Key Employee Retention Plan and (C) Severance Plan and (II) Granting Related Relief [Docket No. 672], seeking to
implement a key employee incentive plan for 4 insider-employees, a tier-based key employee retention plan for 51 non-insider employees, and a tier-based severance plan for all of the Debtors’ remaining employees to stabilize the Debtors’
remaining workforce to continue to allow them to implement the Mining Suspension Plan and their Ongoing Operations and key business functions (collectively, the “Compensation Plans”). On August 19, 2015, the Bankruptcy Court
entered an order authorizing and approving the Debtors’ implementation of the Compensation Plans.
| |
D. |
Events Leading up to the Debtors’ Entry into the Amended and Restated Restructuring Support Agreement |
As described in Section V.C. above, the Debtors implemented the Mining Suspension Plan on July 8, 2015 as a result of extraordinary
challenges, including (i) massive employee attrition, (ii) a refusal by key vendors to contract with the Debtors on commercially reasonable terms, (iii) a materially slower than forecasted recovery rate of gold and silver ounces from
the Debtors’ ore, and (iv) continuing low gold prices. Once it became apparent to the Debtors that they would be required to suspend mining operations at the Hycroft Mine, the Debtors began negotiating modifications to the Original
Restructuring Support Agreement with the Plan Support Parties, premised on a “suspension” case business plan. Additionally, the Debtors discussed certain modifications to the Original Restructuring Support Agreement and the chapter 11 plan
contemplated thereby with the Creditors Committee. These negotiations led to the Debtors’ entry into the Amended and Restated Restructuring Support Agreement on July 23, 2015, which
amended and restated the Original Restructuring Support Agreement18 in accordance with the terms thereof. On July 23, 2015, the Debtors filed the Debtors’ Motion for an Order
Authorizing the Debtors to (I) Assume the Amended and Restated Restructuring Support Agreement and (II) (A) Enter into the Exit Facility Commitment Letter, (B) Pay Fees and Expenses in Connection Therewith and (C) Provide
Related Indemnities [Docket No. 755] (the “RSA Assumption and Exit Financing Motion”), seeking, among other things, approval of (i) the Debtors’ assumption of the Amended and Restated Restructuring Support
Agreement to secure, subject to certain limitations, the Plan Support Parties’ support of the Plan, (ii) the payment of certain fees thereunder, and (iii) the Debtors’ entry into the Exit Facility Commitment Letter with the Exit
Facility Lenders to secure the funding of the Exit Facility in an amount up to $80.0 million. On August 27, 2015, the Bankruptcy Court entered an order granting the RSA Assumption and Exit Financing Motion [Docket No. 926].
| |
E. |
Agreements with Creditors Committee and Equity Committee |
On August 19, 2015, the
Debtors filed the Notice of Agreements in Principle with Official Committee of Unsecured Creditors and Official Committee of Equity Security Holders [Docket No. 864] to announce that the Debtors and the Requisite Consenting Noteholders
had reached agreements in principle with the Creditors Committee and the Equity Committee as to certain modifications to the Plan. As a result of the modifications reflected in the Plan, the Debtors have secured the support of all of the key
constituencies in the Chapter 11 Cases for approval of the Plan.
| VI. |
SUMMARY OF THE PLAN19 |
| |
A. |
General Basis for the Plan |
The contours of the Plan (as set forth in the Plan and
described herein) are designed to provide for the restructuring of the Debtors’ liabilities in a manner designed to maximize recovery to stakeholders and to enhance the financial viability of the Reorganized Debtors.
| 18 |
Wells Fargo was a party to the Amended and Restated Restructuring Support Agreement. Since the execution of the Amended and Restated Restructuring Support Agreement, Wells Fargo has sold to Mudrick Distressed
Opportunity Fund Global, LP and Blackwell Partners (collectively, “Mudrick”) all of Wells Fargo’s rights and obligations as a lender under the Credit Agreement. Mudrick has executed a Joinder Agreement in its capacity as the
Holder of the Claims transferred to it by Wells Fargo and otherwise in accordance with Section 3(c) of the Amended and Restated Restructuring Support Agreement. |
| 19 |
This Section VI is intended only to provide a summary of the key terms, structure, classification, treatment, and implementation of the Plan, and is qualified in its entirety by reference to the entire Plan and exhibits
thereto. Although the statements contained in this Disclosure Statement include summaries of the provisions contained in the Plan and in documents referred to therein, this Disclosure Statement does not purport to be a precise or complete statement
of all such terms and provisions, and should not be relied on for a comprehensive discussion of the Plan. Instead, reference is made to the Plan and all such documents for the full and complete statement of such terms and provisions. The Plan itself
(including attachments) will control the treatment of Claims and Interests under the Plan. To the extent there are any inconsistencies between this Section VI and the Plan (including attachments) the Plan shall govern. |
20
| |
B. |
Treatment of Unclassified Claims |
| |
1. |
Administrative Expense Claims. |
In full and final satisfaction,
settlement, release and discharge of each Administrative Expense Claim, except to the extent that a Holder of an Allowed Administrative Expense Claim and the Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be
unreasonably withheld, or the Reorganized Debtors, agree in writing to less favorable treatment for such Administrative Expense Claim, the Debtors (or the Reorganized Debtors, as the case may be) shall pay to each Holder of an Allowed Administrative
Expense Claim, as applicable, Cash in an amount equal to such Allowed Administrative Expense Claim on, or as soon thereafter as is reasonably practicable, (a) the Effective Date or, if payment is not then due, (b) on the due date of such
Administrative Expense Claim. Except as otherwise provided by the Plan, any request for the payment of an Administrative Expense Claim that is not filed and served within thirty (30) days after the Effective Date shall be discharged and forever
barred and the Holder of such Administrative Expense Claim shall be enjoined from commencing or continuing any action, process or act to collect, offset or recover on such Administrative Expense Claim against any of the Debtors or Reorganized
Debtors.
The Transaction Expenses incurred, or estimated to be incurred, up to and including the Effective Date shall be paid in full in
Cash on the Effective Date (to the extent not previously paid during the course of the Chapter 11 Cases) without the requirement to file a fee application with the Bankruptcy Court or a formal request for payment prior to the Administrative Bar
Date, and without any requirement for Bankruptcy Court review; provided, however, that copies of invoices for payment of Transaction Expenses shall be provided contemporaneously to the Debtors or Reorganized Debtors, as applicable, the
U.S. Trustee, the Creditors Committee, and the Equity Committee.
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2. |
Professional Fee Claims. |
All Professionals seeking allowance by
the Bankruptcy Court of Professional Fee Claims shall file their respective final applications for allowance of compensation for services rendered and reimbursement of expenses incurred by the date that is thirty (30) days after the Effective
Date. Allowed Professional Fee Claims shall be paid in full (i) upon the later of (A) the Effective Date and (B) the date upon which the order relating to any such Allowed Professional Fee Claim is entered by the Bankruptcy Court or
(ii) upon such other terms as may be mutually agreed upon between the Holder of such an Allowed Professional Fee Claim and the Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, or
the Reorganized Debtors. The Reorganized Debtors are authorized to pay compensation for services rendered or reimbursement of expenses incurred after the Effective Date in the ordinary course and without the need for Bankruptcy Court approval. All
requests for the approval of retention applications and the allowance by the Bankruptcy Court of Professional Fee Claims asserted by the Prior Equity Committee Advisors shall be filed by the date that is thirty (30) days after the Effective
Date.
In full and final satisfaction, settlement,
release and discharge of each Allowed Priority Claim, except to the extent that a Holder of an Allowed Priority Claim agrees to less favorable treatment, each Holder of an Allowed Priority Claim due and payable on or before the Effective Date shall,
upon the later of (A) the Effective Date or as soon thereafter as reasonably practicable and (B) the date upon which the Priority Claim comes due, be: (i) paid in full in Cash; (ii) Unimpaired and Reinstated; or
(iii) treated on such other terms as may be agreed upon by such Holder and the Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, or Reorganized Debtors, as applicable, or otherwise
determined by an order of the Bankruptcy Court.
In full and final satisfaction, settlement,
release and discharge of each Allowed DIP Facility Claim, each Holder of an Allowed DIP Facility Claim, on the Effective Date, shall be paid its Pro Rata share of the DIP Facility Consideration; provided, however, that only the DIP
Backstop Lenders shall receive their Pro Rata share (calculated based on the amount of Allowed DIP Facility Claims held by each of the DIP Backstop Lenders relative to each other) of the 3.0% Backstop Put Option Payment. For the avoidance of doubt,
the DIP Facility Consideration shall be paid in its entirety from the proceeds of the Exit Facility.
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| |
C. |
Classification and Treatment of Claims and Interests |
| |
1. |
Class 1 – Secured ABL Claims |
a. Classification. Class 1
consists of all Secured ABL Claims.
b. Allowance. Class 1 Claims shall be Allowed Claims pursuant to the Plan in the aggregate
amount of $75,411,229.34 (including $74,950,000.00 in principal and $461,229.34 in accrued and unpaid interest and fees as of the Petition Date), less (i) the Secured ABL $10MM Cash Payment and (ii) the Secured ABL Claims’ Pro
Rata (after giving effect to the Secured ABL $10MM Cash Payment) share of the amount of Secured ABL/Swap Cash Payments made prior to the Effective Date.
c. Treatment. In full and complete satisfaction, discharge and release of each Class 1 Claim, each Holder of an Allowed Class 1 Claim
shall receive, on the Effective Date: its Pro Rata (after giving effect to the Secured ABL $10MM Cash Payment) share of (i)(A) the Secured ABL/Swap Cash Payments not made prior to the Effective Date and (B) the Secured ABL/Swap Claims Excess
Cash Flow Payment, and (ii) New First Lien Term Loans in an aggregate principal amount equal to (A) the amount of Allowed Claims pursuant to Article 2.7(b) of the Plan minus (B) the amount paid in cash in respect of the Secured ABL
Claims pursuant to clause (i) of Article 2.7(c) of the Plan. In addition, for the avoidance of doubt, any unpaid amounts owed to the holders of Secured ABL Claims pursuant to Section 11 of the DIP Facility Order (including accrued interest
to and including the Effective Date pursuant to clause (a) thereof) shall be due and payable in cash on the Effective Date.
d.
Impairment and Voting. Class 1 Claims are Impaired and the Holders thereof are entitled to vote on the Plan.
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2. |
Class 2 – Secured Swap Claims |
a. Classification.
Class 2 consists of all Secured Swap Claims.
b. Allowance. Class 2 Claims shall be Allowed Claims pursuant to the Plan in the
aggregate principal amount of $86,306,619.00 less the Secured Swap Claims’ Pro Rata share of the amount of Secured ABL/Swap Cash Payments made prior to the Effective Date.
c. Treatment. In full and complete satisfaction, discharge and release of each Class 2 Claim, each Holder of an Allowed Class 2 Claim
shall receive, on the Effective Date: its Pro Rata share of (i)(A) the Secured ABL/Swap Cash Payments not made prior to the Effective Date and (B) the Secured ABL/Swap Claims Excess Cash Flow Payment, and (ii) New First Lien Term Loans in
an aggregate principal amount equal to (A) the amount of Allowed Claims pursuant to Article 2.8(b) of the Plan minus (B) the amount paid in cash in respect of the Secured Swap Claims pursuant to clause (i) of Article 2.8(c) of the
Plan. In addition, for the avoidance of doubt, any unpaid amounts owed to the holders of Secured Swap Claims pursuant to Section 11 of the DIP Facility Order (including accrued interest to and including the Effective Date pursuant to clause
(a) thereof ) shall be due and payable in cash on the Effective Date.
d. Impairment and Voting. Class 2 Claims are Impaired
and the Holders thereof are entitled to vote on the Plan.
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3. |
Class 3 – Other Secured Claims |
a. Classification.
Class 3 consists of all Other Secured Claims against the Debtors.
22
b. Treatment. In full and complete satisfaction, discharge and release of each Allowed
Class 3 Claim, except to the extent a Holder of an Allowed Class 3 Claim agrees to less favorable treatment with the Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, or Reorganized
Debtors, as applicable, each Allowed Class 3 Claim, on the Effective Date shall be (i) paid in full in Cash, (ii) Unimpaired and Reinstated, or (iii) treated on such other terms as the applicable Debtor, with the consent of the
Requisite Consenting Parties, which consent shall not be unreasonably withheld, or Reorganized Debtor, and the Holder thereof may agree.
c. Impairment and Voting. Class 3 Claims are Unimpaired and the Holders thereof are deemed to accept the Plan and are not entitled to
vote on the Plan.
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4. |
Class 4 – Unsecured Claims |
a. Classification. Class 4
consists of any and all Unsecured Claims.
b. Treatment. In full and complete satisfaction, discharge and release of each Allowed
Class 4 Claim, each Holder of an Allowed Class 4 Claim shall receive its Pro Rata share of either (i) 100% of the New Common Stock, subject to dilution on account of: (a) the conversion of the New Second Lien Convertible Notes and
(b) the exercise of the New Warrants or (ii) the Convenience Claim Distribution.
c. Impairment and Voting. Class 4
Claims are Impaired and are entitled to vote on the Plan.
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5. |
Class 5 – Intercompany Claims |
a. Classification.
Class 5 consists of any and all Intercompany Claims.
b. Treatment. Class 5 Claims shall be adjusted, continued, contributed to
capital or discharged to the extent determined by the Debtors, with the consent of the Requisite Consenting Parties, which consent shall not be unreasonably withheld, or the Reorganized Debtors.
c. Impairment and Voting. Class 5 Claims are Unimpaired and the Holders thereof are deemed to accept the Plan and are not entitled to
vote on the Plan.
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6. |
Class 6 – Subordinated Securities Claims |
a.
Classification. Class 6 consists of any and all Subordinated Securities Claims.
b. Treatment. In full and complete
satisfaction, discharge and release of each Allowed Class 6 Claim, each Holder of an Allowed Class 6 Claim shall receive its Pro Rata share of the New Warrants.
c. Impairment and Voting. Class 6 Claims are Impaired and the Holders thereof are entitled to vote on the Plan.
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7. |
Class 7 – Intercompany Interests |
a. Classification.
Class 7 consists of any and all Intercompany Interests.
b. Treatment. Class 7 Interests shall be Reinstated and the legal,
equitable and contractual rights to which Holders of such Allowed Interests are entitled shall remain unaltered so as to maintain the organizational structure of the Debtors as such structure existed on the Petition Date.
23
c. Impairment and Voting. Class 7 Interests are Unimpaired and the Holders thereof are
deemed to accept the Plan and are not entitled to vote on the Plan.
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8. |
Class 8 – Existing Equity Interests |
a.
Classification. Class 8 Interests consists of any and all Existing Equity Interests in the Debtors.
b. Treatment. In full and
complete satisfaction, discharge and release of each Allowed Class 8 Interest, each Holder of an Allowed Class 8 Interest shall receive its Pro Rata share of the New Warrants.
c. Impairment and Voting. Class 8 Interests are Impaired and the Holders of Class 8 Interests are entitled to vote on the Plan.
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D. |
Means for Implementation of the Plan |
| |
1. |
Restructuring Transactions |
a. Transactions.
The Plan contemplates, among other things: (i) the Reorganized Debtors entering into (x) the New First Lien Term Loan Credit
Facility, (y) the Exit Facility and (z) the New Warrant Agreement; (ii) the issuance of New Common Stock; (iii) the issuance of the New Warrants; and (iv) the adoption of the New Organizational Documents and (where required
by applicable law) the filing of the New Organizational Documents with the applicable authorities of the relevant jurisdictions of organization.
b. Continued Corporate Existence; Vesting of Assets in the Reorganized Debtors.
Subject to Article 4.17 of the Plan, on and after the Effective Date, each of the Reorganized Debtors shall continue to exist as a separate
entity in accordance with applicable law in the respective jurisdiction in which it is organized and pursuant to the New Organizational Documents. Notwithstanding anything to the contrary in the Plan, the Unimpaired Claims against a Debtor shall
remain the obligations solely of such Debtor or such Reorganized Debtor and shall not become obligations of any other Debtor or Reorganized Debtor by virtue of the Plan, the Chapter 11 Cases, or otherwise. Except as otherwise provided in the Plan,
on and after the Effective Date, all Assets of the Estates or the Debtors, including all claims, rights and Causes of Action and any property acquired by the Debtors or the Reorganized Debtors under or in connection with the Plan, shall vest in the
Reorganized Debtors free and clear of all Claims, Liens, charges, other encumbrances and Interests other than any Claims, Liens, charges or encumbrances arising or created under the New First Lien Term Loan Credit Facility and the Exit Facility. On
and after the Effective Date, the Reorganized Debtors may operate their business and may use, acquire and dispose of Assets and compromise or settle any Claims and Causes of Action without supervision of or approval by the Bankruptcy Court and free
and clear of any restrictions of the Bankruptcy Code or the Bankruptcy Rules, other than restrictions expressly imposed by the Plan or the Confirmation Order, provided, however, the Reorganized Debtors will use commercially reasonable
efforts to utilize existing vendors after the Effective Date.
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2. |
Substantive Consolidation for Plan Purposes Only |
The Plan shall
serve as a motion by the Debtors seeking entry of a Bankruptcy Court order substantively consolidating the Debtors’ Estates into a single consolidated Estate, solely for all purposes associated with Confirmation and consummation of the Plan. On
the Effective Date, for Plan purposes only, the Debtors shall be deemed merged into ANV, and (a) all assets and liabilities of the Debtors shall be deemed merged into ANV, (b) all guaranties of any Debtor of the payment, performance, or
collection of the obligations of another Debtor shall be eliminated and cancelled, (c) any
24
obligation of any Debtor and all guaranties thereof executed by one or more of the other Debtors shall be treated as a single obligation, and such guaranties shall be deemed a single Claim
against the consolidated Debtors, (d) all joint obligations of two or more Debtors, and all multiple Claims against such entities on account of such joint obligations shall be treated and Allowed only as a single Claim against the consolidated
Debtors and (e) each Claim filed in the Chapter 11 Cases of any Debtor shall be deemed filed against the consolidated Debtors and a single obligation of the Debtors on and after the Effective Date. Entry of the Confirmation Order will
constitute the approval, pursuant to Bankruptcy Code section 105(a), effective as of the Effective Date, of the deemed substantive consolidation of the Chapter 11 Cases of the Debtors for purposes of voting on, Confirmation of, and distributions
under the Plan.
Notwithstanding the foregoing, the deemed consolidation and substantive consolidation (each for Plan purposes only) shall
not (other than for purposes related to funding distributions under the Plan) affect (a) the legal and organizational structure of the Debtors or the Reorganized Debtors, (b) pre- and post-Petition Date guaranties, Liens and security
interests that were required to be maintained (i) in connection with any executory contracts or unexpired leases that were entered into during the Chapter 11 Cases or that have been or will be assumed by the Debtors or (ii) pursuant to the
Plan, (c) distributions out of any insurance policies or proceeds of such policies, and (d) the tax treatment of the Debtors. Furthermore, notwithstanding the foregoing, the deemed consolidation and substantive consolidation (each for Plan
purposes only), shall not affect the statutory obligation of each and every Debtor to pay quarterly fees to the U.S. Trustee pursuant to 28 U.S.C. §1903(a)(6) and Article 10.11 of the Plan.
In the event that the Bankruptcy Court does not order such deemed substantive consolidation of the Debtors, then except as specifically set
forth in the Plan (a) nothing in the Plan or the Disclosure Statement may constitute or be deemed to constitute an admission that one of the Debtors is subject to or liable for any Claim against any other Debtor, (b) Claims against
multiple Debtors may be treated as separate Claims against each applicable Debtor for all purposes (including, without limitation, distributions and voting) and such Claims may be administered as provided in the Plan, (c) the Debtors may not,
nor may they be required to, resolicit votes with respect to the Plan and (d) the Debtors may seek Confirmation of the Plan as if the Plan is a separate Plan for each of the Debtors.
The substantive consolidation effected pursuant to Article 4.2 of the Plan shall not affect, without limitation: (i) the Debtors’ or
the Estates’ (x) defenses to any Claim or Cause of Action, including, without limitation, the ability to assert any counterclaim, (y) setoff or recoupment rights, or (z) requirements for any third party to establish mutuality
prior to substantive consolidation in order to assert a right of setoff against the Debtors or the Estates; or (ii) distributions to the Debtors and/or the Estates out of any insurance policies or the proceeds of such policies.
a. New Common Stock.
On the Effective Date, Reorganized ANV shall issue the New Common Stock to Holders of Unsecured Claims in accordance with Article 2.10 of the
Plan, subject to dilution on account of: (i) the conversion of the New Second Lien Convertible Notes and (ii) the exercise of the New Warrants. Distribution of New Common Stock under the Plan shall together constitute the issuance of 100%
of the New Common Stock that will be issued and outstanding as of the Effective Date. All shares of New Common Stock issued on the Effective Date shall be deemed to have been duly authorized, validly issued, fully paid and nonassessable, and not to
have been issued in violation of any preemptive rights, rights of first refusal or similar rights or any applicable law.
To the extent
that Reorganized ANV is required to register the New Common Stock and/or New Warrants under the Securities Exchange Act or if the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders shall elect, the Debtors or Reorganized
Debtors, as applicable, shall use commercially reasonable efforts to make all such filings and take all such other actions as may be necessary to register the New Common Stock and/or the New Warrants under the Securities Exchange Act without the
need for any further Bankruptcy Court approval. If the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders shall elect, the Debtors shall use commercially reasonable efforts to make all such filings and take all such other
actions as may be necessary to comply with the requirements of each National Securities Exchange for purposes of listing the shares of New Common Stock and New Warrants on such National Securities Exchange, subject to official notice of issuance.
25
To the extent that Reorganized ANV is not required and/or does not elect to register the New
Common Stock under the Securities Exchange Act and if the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders shall so elect, the Debtors or Reorganized Debtors, as applicable, shall use commercially reasonable efforts to make
all such filings and take all such other actions as may be necessary to deregister the Existing Equity Interests under the Securities Exchange Act without the need for any further Bankruptcy Court approval.
b. New Warrants.
On the
Effective Date, in accordance with Articles 2.12 and 2.14 of the Plan, Reorganized ANV shall issue to Holders of Allowed Subordinated Securities Claims and Holders of Existing Equity Interests as of the Distribution Record Date, on a Pro Rata basis,
warrants to purchase shares of New Common Stock (the “New Warrants”). The terms, conditions and other provisions of the New Warrants shall be set forth in a new warrant agreement (the “New Warrant Agreement”) that
will be entered into by Reorganized ANV on the Effective Date. The New Warrant Agreement shall contain terms materially consistent with the Existing Equity Interests Treatment Term Sheet and shall otherwise be in form and substance reasonably
acceptable to the Debtors, the Requisite Consenting Noteholders, the Requisite Exit Facility Lenders and the Equity Committee. The New Warrants shall have the following provisions, and such other provisions as are set forth in the New Warrant
Agreement.
(1) Warrant Shares.
The New Warrants shall be exercisable at any time and from time to time after the Effective Date and prior to the New Warrant Expiration Date.
The New Warrants shall be exercisable into a total number of shares of New Common Stock that is equal to 17.5% of the sum of the Total Share Number plus the number of shares of New Common Stock issued upon exercise of the New Warrants. The
New Warrants must be exercised by payment of the Exercise Price in Cash, except that the New Warrants may be exercised on a cashless basis (i) in connection with (and subject to the consummation of) a Liquidity Event or (ii) if the New
Common Stock is listed for trading on a national securities exchange registered with the Securities Exchange Commission under Section 6(a) of the Securities Exchange Act. Any holder of New Warrants shall, as an express condition to the exercise
thereof, execute a counterpart to the Stockholders Agreement (if the Stockholders Agreement is in effect at the time of such exercise). The New Warrants shall be subject to anti-dilution adjustments consistent with the Existing Equity Interests
Treatment Term Sheet and set forth in the New Warrant Agreement (such adjustments, the “Anti-Dilution Protections”).
(2) Exercise Price.
Subject to adjustment consistent with the Anti-Dilution Protections, at any time of exercise, the exercise price per share of New Common Stock
for the New Warrants (the “Exercise Price”) shall be equal to the quotient obtained by dividing (i) the Adjusted Equity Value by (ii) the Total Share Number.
(3) New Warrant Expiration Date.
The expiration date of the New Warrants shall occur upon the earlier of (i) the date that is seven (7) years after the Effective Date
and (ii) the date of consummation of a Liquidity Event (such earlier date, the “New Warrant Expiration Date”). The Reorganized Debtors shall use commercially reasonable efforts to provide to the holders of the New Warrants
reasonable prior written notice of any Liquidity Event. The New Warrants shall not receive any payment upon their expiration (i.e., there shall be no Black Scholes protection).
(4) Restrictions on Transfer.
If the Reorganized Debtors are not required to register their securities under the Securities Exchange Act, the New Warrant Agreement and the
other documents or certificates evidencing or governing the New Warrants shall include appropriate restrictions such that the sale of the New Warrants would not require the Reorganized Debtors to register any of their securities under the Securities
Exchange Act. If the New Common Stock is listed for trading on a national securities exchange registered with the Securities Exchange Commission under Section 6(a) of the Securities Exchange Act, then Reorganized ANV will use commercially
reasonable efforts to list the New Warrants for trading on such national securities exchange (subject to the listing requirements of such national securities exchange).
26
(5) No Stockholder Rights.
The New Warrants shall not entitle the holder thereof to vote or receive dividends or to be deemed the holder of capital stock or any other
securities of Reorganized ANV, nor shall the New Warrants confer upon the holder thereof (in its capacity as a holder of the New Warrants) any of the rights of a stockholder of Reorganized ANV (including appraisal rights, any right to vote for the
election of directors or upon any matter submitted to stockholders of Reorganized ANV at any meeting thereof, or to receive notice of meetings, or to receive dividends or, except as otherwise provided pursuant to Purchase Rights, subscription rights
or otherwise).
(6) Purchase Rights.
If, after the Effective Date, Reorganized ANV issues or sells any equity securities to any Person who was a stockholder of Reorganized ANV on
the Effective Date for consideration per share that is greater than the Exercise Price, then each Eligible Holder shall have the right (such right, the “Purchase Right”) to participate in such issuance or sale on a pro rata
basis (based on such Eligible Holder’s percentage ownership of shares of New Common Stock assuming full conversion, exercise or exchange of the New Warrants, the New Second Lien Convertible Notes (and all indebtedness, debt securities or equity
securities issued pursuant to any initial or successive refinancing of the New Second Lien Convertible Notes), and all other outstanding options, warrants, or convertible securities that also have a pro rata right to participate in such
issuance or sale). A holder of New Warrants shall be permitted to transfer such holder’s Purchase Rights to any affiliate or family member of such holder so long as (i) such affiliate or family member is an Accredited Investor,
(ii) such transfer does not violate any securities laws, and (iii) such transfer and/or the exercise of the Purchase Right by such transferee does not result in Reorganized ANV having more than 400 holders of any class of equity securities
or otherwise result in Reorganized ANV being required to register any class of equity securities under the Securities Exchange Act. Eligible Holders shall not be entitled to Purchase Rights with respect to any of the following exempted issuances:
(a) issuances of the New Second Lien Convertible Notes and issuances of equity securities upon conversion of the New Second Lien Convertible Notes, (b) issuances of equity securities in connection with the refinancing or repayment of any
indebtedness or debt securities of any of the Reorganized Debtors, (c) issuances of equity securities to employees, directors, consultants and other service providers pursuant to an equity compensation plan approved by the New Board,
(d) issuances of equity securities by means of a pro rata distribution to all holders of New Common Stock, (e) issuances of equity securities in a public offering, and (f) issuances of equity securities upon exercise,
conversion or exchange of any equity securities that were issued in any issuance described in any of the foregoing exempted issuances. In the event that the sale of equity securities by Reorganized ANV triggers Purchase Rights, Reorganized ANV shall
be permitted to sell all of such equity securities to one or more stockholders of Reorganized ANV without first offering to sell such equity securities to the Eligible Holders pursuant to their respective Purchase Rights so long as, within a
reasonable period of time following the sale of such equity securities to such stockholder(s), Reorganized ANV offers to sell to the Eligible Holders their respective pro rata shares (as determined in the first sentence of Article 4.3(b)(6)
of the Plan) of such equity securities pursuant to their respective Purchase Rights.
(7) Piggyback Registration Rights.
If any holder of shares of New Common Stock is granted piggy-back registration rights, the holders of New Common Stock issued upon exercise of
the New Warrants will also be granted piggyback registration rights on substantially the same terms as such other holder.
(8) New
Warrant Representative.
The Equity Committee shall be entitled to appoint a representative for the holders of the New Warrants, which
representative shall be acceptable to the Debtors, the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders (such representative, the “New Warrant Representative”). The New Warrant Representative shall have the
right to monitor any sale process the Reorganized Debtors may commence in seeking to sell substantially all of their business and operations after the Effective Date solely in an observer capacity (it being understood that the New Warrant
Representative (i) may monitor, observe, attend, and, if requested by the New Board, participate in any discussions or meetings of the New Board or stockholders relating to, any aspect of such sale process or any terms or conditions of any
related sale, but shall have no right to vote on any matter relating to any such sale process or such related sale, and (ii) shall not have any right to monitor, observe, vote on, participate in any discussions or meetings of the New Board or
stockholders relating to, or otherwise be involved with, any other transaction, decision or other matter relating to any of the Reorganized Debtors). The New Warrant Representative shall be required to enter into a confidentiality and non-use
agreement that is acceptable to the Debtors or Reorganized Debtors, the Requisite Consenting Noteholders, the Requisite Exit Facility Lenders and,
27
with respect to any confidentiality and non-use agreement that will be entered into by the New Warrant Representative on the Effective Date, the Equity Committee. The Reorganized Debtors shall
pay the New Warrant Representative the New Warrant Representative Compensation.
c. Section 1145 Exemption.
Pursuant to Bankruptcy Code section 1145, the offering, issuance and distribution of (i) any New Common Stock to the Holders of Unsecured
Claims, (ii) any New Warrants to the Holders of Allowed Subordinated Securities Claims and Holders of Existing Equity Interests and (iii) any New Common Stock or other Securities upon exercise of the New Warrants by the holders thereof, in
each such case, shall be exempt from, among other things, the registration and prospectus delivery requirements of Section 5 of the Securities Act and any other applicable law requiring registration and/or delivery of prospectuses prior to the
offering, issuance, distribution, or sale of securities. In addition, any and all (x) New Common Stock issued to the Holders of Unsecured Claims under the Plan, (y) New Warrants issued to the Holders of Allowed Subordinated Securities
Claims and Holders of Existing Equity Interests under the Plan and (z) shares of New Common Stock or other Securities issued upon exercise of the New Warrants issued under the Plan, in each such case, will be freely tradable by the recipients
thereof, subject to: (A) the provisions of Bankruptcy Code section 1145(b)(1) relating to the definition of an underwriter in section 2(a)(11) of the Securities Act, and compliance with any rules and regulations of the United States Securities
and Exchange Commission, if any, applicable at the time of any future transfer of such Securities or instruments; (B) applicable regulatory approval, if any; (C) in the case of the New Common Stock, the provisions of the New Organizational
Documents (including the Stockholders Agreement); and (D) in the case of the New Warrants, the provisions of the New Warrant Agreement.
d. Section 4(a)(2) Exemption.
Pursuant to Section 4(a)(2) of the Securities Act, the offering, issuance, distribution and sale of New Second Lien Convertible Notes (and
the guarantees thereof) and the shares of New Common Stock or other Securities to be received upon conversion thereof shall be exempt from, among other things, the registration and prospectus delivery requirements of Section 5 of the Securities
Act and any other applicable law requiring registration and/or delivery of prospectuses prior to the offering, issuance, distribution or sale of securities. The New Second Lien Convertible Notes (and the guarantees thereof) and the shares of New
Common Stock or other Securities to be received upon conversion thereof may not be transferred or resold absent registration or exemption under the Securities Act or any applicable state securities law. All New Second Lien Convertible Notes (and the
guarantees thereof) issued on the Effective Date and, upon issuance thereof, all shares of New Common Stock or other Securities to be received upon conversion of any New Second Lien Convertible Notes shall be deemed to have been duly authorized,
validly issued, fully paid and nonassessable, and not to have been issued in violation of any preemptive rights, rights of first refusal or similar rights or any applicable law. For the avoidance of doubt, the New Second Lien Convertible Notes are
being issued pursuant to the Exit Facility, and the Disclosure Statement is not a solicitation or offering with respect to the New Second Lien Convertible Notes.
a. New First Lien Term Loan Credit Facility.
On the Effective Date, Reorganized ANV will enter into the New First Lien Term Loan Credit Facility in the form of the New First Lien Term Loan
Credit Agreement pursuant to which the New First Lien Term Loans will be incurred in an original aggregate principal amount equal to (i) the total amount of (A) the Secured Swap Claims plus (B) the Secured ABL Claims less
(ii) the aggregate amount of (A) the Secured ABL/Swap Cash Payments, (B) the Secured ABL $10MM Cash Payment and (C) the Secured ABL/Swap Claims Excess Cash Flow Payment. The payment of the New First Lien Term Loans and other
obligations under the New First Lien Term Loan Credit Facility will be guaranteed by all of the direct and indirect domestic subsidiaries of Reorganized ANV. The New First Lien Term Loan Credit Facility will be secured by liens on substantially all
assets of Reorganized ANV and its direct and indirect domestic subsidiaries, subject to exceptions consistent with the Amended and Restated Restructuring Support Agreement and Restructuring Term Sheet.
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b. Exit Facility.
On the Effective Date, Reorganized ANV will enter into the Exit Facility in the form of the New Second Lien Convertible Notes Definitive
Agreement pursuant to which the New Second Lien Convertible Notes will be issued in an
original aggregate principal amount equal to the greater of
(a) an amount sufficient for Reorganized ANV to have at least $8.0 million of Cash on the Effective Date after giving pro forma effect to, without duplication, (i) all Cash payments to be made under (A) the Plan or (B) an order
of the Bankruptcy Court, in each case whether paid on or in connection with the Effective Date (excluding, for the avoidance of doubt, New First Lien Term Loan Excess Cash Flow Payments), (ii) the payment of all Fees accrued through and
including the Effective Date and (iii) the payment of any Compensation Plan Payments and (b) an amount such that the aggregate amount of (i) the Cash proceeds of the DIP Facility received by the Debtors prior to the Effective Date
plus (ii) the Cash proceeds of the Exit Facility not used to pay the DIP Facility Consideration equals $65.0 million; provided, however, that in no event shall the Exit Facility Lenders be obligated to fund amounts under clause
(a) above which would cause the aggregate principal amount of the New Second Lien Convertible Notes issued pursuant to the Exit Facility on the Effective Date to exceed $80.0 million. The payment of the New Second Lien Convertible Notes will be
guaranteed by all of the direct and indirect domestic subsidiaries of Reorganized ANV. The New Second Lien Convertible Notes, the guarantees by the guarantors in respect thereof and all obligations under the New Second Lien Convertible Notes and
such guarantees shall be secured by liens on substantially all assets of the Reorganized Debtors, subject to limited exceptions that are acceptable to the Requisite Exit Facility Lenders and the Debtors or Reorganized Debtors, as applicable.
c. Other Plan Funding.
Other than as set forth in Articles 4.4(a) and (b) of the Plan, all Cash necessary for the Reorganized Debtors to make payments required
by the Plan shall be obtained from the Debtors’ Cash balances then on hand, after giving effect to the transactions contemplated in the Plan or that occur during the pendency of the Chapter 11 Cases.
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5. |
Corporate Governance, Managers, Officers and Corporate Action. |
a. New Organizational Documents.
On the Effective Date, the New Organizational Documents, including, upon agreement by the Debtors, the Requisite Consenting Noteholders and the
Requisite Exit Facility Lenders, the Stockholders Agreement, substantially in forms to be filed with the Plan Supplement, shall be deemed to be valid, binding, and enforceable in accordance with their terms and provisions, such terms and provisions
being satisfactory to the Requisite Consenting Noteholders, the Requisite Exit Facility Lenders and the Reorganized Debtors. Any shareholder protections in the Stockholders Agreement shall apply equally to all Holders of New Common Stock;
provided, however, that (i) any such protections may vary based on levels of ownership of New Common Stock, (ii) protections relating to rights to purchase Securities shall be subject to any such holder being an Accredited
Investor and (iii) certain holders of New Common Stock (and not all holders of New Common Stock) may have rights to designate members of the New Board. Any Holder of a Claim that is to be distributed shares of New Common Stock pursuant to the
Plan shall be deemed to have duly executed and delivered to Reorganized ANV a counterpart to the Stockholders Agreement, and the Stockholders Agreement shall be deemed to be a valid, binding and enforceable obligation of such Holder (including any
obligation set forth therein to waive or refrain from exercising any appraisal, dissenters’ or similar rights) even if such Holder has not actually executed and delivered a counterpart thereof. On the Effective Date, the applicable Reorganized
Debtors may enter into and deliver the Registration Rights Agreement, which shall be deemed to be valid, binding, and enforceable in accordance with its terms on those parties set forth in such agreement.
b. New Board.
Subject to
any requirement of Bankruptcy Court approval pursuant to Bankruptcy Code section 1129(a)(5), as of the Effective Date, the New Board shall be the persons identified in the Plan Supplement. On the Effective Date, the directors on the New Board will
be comprised of the Chief Executive Officer of the Reorganized Debtors and such other individuals selected by the Requisite Consenting Noteholders with the consent of the Requisite Exit Facility Lenders, which consent shall not be unreasonably
withheld. Pursuant to Bankruptcy Code section 1129(a)(5), the Debtors shall disclose the identity and affiliations of any person proposed to serve on the New Board after the Confirmation Date and prior to the Effective Date, and to the extent such
person is an insider other than by virtue of being a New Board Member, the nature of any compensation for such person.
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c. Officers of the Reorganized Debtors.
On and after the Effective Date, the current officers of the Debtors shall continue to serve in their same capacity with the Reorganized
Debtors in accordance with the Officers’ Employment Agreements, to be assumed under the Plan to the extent set forth in the Schedule of Assumed Executory Contracts and Unexpired Leases; provided, however, that the assumption of
the Officers’ Employment Agreements for the Debtors’ Chief Executive Officer and Chief Financial Officer shall be subject to the consent of the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders, which consent shall
not be unreasonably withheld; provided, further, that no Officers’ Employment Agreement shall be assumed or deemed assumed by any of the Debtors unless the officer party thereto agrees in writing (in the form of an amendment to
such Officers’ Employment Agreement) that, from and after the date such Officers’ Employment Agreement is assumed, any provision in such Officers’ Employment Agreement that grants or provides such officer with any right to any
Excluded Benefits shall no longer be effective and shall be deleted in its entirety from such Officers’ Employment Agreement and such officer shall no longer be entitled to any benefits, entitlements or rights thereto, such amendment to be in
form and substance acceptable to the Requisite Consenting Noteholders and the Requisite Exit Facility Lenders.
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6. |
Management Incentive Plan/Post-Emergence Key Employee Retention Plan. |
Subject only to the occurrence of the Effective Date, the Management Incentive Plan and Post-Emergence Key Employee Retention Program shall be
effective without any further action by the Reorganized Debtors. For the avoidance of doubt, the Management Incentive Plan and Post-Emergence Key Employee Retention Program are entirely post-Effective Date compensation plans and any awards
thereunder, to the extent earned, shall be paid by the Reorganized Debtors. For the avoidance of doubt, the Bankruptcy Court’s Confirmation of the Plan shall not be deemed to be an approval or authorization of the specific terms of the
Management Incentive Plan or the Post-Emergence Key Employee Retention Program.
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7. |
Cancellation of Notes, Instruments, and Existing Equity Interests. |
On the Effective Date, except as otherwise provided for in the Plan or any agreement, instrument or other document incorporated in the Plan or
the Plan Supplement, (i) the promissory notes, share certificates (including treasury stock), the Notes, the Indenture, the Swaps, the Credit Agreement, the Existing Equity Interests and other instruments or agreements evidencing any Claims or
Interests (other than Intercompany Interests), (ii) all options, warrants, calls, rights, puts, awards, commitments or any other agreements of any character to acquire Claims or Interests and (iii) all registration rights, preemptive
rights, rights of first refusal, rights of first offer, co-sale rights and other investor rights governing or relating to any Interests, in any such case shall be deemed automatically extinguished, cancelled and of no further force and effect,
without any further act or action under any applicable agreement, law, regulation, order or rule, and the obligations of the Debtors under the notes, share certificates, the Notes, the Indenture, the Swaps, the Credit Agreement, the Existing Equity
Interests and other instruments evidencing any Claims or Interests (other than Intercompany Interests) shall be automatically discharged. The Holders of or parties to such cancelled notes, share certificates, Notes, the Indenture, the Swaps, the
Credit Agreement, the Existing Equity Interests and other agreements and instruments shall have no rights arising from or relating to such notes, share certificates, Notes, Indenture, Swaps, Credit Agreement, Existing Equity Interests and other
agreements and instruments or the cancellation thereof, except the rights provided pursuant to the Plan. Notwithstanding the foregoing, (a) (i) the Notes and Indenture shall continue in effect solely for the purpose of (x) allowing
the Indenture Trustee or its agents to make distributions to Holders of Notes in accordance with the terms of the Plan and the Confirmation Order and to enforce its rights and those of the Holders of Notes under the Plan and the Confirmation Order
in the Chapter 11 Cases and any appeals; (y) allowing Holders of Notes to receive distributions under the Plan; and (z) preserving the rights and liens of the Indenture Trustee arising under Sections 6.11 and 7.08 of the Indenture with
respect to actions taken to perform its obligations under the Plan and the Confirmation Order, and (ii) the Indenture shall terminate completely upon the completion of all distributions to the Holders of the Notes and the satisfaction in full
of any and all obligations to the Indenture Trustee under Section 7.08 of the Indenture and (b) (i) the Credit Agreement shall continue in effect solely for the purpose of (x) allowing the Administrative Agent or its agents to
make distributions to Holders of Secured ABL Claims and Secured Swap Claims and (y) allowing Holders of Secured ABL Claims and Secured Swap Claims to receive distributions under the Plan and (ii) the Credit Agreement shall terminate
completely upon the completion of all distributions to the Holders of the Secured ABL Claims. At such time as the Indenture Trustee has completed performance of all of its duties set forth in the Plan and the Confirmation Order, if any, the
Indenture Trustee, and its successors and assigns, shall be relieved of all obligations under the Indenture.
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8. |
Cancellation of Liens. |
On the Effective Date, except as set forth
in the Plan, any Lien securing any Claim shall be deemed released, and the Holder of such Claim shall be authorized and directed to release any collateral or other property of any Debtor (including any cash collateral) held by such Holder and to
take such actions as may be requested by the Debtors (or the Reorganized Debtors, as the case may be) to evidence the release of such Lien, including the execution, delivery and filing or recording of such releases as may be requested by the Debtors
(or the Reorganized Debtors, as the case may be).
On and after the Effective Date, the Debtors or
the Reorganized Debtors may take all actions as may be necessary or appropriate to effect any transactions described in, approved by, contemplated by, or necessary to effectuate the Restructuring Transaction under and in connection with the Plan,
including: (a) the execution, delivery and/or filing, as applicable, of appropriate agreements or other documents of merger, consolidation, restructuring, conversion, disposition, transfer, dissolution or liquidation containing terms that are
consistent with the terms of the Plan and that satisfy the applicable requirements of applicable law and any other terms to which the applicable entities may agree; (b) the execution, delivery and/or filing, as applicable, of appropriate
instruments of transfer, assignment, assumption or delegation of any asset, property, right, liability, debt or obligation on terms consistent with the terms of the Plan and having other terms for which the applicable parties agree; (c) the
execution, delivery and/or filing, as applicable, of appropriate certificates or articles of incorporation, reincorporation, merger, consolidation, conversion or dissolution and the New Organizational Documents pursuant to applicable state law;
(d) the issuance and distribution of the shares of New Common Stock as provided for in the Plan; (e) the adoption of the Management Incentive Plan; (f) the issuance and sale of the New Second Lien Convertible Notes (and the guarantees
thereof) as provided for in the Plan and in the New Second Lien Convertible Definitive Agreement, and the issuance and distribution of the shares of New Common Stock or other Securities upon conversion of the New Second Lien Convertible Notes;
(g) the issuance and distribution of the New Warrants as provided for in the Plan, and the issuance and sale of the shares of New Common Stock or other Securities upon exercise of the New Warrants; and (h) all other actions that may be
required by applicable law, subject, in each case, to the New Organizational Documents. All matters provided for in the Plan involving the corporate structure of the Debtors, and any corporate action required by the Debtors in connection therewith,
shall be deemed to have occurred on, and shall be in effect as of, the Effective Date, without any requirement of further action by the security holders, directors, managers, authorized persons or officers of the Debtors. The authorizations and
approvals contemplated by Article 4.9 of the Plan shall be effective notwithstanding any requirements under nonbankruptcy law.
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10. |
New First Lien Term Loan Credit Facility, New Intercreditor Agreement, Exit Facility and New Warrant Agreement. |
On the Effective Date, without any requirement of further action by the security holders, directors, managers, authorized persons or officers
of the Debtors, the Reorganized Debtors shall be authorized to enter into, perform their obligations under, and consummate the transactions contemplated by, the New First Lien Term Loan Credit Facility, the New Intercreditor Agreement, the Exit
Facility, the New Warrant Agreement and any notes, documents, instruments, certificates or agreements in connection therewith, including, without limitation, any documents required in connection with the creation, perfection or priority of the Liens
on any collateral securing the New First Lien Term Loan Credit Facility and/or the Exit Facility.
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11. |
Effectuating Documents; Further Transactions. |
On and after the
Effective Date, the Reorganized Debtors and the officers and members of the boards of managers or directors thereof, are authorized to and may issue, execute, deliver, file or record such contracts, securities, instruments, releases and other
agreements or documents and take such actions as may be necessary or appropriate to effectuate, implement and further evidence the terms and conditions of the Plan and the securities issued pursuant to the Plan in the name of and on behalf of the
Reorganized Debtors, without the need for any approvals, authorization, or consents except for those expressly required pursuant to the Plan.
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12. |
Exemption from Certain Transfer Taxes and Recording Fees. |
To the
fullest extent permitted by Bankruptcy Code section 1146(a), any transfer from a Debtor to a Reorganized Debtor or to any entity pursuant to, in contemplation of, or in connection with the Plan or pursuant to: (a) the issuance, distribution,
transfer, or exchange of any debt, securities, or other interest in the Debtors or the Reorganized Debtors; (b)
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the creation, modification, consolidation, or recording of any mortgage, deed of trust or other
security interest, or the securing of additional indebtedness by such or other means; (c) the making, assignment, or recording of any lease or sublease; or (d) the making, delivery, or recording of any deed or other instrument of transfer
under, in furtherance of, or in connection with, the Plan, including any deeds, bills of sale, assignments, or other instrument of transfer executed in connection with any transaction arising out of, contemplated by, or in any way related to the
Plan, shall not be subject to any document recording tax, stamp tax, conveyance fee, intangibles, or similar tax, mortgage tax, real estate transfer tax, mortgage recording tax, sales or use tax, Uniform Commercial Code filing or recording fee,
regulatory filing or recording fee, or other similar tax or governmental assessment, and the appropriate state or local governmental officials or agents shall forego the collection of any such tax or governmental assessment and to accept for filing
and recordation any of the foregoing instruments or other documents without the payment of any such tax or governmental assessment.
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13. |
No Further Approvals. |
The transactions contemplated by the Plan
shall be approved and effective as of the Effective Date without the need for any further state or local regulatory approvals or, unless otherwise required by the Plan, approvals by any non-Debtor parties, and without any requirement for further
action by the Debtors, Reorganized Debtors, or any entity created to effectuate the provisions of the Plan.
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14. |
Dissolution of Committees. |
The Creditors Committee and the Equity
Committee shall continue in existence until the Effective Date to exercise those powers and perform those duties specified in Bankruptcy Code section 1103 and shall perform such other duties as they may have been assigned by the Bankruptcy Court
prior to the Effective Date. On the Effective Date, the Creditors Committee and the Equity Committee shall be dissolved and the Creditors Committee’s and Equity Committee’s members shall be deemed released of all their duties,
responsibilities, and obligations arising from or related to the Chapter 11 Cases, and the retention or employment of the Creditors Committee’s and Equity Committee’s Professionals shall terminate, except with respect to any Professional
Fee Claim. After the Effective Date, the Creditors Committee, the Creditors Committee’s Professionals, the Equity Committee and the Equity Committee’s Professionals shall not be entitled to compensation or reimbursement of expenses from
the Reorganized Debtors for any services incurred after the Effective Date, except for services rendered or expenses incurred with respect to any Professional Fee Claim.
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15. |
Creditor Representative. |
On or before the filing of the Plan
Supplement, the Creditor Representative shall be selected by the Creditors Committee. Prior to the Confirmation Date, the Person designated as Creditor Representative shall file an affidavit demonstrating that such Person is disinterested. If
approved by the Bankruptcy Court in the Confirmation Order, the Person so designated shall become the Creditor Representative on the Effective Date. Notwithstanding anything contained in the Plan to the contrary, as of the Effective Date and
thereafter and to the fullest extent permitted by applicable law, the Creditor Representative and its professionals shall not have nor incur any liability for any claim, cause of action, or other assertion of liability solely for any act taken or
omitted in connection with, related to, or arising out of the performance of any act, duty, responsibility or omission arising under the Plan; provided, however, that the foregoing shall not affect the liability of the Creditor
Representative or its professionals that otherwise would result from any act or omission to the extent that such act or omission is determined by a Final Order to have constituted actual fraud, willful misconduct, or gross negligence.
The Creditor Representative shall have the power to take the actions granted in the Plan and any powers reasonably incidental thereto which
the Creditor Representative, as an agent of the Reorganized Debtors and in its reasonable discretion, deems necessary or appropriate to fulfill the purpose of Article 4.15 of the Plan, including: (i) filing, prosecuting, settling or otherwise
resolving any objection to Convenience Claims or, after consultation with the Reorganized Debtors, any other Unsecured Claims (other than Notes Claims) on behalf of the Reorganized Debtors; (ii) monitoring and consulting with the Reorganized
Debtors with respect to any sale process the Reorganized Debtors may commence in seeking to sell substantially all of their business and operations after the Effective Date; and (iii) retaining and paying professionals as necessary to fulfill
the purpose of Article 4.15 of the Plan.
The fees and expenses of the Creditor Representative, including but not limited to the Creditor
Representative’s attorneys and financial advisors, shall be satisfied and paid solely from the Creditor Representative Reserve Account.
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On the Effective Date, the Creditor Representative Reserve Account will be funded by the Debtors
with Cash in the amount of $250,000. The Creditor Representative Reserve Account shall be held in trust solely for the post-Effective Date fees and expenses of the Creditor Representative and its professionals.
Upon the completion of the Creditor Representative’s duties outlined in Article 4.15(b) of the Plan and payment of all fees and expenses
of the Creditor Representative and its professionals, all remaining funds in the Creditor Representative Reserve Account shall be released and distributed to Holders of Convenience Claims as of the Distribution Record Date pursuant to Article 2.10
of the Plan.
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16. |
Pre-Effective Date Injunctions or Stays. |
All injunctions or stays,
whether by operation of law or by order of the Bankruptcy Court, provided for in the Chapter 11 Cases pursuant to Bankruptcy Code sections 105 or 362 or otherwise that are in effect on the Confirmation Date shall remain in full force and effect
until the Effective Date.
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17. |
Dissolution of Certain Debtors. |
On the Effective Date, each of the
Debtors identified in the Plan Supplement to be dissolved shall be deemed dissolved and their obligations under Article 5.9 of the Plan assumed by the Reorganized Debtors. On, or as soon as practicable, after the Effective Date, such Debtors shall,
and the officers, directors, members, managers or other similar representatives of such Debtors shall be authorized and directed to: (a) execute, acknowledge and/or file for each such Debtor a certificate of dissolution, articles of dissolution
or similar document, together with all other necessary corporate and company documents, to effect the dissolution of such Debtor under the applicable laws of its state of incorporation or formation (as applicable); (b) complete, execute and
file all final or otherwise required federal, state and local tax returns for each such Debtor, and pursuant to section 505(b) of the Bankruptcy Code, request an expedited determination of any unpaid tax liability of such Debtor or its Estate for
any tax incurred during the administration of such Debtor’s Chapter 11 Case, as determined under applicable tax laws; and (c) take such other actions as the Debtors may determine to be necessary or desirable to carry out this provision, in
each case (other than any relief sought under section 505(b) of the Bankruptcy Code) without the need for any further Bankruptcy Court approval. All actions necessary to effectuate such dissolutions shall be deemed authorized and approved in all
respects without further action under applicable law, regulation, order or rule, including, without limitation, any action by the stockholders, members, board of directors, board of managers or other governing body of each such Debtor. Upon the
dissolution of any such Debtor, the Reorganized Debtors shall be entitled to seek to obtain a final decree closing the Chapter 11 Case of such Debtor.
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E. |
Discharge, Release, Injunction and Related Provisions |
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1. |
Discharge of Claims and Termination of Interests. |
As of the
Effective Date, except as otherwise provided in the Plan or the Confirmation Order, the rights afforded under the Plan and the treatment of Claims and Interests under the Plan shall be in exchange for and in complete satisfaction, discharge and
release of all Claims and satisfaction or termination of all Interests. Except as otherwise provided in the Plan or the Confirmation Order, Confirmation shall, as of the Effective Date: (i) discharge the Debtors and the Reorganized Debtors from
all Claims or other debts that arose before the Effective Date, whether liquidated or unliquidated, fixed or contingent, matured or unmatured, and all debts of the kind specified in Bankruptcy Code sections 502(g), 502(h) or 502(i), in each case
whether or not (w) a Proof of Claim is filed or deemed filed pursuant to Bankruptcy Code section 501, (x) a Claim based on such debt is Allowed pursuant to Bankruptcy Code section 502, (y) the Holder of a Claim based on such debt has
accepted the Plan or (z) such Claim is listed in the Schedules; and (ii) cancel, release and extinguish all Interests and other rights of equity security holders in the Debtors other than the Intercompany Interests.
As of the Effective Date, except as otherwise provided in the Plan or the Confirmation Order, all Persons shall be precluded from asserting
against the Debtors or the Reorganized Debtors, or their respective successors or property, any other or further Claims, demands, debts, rights, causes of action, liabilities or equity interests based upon any act, omission, transaction or other
activity of any kind or nature that occurred prior to the Effective Date. In accordance with the foregoing, except as provided in the Plan or the Confirmation Order, the Confirmation Order will be a judicial determination, as of the Effective Date,
of a discharge of all such Claims and other debts and liabilities against the Debtors
33
and cancellation, release and extinguishment of all Interests and other rights of equity security holders in the Debtors, pursuant to Bankruptcy Code sections 524 and 1141, and such discharge
will void any judgment obtained against the Debtors or the Reorganized Debtors at any time, to the extent that such judgment relates to a discharged Claim.
Except as otherwise provided in the Plan or the
Confirmation Order, as of the Effective Date, all Persons that have held, currently hold or may hold a Claim or other debt or liability that is discharged or an Interest or other right of an equity security holder that is terminated pursuant to the
terms of the Plan are permanently enjoined from taking any of the following actions on account of any such discharged Claims, debts or liabilities or terminated Interests or rights: (i) commencing or continuing in any manner any action or other
proceeding against the Debtors or the Reorganized Debtors or their respective property; (ii) enforcing, attaching, collecting or recovering in any manner any judgment, award, decree or order against the Debtors or the Reorganized Debtors or
their respective property; (iii) creating, perfecting or enforcing any lien or encumbrance against the Debtors or the Reorganized Debtors or their respective property; (iv) asserting a setoff, right of subrogation or recoupment of any kind
against any debt, liability or obligation due to the Debtors or the Reorganized Debtors or their respective property; and (v) commencing or continuing any action, in any manner, in any place that does not comply with or is inconsistent with the
provisions of the Plan. Notwithstanding anything contained in the Confirmation Order or the Plan to the contrary, any rights of Holders of Claims under Bankruptcy Code section 553(a) or other applicable law to assert any counterclaims, cross claims,
setoff and/or recoupment rights that they may have under applicable law shall not be impaired by the Confirmation Order or the Plan, and subject to applicable law may be asserted and/or exercised after the Effective Date.
The releases set forth in the Plan and described
herein are the product of a compromise and settlement with various parties in interest in these cases. The Debtors believe that the releases are reasonable, narrowly tailored and necessary for the Debtors to reorganize effectively.
The Debtors believe that the Released Parties have benefitted the Debtors’ estates. The Plan Support Parties have supported the Plan
by negotiating a settlement and compromise that forms the basis for the Plan and providing financing that enables the Debtors to exit Chapter 11. The Plan Support Parties, the Debtors and their respective Related Persons have, through their
expertise, effort and collaboration, crafted the Plan. The DIP Agent, DIP Lenders and DIP Backstop Lenders have provided postpetition financing to the Debtors. The Exit Facility Lenders (and any agent, trustee or similar representatives of the Exit
Facility Lenders under the Exit Facility) are providing the financing necessary to effectuate the Plan.
Debtor
Releases.
Notwithstanding anything contained in the Plan to the contrary, on the Confirmation Date and effective as of the
Effective Date and to the fullest extent permitted by applicable law, for good and valuable consideration provided by each of the Released Parties, the adequacy of which is hereby confirmed, the Released Parties are deemed released and discharged by
the Debtors and their Estates from any and all claims, interests, obligations, rights, suits, damages, causes of action, remedies, and liabilities whatsoever, including any derivative claims, whether known or unknown, foreseen or unforeseen,
existing or hereinafter arising, in law, equity, or otherwise, based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the Debtors’ restructuring, the Restructuring Transaction, the Chapter 11 Cases, the DIP
Facility, the Exit Facility, the purchase, sale, or rescission of the purchase or sale of any security of the Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the
business or contractual arrangements between any Debtor and any Released Party, the restructuring of Claims and Interests prior to or during the Chapter 11 Cases, the negotiation, formulation, or preparation of the Plan, the Disclosure Statement,
the Plan Supplement, the Original Restructuring Support Agreement, the Amended and Restated Restructuring Support Agreement, the Restructuring Documents, or any related agreements, instruments, or other documents, upon any other act or omission,
transaction, agreement, event, or other occurrence taking place on or before the Effective Date, other than claims or liabilities arising out of or relating to any act or omission of a Released Party that constitutes actual fraud, willful misconduct
or gross negligence.
34
Released Parties Releases.
Notwithstanding anything contained in the Plan to the contrary, on the Confirmation Date and effective as of the Effective Date and to the
fullest extent permitted by applicable law, the Released Parties and any Holders of Claims of or Interests in the Debtors who vote to accept the Plan or who vote to reject the Plan and do not elect to opt-out of the releases are deemed to have
released and discharged the other Released Parties, the Debtors and their Estates from any and all claims, interests, obligations, rights, suits, damages, causes of action, remedies, and liabilities whatsoever, including any derivative claims,
asserted on behalf of any Debtor, whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity, or otherwise, that any such Released Party or any such Holder of Claims of or Interests in the Debtors would have
been legally entitled to assert (whether individually or collectively), based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the Debtors’ restructuring, the Restructuring Transaction, the Chapter 11 Cases,
the DIP Facility, the Exit Facility, the purchase, sale, or rescission of the purchase or sale of any security of the Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan,
the business or contractual arrangements between any Debtor and (i) any Released Party or (ii) any Holder of Claims of or Interests in the Debtors who votes to accept the Plan or who votes to reject the Plan and does not elect to opt-out
of the releases, the restructuring of Claims and Interests prior to or in the Chapter 11 Cases, the negotiation, formulation, or preparation of the Plan, the Disclosure Statement, the Plan Supplement, the Original Restructuring Support Agreement,
the Amended and Restated Restructuring Support Agreement, the Restructuring Documents, or any related agreements, instruments, or other documents, upon any other act or omission, transaction, agreement, event, or other occurrence taking place on or
before the Effective Date, other than claims or liabilities arising out of or relating to any act or omission of a Released Party that constitutes actual fraud, willful misconduct, or gross negligence.
Notwithstanding anything contained in the Plan to the
contrary, on the Confirmation Date and effective as of the Effective Date and to the fullest extent permitted by applicable law, the Exculpated Parties shall not have nor incur any liability for any claim, cause of action, or other assertion of
liability solely for any act taken or omitted during the Chapter 11 Cases in or in connection with, related to, or arising out of the Restructuring Transaction, the Chapter 11 Cases, the DIP Facility, the Exit Facility, the Original Restructuring
Support Agreement, the Amended and Restated Restructuring Support Agreement, the negotiation, formulation, preparation, administration, consummation and/or implementation of the Plan or any contract, instrument, document, or other agreement entered
into in connection with the Plan (including the Restructuring Documents) or any other matter relating to the Debtors or their operations; provided, however, that the foregoing exculpation shall not affect the liability of any
Exculpated Party that otherwise would result from any act or omission to the extent that such act or omission is determined by a Final Order to have constituted actual fraud, willful misconduct, or gross negligence.
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5. |
Preservation of Insurance |
The Debtors’ discharge, exculpation
and release, and the exculpation and release in favor of the Released Parties and Exculpated Parties, as provided in the Plan, shall not diminish or impair any rights that a Holder of Claims or Interests may have against existing insurance
maintained by the Debtors for (a) themselves, (b) their current and former directors and officers, or (c) any other Person.
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6. |
Retention and Enforcement of Causes of Action. |
Except as otherwise
provided in the Plan, or in any document, instrument, release or other agreement entered into in connection with the Plan, in accordance with Bankruptcy Code section 1123(b), the Debtors and their Estates shall retain the Causes of Action,
including, without limitation, the Causes of Action identified in the Plan Supplement (the “Retained Causes of Action”). The Reorganized Debtors, as the successors in interest to the Debtors and their Estates, may enforce, sue on,
settle or compromise (or decline to do any of the foregoing) any or all Causes of Action, including the Retained Causes of Action. The Debtors or the Reorganized Debtors expressly reserve all rights to prosecute any and all Causes of Action,
including the Retained Causes of Action against any Person, except as otherwise expressly provided in the Plan, and no preclusion doctrine, including the doctrines of res judicata, collateral estoppel, issue preclusion, claim preclusion, estoppel
(judicial, equitable or otherwise), or laches, shall apply to such Cause of Action or Retained Cause of Action upon, after, or as a consequence of Confirmation or the occurrence of the Effective Date.
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| VII. |
PROJECTED FINANCIAL INFORMATION |
Attached hereto as Exhibit C are
projected consolidated financial statements, which include consolidated, projected, unaudited, financial statement information of the Reorganized Debtors (collectively, the “Financial Projections”) for the period November 1,
2015 through December 31, 2015. The Financial Projections are based on an assumed Effective Date of October 31, 2015. To the extent that the Effective Date occurs after October 31, 2015, recoveries under the Plan by Holders of Allowed
Claims could be impacted.
Holders of Claims and Interests and other interested parties should see the below “Risk
Factors” for a discussion of certain factors that may affect the future financial performance of the Reorganized Debtors.
Holders of Claims and Interests entitled to vote on the Plan should read
and consider carefully the risk factors set forth below before voting to accept or reject the Plan. Although there are many risk factors discussed below, these factors should not be regarded as constituting the only risks present in connection with
the Debtors’ business or the Plan and its implementation.
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A. |
Risks Related to Bankruptcy |
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1. |
Parties in interest may object to the Plan’s classification of Claims and Interests. |
Bankruptcy Code section 1122 provides that a plan may place a claim or an interest in a particular class only if such claim or interest is
substantially similar to the other claims or interests in such class. The Debtors believe that the classification of the Claims and Interests under the Plan complies with the requirements set forth in the Bankruptcy Code because the Debtors created
Classes of Claims and Interests, each encompassing Claims or Interests, as applicable, that are substantially similar to the other Claims and Interests in each such Class. Nevertheless, there can be no assurance that the Bankruptcy Court will reach
the same conclusion.
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2. |
The Debtors may fail to satisfy vote requirements. |
In the event
that votes are received in number and amount sufficient to enable the Bankruptcy Court to confirm the Plan, the Debtors intend to seek, as promptly as practicable thereafter, Confirmation of the Plan. In the event that sufficient accepting votes are
not received, the Debtors may seek to confirm an alternative chapter 11 plan. There can be no assurance that the terms of any such alternative chapter 11 plan would be similar or as favorable to the Holders of Allowed Claims and Allowed Interests as
those proposed in the Plan.
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3. |
The Debtors may not be able to secure Confirmation of the Plan. |
Bankruptcy Code section 1129 sets forth the requirements for confirmation of a chapter 11 plan, and requires, among other things, a finding by
the Bankruptcy Court that: (a) such plan “does not unfairly discriminate” and is “fair and equitable” with respect to any non-accepting classes; (b) confirmation of such plan is not likely to be followed by a
liquidation or a need for further financial reorganization unless such liquidation or reorganization is contemplated by the plan; and (c) the value of distributions to non-accepting holders of claims and equity interests within a particular
class under such plan will not be less than the value of distributions such holders would receive if the debtors were liquidated under chapter 7 of the Bankruptcy Code.
There can be no assurance that the requisite acceptances to confirm the Plan will be received. Even if the requisite acceptances are received,
there can be no assurance that the Bankruptcy Court will confirm the Plan. A non-accepting Holder of a Claim or Interest, or a Holder of a Claim or Interest that is deemed to reject the Plan, might challenge either the adequacy of this Disclosure
Statement or whether the balloting procedures and voting results satisfy the requirements of
36
the Bankruptcy Code or Bankruptcy Rules. Even if the Bankruptcy Court determined that this Disclosure Statement, the balloting procedures and voting results were appropriate, the Bankruptcy Court
could still decline to confirm the Plan if it found that any of the statutory requirements for Confirmation had not been met. If the Plan is not confirmed, it is unclear what distributions, if any, Holders of Allowed Claims and Holders of Allowed
Interests would receive with respect to such Claims and Interests.
The Debtors, subject to the terms and conditions of the Plan and the
Amended and Restated Restructuring Support Agreement, reserve the right to modify the terms and conditions of the Plan as necessary for Confirmation. Any such modifications could result in a less favorable treatment of any non-accepting Class, as
well as of any Classes junior to such non-accepting Class, than the treatment currently provided in the Plan. Such a less favorable treatment could include a distribution of property to the Class affected by the modification of a lesser value than
currently provided in the Plan or no distribution of property whatsoever under the Plan.
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4. |
The conditions precedent to the Effective Date may not occur. |
As
more fully set forth in Article VIII of the Plan, the Effective Date is subject to a number of conditions precedent. If such conditions precedent are not met or waived, the Effective Date will not occur.
| |
5. |
Nonconsensual Confirmation. |
In the event that any Impaired Class
of Claims or Interests does not vote to accept the Plan, or if an Impaired Class of Claims or Interests is deemed to reject the Plan, the Bankruptcy Court may nevertheless confirm the Plan at the Debtors’ request if at least one Impaired Class
of Claims has accepted the Plan (with such acceptance being determined without including the vote of any “insider” in such class), and, as to each Impaired Class that has not accepted the Plan, the Bankruptcy Court determines that the Plan
“does not discriminate unfairly” and is “fair and equitable” with respect to the dissenting Impaired Classes. The Debtors shall request Confirmation of the Plan, as it may be modified from time to time, under Bankruptcy Code
section 1129(b) with respect to any Impaired Class that votes to reject the Plan, if any. Although the Debtors believe that the Plan satisfies the nonconsensual Confirmation requirements of Bankruptcy Code section 1129(b), there can be no assurance
that the Bankruptcy Court will reach the same conclusion. In addition, the pursuit of nonconsensual Confirmation or consummation of the Plan may result in, among other things, delay and increased expenses relating to Professional Fee Claims.
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6. |
The Debtors may not be able to achieve their projected financial results. |
The Financial Projections set forth on Exhibit C to this Disclosure Statement represent the Debtors’ best estimate of the
Debtors’ future financial performance based on currently known facts and assumptions about the Debtors’ future operations as well as the U.S. and world economy in general and the industry segments in which the Debtors exist in particular.
The Debtors’ actual financial results may differ significantly from the Financial Projections. If the Debtors do not achieve their projected financial results, the Debtors may lack sufficient liquidity to continue as planned after the Effective
Date. Moreover, the financial condition and results of the Reorganized Debtors from and after the Effective Date may not be comparable to the financial condition or results of operations reflected in the Debtors’ historical financial
statements.
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7. |
Certain tax implications of the Chapter 11 Cases. |
Holders of
Claims and Interests should carefully review Section XII hereof, “Certain Federal Income Tax Consequences of the Plan,” to determine how the tax implications of the Plan and the Chapter 11 Cases may adversely affect the Reorganized Debtors
and certain Holders of Claims and Interests. The tax consequences of the Plan are very complicated, especially for non-U.S. Holders of Unsecured Claims.
37
| |
8. |
The Debtors’ emergence from chapter 11 is not assured. |
While
the Debtors expect to emerge from chapter 11, there can be no assurance that the Debtors will successfully reorganize or when this reorganization will occur, irrespective of the Debtors obtaining Confirmation of the Plan.
| |
9. |
Confirmation and consummation may be delayed if the Debtors have to resolicit. |
If the Debtors resolicit acceptances of the Plan from parties entitled to vote thereon, Confirmation of the Plan could be delayed and possibly
jeopardized. Nonconfirmation of the Plan could result in an extended chapter 11 proceeding, during which time the Debtors could experience significant deterioration in their relationships with trade vendors and major customers. Furthermore, if the
Effective Date is significantly delayed, there is a risk that the Amended and Restated Restructuring Support Agreement may expire or be terminated in accordance with its terms.
| |
B. |
Risks Related to the Debtors’ or the Reorganized Debtors’ Business |
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1. |
A decline in gold and silver prices could result in decreased revenues, decreased net income, increased losses, and decreased cash flows, and may negatively affect the Debtors’ business.
|
Gold and silver are commodities. Their prices fluctuate and are affected by many factors beyond the Debtors’
control, including interest rates, expectations regarding inflation, speculation, currency values, central bank activities, governmental decisions regarding the disposal of precious metals stockpiles, global and regional demand and production,
political and economic conditions and other factors. The prices of gold and silver, as quoted by the London Bullion Market Association on July 22, 2015, were $1,088.60 per ounce for gold and $14.78 per ounce for silver, respectively. The prices
of gold and silver may decline in the future. A substantial or extended decline in gold or silver prices would adversely impact the Debtors’ financial position, revenues, net income and cash flows, particularly in light of the Debtors’
current strategy of not engaging in hedging transactions with respect to gold or silver. In addition, sustained lower gold or silver prices may: (i) reduce or eliminate the profit, if any, that the Debtors currently expect from ore stockpiles
and ore on leach pads; (ii) halt, delay, modify, or cancel plans for the construction of a mill for the sulfide ores or the development of new and existing projects; (iii) make it more difficult for the Debtors to satisfy and/or service
their debt obligations; (iv) reduce existing reserves by removing ores from reserves that can no longer be economically processed at prevailing prices; (v) cause the Debtors to recognize an impairment to the carrying values of mineral
properties and long-lived assets; and (vi) reduce funds available for potential future exploration with the result that depleted reserves may not be replaced.
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2. |
The Reorganized Debtors may not be able to recommence their mining and exploration operations. |
As described in Section V.C. above, on July 8, 2015, the Debtors commenced the implementation of the Mining Suspension Plan. The Debtors
believe that the Mining Suspension Plan will allow the Reorganized Debtors the flexibility to determine post-emergence the best way to maximize value, whether through recommencing operations or through a sale of the Debtors’ assets. There can
be no guarantee that the Reorganized Debtors will be able to recommence mining operations or that they will be able to sell their assets.
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3. |
Because the Debtors do not currently use forward sale or other significant hedging arrangements to protect against gold and silver prices and commodity prices (other than related to a portion of the
Debtors’ diesel costs from time to time), the Debtors’ operating results are exposed to the impact of any significant decrease in the price of gold or silver or any significant increase in commodity prices.
|
The Debtors do not currently enter into forward sales or other significant hedging arrangements to reduce the risk of
exposure to volatility in metal and commodity prices. Accordingly, the Debtors’ future operations are exposed to the
38
impact of any significant decrease in gold or silver prices and any significant increase in commodity prices. If such prices change significantly, the Debtors will realize reduced revenues and
increased costs. The Debtors are restricted from entering into forward sales or other significant hedging arrangements at a future date pursuant to the terms of the DIP Credit Agreement. The terms of the New First Lien Term Loan Credit Agreement and
the New Second Lien Convertible Notes Definitive Agreement may also preclude the Debtors from entering into such arrangements.
| |
4. |
Cost estimates and timing of the Hycroft Mine expansion project and new projects is uncertain, which may adversely affect expected production and profitability. |
The capital expenditures and time required to further develop and explore the Hycroft Mine are considerable and changes in costs, construction
schedules or both, can adversely affect project economics and expected production and profitability. There are a number of factors that can affect costs and construction schedules, including, among others: (i) changes in input commodity prices
and labor costs; (ii) availability and terms of financing; (iii) availability of labor, energy, transportation, equipment, and infrastructure; (iv) fluctuations in currency exchange rates; (v) changes in anticipated tonnage,
grade and metallurgical characteristics of the ore to be mined and processed; (vi) recovery rates of gold and other metals from the ore; (vii) difficulty of estimating construction costs over a period of years; (viii) delays in
completing any environmental review or in obtaining environmental or other government permits; (ix) weather and severe climate impacts; and (x) potential delays related to social and community issues.
The Debtors currently recover gold and silver from oxide and transitional ores at the Hycroft Mine. The Debtors recently completed an updated
Hycroft mill feasibility study, which relates to the economic potential of recovering metals from the sulfide mineralization at the Hycroft property. The Debtors have not yet secured the financing required to begin construction of the mill
expansion, but they continue to explore potential available financing options.
| |
5. |
The Debtors’ results of operations, liquidity, and financial position may be negatively impacted if actual recoveries of gold and silver from the Hycroft Mine are lower than initial
estimations. |
The Hycroft Mine utilizes a heap leach process to extract gold and silver from ore. The heap
leach process extracts gold and silver by placing ore on an impermeable pad and applying a dilute cyanide solution that dissolves a portion of the contained gold and silver, which are then recovered in metallurgical processes. The Debtors use
several integrated steps in the process of extracting gold and silver to estimate the metal content of ore placed on the leach pad. Although the Debtors refine their estimates as appropriate at each step in the process, the final amounts are not
determined until a third-party smelter refines the doré and/or metal-laden carbon and determines the final ounces of gold and silver available for sale. The Debtors then review this end result and reconcile it to the estimates developed and
used throughout the production process. Based on this review, the Debtors adjust their estimation procedures when appropriate. Due to the complexity of the estimation process and the number of steps involved, among other things, actual recoveries
can vary from estimates, and the amount of the variation could be significant and could have a material adverse impact on the Debtors’ financial condition and results of operations.
Each of these factors not only applies to current and future gold recovery operations at the Hycroft Mine, but also would apply to any future
development of other properties acquired in the future. In the case of mines that the Debtors may acquire and develop in the future, the Debtors will not have the benefit of actual experience in their estimates with respect to those mines, and there
is a greater likelihood that actual results will vary from the estimates.
| |
6. |
The Debtors may not achieve their production and/or sales estimates and the Debtors’ costs may be higher than their estimates, thereby reducing cash flows and negatively impacting the results of
operations. |
The Debtors prepare estimates of future production, sales, and costs for their operations. The
Debtors develop their estimates based on, among other things, mining experience, reserve and other mineralized material estimates, assumptions regarding ground conditions and physical characteristics of ores (such as hardness and presence or absence
of certain metallurgical characteristics) and estimated rates and costs of processing. All of the Debtors’ estimates are subject to numerous uncertainties, many of which are beyond their control. Actual production and/or sales may be lower than
the
39
Debtors’ estimates and actual costs may be higher than estimates, which could negatively impact cash flows
and results of operations. While the Debtors believe that their estimates are reasonable at the time they are made, actual results will vary and such variations may be material. These estimates are necessarily speculative in nature, and it may be
the case that one or more of the assumptions underlying such projections and estimates may not materialize.
| |
7. |
The Debtors’ gold and silver production may decline, reducing the Debtors’ revenues and negatively impacting their business. |
The Debtors’ future gold and silver production may decline as a result of an exhaustion of reserves, the inability to process existing
sulfide ores, possible closure of mines and continued suspension of mining operations. From time to time, it has been the Debtors’ business strategy to conduct gold and silver exploratory activities at the Hycroft Mine; however, if the Debtors
cannot expand and/or replace oxide ore reserves or complete expansion projects that would allow the Debtors to process sulfide reserves, revenues from the sale of gold and silver may decline, negatively affecting their results of operations or the
duration in which the Debtors are able to operate. The Debtors can provide no assurance that their future gold and silver production will not decline.
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8. |
A shortage of equipment and supplies and/or the time it takes such items to arrive at the Hycroft Mine could adversely affect the Debtors’ ability to operate their business.
|
The Debtors are dependent on various supplies and equipment to carry out their producing, mining, exploration and
development operations (to the extent the Debtors or the Reorganized Debtors decide to recommence mining, and exploration operations). The shortage of such supplies, equipment and parts and/or the time it takes such items to arrive at the Hycroft
Mine could have a material adverse effect on the Debtors’ ability to continue their Ongoing Operations, recommence mining, exploration and development operations, and complete expansion projects and therefore limit production or increase the
cost of production. Such shortages could also result in increased construction costs and cause delays in expansion projects.
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9. |
Changes in the cost or supply of energy or commodities used in operations may adversely affect the profitability of the Debtors’ operations and financial condition. |
The Debtors’ mining and production operations and exploration activities (with respect to the Debtors’ mining operations and
exploration activities, to the extent they are recommenced), are intensive users of energy. The Debtors’ principal energy sources are electricity and diesel fuel. The Debtors rely upon third parties for their supply of energy resources consumed
in mining activities. Energy prices can be affected by numerous factors beyond the Debtors’ control, including global and regional supply and demand, political and economic conditions, and applicable regulatory regimes. The prices of various
sources of energy may increase significantly from current levels. An increase in energy prices could materially and adversely affect the results of operations and financial condition.
Disruptions in the supply of the Debtors’ energy resources could temporarily impair their ability to produce gold and silver or delay any
expansion projects or plans. The Hycroft Mine is in a remote location requiring the building of power lines and long distance transmission of power. A disruption in the transmission of energy, inadequate energy transmission infrastructure or the
termination of any of the Debtors’ energy supply contracts could interrupt their supply and adversely affect the Debtors’ operations or expansion projects.
The Debtors’ production costs are also affected by the prices of commodities that they consume or use in their operations, such as diesel
fuel, lime, sodium cyanide and explosives. The prices of such commodities are influenced by supply and demand trends affecting the mining industry in general and other factors outside the Debtors’ control. Increases in the price for materials
consumed in their mining and production activities could materially and adversely affect the Debtors’ results and financial condition.
40
| |
10. |
The Debtors face intense competition in the mining industry. |
The
mining industry is intensely competitive. As a result of this competition, some of which is with large established mining companies with substantial capabilities and with greater financial and technical resources than the Debtors have available, the
Debtors may be unable to acquire additional attractive mining claims or financing on terms they consider acceptable, which may adversely impact the Debtors’ growth and development. This, in turn, may adversely affect the Debtors’ financial
condition and results. The Debtors also compete with other mining companies in the recruitment and retention of qualified managerial and technical employees. If the Debtors are unable to successfully attract and retain qualified employees, their
exploration and development programs, to the extent recommenced, may again be slowed down or suspended.
| |
11. |
The Debtors’ reliance on third party contractors and consultants to conduct a significant portion of the Debtors’ operations and construction projects exposes the Debtors to risks.
|
The Debtors contract and engage third party contractors and consultants for a portion of their operations and for
construction projects, including the crushing facility and the mill expansion project. As a result, the Debtors’ operations and construction projects are subject to a number of risks, some of which are outside the Debtors’ control,
including: (i) negotiating agreements with contractors and consultants on acceptable terms; (ii) the inability to replace a contractor or consultant and their operating equipment in the event that either party terminates the agreement;
(iii) reduced control over those aspects of operations which are the responsibility of the contractor or consultant; (iv) failure of a contractor or consultant to perform under their agreement or disputes relative to their performance;
(v) interruption of operations or increased costs in the event that a contractor or consultant ceases their business due to insolvency or other unforeseen events; (vi) failure of a contractor or consultant to comply with applicable legal
and regulatory requirements, to the extent they are responsible for such compliance; and (vii) problems of a contractor or consultant with managing their workforce, labor unrest or other employment issues.
In addition, the Debtors may incur liability to third parties as a result of the actions of their contractors or consultants. The occurrence
of one or more of these risks could decrease the Debtors’ gold and silver production, increase the Debtors’ costs, delay expansion projects, and adversely affect their results and financial position.
| |
12. |
The Debtors cannot be certain that their development and potential future exploration activities will be commercially successful. |
Substantial expenditures are required to further explore the Hycroft Mine, to establish reserves and other mineralized material through
drilling and analysis, to develop metallurgical processes to extract metal from the ore and, in the case of new properties or the expansion of their existing projects, to develop the mining and processing facilities and infrastructure at any site
chosen for mining. The Debtors cannot provide assurance that any reserves or other mineralized material discovered will be in sufficient quantities to justify commercial operations or that the funds required for development can be obtained on a
timely basis. A number of factors, including costs, actual mineralization, consistency and reliability of ore grades and commodity prices, affect successful project development. The efficient operation of processing facilities, the existence of
competent operational management, as well as the availability and reliability of appropriately skilled and experienced consultants also can affect successful project development. There can be no assurance that the Debtors’ development and
future exploration programs, including the advancement of the Hycroft Mine oxide operation (to the extent mining is recommenced, if at all) and the updated Hycroft milling feasibility study for the mill expansion project, will result in economically
viable mining operations or yield new mineral reserves or other mineralized material.
| |
13. |
The Debtors’ ability to find and acquire new mineral properties and prospects for the future growth of the Debtors’ business are uncertain. |
Because mines have limited lives based on proven and probable ore reserves, the Debtors are continually seeking to replace and expand their ore
reserves. Identifying promising mining properties is difficult and speculative. The Debtors encounter strong competition from other mining companies in connection with the acquisition of properties producing or capable of producing gold and silver.
Many of these companies have greater financial resources than the Debtors.
41
Consequently, the Debtors may be unable to replace and expand current ore reserves through the acquisition of new
mining properties or interests therein on terms that they consider acceptable. As a result, the Debtors’ revenues from the future sale of gold and silver may decline, resulting in lower income and reduced growth.
| |
14. |
Mining development, exploration, and processing operations pose risks and costs that may negatively impact the Debtors’ business. |
Mining development, exploration, and processing operations involve many hazards and uncertainties, including, among others: (i) unusual
and unexpected rock formations or water conditions; (ii) seismic activity; (iii) metallurgical or other processing problems; (iv) ground or slope failures; (v) industrial accidents; (vi) environmental contamination or
leakage; (vii) fires; (viii) flooding and periodic interruptions due to inclement or hazardous weather conditions or other acts of nature; (ix) organized labor disputes or work slow-downs; (x) mechanical equipment failure and
facility performance problems; and (xi) the availability of critical materials, equipment and skilled labor.
These occurrences could
result in damage to, or destruction of, the Debtors’ properties or production facilities, personal injury or death, environmental damage, delays in mining or processing, increased production costs, asset write downs, monetary losses and legal
liability, any of which could have an adverse effect on the Debtors’ results and financial condition and adversely affect their projected development and production estimates.
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15. |
The Debtors may be adversely affected by challenges relating to slope stability. |
The Debtors’ open pit mines get deeper as and to the extent they mine them, presenting certain geotechnical challenges including the
possibility of slope failure. If the Debtors are required to decrease pit slope angles or provide additional road access to prevent such a failure, their stated reserves could be negatively affected. Further, hydrological conditions relating to pit
slopes, renewal of material displaced by slope failures and increased stripping requirements could also negatively affect their stated reserves. The Debtors have taken actions in order to maintain slope stability, but cannot provide any assurances
that they will not have to take additional action in the future or that their actions taken to date will be sufficient. Unexpected failure or additional requirements to prevent slope failure may negatively affect the Debtors’ results and
financial condition, as well as have the effect of diminishing their stated ore reserves.
| |
16. |
The Debtors’ insurance may not cover all of the risks associated with the Debtors’ business. |
The mining business is subject to risks and hazards, including construction risks, environmental hazards, industrial accidents, the
encountering of unusual or unexpected geological formations, slide-ins, flooding, earthquakes, and periodic interruptions due to inclement or hazardous weather conditions. These occurrences could result in damage to, or destruction of, mineral
properties or production facilities, personal injury or death, environmental damage, reduced production and delays in mining, asset write-downs, monetary losses and possible legal liability. Insurance fully covering many of these risks is not
generally available to the Debtors and if it is, the Debtors may elect not to obtain such insurance because of the high premium costs or commercial impracticality. The Debtors do not currently carry business interruption insurance and have no plans
to obtain such insurance in the future. Any liabilities that the Debtors incur for these risks and hazards could be significant and could adversely affect the Debtors’ results, cash flows and financial condition.
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17. |
The Debtors’ operations are subject to numerous governmental permits that are difficult to obtain and the Debtors may not be able to obtain or renew all of the permits they require, or such permits may
not be timely obtained or renewed. |
In the ordinary course of business the Debtors are required to obtain and
renew governmental permits for the Debtors’ operations, including in connection with the Debtors’ mining and exploration plans at the Hycroft Mine. The Debtors also need additional governmental permits in order to complete their expansion
of the Hycroft Mine operations, including without limitation, permits to construct the tailings impoundment and allow mining below the water table. Obtaining or renewing the necessary governmental permits is a complex, costly and time-consuming
process. The duration and success of the Debtors’ efforts to obtain and renew permits are contingent upon many variables not within the
42
Debtors’ control, including the interpretation of applicable requirements implemented by the permitting
authority and intervention by third parties in any required environmental review. The Debtors may not be able to obtain or renew permits that are necessary to their operations on a timely basis or at all, and the cost to obtain or renew permits may
exceed the Debtors’ estimates. Failure to comply with the terms of the Debtors’ permits may result in injunctions, fines, suspension or revocation of permits and other penalties. The Debtors can provide no assurance that they have been, or
will at all times be, in full compliance with all of the terms of their permits or that they have all required permits.
| |
18. |
Compliance with current and future government regulations may cause the Debtors to incur significant costs. |
The Debtors’ operations are subject to extensive federal and state legislation governing matters such as mine safety, occupational health,
labor standards, prospecting, exploration, production, exports, toxic and hazardous substances, explosives, management of natural resources, price controls, land use, water use, air emissions, waste disposal, environmental review and taxes.
Compliance with this and other legislation could require the Debtors to make significant financial outlays. The enactment of new legislation or more stringent enforcement of current legislation may increase costs, which could have a negative effect
on the Debtors’ financial position, results of operations, and liquidity. The Debtors cannot make assurances that they will be able to adapt to these regulatory developments on a timely or cost-effective basis. Violations of these laws,
regulations and other regulatory requirements could lead to substantial fines, penalties or other sanctions, including possible shut-downs of the Hycroft Mine or future operations, as applicable.
| |
19. |
Any defects in title could cause the Debtors to lose their rights in mineral properties and jeopardize their business operations. |
The Debtors’ mineral properties consist of private mineral rights, leases covering private lands, leases of patented mining claims and
unpatented mining claims. Many of the Debtors’ mining properties in the U.S. are unpatented mining claims located on lands administered by the Bureau of Land Management (the “BLM”), Nevada State Office to which the Debtors have
only possessory title. Because title to unpatented mining claims is subject to inherent uncertainties, it is difficult to determine conclusively ownership of such claims. These uncertainties relate to such things as sufficiency of mineral discovery,
proper location and posting and marking of boundaries, and possible conflicts with other claims not determinable from descriptions of record. The Debtors believe that a substantial portion of all mineral exploration, development and mining in the
U.S. now occurs on unpatented mining claims, and this uncertainty is inherent in the mining industry.
The present status of the
Debtors’ unpatented mining claims located on public lands allows the Debtors the right to mine and remove valuable minerals, such as precious and base metals, from the claims conditioned upon applicable environmental reviews and permitting
programs. The Debtors also are generally allowed to use the surface of the land solely for purposes related to mining and processing the mineral-bearing ores. However, legal ownership of the land remains with the U.S. government. The Debtors remain
at risk that the mining claims may be forfeited either to the U.S. government or to rival private claimants due to failure to comply with statutory requirements. If the Debtors do not obtain fee title to their unpatented mining claims, the Debtors
can provide no assurance that they will be able to obtain compensation in connection with the forfeiture of such claims.
Finally, there
may be challenges to title to the mineral properties in which the Debtors hold a material interest. If there are title defects with respect to any properties, the Debtors might be required to compensate other persons or perhaps reduce their interest
in the affected property. Also, in any such case, the investigation and resolution of title issues could divert the Debtors’ management’s time from any ongoing production, exploration and development programs.
| |
20. |
Proposed legislation, if enacted, could significantly affect the cost of the Debtors’ operations on their unpatented mining claims or the amount of Net Proceeds of Mineral Tax the Debtors pay to the
State of Nevada. |
Members of the U.S. Congress have repeatedly introduced bills which would supplant or alter
the provisions of the Mining Law of 1872. Such bills have proposed, among other things, to either eliminate or greatly limit the right to a mineral patent and to impose a federal royalty on production from unpatented mining claims. Such proposed
legislation could change the cost of holding unpatented mining claims and could significantly impact the Debtors’ ability to develop
43
mineralized material on unpatented mining claims. A majority of the Debtors’ mining claims are on unpatented claims. Although the Debtors cannot predict what legislated royalties might be,
the enactment of these proposed bills could adversely affect the potential for development of their unpatented mining claims and the economics of their existing operating mines on federal unpatented mining claims. Passage of such legislation could
adversely affect the Debtors’ financial performance.
The Debtors pay Net Proceeds of Mineral Tax (“NPT”) to the
state of Nevada on up to 5% of net proceeds generated from the Hycroft Mine. Net proceeds are calculated as the excess of gross yield over direct costs. Gross yield is determined as the value received when minerals are sold, exchanged for anything
of value or removed from the state. Direct costs generally include the costs to develop, extract, produce, transport and refine minerals. From time to time Nevada legislators introduce bills which aim to increase the amount of NPT mining companies
operating in the state pay. If legislation is passed that increases the NPT that the Debtors must pay to the state of Nevada, the Debtors’ business, results of operations, and cash flows could be negatively impacted.
| |
C. |
Risks Related to Environmental Issues |
| |
1. |
Environmental regulations could require the Debtors to make significant expenditures or expose the Debtors to potential liability. |
To the extent that the Debtors become subject to environmental liabilities, the payment of such liabilities or the costs that the Debtors may
incur, including costs to investigate and/or remediate environmental pollution, would reduce funds otherwise available to the Debtors and could have a material adverse effect on their financial condition, results of operations, and liquidity. If the
Debtors are unable to fully remediate an environmental violation or release of hazardous substances, they may be required to suspend operations or enter into interim compliance measures pending completion of the required remedial or corrective
action. The environmental standards that may ultimately be imposed at a mine site can vary and may impact the cost of remediation. Actual remedial costs may exceed the financial accruals that have been made for such remediation. The potential
exposure may be significant and could have a material adverse effect on the Debtors’ financial condition and results of operations.
Moreover, governmental authorities and private parties may bring lawsuits based upon damage to property or natural resources and injury to
persons resulting from the environmental, health and safety impacts of the Debtors’ past and current operations, which could lead to the imposition of substantial fines, remediation costs, penalties, injunctive relief and other civil and
criminal sanctions. Substantial costs and liabilities, including those required to restore the environment after the closure of mines, are inherent in the Debtors’ operations. Although the Debtors believe that they are in substantial compliance
with applicable laws and regulations, they cannot provide any assurance that any such law, regulation, enforcement or private claim will not have a negative effect on the Debtors’ business, financial condition or results of operations.
| |
2. |
The Debtors’ exploration activities (to the extent recommenced) and development operations are subject to extensive environmental regulations, which could result in the incurrence of additional costs
and operational delays. |
All phases of the Debtors’ operations are subject to extensive federal and state
environmental regulation. These environmental regulations require the Debtors to obtain various operating permits, approvals and licenses and also impose standards and controls relating to exploration, development and production activities. For
instance, the Debtors are required to hold a Nevada Reclamation Permit with respect to the Hycroft Mine. This permit mandates concurrent and post-mining reclamation of mines and requires the posting of reclamation bonds sufficient to guarantee the
cost of mine reclamation. The Debtors have set up a provision for their reclamation bond at the Hycroft Mine. Compliance with this and other federal and state regulations could result in delays in beginning or expanding operations, incurring
additional costs for investigation or cleanup of hazardous substances, payment of penalties for non-compliance or discharge of pollutants, and post-mining closure, reclamation and bonding, all of which could have an adverse impact on the
Debtors’ financial performance and results of operations.
44
The Debtors are required to mitigate long-term environmental impacts by stabilizing, contouring,
re-sloping and re-vegetating various portions of a site after mining and mineral processing operations are completed. These reclamation efforts will be conducted in accordance with detailed plans, which must be reviewed and approved by the
appropriate regulatory agencies. The Debtors’ principal reclamation liability is at the Hycroft Mine and is fully secured by surface management surety bonds that meet the financial bonding requirements of the BLM. The Debtors’ most recent
reclamation cost estimate was approved by the BLM in their January 2014 decision letter and totals $58.3 million. At December 31, 2014, the Debtors’ surface management surety bonds totaled $59.9 million, which were partially collateralized
by restricted cash of $38.1 million. If the Debtors were to carry out unanticipated reclamation work in the future, their financial position could be adversely affected or their posted bonds may be insufficient.
In connection with the issuance of the surety bonds, the Debtors entered into indemnity agreements with their commercial surety companies that
obligate the Debtors to indemnify the sureties in the event that the Debtors fail to comply with applicable regulations and the surety bonds are forfeited to the governmental agencies. Therefore, default by the Debtors or the Reorganized Debtors may
result in additional claims for indemnity by any surety that had issued surety bonds related to the operations.
One of the sureties,
Westchester Fire Insurance Company (“Westchester”), has asserted that the existing surety bonds may not be assumed by the Debtors for use by the Reorganized Debtors. Westchester has asserted that under certain facts and
circumstances the state and federal regulatory authorities may require the transfer of the Hycroft mining permit and a replacement of the existing surety bonds with new surety bonds or other adequate financial assurance. Westchester has also
asserted that the Bankruptcy Code prevents the assumption of the existing surety bonds for use by the Reorganized Debtors unless an agreement is reached with the surety for consent for such an assumption. The Debtors dispute Westchester’s
assertions. The ability of the Reorganized Debtors to replace the approximate $59.9 million in surety bonds in the event that Westchester prevails with respect to its assertions may affect the Debtors’ ability to complete the reorganization.
| |
3. |
Changes in environmental regulations could adversely affect the Debtors’ cost of operations or result in operational delays. |
The regulatory environment in which the Debtors operate is evolving in a manner that will require stricter standards and enforcement, increased
fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. New environmental laws and regulations or
changes in existing environmental laws and regulations could have a negative effect on exploration activities, operations, production levels and methods of production. The Debtors can provide no assurance that future changes in environmental laws
and regulations will not adversely affect their current operations or future projects. Any changes to these laws and regulations could have an adverse impact on the Debtors’ financial performance and results by, for example, requiring changes
to operating constraints, technical criteria, fees or surety requirements.
| |
4. |
Regulations and pending legislation governing issues involving climate change could result in increased operating costs, which could have a material adverse effect on the Debtors’ business, and climate
change could have an adverse impact on the Debtors’ cost of operations. |
Regulations and pending
legislation governing issues involving climate change could result in increased operating costs, which could have a material adverse effect on the Debtors’ business. A number of governments or governmental bodies have introduced or are
contemplating regulatory changes in response to various climate change interest groups and the potential impact of climate change. Legislation and increased regulation regarding climate change could impose significant costs on the Debtors, their
venture partners and their suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting and other costs to comply with such regulations. Any adopted future climate change regulations
could also negatively impact the Debtors’ ability to compete with companies situated in areas not subject to such regulations. Given the emotion, political significance and uncertainty around the impact of climate change and how it should be
dealt with, the Debtors cannot predict how legislation and regulation will affect their financial condition, operating performance and ability to compete. Furthermore, even without such regulation, increased awareness and any adverse publicity in
the global marketplace about potential impacts on climate change by the Debtors or other companies in the mining industry could harm the Debtors’ reputation.
45
| |
D. |
Risks Related to the Debtors’ Indebtedness and Plan Securities |
| |
1. |
The outstanding indebtedness may adversely affect the Reorganized Debtors’ financial health and operating flexibility. |
The terms of the New First Lien Term Loans and the New Second Lien Convertible Notes may require the Reorganized Debtors to take, or refrain
from taking, certain actions in order to satisfy certain customary affirmative and negative covenants and to meet certain financial ratios and tests, including ratios and tests based on leverage, interest coverage, and net worth. For example, these
covenants and other restrictions may limit the ability of the Reorganized Debtors to, among other things, incur indebtedness, create liens on assets, sell assets, manage cash flows, transfer assets to other subsidiaries, make capital expenditures,
engage in mergers and acquisitions, enter into risk management contracts, and make distributions to equity holders. These covenants and other restrictions may adversely affect the financial health and operating flexibility of the Reorganized Debtors
by, among other things: (a) limiting the Reorganized Debtors’ ability to borrow additional amounts for working capital, capital expenditures, debt service requirements, execution of business strategies, and development or other purposes;
(b) limiting the Reorganized Debtors’ ability to use operating cash flows in other areas of the business or to pay dividends; (c) increasing the vulnerability of the Reorganized Debtors to general adverse economic and industry
conditions, including increases in interest rates; (d) limiting the Reorganized Debtors’ ability to capitalize on business opportunities, reinvest in or develop the Reorganized Debtors’ assets, and react to competitive pressures and
adverse changes in government regulations; (e) limiting the Reorganized Debtors’ ability, or increasing the costs, to restructure funded indebtedness; (f) limiting the Reorganized Debtors’ ability to enter into marketing
transactions by reducing the number of potential counterparties to such transactions as well as the volume of those transactions; and (g) giving secured lenders the ability to foreclose on assets.
| |
2. |
Continuing leverage and ability to service their debts. |
The
Debtors believe that, following consummation of the Plan, the Reorganized Debtors will be able to meet their anticipated future operating expenses, capital expenditures, and debt service obligations. However, the Reorganized Debtors’ ability to
meet their debt service obligations and to carry out capital spending that is important to their growth and productivity will depend on a number of factors, including future performance, cash flows, and their ability to achieve their business plan.
These factors will be affected by general economic, financial, competitive, regulatory, business, and other factors that are beyond the Reorganized Debtors’ control. Accordingly, the Reorganized Debtors cannot provide assurances that they will
be able to meet their debt service obligations. In the event the Reorganized Debtors are unable to meet their debt service obligations, the lenders or other holders of indebtedness could declare a default. In the event of such a default:
(a) the lenders or other holders of indebtedness could require the Reorganized Debtors to restructure their debt, post additional collateral, enhance their equity and liquidity, increase their interest payments or pay down their indebtedness;
(b) the lenders or other holders of indebtedness could elect to declare all the funds borrowed thereunder to be due and payable and, if not paid on demand, institute foreclosure proceedings against the Reorganized Debtors’ assets securing
such indebtedness; or (c) even if those lenders or other holders do not declare a default, they may be able to cause all of the Reorganized Debtors’ available Cash to be used to repay the indebtedness owed to them or restrict the
Reorganized Debtors’ access to their Cash.
| |
3. |
The value of the New Common Stock may be volatile and adversely affected by a number of factors. |
The value of the New Common Stock may be volatile and adversely affected by a number of factors, including many of the risks described in this
Disclosure Statement, as well as the Reorganized Debtors’ actual results and prospects. If, for example, the Reorganized Debtors fail to comply with the covenants in the agreements governing the New First Lien Term Loans, or the New Second Lien
Convertible Notes, resulting in an event of default thereunder, certain of the Reorganized Debtors’ outstanding indebtedness could be accelerated, which could have a material adverse effect on the value of the New Common Stock.
46
| |
4. |
The New Common Stock in Reorganized ANV will be subordinated to the indebtedness under the New First Lien Term Loans and the New Second Lien Convertible Notes. |
The Debtors’ obligations under the New First Lien Term Loans and the New Second Lien Convertible Notes and other non-equity claims will
rank senior to the New Common Stock in Reorganized ANV as to rights upon any foreclosure, dissolution, winding up, liquidation or reorganization, or other bankruptcy proceeding. In the event of any distribution or payment of the Reorganized
Debtors’ assets under any of the foregoing circumstances, the Reorganized Debtors’ creditors will have a superior claim and interest, as applicable, to the equity in Reorganized ANV. If any of the foregoing events occur, there can be no
assurance that there will be sufficient assets to warrant any distribution to holders of equity in Reorganized ANV.
| |
5. |
The New Common Stock may not have an established trading market. |
The New Common Stock may not be listed on a national securities exchange and the Reorganized Debtors may not file any reports with the SEC.
Accordingly, there may be no public market for the New Common Stock and there can be no guarantee that liquid trading markets for the New Common Stock will develop. In the event a liquid trading market for the New Common Stock does not develop, the
ability to transfer or sell New Common Stock may be substantially limited.
| |
6. |
Certain Holders of Plan Securities may be restricted in their ability to transfer or sell their securities. |
To the extent that the offer and sale of the New Common Stock, New Warrants or any other securities issued under the Plan is covered by
Bankruptcy Code section 1145(a)(1), they may be resold by the holders thereof without registration under the Securities Act, provided that the holder is not an “underwriter” as defined in Bankruptcy Code section 1145(b) with respect
to such securities. Resales by Persons who receive New Common Stock or New Warrants pursuant to the Plan that are deemed to be “underwriters” as defined in Bankruptcy Code section 1145(b) would not be exempted from registration under the
Securities Act by Bankruptcy Code section 1145. Such Persons only would be permitted to resell such New Common Stock or New Warrants without registration if they are able to comply with an applicable exemption from registration, which would be the
case in connection with a resale transaction satisfying the conditions to Rule 144 under the Securities Act.
To the extent that the
offer, issuance, distribution and sale of the New Second Lien Convertible Notes (and the guarantees thereof) and the shares of New Common Stock or other Securities to be received upon conversion thereof are covered by Section 4(a)(2) of the
Securities Act, the New Second Lien Convertible Notes (and the guarantees thereof) and the shares of New Common Stock or other Securities to be received upon conversion thereof are “restricted securities” within the meaning of Rule 144
under the Securities Act and subject to the transfer restrictions applicable thereto. For the avoidance of doubt, the New Second Lien Convertible Notes are being issued pursuant to the Exit Facility and the Disclosure Statement is not a solicitation
or offering with respect to the New Second Lien Convertible Notes.
The New Common Stock or the New Warrants may not be registered under
the Securities Act or any state securities laws, and the Debtors make no representation regarding the right of any Holder of New Common Stock or New Warrants to freely resell such Plan Securities.
| |
E. |
Risks Associated with Financial Information and Projections |
| |
1. |
Inherent uncertainty of Debtors’ Financial Projections. |
The
Financial Projections, attached hereto as Exhibit C, were prepared by the Debtors to demonstrate to the Bankruptcy Court the feasibility of the Plan and their ability to continue the Ongoing Operations upon emergence from chapter 11. This
information was prepared for the limited purpose of furnishing recipients of this Disclosure Statement with adequate information to make an informed judgment regarding acceptance of the Plan, and was not prepared for the purpose of providing the
basis for an investment decision relating to the issuance of the New Common Stock. This
47
information was not audited or reviewed by the Debtors’ independent public accountants. The Debtors do not intend to update or otherwise revise the Financial Projections, including any
revisions to reflect events or circumstances existing or arising after the date of this Disclosure Statement or to reflect the occurrence of unanticipated events, even if any or all of the underlying assumptions do not come to fruition. Furthermore,
the Debtors do not intend to update or revise the Financial Projections to reflect changes in general economic or industry conditions.
At
the time they were prepared, the Financial Projections reflected numerous assumptions concerning the Debtors’ anticipated future performance and with respect to prevailing and anticipated market and economic conditions that were and remain
beyond their control and that may not materialize. Projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic and competitive risks, and the assumptions underlying the
Financial Projections and/or valuation estimates may prove to be wrong in material respects. Actual results may vary significantly from those contemplated by the Financial Projections. As a result, such projections are only an estimate and should
not be relied upon as necessarily indicative of future, actual recoveries.
The business plan was developed by the Debtors with the help
of their advisors. There can be no assurances that the Debtors’ business plan will not change, perhaps materially, as a result of decisions management makes after fully evaluating the strategic direction of the Debtors and their business plan.
Any deviations from the Debtors’ business plan would necessarily cause a deviation from the Financial Projections, and could result in materially different outcomes from those projected.
| |
2. |
The financial information contained in this Disclosure Statement has not been audited |
In preparing this Disclosure Statement, the Debtors relied on financial data derived from their books and records that was available at the
time of such preparation. Although the Debtors have used their reasonable business judgment to ensure the accuracy of the financial information provided in this Disclosure Statement, and while the Debtors believe that such financial information
fairly reflects the financial condition of the Debtors, the Debtors are unable to represent or warrant that the financial information contained in this Disclosure Statement and attached hereto is without inaccuracies.
| IX. |
SOLICITATION AND VOTING PROCEDURES |
On April 24, 2015 the Debtors filed the
Debtors’ Motion for an Order (I) Approving Proposed Disclosure Statement and the Form and Manner of the Notice of the Disclosure Statement Hearing, (II) Establishing Solicitation and Voting Procedures, (III) Scheduling a Confirmation
Hearing, and (IV) Establishing Notice and Objection Procedures for Confirmation of Debtors’ Plan of Reorganization [Docket No. 253] (the “Disclosure Statement Motion”). Revised draft Ballots and the proposed order of
the Bankruptcy Court approving the form of the Ballots and the Solicitation of the Plan, which had been amended to reflect the terms of the Amended and Restated Restructuring Support Agreement, were filed by the Debtors on July 23, 2015.
Further revised draft Ballots and a further revised proposed order of the Bankruptcy Court approving the form of the Ballots and the Solicitation of the Plan, which had been amended to reflect the agreement between the Debtors, the Requisite
Consenting Noteholders, the Creditors Committee and the Equity Committee, were filed by the Debtors on August 26, 2015. On August 28, 2015, the Bankruptcy Court entered an order granting the Disclosure Statement Motion [Docket
No. 940] (the “Disclosure Statement Order”).
The Disclosure Statement Order will be accompanied by an applicable
Ballot to be used for voting on the Plan, and will be distributed to the Holders of Claims in Class 1, Class 2, Class 4, and Class 6, and to the Holders of Interests in Class 8, as applicable, as of the Voting Record Date (as defined in the
Disclosure Statement Order). For the avoidance of doubt, the Disclosure Statement Order and applicable ballots will be sent to Holders of Interests in Class 8 on The Depository Trust Company’s records as of the Voting Record Date. The
procedures and instructions for voting and related deadlines will be attached to the applicable Ballot. Any party who desires additional copies of these documents may request them from the Balloting Agent by writing to 830 Third Avenue, 9th
Floor, New York, NY 10022, calling (855) 936-2883 or emailing angballots@PrimeClerk.com.
48
X. CONFIRMATION OF THE PLAN
| |
A. |
Requirements for Confirmation of the Plan |
Among the requirements for Confirmation of
the Plan pursuant to Bankruptcy Code section 1129 are: (i) the Plan is in the “best interests” of Holders of Claims and Interests; (ii) the Plan is feasible; and (iii) the Plan is accepted by all Impaired Classes of Claims
and Interests, or if rejected by an Impaired Class or if an Impaired Class is deemed to reject, the Plan “does not discriminate unfairly” and is “fair and equitable” as to the Class.
At the Confirmation Hearing, the Bankruptcy Court will determine whether the Plan satisfies all of the requirements of Bankruptcy Code section
1129. The Debtors believe that: (i) the Plan satisfies or will satisfy all of the necessary statutory requirements of chapter 11; (ii) the Debtors have complied or will have complied with all of the necessary requirements of chapter 11;
and (iii) the Plan has been proposed in good faith.
| |
B. |
Best Interests of Creditors/Liquidation Analysis |
Often called the “best
interests” test, Bankruptcy Code section 1129(a)(7) requires that a bankruptcy court find as a condition to confirmation, that a chapter 11 plan provides, with respect to each impaired20 class of claims or interests, that each holder of an impaired claim or interest in such class either (i) has accepted the plan or (ii) will receive or retain under the plan property of a
value that is not less than the amount that the holder would receive or retain if the debtors liquidated under chapter 7.
The Debtors
believe that the Plan meets the “best interests of creditors” test of Bankruptcy Code section 1129(a)(7). Attached hereto as Exhibit D and incorporated herein by reference is a liquidation analysis (the “Liquidation
Analysis”) prepared by the Debtors with the assistance of the Debtors’ financial and legal advisors. As reflected in the Liquidation Analysis, the Debtors believe that liquidation of the Debtors’ business under chapter 7 of the
Bankruptcy Code would result in significantly reduced recoveries for Holders of Impaired Claims or Interests as compared to distributions contemplated under the Plan.
Bankruptcy Code section 1129(a)(11) requires that confirmation of a plan of
reorganization is not likely to be followed by the liquidation, or the need for further financial reorganization of the debtor, or any successor to the debtor (unless such liquidation or reorganization is proposed in the plan of reorganization).
To determine whether the Plan meets this feasibility requirement, the Debtors have analyzed their ability to meet their respective
obligations under the Plan. As part of this analysis, the Debtors have prepared the Financial Projections attached hereto as Exhibit C and incorporated herein by reference. Based upon the Financial Projections, the Debtors believe that they
will be a viable operation following these Chapter 11 Cases and that the Plan will meet the feasibility requirements of the Bankruptcy Code.
| |
D. |
Acceptance by Impaired Classes |
The Bankruptcy Code requires, as a condition to
confirmation, except as described in the following section, that each class of claims or equity interests impaired under a plan, accept the plan. A class that is not impaired under a plan is deemed to have accepted the plan and, therefore,
solicitation of acceptances with respect to such a class is not required.
Bankruptcy Code section 1126(c) defines acceptance of a plan by
a class of impaired creditors as acceptance by holders of at least two-thirds in dollar amount and more than one-half in number of claims in that class, but for that purpose counts only those who actually vote to accept or to reject a plan. Thus, a
Class of Claims will have voted to accept the Plan only if two-thirds in amount and more than one-half in number actually voting cast their Ballots in favor of acceptance, subject to Article III of the Plan.
| 20 |
A class of claims or interests is “impaired” within the meaning of Bankruptcy Code section 1124 unless the plan (i) leaves unaltered the legal, equitable and contractual rights to which the claim or
interest entitles the holder of such claim or interest or (ii) cures any default, reinstates the original terms of such obligation, compensates the holder for certain damages or losses, as applicable, and does not otherwise alter the legal,
equitable or contractual rights to which such claim or interest entitles the holder of such claim or interest. |
49
Bankruptcy Code section 1126(d) defines acceptance of a plan by a class of impaired interests as
acceptance by holders of at least two-thirds in dollar amount of those interests who actually vote to accept or to reject a plan. Votes that have been “designated” under Bankruptcy Code section 1126(e) are not included in the calculation
of acceptance by a class of interests. Thus, a Class of Interests will have voted to accept the Plan only if two-thirds in amount actually voting cast their Ballots in favor of acceptance, not counting designated votes, subject to Article III of the
Plan.
| |
E. |
Confirmation without Acceptance by All Impaired Classes |
Bankruptcy Code section 1129(b)
allows a bankruptcy court to confirm a plan even if impaired classes entitled to vote on the plan have not accepted it or if an impaired class is deemed to reject the plan; provided, however, the plan is accepted by at least one
impaired class of claims (without regard to the votes of insiders).Pursuant to Bankruptcy Code section 1129(b), notwithstanding an impaired class’s rejection or deemed rejection of the plan, such plan will be confirmed, at the plan
proponent’s request, in a procedure commonly known as “cram down,” so long as the plan does not “discriminate unfairly” and is “fair and equitable” with respect to each class of claims or interests that is impaired
under, and has not accepted, the plan.
| |
1. |
No Unfair Discrimination |
The test for unfair discrimination
applies to classes of claims or interests that are of equal priority and are receiving different treatment under a plan. The test does not require that the treatment be the same or equivalent but that such treatment be “fair.” In general,
bankruptcy courts consider whether a plan discriminates unfairly in its treatment of classes of claims of equal rank (e.g., classes of the same legal character). The Debtors do not believe the Plan discriminates unfairly against any Impaired Class
of Claims or Interests. The Debtors believe that the Plan and the treatment of all Classes of Claims and Interests satisfy the foregoing requirements for non-consensual Confirmation.
| |
2. |
Fair and Equitable Test |
The fair and equitable test applies to
classes of different priority and status (e.g., secured versus unsecured) and includes the general requirement that no class of claims receive more than 100% of the amount of the allowed claims in such class. As to each non-accepting class,
the test sets different standards depending on the type of claims or interests in such class. As set forth below, the Debtors believe that the Plan satisfies the “fair and equitable” requirement, notwithstanding the fact that certain
Classes are deemed to reject the Plan. There is no Class receiving more than a 100 percent recovery and no junior Class is receiving a distribution under the Plan until all senior Classes have received a 100 percent recovery.
Secured Claims
The condition that a
plan be “fair and equitable” to a non-accepting class of secured claims may be satisfied, among other things, if a debtor demonstrates that: (i) the holders of such secured claims retain the liens securing such claims to the extent of
the allowed amount of the claims, whether the property subject to the liens is retained by the debtor or transferred to another entity under the plan; and (ii) each holder of a secured claim in the class receives deferred cash payments totaling
at least the allowed amount of such claim with a present value, as of the effective date of the plan, at least equivalent to the value of the secured claimant’s interest in the debtor’s property subject to the liens.
Unsecured Claims
The condition that a
plan be “fair and equitable” to a non-accepting class of unsecured claims includes the requirement that either: (i) the plan provides that each holder of a claim of such class receive or retain on account of such claim property of a
value, as of the effective date of the plan, equal to the allowed amount of such claim; or (ii) the holder of any claim or interest that is junior to the claims of such class will not receive or retain any property under the plan on account of
such junior claim or junior interest.
50
Interests
The condition that a plan be “fair and equitable” to a non-accepting class of interests includes the requirements that either:
(i) the plan provides that each holder of an interest in that class receives or retains under the plan on account of that interest property of a value, as of the effective date of the plan, equal to the greater of: (1) the allowed amount
of any fixed liquidation preference to which such holder is entitled; (2) any fixed redemption price to which such holder is entitled; or (3) the value of such interest; or (ii) if the class does not receive the amount as required
under (i) no class of interests junior to the non-accepting class may receive a distribution under the plan.
| |
3. |
Failure to Vote on the Plan |
If no Holders of Claims or Interests
in a particular Class vote to accept or reject the Plan, the Plan shall be deemed accepted by the Holders of such Claims or Interests in such Class. See In re Tribune Co., 464 B.R. 126, 183 (Bankr. D. Del. 2011); In re Ruti-Sweetwater,
Inc., 836 F.2d 1263, 1266 (10th Cir. 1988); In re Adelphia Commc’ns Corp., 368 B.R. 140, 261-62 (Bankr. S.D.N.Y. 2007); cf. In re Szostek, 886 F.2d 1405, 1413 (3d Cir. 1989).
| |
F. |
Valuation of the Debtors |
In conjunction with formulating the Plan and satisfying their
obligations under Bankruptcy Code section 1129, the Debtors determined that it was necessary to estimate the post-Confirmation going concern value of the Reorganized Debtors. Based on the projections and solely for the purposes of the Plan,
Moelis & Company LLC, the Debtors’ financial advisor, has undertaken a valuation analysis (the “Valuation Analysis”) to estimate the value available for distribution to Holders of Allowed Claims and Interests entitled
to receive distributions under the Plan. The Valuation Analysis is set forth in Exhibit E attached hereto and is incorporated herein by reference.
| XI. |
APPLICABILITY OF FEDERAL AND OTHER SECURITIES LAWS |
On the Effective Date, Reorganized ANV shall issue on a Pro Rata basis,
(i) 100% of the shares of the New Common Stock to Holders of Class 4 Allowed Unsecured Claims, subject to dilution on account of (a) the conversion of the New Second Lien Convertible Notes and (b) the exercise of the New Warrants, in
accordance with Article 2.10 of the Plan, and (ii) 100% of the New Warrants to Holders of Class 6 Subordinated Securities Claims and Class 8 Allowed Existing Equity Interests, in accordance with Articles 2.12 and 2.14 of the Plan (collectively,
the “Plan Securities”)
The Debtors believe that the Plan Securities constitute “securities,” as defined in
section 2(a)(1) of the Securities Act, Bankruptcy Code section 101, and applicable state securities laws or “blue sky” laws (“Blue Sky Laws”).
| |
B. |
Issuance and Resale of Plan Securities Under the Plan |
| |
1. |
Exemptions from Registration |
The Debtors are relying on Bankruptcy
Code section 1145(a) to exempt from registration under the Securities Act and Blue Sky Laws the offer, issuance, and distribution of the Plan Securities.
Bankruptcy Code section 1145 provides that the registration requirements of section 5 of the Securities Act (and any state Blue Sky Law
requirements) shall not apply to the offer or sale of stock, options, warrants, or other securities by a debtor if (a) the offer or sale occurs under a plan of reorganization; (b) the recipients of the securities hold a claim against, an
interest in, or claim for administrative expense against, the debtor; and (c) the securities are issued in exchange for a claim against or interest in a debtor or are issued principally in such exchange and partly for Cash and property.
In reliance upon this exemption, the offer and sale of the Plan Securities will not be registered under the Securities Act or any state Blue
Sky Laws.
51
The offering, issuance and distribution of the Plan Securities is covered by Bankruptcy Code
section 1145 and will be deemed a public offering. Accordingly, the Plan Securities will not be deemed “restricted securities” as defined under Rule 144(a)(3) of the Securities Act and may be resold without registration under the
Securities Act, unless the Holder is an “underwriter” (as discussed below) with respect to such securities, as that term is defined in Bankruptcy Code section 1145(b). In addition, the Plan Securities generally may be resold without
registration under state securities laws pursuant to various exemptions provided by the respective Blue Sky Laws of those states; however, the availability of such exemptions cannot be determined unless individual state Blue Sky Law provisions are
examined. Therefore, recipients of the Plan Securities are advised to consult with their own legal advisors as to the availability of any such exemption from registration under state Blue Sky Laws in any given instance and as to any applicable
requirements or conditions to such availability.
| |
2. |
Resales of Plan Securities; Definition of Underwriter |
If the
Holder of the Plan Securities is an “underwriter” as defined in Bankruptcy Code section 1145(b), the Plan Securities may be resold under the Securities Act and applicable state Blue Sky Laws only via an effective registration statement
under the Securities Act or pursuant to an applicable exemption from registration, including, with respect to the latter, a resale transaction satisfying the applicable conditions of Rule 144 promulgated under the Securities Act. Bankruptcy Code
section 1145(b)(1) defines an “underwriter” as one who, except with respect to “ordinary trading transactions of an entity that is not an issuer,” (a) purchases a claim against, interest in, or claim for an administrative
expense in the case concerning, the debtor, if such purchase is with a view to distribution of any security received or to be received in exchange for such claim or interest; (b) offers to sell securities offered or sold under a plan for the
holders of such securities; (c) offers to buy securities offered or sold under a plan from the holders of such securities, if such offer to buy is (i) with a view to distribution of such securities and (ii) under an agreement made in
connection with the plan, with the consummation of the plan, or with the offer or sale of securities under the plan; or (d) is an issuer of the securities within the meaning of section 2(a)(11) of the Securities Act. In addition, a Person who
receives a fee in exchange for purchasing an issuer’s securities could also be considered an underwriter within the meaning of section 2(a)(11) of the Securities Act.
The definition of an “issuer” for purposes of whether a Person is an underwriter under Bankruptcy Code section 1145(b)(1)(D), by
reference to section 2(a)(11) of the Securities Act, includes as “statutory underwriters” all persons who, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with, an issuer
of securities. The reference to “issuer,” as used in the definition of “underwriter” contained in section 2(a)(11), is intended to cover “controlling persons” of the issuer of the securities. “Control,” as
defined in Rule 405 of the Securities Act, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or
otherwise. Accordingly, an officer or director of a reorganized debtor or its successor under a plan of reorganization may be deemed to be a “controlling person” of such debtor or successor, particularly if the management position or
directorship is coupled with ownership of a significant percentage of the reorganized debtor’s or its successor’s voting securities. Moreover, the legislative history of Bankruptcy Code section 1145 suggests that a creditor who owns ten
percent (10%) or more of a class of voting securities of a reorganized debtor may be presumed to be a “controlling person” and, therefore, an underwriter.
Under certain circumstances, Holders of Plan Securities who are deemed to be “underwriters” may be entitled to resell their Plan
Securities pursuant to the limited resale safe harbor provisions of Rule 144. Generally, Rule 144 would permit the public resale of securities received by such person if current information regarding the issuer is publicly available and if volume
limitations, manner of sale requirements and certain other conditions are met. However, the Debtors do not presently intend to make publicly available the requisite current information regarding the Debtors, and as a result, Rule 144 will not be
available for resales of Plan Securities by Persons deemed to be underwriters. Whether any particular Person would be deemed to be an “underwriter” (including whether such Person is a “controlling person”) with respect to the
Plan Securities would depend upon various facts and circumstances applicable to that Person. Accordingly, the Debtors express no view whether any Person would be deemed an “underwriter” with respect to the Plan Securities. In view of the
complex nature of the question of whether a particular Person may be an “underwriter,” the Debtors make no representations concerning the right of any Person to freely resell Plan Securities. Accordingly, the Debtors recommend that
potential recipients of Plan Securities consult their own counsel concerning their ability to freely trade such securities without compliance with the federal and state securities laws.
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| |
C. |
Listing of New Common Stock |
The Debtors may, but shall not be obligated to, list the
New Common Stock on a national securities exchange.
| XII. |
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN |
The following is a summary of
certain U.S. federal income tax consequences of the Plan to the Debtors and certain Holders of Claims or Interests. This summary is based on the Internal Revenue Code of 1986, as amended (the “Tax Code”), Treasury regulations
thereunder, and administrative and judicial interpretations and practice, all as in effect on the date of this Disclosure Statement and all of which are subject to change, with possible retroactive effect. Due to the lack of definitive judicial and
administrative authority in a number of areas, substantial uncertainty may exist with respect to some of the tax consequences described below. No opinion of counsel has been obtained, and the Debtors do not intend to seek a ruling from the Internal
Revenue Service (the “IRS”) as to any of the tax consequences of the Plan discussed below. Events occurring after the date of this Disclosure Statement, including changes in law and changes in administrative positions, could affect
the U.S. federal income tax consequences of the Restructuring Transaction. No representations are being made regarding the particular tax consequences of the confirmation and consummation of the Offer or the Plan to the Debtors or any Holder of a
Claim or Interest. There can be no assurance that the IRS will not challenge one or more of the tax consequences of the Plan described below.
This summary does not apply to Holders of Claims or Interests that are otherwise subject to special treatment under U.S. federal income tax
law (including, for example, banks, governmental authorities or agencies, financial institutions, insurance companies, pass-through entities, tax-exempt organizations, brokers and dealers in securities, mutual funds, small business investment
companies, employees, persons who receive their Claims or Interests pursuant to the exercise of an employee stock option or otherwise as compensation, persons holding Claims or Interests that are a hedge against, or that are hedged against, currency
risk or that are part of a straddle, constructive sale, or conversion transaction and regulated investment companies). The following discussion assumes that Holders of Claims or Interests hold such Claims or Interests as “capital assets”
within the meaning of Tax Code section 1221. Moreover, this summary does not purport to cover all aspects of U.S. federal income taxation that may apply to the Debtors and Holders of Claims or Interests based upon their particular circumstances.
Additionally, this summary does not discuss any tax consequences that may arise under any laws other than U.S. federal income tax law, including under state, local, estate, gift, non-U.S. or any other applicable tax law.
For purposes of this summary, a “U.S. Holder” means a Holder of a Claim or Interest that, in any case, is, for U.S. federal income
tax purposes: (i) an individual that is a citizen or resident of the U.S.; (ii) a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the U.S., any state
thereof or the District of Columbia; (iii) an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or (iv) a trust, if (a) a court within the U.S. is able to exercise primary supervision
over its administration and one or more U.S. persons have the authority to control all of the substantial decisions of such trust, or (b) it has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person. A
“Non-U.S. Holder” means a Holder of a Claim or Interest that is not a U.S. Holder and is, for U.S. federal income tax purposes, an individual, corporation (or other entity treated as a corporation for U.S. federal income tax purposes),
estate or trust.
If an entity taxable as a partnership for U.S. federal income tax purposes holds a Claim, the U.S. federal income tax
treatment of a partner (or other owner) of the entity generally will depend on the status of the partner (or other owner) and the activities of the entity. Such partner (or other owner) should consult its tax advisor as to the tax consequences of
the Plan.
This summary assumes that the Credit Agreement, the Scotiabank Cross Currency Swap, the Diesel Swaps, the Notes, the DIP Credit
Facility, the New First Lien Term Loans and the New Second Lien Convertible Notes are debt for U.S. federal income tax purposes. If the IRS were to successfully assert that any such obligations are not debt for U.S. federal income tax purposes, the
U.S. federal income tax consequences to Holders of such obligations would be materially different from the consequences described herein.
The U.S. federal income tax consequences of the Plan are complex. The following summary is for informational purposes only and is not a
substitute for careful tax planning and advice based on the individual circumstances pertaining to a Holder of a Claim or Interest. All Holders of Claims and Interests are urged to consult their own tax advisors as to the consequences of the
restructuring described in the Plan under federal, state, local, non-U.S. and any other applicable tax laws.
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A. |
U.S. Federal Income Tax Consequences to the Debtors Under the Plan |
For U.S. federal
income tax purposes, the Debtors are ANV and certain of its direct and indirect U.S. subsidiaries. The U.S. corporate Debtors, together with any of their U.S. subsidiaries, are referred to collectively as the “ANV Consolidated
Group.” The ANV Consolidated Group has consolidated estimated net operating loss (“NOL”) carryforwards as of December 31, 2014, of approximately $177 million. However, the ANV Consolidated Group’s NOLs are subject
to audit and possible challenge by the IRS. Accordingly, the amount of the ANV Consolidated Group’s NOLs ultimately may vary from the amounts set forth above.
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1. |
Cancellation of Indebtedness Income |
Generally, a corporation will
recognize cancellation of debt (“COD”) income upon satisfaction of its outstanding indebtedness for total consideration less than the amount of such indebtedness. Subject to the discussion below on foreign currency exchange rules,
the amount of COD income, in general, is the excess of (a) the adjusted issue price of the indebtedness satisfied, over (b) the sum of (x) the amount of cash paid, and (y) the issue price of any new indebtedness of the taxpayer
issued and (z) fair market value of any other new consideration (including stock of the debtor) given in satisfaction of such indebtedness at the time of the exchange.
A corporation will not, however, be required to include any amount of COD income in gross income if the corporation is a debtor under the
jurisdiction of a court in a case under chapter 11 of the Bankruptcy Code and the discharge of debt occurs pursuant to that proceeding (the “Section 108(a) Bankruptcy Exception”). Instead, as a consequence of such exclusion, the
debtor must reduce its tax attributes by the amount of COD income excluded from gross income. Under Tax Code section 108(b), a debtor that excludes COD income from gross income under the Section 108(a) Bankruptcy Exception generally must reduce
certain tax attributes by the amount of the excluded COD income. In general, tax attributes are reduced in the following order: (a) NOLs and NOL carryforwards, (b) general business and minimum tax credit carryforwards, (c) capital
loss carryforwards, (d) basis of the debtor’s assets, and (e) foreign tax credit carryforwards. A debtor’s tax basis in its assets generally may not be reduced below the amount of liabilities remaining immediately after the
discharge of indebtedness. NOLs for the taxable year of the discharge and NOL carryovers to such year generally are the first attributes subject to reduction. However, a debtor may elect under Tax Code section 108(b)(5) (the “Section
108(b)(5) Election”) to reduce its basis in its depreciable property first. If a debtor makes a Section 108(b)(5) Election, the limitation on reducing the debtor’s basis in its assets below the amount of its remaining liabilities
does not apply.
COD income is determined on a company-by-company basis. If a debtor with excluded COD income is a member of a
consolidated group, Treasury regulations address the application of the rules for the reduction of tax attributes (the “Consolidated Attribute Reduction Rules”). If the debtor is a member of a consolidated group and is required to
reduce its basis in the stock of another group member, a “look-through rule” generally requires a corresponding reduction in the tax attributes of the lower-tier member. If the amount of a debtor’s excluded COD income exceeds the
amount of attribute reduction resulting from the application of the foregoing rules, certain other tax attributes of the consolidated group may also be subject to reduction. If the debtor is a member of a consolidated group, the debtor may treat
stock in another group member as depreciable property for purposes of the Section 108(b)(5) Election, provided the lower-tier member consents to a corresponding reduction in its basis in its depreciable property. Finally, if the attribute
reduction is less than the amount of COD income and a member of the ANV Consolidated Group has an excess loss account (an “ELA”) (i.e., negative basis in the stock of another member of the consolidated group), the ANV
Consolidated Group will recognize taxable income to the extent of the lesser of such ELA or the amount of the COD income that was not offset by tax attributes.
The Debtors expect to realize a significant amount of COD income as a result of the Plan. The amount of COD income will depend upon, among
other things, the currency gain (described below) and the fair market value of the New Common Stock, which may not be determined until after the Effective Date of the Plan. Pursuant to the Section 108(a) Bankruptcy Exception, the Debtors will
not include this COD income in gross income. Instead, the Debtors will be required to reduce their tax attributes in accordance with the Consolidated Attribute Reduction Rules after determining the taxable income (or loss) of the ANV Consolidated
Group for the taxable year of discharge. Accordingly, the tax attributes (and, in particular, NOLs) are available to offset taxable income that accrues between the Effective Date and the end of Reorganized ANV’s taxable year. Basis reduction
applies to assets owned by a debtor at the beginning of the tax year following the discharge.
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Under the Consolidated Attribute Reduction Rules, the Debtors’ excluded COD income will be
applied to reduce their NOLs and, if necessary, other tax attributes, including the Debtors’ tax basis in their assets. The Debtors currently anticipate that the application of Consolidated Attribute Reduction Rules (unless a
Section 108(b)(5) Election is made) will result in the elimination of the ANV Consolidated Group’s consolidated NOLs and a reduction of the basis in their assets.
The extent to which NOLs and other tax attributes remain following the application of the Consolidated Attribute Reduction Rules will depend
upon a number of factors, including the amount of COD income that is actually incurred and whether the Debtors make the Section 108(b)(5) Election. The Debtors have not yet determined whether they will make a Section 108(b)(5) Election.
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2. |
Impact of Foreign Currency Exchange Rules on the COD Income Calculation |
In determining the adjusted issue price of the Notes for purposes of calculating COD income, the amount of COD income will be calculated after
applying the special foreign currency rules of Tax Code section 988 because the Notes were issued in Canadian dollars, while the functional currency of the Debtors is the U.S. dollar. These rules provide that the Debtors will recognize foreign
exchange gain or loss equal to the difference between the functional currency value of the nonfunctional currency received when the debt was incurred and the value of the nonfunctional currency when the debt is retired. Foreign currency gain is
treated as ordinary income. The Debtors will therefore recognize foreign currency gain due to the decline of the Canadian dollar since the issue date of the Notes (May 25, 2012). This currency gain will be treated as ordinary income to the Debtors
and will reduce the adjusted issue price of the indebtedness satisfied by the amount of its currency gain prior to calculating the amount of COD. It is expected that this currency gain will be more than offset by the deduction for the amount paid by
the Debtors on the Secured Swap Claims.
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3. |
Potential Limitations on NOL Carryforwards and Other Tax Attributes |
| |
a. |
Limitation on NOLs and Other Tax Attributes |
Under Tax Code section 382, if a
“loss corporation” (generally, a corporation with NOLs and/or built-in losses) undergoes an “ownership change,” the amount of its pre-change losses (including certain losses or deductions which are
“built-in,”i.e., economically accrued but unrecognized as of the date of the ownership change) that may be utilized to offset future taxable income generally are subject to an annual limitation. Similar rules apply to a
corporation’s capital loss carryforwards and tax credits.
The Debtors’ issuance of New Common Stock pursuant to
the Plan is expected to result in an ownership change for purposes of Tax Code section 382. Accordingly, assuming that the Debtors emerge with any NOLs following attribute reduction, and subject to the discussion below of certain special bankruptcy
exceptions in this Section XII.A.3.a, the ANV Consolidated Group’s pre-change losses may be subject to an annual limitation. This limitation applies in addition to, and not in lieu of, any other limitation that may already or in the future be
in effect and the attribute reduction that may result from COD.
| |
b. |
General Section 382 Limitation |
In general, the amount of the annual limitation to
which a corporation that undergoes an ownership change will be subject is equal to the product of (i) the fair market value of the stock of the loss corporation (or, in the case of a consolidated group, generally the stock of the common parent)
immediately before the ownership change (with certain adjustments) and (ii) the “long term tax exempt rate” in effect for the month in which the ownership change occurs (e.g., 2.82% for ownership changes occurring in August
2015). As noted below in Section XII.A.3.d, if a corporation (or a consolidated group) in bankruptcy undergoes an ownership change pursuant to a confirmed bankruptcy plan, the fair market value of the stock of the corporation is generally determined
immediately after (rather than before) the ownership change, after giving effect to the discharge of creditors’ claims but subject to certain adjustments. In no event, however,
55
can the stock value for this purpose exceed the pre-change gross value of the corporation’s assets. If a loss corporation has a net unrealized built-in gain (“NUBIG”)
immediately prior to the ownership change, the annual limitation may be increased as certain gains are recognized during the five-year period beginning on the date of the ownership change (the “Recognition Period”). If a loss
corporation has a net unrealized built-in loss (“NUBIL”) immediately prior to the ownership change, certain losses recognized during the Recognition Period also would be subject to the annual limitation and thus may reduce the
amount of pre-change NOLs that could be used by the loss corporation during the Recognition Period.
Any portion of the
annual limitation that is not used in a given year may be carried forward, thereby adding to the annual limitation for the subsequent taxable year. However, if the corporation (or the consolidated group) does not continue its historic business or
use a significant portion of its historic assets in a new business for at least two years after the ownership change, unless the corporation qualifies for certain bankruptcy exceptions discussed below in Section XII.A.3.d, the annual limitation
resulting from the ownership change is reduced to zero, thereby precluding any utilization of the corporation’s pre-change losses, absent any increases due to recognized built-in gains (“RBIGs”). In addition, if a redemption or
other corporate contraction occurs in connection with the ownership change of the loss corporation (or the consolidated group), or if the loss corporation (or the consolidated group) has substantial nonbusiness assets, the annual limitation is
reduced to take the redemption, other corporate contraction or nonbusiness assets into account. Furthermore, if the corporation (or the consolidated group) undergoes a second ownership change, the second ownership change may result in a lesser (but
never a greater) annual limitation with respect to any losses that existed at the time of the first ownership change.
| |
c. |
Built-in Gains and Losses |
A NUBIG or NUBIL is generally the difference between the
fair market value of a loss corporation’s assets and its tax basis in the assets, subject to a statutorily defined threshold amount. The amount of a loss corporation’s NUBIG or NUBIL must be adjusted for built-in items of income or
deduction that would be attributable to a pre-change period if recognized during the Recognition Period. The NUBIG or NUBIL of a consolidated group generally is calculated on a consolidated basis, subject to special rules.
If a loss corporation has a NUBIG immediately prior to an ownership change, any RBIGs will increase the annual limitation in the taxable year
the RBIG is recognized. An RBIG generally is any gain (and certain income) with respect to an asset held immediately before the date of the ownership change that is recognized during the Recognition Period to the extent of the fair market value of
the asset over its tax basis immediately prior to the ownership change. However, the aggregate amount of all RBIGs that are recognized during the Recognition Period may not exceed the NUBIG. On the other hand, if a loss corporation has a NUBIL
immediately prior to an ownership change, any recognized built-in losses (“RBILs”) will be subject to the annual limitation in the same manner as pre-change NOLs. An RBIL generally is any loss (and certain deductions) with respect
to an asset held immediately before the date of the ownership change that is recognized during the Recognition Period to the extent of the excess of the tax basis of the asset over its fair market value immediately prior to the ownership change.
However, the aggregate amount of all RBILS that are recognized during the Recognition Period may not exceed the NUBIL. RBIGs and RBILs may be recognized during the Recognition Period for depreciable and amortizable assets that are not actually
disposed. The Debtors believe that the ANV Consolidated Group will have a NUBIL on the Effective Date and will have RBILs recognized during the Recognition Period on depreciable and amortizable assets.
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d. |
Special Bankruptcy Exceptions |
An exception to the foregoing annual limitation rules
generally applies when existing shareholders and “qualified creditors” of a debtor corporation under the jurisdiction of a court in a chapter 11 case receive, in respect of their claims or interests, at least 50% of the vote and value of
the stock of the reorganized debtor (or a controlling corporation if also in chapter 11) pursuant to a confirmed plan (the “Section 382(l)(5) Exception”). Under the Section 382(l)(5) Exception, a debtor’s pre-change losses
are not limited on an annual basis, but instead NOL carryforwards will be reduced by the amount of any interest deductions claimed during the three taxable years preceding the effective date of the plan of reorganization, and during the part of the
taxable year prior to and including the effective date of the plan of reorganization, in respect of all debt converted into stock in the reorganization. If the Section 382(l)(5) Exception applies and a debtor undergoes another ownership change
within two years after the effective date of the plan of reorganization, then the debtor’s pre-change losses effectively are eliminated in their entirety. For purposes of the Section 382(l)(5) Exception, a
56
“qualified creditor” generally consists of certain long-term creditors (who held the claims continuously for at least 18 months prior to the filing of the bankruptcy petition), ordinary
course creditors (e.g., trade creditors) or creditors receiving less than 5% of the stock of the debtor in a bankruptcy case. If a debtor qualifies for the Section 382(l)(5) Exception, the exception applies unless the debtor
affirmatively elects for it not to apply.
Where the Section 382(l)(5) Exception is not applicable to a corporation in
bankruptcy (either because the debtor does not qualify for it or the debtor otherwise elects not to utilize the Section 382(l)(5) Exception), a second special rule will generally apply (the “Section 382(l)(6) Exception”). Under
the Section 382(l)(6) Exception, the annual limitation will be calculated by reference to the lesser of the value of the debtor corporation’s new stock (with certain adjustments) immediately after the ownership change or the value of such
debtor corporation’s assets (determined without regard to liabilities) immediately before the ownership change. This differs from the ordinary rule that requires the fair market value of a debtor corporation that undergoes an ownership change
to be determined before the events giving rise to the change. The Section 382(l)(6) Exception also differs from the Section 382(l)(5) Exception in that the debtor corporation is not required to reduce its NOL carryforwards by the amount of
interest deductions claimed within the prior three-year period, and the debtor may undergo a change of ownership within two years of the Effective Date without triggering the elimination of its pre-change losses.
| |
e. |
Application of Section 382 to the Debtors |
The Debtors estimate that they have
approximately $177 million of consolidated NOLs as of December 31, 2014; however, interest deductions attributable to debt that will be equitized will reduce the NOLs that would be available under the Section 382(l)(5) Exception.
It is expected that the amount of the Debtors’ COD will exceed its NOLs. Even if the Debtors emerge with NOLs, it is possible that the
Debtors will not qualify for the Section 382(l)(5) Exception. Alternatively, the Debtors may decide to elect out of the Section 382(l)(5) Exception, particularly if it appears likely that another ownership change will occur within two
years after the Effective Date. In either case, the Debtors expect that their use of any pre-change losses after the Effective Date will be subject to limitations based on the rules discussed above, but taking into account the Section 382(l)(6)
Exception. Regardless of whether the Debtors take advantage of the Section 382(l)(6) Exception or the Section 382(l)(5) Exception, the Debtors’ use of their pre-change losses after the Effective Date may be adversely affected if an
ownership change within the meaning of Tax Code section 382 were to occur after the Effective Date.
The Debtors do not
currently anticipate utilizing the Section 382(l)(5) Exception. As explained above, if the Debtors do utilize the Section 382(l)(5) Exception and another ownership change were to occur within the two-year period after consummation of the
Plan, then the Debtors’ pre-change losses would effectively be eliminated. If the Section 382(l)(5) Exception applies, the New Common Stock may be subject to certain trading restrictions. Such trading restrictions would generally apply
only to a person who owns or desires to own 4.75% or more of the New Common Stock.
Aside from the objective limitations of Tax Code section 382, the IRS
may disallow the subsequent use of a corporation’s pre-change losses following an acquisition of control of a corporation by one or more persons if the principal purpose of the acquisition is the avoidance or evasion of tax by securing a tax
benefit which such person(s) or the corporation would not otherwise enjoy. Other provisions of the Tax Code may also preclude the use of a corporation’s NOLs and certain tax attributes in other ways under certain circumstances.
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4. |
Alternative Minimum Tax |
In general, a federal alternative minimum tax
(“AMT”) is imposed on a corporation’s alternative minimum taxable income (“AMTI”) each year at a 20% rate to the extent that such tax exceeds the corporation’s regular federal income tax for such year.
AMTI is generally equal to regular taxable income with certain adjustments. For purposes of computing AMTI, certain tax deductions and other beneficial allowances are modified or eliminated. In particular, even though a corporation may otherwise be
able to offset all of its taxable income for regular tax purposes by available NOLs, only 90% of a corporation’s AMTI generally may be offset by its AMT NOLs.
In addition, if a corporation (or a consolidated group) undergoes an ownership change within the meaning of Tax Code section 382 and has a
NUBIL at the time of such change, the corporation’s (or the consolidated group’s) aggregate basis in its assets would be reduced for certain AMT purposes to reflect the fair market value of such assets as of the date of the ownership
change.
57
Any AMT that a corporation pays generally will be allowed as a nonrefundable credit against its
regular federal income tax liability in future years when the corporation is not subject to the AMT. Any unused credit may be carried forward indefinitely.
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B. |
U.S. Federal Income Tax Consequences to U.S. Holders Under the Plan |
The U.S. federal
income tax consequences of the Plan to U.S. Holders of Claims and Interests (including the character, amount and timing of income, gain or loss recognized) generally will depend upon, among other factors: (i) the manner in which the U.S. Holder
acquired a Claim or Interest; (ii) the length of time a Claim or Interest has been held; (iii) whether a Claim was acquired at a discount; (iv) whether the U.S. Holder has taken a bad debt deduction in the current or prior years;
(v) whether the U.S. Holder has previously included accrued but unpaid interest with respect to a Claim; (vi) the U.S. Holder’s method of tax accounting; (vii) whether the U.S. Holder will realize foreign currency exchange gain
or loss with respect to a Claim or Interest; and (viii) whether the Debtors reorganize as is expected. Therefore, U.S. Holders of Claims and Interests are urged to consult their tax advisors for information that may be relevant to their
specific situation and circumstances and the particular tax consequences to such Holders as a result thereof.
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1. |
Treatment of a Debt Instrument as a Security |
The U.S. federal income tax
consequences to U.S. Holders of Claims will depend, in part, on whether a debt instrument exchanged is treated as a “security” under the reorganization provisions of the Tax Code. Whether a debt instrument constitutes a security for U.S.
federal income tax purposes is determined based on all the relevant facts and circumstances, but most authorities have held that the length of the term of a debt instrument is an important factor in determining whether such instrument is a security
for U.S. federal income tax purposes. These authorities have indicated that a term of less than five years is evidence that the instrument is not a security, whereas a term of ten years or more is evidence that it is a security. There are numerous
other factors that could be taken into account in determining whether a debt instrument is a security, including the security for payment, the creditworthiness of the obligor, the subordination or lack thereof to other creditors, the right to vote
or otherwise participate in the management of the obligor, convertibility of the instrument into an equity interest of the obligor, whether payments of interest are fixed, variable or contingent, and whether such payments are made on a current basis
or accrued.
The term of the Notes is approximately seven years, one month. Although there is no assurance that the IRS will agree with
such characterization, the Debtors expect to take the position that the Notes constitute securities for U.S. federal income tax purposes. The Debtors do not anticipate that the DIP Facility Claims, the Secured ABL Claims or the Secured Swap Claims
will be treated as securities for U.S. federal income tax purposes.
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2. |
Treatment of U.S. Holders of DIP Facility Claims |
On the Effective Date,
each Holder of an Allowed DIP Facility Claim shall receive its Pro Rata share of the DIP Facility Consideration, i.e., Cash equal to the aggregate amount of all loans and other monetary obligations owed by the Debtors to the DIP Agent and/or
the DIP Lenders under the DIP Credit Agreement and/or pursuant to the DIP Facility Order that are unpaid as of the Effective Date), including, without limitation, (a) the aggregate outstanding principal amount of the outstanding loans under the
DIP Facility at par (including any interest thereon that was previously paid-in-kind (“PIK”)), (b) all accrued and unpaid interest on the loans under the DIP Facility, (c) the 4.0% PIK Put Option Payment and (d) the
3.0% Backstop Put Option Payment; provided, however, that only the DIP Backstop Lenders shall receive their Pro Rata share of the 3.0% Backstop Put Option Payment. For the avoidance of doubt, the DIP Facility Consideration shall be
paid in its entirety from the proceeds of the Exit Facility.
The DIP Facility will be treated as issued with original issue discount
(“OID”) for U.S. federal income tax purposes if its issue price is less than its stated redemption price at maturity by at least a de minimis amount. A debt instrument’s stated redemption price at maturity includes all
principal, interest, and other amounts payable over the term of the debt instrument, other than “qualified stated interest.” Stated interest is “qualified stated interest” if it is unconditionally payable in cash at least
annually. Because Holders of DIP Facility Claims will receive payments other than qualified stated interest, the DIP Facility is treated as being issued with OID for U.S. federal income tax purposes. The DIP Facility is issued with OID in an
aggregate amount equal to the excess of (a) the sum of all payments on the DIP Facility other than qualified stated interest, including PIK interest and put option payments, over (b) the issue price (as described below under Section
XII.B.7.a) of the DIP Facility.
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The Debtors expect that the DIP Facility Claims will be subject to the rules under Tax Code
section 1271(a)(4) as a short-term nongovernment obligation. Under these rules, and subject to the discussion below on obligations subject to Tax Code section 1281, OID on the DIP Facility is not currently included in the Holder’s income.
Instead, the Holder’s “ratable portion” of OID (based, generally speaking, on the number of days the Holder held the obligation) is treated as ordinary interest income when the DIP Facility Claim is disposed of or retired. While not
free from doubt, Holders of DIP Facility Claims may be required to report cash payments on the DIP Credit Agreement in the year received. Although Tax Code section 1271(a)(4) indicates that gain realized on the sale or exchange of a DIP Facility
Claim will be treated as ordinary interest income to the Holder to the extent of the “ratable portion” of the OID, Tax Code section 1271(a)(2) requires that gain recognized on the disposition of a debt instrument, up to the amount of the
debt instrument’s OID, be treated as ordinary income to the DIP Facility if at the time of original issue there was an intention to call the debt instrument before maturity. It is currently anticipated that the DIP Facility will be repaid on
the Effective Date of the Plan and that such date will be prior to the one-year maturity date of the DIP Facility. Accordingly, the Debtors expect to take the position that, to the extent any gain on the disposition of the DIP Facility Claims does
not exceed the OID on the DIP Facility Claims, such gain should be treated as ordinary interest income for federal income tax purposes. Moreover, if a DIP Facility Claim is disposed of at loss, the entire discount would not be recognized by the
Holder. Any gain realized on disposition in excess of the OID will be treated as capital gain.
Certain specified types of short-term
obligations are subject to different rules under Tax Code section 1281. Section 1281 applies to any short-term obligation that is (a) held by a taxpayer using an accrual method of accounting; (b) held primarily for sale to customers
in the ordinary course of the taxpayer’s trade or business; (c) held by a bank; (d) held by a regulated investment company or a common trust fund; (e) identified by the taxpayer under Tax Code section 1256(e)(2) as being part of
a hedging transaction; or (f) a stripped bond or stripped coupon held by the person who stripped the bond or coupon. Short-term obligations that are not subject to Tax Code section 1281 generally are taxed in a manner similar to the treatment
of market discount bonds.
The Debtors do not anticipate that Tax Code section 1281 will apply to most Holders of DIP Facility Claims.
However, a Holder can elect to have Tax Code section 1281 apply to an obligation, in which case OID must be included in income currently as it accrues. Accrual of OID on short-term obligations for cash basis taxpayers generally is based ratably on
the number of days accrued over the period, but such taxpayers can elect to use economic accrual principles. Holders of DIP Facility Claims should consult their independent tax advisors regarding the tax consequences of an election to treat such
Claims under the rules of Tax Code section 1281.
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3. |
Treatment of U.S. Holders of Secured ABL Claims |
The Secured ABL Claims
shall be Allowed Claims pursuant to the Plan in the aggregate amount of $75,411,229.34 (including $74,950,000.00 in principal and $461,229.34 in accrued and unpaid interest and fees). Under the Plan, each Holder of an Allowed Secured ABL Claim shall
receive its Pro Rata (after giving effect to the Secured ABL $10MM Cash Payment) share of (i)(A) the Secured ABL/Swap Cash Payments not made prior to the Effective Date and (B) the Secured ABL/Swap Claims Excess Cash Flow Payment, and
(ii) New First Lien Term Loans in an aggregate principal amount equal to (A) the amount of allowed claims pursuant to Section 2.7(b) of the Plan minus (B) the amount paid in cash in respect of the Secured ABL Claims pursuant to
clause (i) of Section 2.7(c) of the Plan.
A U.S. Holder of an Allowed Secured ABL Claim should be treated as exchanging such
Claim for its Pro Rata share of New First Lien Term Loans and Secured ABL/Swap Cash Payments not made prior to the Effective Date, if any, in a fully taxable exchange because the Secured ABL Claims will not qualify as securities for U.S. Federal
income tax purposes. A U.S. Holder who is subject to this treatment should recognize gain or loss equal to the difference between (a) the issue price of its share of the New First Lien Term Loans and the Secured ABL/Swap Cash Payments, if any,
received, and (b) such Holder’s adjusted tax basis in its Secured ABL Claim surrendered in the exchange. If the Secured ABL Claim is held as a capital asset, the gain generally would be long-term capital gain if the U.S. Holder held its
Secured ABL Claim for more than one year at the time of the exchange. The deductibility of capital losses is subject to certain limitations discussed below in Section XII.B.7.e. A U.S. Holder’s tax basis in the New First Lien Term Loans should
equal the adjusted issue price of its share of the New First Lien Term Loans received. A U.S. Holder’s holding period for the New First Lien Term Loans received on the Effective Date should begin on the day following the Effective Date.
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To the extent that a portion of the New First Lien Term Loans and Secured ABL/Swap Cash Payments,
if any, received in exchange for a U.S. Holder’s Secured ABL Claim is allocable to accrued but untaxed interest, the U.S. Holder will recognize ordinary income (see the discussions of “accrued interest” and “market discount”
below in Sections XII.B.7.b-c). The tax basis of any portion of the New First Lien Term Loans treated as received in satisfaction of accrued but untaxed interest should equal the amount of such accrued but untaxed interest, and the holding period
for any such New First Lien Term Loans should begin on the day following the Effective Date.
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4. |
Treatment of U.S. Holders of Secured Swap Claims |
The Secured Swap Claims
shall be Allowed Claims pursuant to the Plan in the aggregate principal amount of $86,306,619.00, less the Secured Swap Claims’ Pro Rata share of the amount of Secured ABL/Swap Cash Payments made prior to the Effective Date. Under the Plan,
each Holder of an Allowed Secured Swap Claim shall receive its Pro Rata share of (i)(A) the Secured ABL/Swap Cash Payments not made prior to the Effective Date and (B) the Secured ABL/Swap Claims Excess Cash Flow Payment, and (ii) New
First Lien Term Loans in an aggregate principal amount equal to (A) the amount of allowed claims pursuant to Section 2.8(b) of the Plan minus (B) the amount paid in cash in respect of the Secured Swap Claims pursuant to clause
(i) of Section 2.8(c) of the Plan.
A U.S. Holder of a Secured Swap Claim should be treated as exchanging such Claim for its
interest in the New First Lien Term Loans and Secured ABL/Swap Cash Payments in a fully taxable exchange because the Secured Swap Claims will not qualify as securities for U.S. Federal income tax purposes. A U.S. Holder who is subject to this
treatment should recognize gain or loss equal to the difference between (a) the issue price of the New First Lien Term Loans and the Secured ABL/Swap Cash Payments, if any, received, and (b) such Holder’s adjusted tax basis in its
Secured Swap Claim surrendered in the exchange, which gain is expected to be ordinary. A U.S. Holder’s tax basis in the New First Lien Term Loans should equal the adjusted issue price of the debt received. A U.S. Holder’s holding period
for the New First Lien Term Loans received on the Effective Date should begin on the day following the Effective Date.
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5. |
Treatment of U.S. Holders of Unsecured Claims |
Under the terms of the
Plan, Allowed Unsecured Claims, including, among others, Notes Claims, will be cancelled on the Effective Date and each Holder of an Allowed Unsecured Claim will receive either (i) its Pro Rata share of 100% of the New Common Stock, subject to
dilution on account of (a) the conversion of the New Second Lien Convertible Notes and (b) the exercise of the New Warrants, or (ii) its Pro Rata share of the Convenience Claim Distribution.
The analysis of the tax consequences to a U.S. Holder of Notes Claims of the exchange of Allowed Notes Claims for New Common Stock of
Reorganized ANV or the Convenience Claim Distribution depends on whether the Notes are treated as securities for U.S. federal income tax purposes, as defined above in Section XII.B.1. As mentioned above, given the length of the maturity and other
considerations, the Debtors expect to treat the Notes as securities.
If (a) the Notes are treated as securities for U.S. federal
income tax purposes and (b) a U.S. Holder of Notes Claims solely receives New Common Stock, the exchange of Notes Claims for New Common Stock would be treated as a recapitalization, and therefore a reorganization, under Tax Code section
368(a)(1)(E). Except to the extent that any portion of the New Common Stock received is allocable to accrued but untaxed interest (discussed below in Section XII.B.7.b), a U.S. Holder of Notes Claims would not recognize taxable gain or loss with
respect to this exchange. Such Holder’s tax basis in its New Common Stock received in exchange for the Notes Claim should be equal to such Holder’s tax basis in such Notes Claims surrendered therefor. A U.S. Holder’s holding period
for its New Common Stock should include the holding period for the surrendered Notes Claims.
To the extent that the Notes Claims were
acquired with market discount and the treatment in the immediately preceding paragraph applies, any market discount that accrued on such Notes Claims (i.e., up to the time of the exchange) but was not included in gross income by the U.S.
Holder is carried over to the New Common Stock received therefor and any gain recognized on the subsequent sale, exchange, redemption or other disposition of such New Common Stock is treated as ordinary income to the extent of such accrued, but not
recognized, market discount (see discussion in Section XII.B.7.c, below).
If the Notes are not treated as securities for U.S. federal
income tax purposes, a U.S. Holder of Notes Claims would be treated as exchanging such Claims for the New Common Stock or Convenience Claim Distribution in a fully taxable exchange. The exchange of Notes Claims will also be a fully taxable exchange
if a U.S. Holder elects to receive its
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Pro Rata share of the Convenience Claim Distribution, regardless of whether the Notes are treated as securities for U.S. federal tax purposes. In either event, a U.S. Holder who is subject to
this treatment would recognize gain or loss equal to the difference between (i) the fair market value of the New Common Stock or the amount of the Convenience Claim Distribution received and (ii) such Holder’s adjusted tax basis in
its Notes Claim surrendered in the exchange. If the Notes were held as a capital asset, the gain generally would be long-term capital gain if the U.S. Holder held its Notes Claim for more than one year at the time of the exchange. The deductibility
of capital losses is subject to certain limitations discussed below in Section XII.B.7.e. Such U.S. Holder’s tax basis in the New Common Stock should equal the fair market value of such interests. A U.S. Holder’s holding period for the New
Common Stock received on the Effective Date would begin on the day following the Effective Date.
For U.S. Holders of Allowed Unsecured
Claims other than Notes Claims, such Holders would be treated as exchanging such Claims for the New Common Stock or the Convenience Claim Distribution, respectively, in a fully taxable exchange. A U.S. Holder who is subject to this treatment would
recognize gain or loss equal to the difference between (i) the fair market value of the New Common Stock or the amount of the Convenience Claim Distribution received and (ii) such Holder’s adjusted tax basis in its Allowed Unsecured
Claim surrendered in the exchange. U.S. Holders of Allowed Unsecured Claims that elect to receive New Common Stock in exchange for surrendering such Claims should have a tax basis in the New Common Stock equal to the fair market value of such
interests, and such Holders’ holding period for the New Common Stock would begin on the day following the Effective Date.
Regardless
of whether the exchange is treated as a recapitalization or as a taxable exchange, a U.S. Holder of Notes Claims will recognize foreign currency gain or loss on the exchange under the rules in Tax Code section 988 and the regulations thereunder.
Such gain or loss will be ordinary gain or loss. The amount characterized as foreign currency gain or loss generally will be equal to the difference between (i) the U.S. dollar value of the foreign currency purchase price of the Notes on the
date the Holder purchased such Notes and (ii) the U.S. dollar value of such foreign currency purchase price on the date of the disposition. Similarly, a U.S. Holder will recognize exchange gain or loss on the disposition of Notes with respect
to any accrued market discount on such Notes that such U.S. Holder has included in gross income. Any such exchange gain or loss recognized on such disposition will be ordinary gain or loss.
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6. |
Treatment of U.S. Holders of Allowed Subordinated Securities Claims and Existing Equity Interests |
Under the Plan, U.S. Holders of Allowed Subordinated Securities Claims and Existing Equity Interests will receive their Pro Rata share of the
New Warrants. A U.S. Holder of Allowed Subordinated Securities Claims or Existing Equity Interests should be treated as exchanging such Allowed Subordinated Securities Claims or Existing Equity Interests for the New Warrants in a fully taxable
exchange. U.S. Holders of Allowed Subordinated Securities Claims and Existing Equity Interests will recognize gain or loss equal to the difference between the respective Holder’s adjusted tax basis in its Allowed Subordinated Securities Claims
or Existing Equity Interests surrendered in the exchange and the value of the New Warrants received. If the Existing Equity Interests were held as a capital asset, the gain or loss generally would be long-term capital gain or loss if the U.S. Holder
held its Existing Equity Interests for more than one year at the time of the exchange. The deductibility of capital losses is subject to certain limitations discussed below in Section XII.B.7.e. A U.S. Holder’s tax basis in the New Warrants
should equal the fair market value of such interests. A U.S. Holder’s holding period for the New Warrants received on the Effective Date would begin on the day following the Effective Date.
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7. |
Other Considerations for U.S. Holders |
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a. |
Issue Price and Original Issue Discount |
A debt instrument, such as the New First Lien
Term Loans and New Second Lien Convertible Notes (together, the “New Debt”), is treated as issued with OID for U.S. federal income tax purposes if its issue price is less than its stated redemption price at maturity by at least a
de minimis amount. A debt instrument’s stated redemption price at maturity includes all principal and interest payable over the term of the debt instrument, other than “qualified stated interest.” Stated interest is
“qualified stated interest” if it is unconditionally payable in cash at least annually.
The issue price of the New First Lien
Term Loans will depend on whether a substantial amount of either the New First Lien Term Loans or the Secured ABL Claims and Secured Swap Claims for which they are exchanged is considered to be “traded on an established market” at the time
of the exchange. In general, debt instruments will be treated as traded
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on an established market if, within the 31-day period ending 15 days after the applicable measurement date, (a) a “sales price” for trades of the debt instrument is available,
(b) a “firm” price quote for the debt instrument is available, or (c) one or more “indicative” quotes are available, each as defined in Treasury Regulations section 1.1273-2(f)(1). Notwithstanding the foregoing,
Treasury Regulations section 1.1273-2(f)(6) provides that a debt instrument will not be treated as traded on an established market if the outstanding stated principal amount of the issue that includes that a debt instrument does not exceed $100
million on the date on which the instrument is tested under these rules.
Although neither the Secured ABL Claims nor the Secured Swap
Claims have balances exceeding $100 million outstanding, the stated principal amount of the New First Lien Term Loans for which these Secured ABL Claims and Secured Swap Claims will be exchanged will exceed $100 million. Accordingly, the issue price
of the New First Lien Term Loans will be considered to be traded on an established market if it meets one of the conditions of Treasury Regulations section 1.1273-2(f)(1). If the New First Lien Term Loans are traded on an established market within
15 days following the exchange, the issue price of the New First Lien Terms will equal the trading price, as indicated by the source(s) set forth in (a) through (c) above. If the New First Lien Term Loans are not traded on an established
market at the time of the exchange, the issue price of the New First Lien Term Loans will generally equal the stated principal amount.
Since the New Second Lien Convertible Notes are being issued for money, the issue price of the New Second Lien Convertible Notes should be the
first price at which a substantial amount of the New Second Lien Convertible Notes is sold.
A portion of the consideration received by U.S. Holders of Allowed
Claims may be attributable to accrued but untaxed interest on such Claims. Any such amount should be taxable to that U.S. Holder as interest income if such accrued interest has not been previously included in the U.S. Holder’s gross income for
U.S. federal income tax purposes. However, the IRS has privately ruled that a holder of a security of a corporate issuer, in an otherwise tax-free exchange, could not claim a current deduction with respect to any unpaid OID. Accordingly, it is also
unclear whether, by analogy, a U.S. Holder that disposes of a Claim that does not constitute a security in a taxable transaction would be required to recognize a capital loss, rather than an ordinary loss, with respect to previously included OID
that is not paid in full.
If the fair value of the consideration is not sufficient to fully satisfy all principal and interest on the
Claims, the extent to which such consideration will be attributable to accrued but untaxed interest is uncertain. Under the Plan, the aggregate consideration to be distributed to U.S. Holders of Allowed Claims in each Class will be allocated first
to the principal amount of Allowed Claims, with any excess allocated to untaxed interest that accrued on such Claims, if any. Certain legislative history indicates that an allocation of consideration as between principal and interest provided in a
chapter 11 plan of reorganization is binding for U.S. federal income tax purposes, while certain Treasury regulations treat payments as allocated first to any accrued but untaxed interest. The IRS could take the position that the consideration
received by U.S. Holders should be allocated in some way other than as provided in the Plan. U.S. Holders of Allowed Claims should consult their own tax advisors regarding the proper allocation of the consideration received by them under the Plan
between principal and accrued but untaxed interest.
Under the “market discount” provisions of the Tax Code, some
or all of any gain recognized by a U.S. Holder upon the disposition of a debt instrument of an Allowed Claim may be treated as ordinary income (instead of capital gain), to the extent of the amount of market discount on the debt constituting the
exchanged Claim. In general, a debt instrument is considered to have been acquired with market discount if it is acquired other than on original issue and if the U.S. Holder’s adjusted tax basis in such instrument is less than (i) the sum
of all remaining payments to be made on the debt instrument, excluding “qualified stated interest,” or (ii) in the case of a debt instrument issued with OID, its adjusted issue price, in each case, by at least a de minimis
amount (equal to the product of 0.25% of the sum of all remaining payments to be made on the debt instrument, excluding qualified stated interest, and the number of remaining whole years to maturity).
Any gain recognized by a U.S. Holder on the taxable disposition of debt instruments that it acquired with market discount should be treated as
ordinary income to the extent of the market discount that accrued thereon while such debt instruments were considered to be held by the U.S. Holder (unless such U.S. Holder elected to include market discount in income as it accrued). To the extent
that debt instruments that were acquired with market discount are exchanged in a tax-free transaction for other property, any market discount that accrued on such debt instruments (i.e., up to the time of the
62
exchange) but was not recognized by the U.S. Holder is carried over to the property received therefor and any gain recognized on the subsequent sale, exchange, redemption or other disposition of
such property is treated as ordinary income to the extent of such accrued, but not recognized, market discount.
If the New Debt is not treated as a contingent
payment debt instrument (“CPDI”) and a U.S. Holder’s initial tax basis in its interest in the New Debt is less than or equal to the stated redemption price at maturity of such interest, but greater than the issue price of such
interest, the U.S. Holder will be treated as acquiring the New Debt at an “acquisition premium.” Unless an election is made, the U.S. Holder generally will reduce the amount of OID otherwise includible in gross income for an accrual period
by an amount equal to the amount of OID otherwise includible in gross income multiplied by a fraction, the numerator of which is the excess of the U.S. Holder’s initial tax basis in its interest in the New Debt over such interest’s issue
price and the denominator of which is the excess of the sum of all amounts payable on such interest over the interest’s issue price.
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e. |
Limitation on Use of Capital Losses |
U.S. Holders who recognize capital
losses will be subject to limits on their use of capital losses. For U.S. Holders other than corporations, capital losses may be used to offset any capital gains (without regard to holding periods) plus ordinary income to the extent of the lesser of
(i) $3,000 ($1,500 for married individuals filing separate returns), or (ii) the excess of the capital losses and the capital gains. Non-corporate U.S. Holders may carry over unused capital losses and apply them to capital gains and a
portion of their ordinary income, though losses from the sale or exchange of capital assets may only be used to offset capital gains. For corporate U.S. Holders, capital losses may only be used to offset capital gains. U.S. Holders who have more
capital losses than can be used in a tax year may be allowed to carry over the excess capital losses for use in succeeding tax years. For corporate U.S. Holders, unused capital losses may be carried forward for the five years following the capital
loss year or carried back to the three years preceding the capital loss year. Non-corporate U.S. Holders may carry over unused capital losses for an unlimited number of years.
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f. |
Net Investment Income Tax |
Certain U.S. Holders that are individuals, estates or trusts
are required to pay an additional 3.8% Medicare tax on “unearned” net investment income (i.e., income received from, among other things, the sale or other disposition of certain capital assets). Holders that are individuals, estates or
trusts should consult their tax advisors regarding the effect, if any, of this tax provision on their ownership and disposition of any consideration to be received under the Plan.
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8. |
Consequences of Ownership and Disposition of the New Debt |
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a. |
Treatment of OID and PIK Interest |
The stated interest on the New First Lien Term Loans
should be qualified stated interest. Thus if the New First Lien Term Loans are not treated for U.S. federal income tax purposes as traded on an established securities market (as discussed in Section XII.B.7.a), the New First Lien Term Loans should
not be treated as being issued with OID for federal income tax purposes. The stated interest on the New First Lien Term Loans generally will be taxable as ordinary interest income in accordance with the holder’s regular method of accounting at
the time such payments are accrued or received. It is possible that the New First Lien Term Loans will be treated for U.S. federal income tax purposes as traded on an established market (discussed above in Section XII.B.7.a). If so, they could have
an issue price with a discount or premium. If issued at a discount, OID must be accrued over the term of the New First Lien Term Loans; if the issue price is greater than the stated principal amount, the premium will be amortized over such term.
No stated interest on the New Second Lien Convertible Notes will be qualified stated interest for U.S. federal income tax purposes
because the New Second Lien Convertible Loans provide that the Debtors will be entitled to pay all of the interest on the notes in the form of PIK interest. As a result, the New Second Lien Convertible Notes will be treated as being issued with OID
for U.S. federal income tax purposes.
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The New Second Lien Convertible Notes will be issued with OID in an aggregate amount equal to the
excess of all payments due under the New Second Lien Convertible Notes (initially taking into account the payment schedule as described below) over its ‘‘issue price’’ (as defined above in Section XII.B.7.a). U.S. Holders of the
New Second Lien Convertible Notes, whether on the cash or accrual method of accounting for U.S. federal income tax purposes, must include the OID in gross income (as ordinary income) as it accrues (on a constant yield to maturity basis), regardless
of whether cash attributable to such OID is received at such time.
The amount of OID includible in gross income by a U.S. Holder in any
taxable year generally is the sum of the ‘‘daily portions’’ of OID with respect to the note for each day during such taxable year on which the U.S. Holder holds the note. The daily portion is determined by allocating to each day
in any ‘‘accrual period’’ a pro rata portion of the OID allocable to that accrual period. The ‘‘accrual period’’ for a note may be of any length and may vary in length over the term of the note,
provided that each accrual period is no longer than one year and each scheduled payment of principal or interest occurs on the first day or the final day of an accrual period. The amount of OID allocable to any accrual period, subject to the
possible adjustments described below, will be an amount equal to the product of the note’s ‘‘adjusted issue price’’ at the beginning of the accrual period and its yield to maturity (determined on a constant yield method,
compounded at the close of each accrual period and properly adjusted for the length of the accrual period). OID allocable to the final accrual period is the difference between the amount payable at maturity and the adjusted issue price at the
beginning of the final accrual period. The ‘‘adjusted issue price’’ of a note at the beginning of any accrual period is equal to its issue price increased by the accrued OID for each prior accrual period and reduced by any
payments made on the note during the accrual period. The ‘‘yield to maturity’’ of the New Second Lien Convertible Notes is the discount rate that, when used in computing the present value (as of the issue date) of all principal
and interest payments to be made on the Loan, produces an amount equal to the issue price of the New Second Lien Convertible Notes.
For
purposes of this discussion, it is presumed that the PIK interest on the New Second Lien Convertible Notes will be paid in a single payment at maturity and that this single payment will be reflected on the payment schedule used for determining the
accrual of OID on the New Second Lien Convertible Notes. Accordingly, the Debtors do not expect to treat the New Debt as subject to the rules applicable to CPDIs. If, contrary to this presumption, any PIK or cash interest (as applicable) is actually
paid on the New Second Lien Convertible Notes, then solely for the purposes of recomputing the OID accruals on the Loan going forward and establishing a new payment schedule, the New Second Lien Convertible Notes will be treated as retired and
reissued on the date of such change in circumstances for an amount equal to its then adjusted issue price and the yield to maturity on the Loans will be redetermined taking into account such change in circumstances.
Any PIK interest will generally not be treated as a payment of interest on an original note for U.S. federal income tax purposes. Instead, any
PIK interest together with the original note will be treated as a single debt instrument for U.S. federal income tax purposes.
Each
payment of cash interest under the New Second Lien Convertible Notes will be treated first as a payment of any accrued OID on the note to the extent such accrued OID has not been allocated to prior cash payments and second as payments of principal
on the note. U.S. Holders generally will not be required to separately include cash interest on the New Second Lien Convertible Notes to the extent such cash payments constitute payments of previously accrued OID or payments of principal.
The rules regarding OID are complex and the rules described above may not apply in all cases. If other rules apply instead, U.S. Holders of
the New Second Lien Convertible Notes could be treated differently than described above. Prospective investors in the New Second Lien Convertible Notes are urged to consult their own tax advisors regarding the potential application of the OID and
other rules to the New Second Lien Convertible Notes and the consequences thereof.
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b. |
Sale, Retirement or Other Taxable Disposition of the New Debt |
A U.S. Holder of the New
Debt will recognize gain or loss upon the sale, redemption, retirement or other taxable disposition of such New Debt equal to the difference between the amount realized upon the disposition (less any portion allocable to accrued interest that has
not yet been included in income by the U.S. Holder, which generally will be taxable as ordinary income) and the U.S. Holder’s adjusted tax basis in such New Debt.
If the New Debt is not treated as a CPDI then, subject to certain exceptions, any gain or loss on the sale, redemption, retirement or other
taxable disposition of interests in the New Debt generally will be capital gain or loss, and will be long-term capital gain or loss if the U.S. Holder has held its interest in the New Debt for more than one year as of the date of disposition. U.S.
Holders should consult their tax advisors regarding the applicable tax rates and netting rules for capital gains and losses. There are limitations on the deduction of capital losses by both corporate and non-corporate taxpayers.
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An exchange of convertible debt securities for the issuing corporation’s stock generally
will be treated as a nontaxable event. Accordingly, a U.S. Holder that exercises the conversion feature of the New Second Lien Convertible Notes and receives New Common Stock of Reorganized ANV should not realize gain or loss on the conversion. A
U.S. Holder’s basis and holding period for its New Second Lien Convertible Notes will carry over to the New Common Stock into which such interest is converted.
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9. |
Consequences of Ownership and Disposition of the New Common Stock and the New Warrants |
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a. |
Distributions on New Common Stock |
Cash distributions made by Reorganized ANV in
respect of New Common Stock will constitute a taxable dividend when such distribution is actually or constructively received, to the extent such distribution is paid out of the current or accumulated earnings and profits of Reorganized ANV (as
determined under U.S. federal income tax principles). To the extent the amount of any distribution received by a U.S. Holder in respect of New Common Stock exceeds the current or accumulated earnings and profits of Reorganized ANV, the distribution
(1) will be treated as a non-taxable return of the U.S. Holder’s adjusted tax basis in that New Common Stock and (2) thereafter will be treated as capital gain.
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b. |
Exercise of New Warrants |
U.S. Holders of New Warrants generally will not realize gain
or loss upon the exercise of the New Warrants into New Common Stock. A U.S. Holder’s basis in the New Common Stock received upon the exercise of such Holder’s New Warrants will equal the sum of (i) the fair market value of the New
Warrants on the Effective Date and (ii) the Exercise Price, and its holding period in the New Common Stock will begin on the date of exercise of the New Warrants.
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c. |
Dispositions of New Common Stock and New Warrants |
Sales or other taxable dispositions
by U.S. Holders of New Common Stock or New Warrants generally will give rise to gain or loss equal to the difference between the amount realized on the disposition and the U.S. Holder’s tax basis in such New Common Stock or New Warrants. In
general, gain or loss recognized on the sale or exchange of New Common Stock or New Warrants will be capital gain or loss and, if the U.S. Holder’s holding period for such New Common Stock or New Warrants exceeds one year, will be long-term
capital gain or loss. Certain U.S. Holders, including individuals, are eligible for preferential rates of U.S. federal income tax in respect of long-term capital gains realized. The deduction of capital losses against ordinary income is subject to
limitations under the Tax Code.
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C. |
Information Reporting and Backup Withholding |
All distributions to Holders of Claims and
Interests under the Plan are subject to any applicable tax withholding, including employment tax withholding. Under U.S. federal income tax law, interest, dividends and other reportable payments may be, under certain circumstances, subject to
“backup withholding” at the then-applicable withholding rate (currently 28%). Backup withholding generally applies if a Holder (i) fails to furnish its social security number or other taxpayer identification number
(“TIN”), (ii) furnishes an incorrect TIN, (iii) fails properly to report interest or dividends, or (iv) under certain circumstances, fails to provide a certified statement, signed under penalty of perjury, that the
TIN provided is its correct TIN and that it is a U.S. person not subject to backup withholding. Backup withholding is not an additional tax but merely an advance payment, which may be refunded to the extent it results in an overpayment of tax and if
the appropriate information is supplied to the IRS. Certain Persons are exempt from backup withholding, including, in certain circumstances, corporations and financial institutions.
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D. |
U.S. Federal Income Tax Considerations for Non-U.S. Holders |
The rules governing U.S.
federal income taxation of a Non-U.S. Holder are complex. The following discussion includes only certain U.S. federal income tax consequences of the Restructuring Transaction to Non-U.S. Holders. The discussion does not include any non-U.S. tax
considerations. Non-U.S. Holders should consult with their own tax advisors
65
to determine the effect of U.S. federal, state, and local tax laws, as well as any other applicable non-U.S. tax
laws and/or treaties, with regard to their participation in the transactions contemplated by the Plan, their ownership of Claims or Interests, and the ownership and disposition of the New Debt, New Common Stock, New Warrants and other consideration,
as applicable.
Whether a Non-U.S. Holder realizes gain or loss on the exchange and the amount of such gain or loss is determined in the
same manner as set forth above in connection with U.S. Holders.
Any gain realized by a Non-U.S. Holder on the exchange
of its Claim or Interest generally will not be subject to U.S. federal income taxation unless (a) the Non-U.S. Holder is an individual who was present in the U.S. for 183 days or more during the taxable year in which the Restructuring
Transactions occur and certain other conditions are met or (b) such gain is effectively connected with the conduct by such Non-U.S. Holder of a trade or business in the U.S. (and if an income tax treaty applies, such gain is attributable to a
permanent establishment maintained by such Non-U.S. Holder in the U.S.).
If the first exception applies, to the extent that any gain is
taxable and does not qualify for deferral as described in Section XII.B above, the Non-U.S. Holder generally will be subject to U.S. federal income tax at a rate of 30% (or at a reduced rate or exemption from tax under an applicable income tax
treaty) on the amount by which such Non-U.S. Holder’s capital gains allocable to U.S. sources exceed capital losses allocable to U.S. sources during the taxable year of the exchange. If the second exception applies, the Non-U.S. Holder
generally will be subject to U.S. federal income tax with respect to any gain realized on the exchange if such gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the U.S. in the same manner as a U.S.
Holder. In order to claim an exemption from withholding tax, such Non-U.S. Holder will be required to provide a properly executed IRS Form W-8ECI (or such successor form as the IRS designates). In addition, if such Non-U.S. Holder is a corporation,
it may be subject to a branch profits tax equal to 30% (or such lower rate provided by an applicable income tax treaty) of its effectively connected earnings and profits for the taxable year, subject to certain adjustments.
Payments to a Non-U.S. Holder that are attributable to interest
(including OID), or to accrued but untaxed interest, generally will not be subject to U.S. federal income or withholding tax, provided that the withholding agent has received or receives, prior to payment, appropriate documentation (generally, IRS
Form W-8BEN or W-8BEN-E) establishing that the Non-U.S. Holder is not a U.S. person. Interest income will also include any gain from the sale, redemption, retirement or other taxable disposition of the New Debt that is treated as interest income
(discussed above in Section XII.B.7.b). Interest income, however, may be subject to U.S. income or withholding tax if:
(i) the Non-U.S. Holder actually or constructively owns 10% or more of the total combined voting power of all classes of
Reorganized ANV’s stock entitled to vote (taking into account the conversion feature of the New Second Lien Convertible Notes);
(ii) the Non-U.S. Holder is a “controlled foreign corporation” that is a “related person” with respect to
Reorganized ANV (each, within the meaning of the Tax Code);
(iii) the Non-U.S. Holder is a bank receiving interest
described in Tax Code section 881(c)(3)(A); or
(iv) such interest is effectively connected with the conduct by the
Non-U.S. Holder of a trade or business within the U.S. (in which case, provided the Non-U.S. Holder provides a properly executed IRS Form W-8ECI (or successor form) to the withholding agent, the Non-U.S. Holder (x) generally will not be subject
to withholding tax, but (y) will be subject to U.S. federal income tax in the same manner as a U.S. Holder (unless an applicable income tax treaty provides otherwise), and a Non-U.S. Holder that is a corporation for U.S. federal income tax
purposes may also be subject to a branch profits tax with respect to such Non-U.S. Holder’s effectively connected earnings and profits that are attributable to the accrued but untaxed interest at a rate of 30% (or at a reduced rate or exemption
from tax under an applicable income tax treaty)).
66
A Non-U.S. Holder that does not qualify for exemption from withholding tax with respect to
interest (including OID) or accrued but untaxed interest that is not effectively connected income generally will be subject to withholding of U.S. federal income tax at a 30% rate (or at a reduced rate or exemption from tax under an applicable
income tax treaty) on payments that are attributable to such interest or accrued but untaxed interest. For purposes of providing a properly executed IRS Form W-8BEN or W-8BEN-E, special procedures are provided under applicable Treasury regulations
for payments through qualified foreign intermediaries or certain financial institutions that hold customers’ securities in the ordinary course of their trade or business.
| |
a. |
Taxation of United States Real Property Interests |
Under the Foreign Investment in Real
Property Tax Act of 1980 (“FIRPTA”), gain or loss of a foreign person on a disposition of a United States real property interest (“USRPI”) is deemed to be effectively connected with a trade or business carried on in
the United States. A USRPI includes any interest (other than solely as a creditor) in a domestic corporation if the domestic corporation is a United States real property holding corporation (“USRPHC”). Under the regulations, an
interest will be treated as an interest in real property other than solely as a creditor if it is a right to share in the appreciation in value of stock of a corporation or a right, whether or not presently exercisable, directly or indirectly to
share in the appreciation of value of or to acquire, by purchase, conversion, exchange, or in any other manner, stock of a corporation. Contingent and conversion rights, such as options, rights of first refusal, and similar interests whereby the
lender may receive partial ownership of the property or entities, are non-creditor interests for FIRPTA purposes. Under FIRPTA, payments of interest and principal under a debt instrument do not constitute gain subject to FIRPTA withholding.
The Debtors believe that ANV is, and Reorganized ANV will be, a USRPHC. Accordingly, under the rules discussed in the preceding
paragraph, Debtors’ Common Stock, the New Common Stock, the New Warrants and the New Second Lien Convertible Notes will be treated as USRPIs, except to the extent that a Non-U.S. Holder qualifies for the “5% Public Shareholder
Exception” discussed below. Alternatively, a disposition of the New Common Stock, the New Warrants and the New Second Lien Convertible Notes will not, in general, be subject to tax or withholding under FIRPTA if the disposition is pursuant
to a liquidating distribution by the Debtors following a taxable sale of the Debtors’ USRPIs.
| |
b. |
Regularly Traded Stock Exception |
Tax Code section 897(c)(3) sets forth the 5% Public
Shareholder Exception, which excepts a holder’s regularly traded stock in a corporation from treatment as a USRPI if any class of stock of the corporation is regularly traded on an established securities exchange and the holder of such interest
does not, at any time during an applicable measuring period, own more than 5% of that class of stock. For purposes of determining whether any person holds more than 5% of any class of stock under the 5% Public Shareholder Exception, the constructive
ownership rules of Tax Code section 318(a) apply, with certain adjustments. Under the regulations, interests regularly traded on an established securities market located in the United States qualify as publicly traded for purposes of the 5% Public
Shareholder Exception.
The Regulations implement the 5% Public Shareholder Exception by providing that if any non-regularly traded class
of interests in a corporation is convertible into a regularly traded class of interests in the corporation, an interest in such non-regularly traded class will be treated as a USRPI if it had a fair market value greater than the fair market value of
5% of the regularly traded class of the corporation’s stock into which it is convertible, determined as of the date such interest was acquired by its present holder (including other holdings in the corporation that would qualify as a USRPI).
Although these regulations set forth the rules for determining the fair market value of property for purposes of Tax Code section 897, they do not address the proper treatment for valuation of convertible interests. In particular, it is unclear
whether, in order to determine the value of a holder’s interest in convertible debt, the conversion feature should be treated as exercised only by the particular holder or by the entire class of holders of such interests.
Whether the New Common Stock, the New Warrants and/or the New Second Lien Convertible Notes qualify for the 5% Public Shareholder Exception
(and, thus, whether they will be treated as USRPIs) will depend upon application of the above rules at the time of a Non-U.S. Holder’s acquisition and disposition of such shares and interests. Following the Effective Date, the Debtors may take
steps to create a market for the New Common Stock for purposes of qualifying the New Common Stock as regularly traded on an established securities market, although no assurances can be given that the Debtors will take such steps or, that if they do,
the Debtors’ actions will result in the New Common Stock so qualifying or
67
that such actions will permit certain Non-U.S. Holders to rely on the 5% Public Shareholder Exception with respect to their New Common Stock, New Warrants or New Second Lien Convertible Notes. In
this regard, and in any event, since the New Common Stock will be issued on the Effective Date, it cannot be regularly traded on an established securities market prior to such time, and the New Common Stock might not be regularly traded on an
established securities market until a later date. Non-U.S. Holders should consult their independent tax advisors to determine whether the New Common Stock, the New Warrants and/or the New Second Lien Convertible Notes are subject to FIRPTA.
In order to ensure that a foreign investor will pay taxes on gain realized
on the sale or disposition of a U.S. real property interest, the transferee is generally required to withhold and deduct a tax equal to 10 percent of the amount realized on the disposition. This is separate from the general withholding rules
applicable to withholding on dividends paid to Non-U.S. Holders, discussed below.
As discussed above, if any class of stock of a
corporation is regularly traded on an established securities market, its stock (including any class of stock that is not publicly traded) will not be a USRPI except with respect to any holder owning more than 5% of such class of stock. Regulations
under Tax Code section 1445 provide that no withholding is required upon the acquisition of an interest in a corporation if any class of stock of the corporation is regularly traded on an established securities market, although different rules apply
in the case of an acquisition from a single transferor of substantial non-regularly traded interests in a publicly traded corporation. Treasury Regulations section 1.897-9T(b). The Tax Code section 1445 withholding rules apply the same principles
discussed above regarding aggregation of related acquisitions and the presumption that stock will be presumed to be regularly traded on an established securities market for a calendar quarter if those interests were regularly traded during the
preceding calendar quarter.
| |
4. |
U.S. Federal Income Tax Consequences to Non-U.S. Holders of Owning and Disposing of New Common Stock |
| |
a. |
Dividends on New Common Stock |
Any distributions made with respect to New Common Stock
will constitute dividends for U.S. federal income tax purposes to the extent of Reorganized ANV’s current or accumulated earnings and profits as determined under U.S. federal income tax principles. Except as described below, dividends paid with
respect to New Common Stock held by a Non-U.S. Holder that are not effectively connected with a Non-U.S. Holder’s conduct of a U.S. trade or business (or if an income tax treaty applies, are not attributable to a permanent establishment
maintained by such Non-U.S. Holder in the U.S.) will be subject to U.S. federal withholding tax at a rate of 30% (or lower treaty rate or exemption from tax, if applicable). A Non-U.S. Holder generally will be required to satisfy certain IRS
certification requirements in order to claim a reduction of or exemption from withholding under a tax treaty by filing IRS Form W-8BEN or W-8BEN-E (or a successor form) upon which the Non-U.S. Holder certifies, under penalties of perjury, its status
as a non-U.S. person and its entitlement to the lower treaty rate or exemption from tax with respect to such payments.
Dividends paid with respect to New Common Stock held by a Non-U.S. Holder that are effectively connected with a Non-U.S.
Holder’s conduct of a U.S. trade or business (and if an income tax treaty applies, are attributable to a permanent establishment maintained by such Non-U.S. Holder in the U.S.) generally will be subject to U.S. federal income tax in the same
manner as a U.S. Holder, and a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes may also be subject to a branch profits tax with respect to such Non-U.S. Holder’s effectively connected earnings and profits that are
attributable to the dividends at a rate of 30% (or at a reduced rate or exemption from tax under an applicable income tax treaty).
| |
b. |
Sale, Redemption, or Repurchase of New Common Stock or New Warrants |
A Non-U.S. Holder
generally will not be subject to U.S. federal income tax with respect to any gain realized on the sale or other taxable disposition (including a cash redemption) of New Common Stock or New Warrants, unless:
(i) such Non-U.S. Holder is an individual who is present in the U.S. for 183 days or more in the taxable year of
disposition or who is subject to special rules applicable to former citizens and residents of the U.S.;
68
(ii) such gain is effectively connected with such Non-U.S. Holder’s conduct
of a U.S. trade or business (and if an income tax treaty applies, such gain is attributable to a permanent establishment maintained by such Non-U.S. Holder in the U.S.); or
(iii) Reorganized ANV is or has been during a specified testing period a USRPHC.
If the first exception applies, the Non-U.S. Holder generally will be subject to U.S. federal income tax at a rate of 30% (or at
a reduced rate or exemption from tax under an applicable income tax treaty) on the amount by which such Non-U.S. Holder’s capital gains allocable to U.S. sources exceed capital losses allocable to U.S. sources during the taxable year of
disposition of New Common Stock. If the second exception applies, the Non-U.S. Holder generally will be subject to U.S. federal income tax with respect to such gain in the same manner as a U.S. Holder, and a Non-U.S. Holder that is a corporation for
U.S. federal income tax purposes may also be subject to a branch profits tax with respect to earnings and profits effectively connected with a U.S. trade or business that are attributable to such gains at a rate of 30% (or at a reduced rate or
exemption from tax under an applicable income tax treaty). The consequences of Reorganized ANV being a USRPHC are discussed in the preceding section.
| |
c. |
Conversion of New Second Lien Convertible Notes and Exercise of New Warrants |
In
general, it is expected that neither conversion of the New Second Lien Convertible Notes nor exercise of the New Warrants into New Common Stock will cause a Non-U.S. Holder to recognize gain or loss under the Tax Code. However, each Non-U.S. Holder
is urged to consult its own tax advisor prior to conversion of the New Second Lien Convertible Notes and/or exercise of the New Warrants into New Common Stock and prior to a sale or disposition of New Common Stock acquired by such a conversion
and/or exercise regarding recognition of gain or loss and any FIRPTA reporting requirements to the IRS relating to such conversion/exercise, sale or disposition.
Under the Foreign Account Tax Compliance Act
(“FATCA”), foreign financial institutions and certain other foreign entities must report certain information with respect to their U.S. account holders and investors or be subject to withholding on the receipt of “withholdable
payments.” For this purpose, “withholdable payments” are generally U.S.-source payments of fixed or determinable, annual or periodical income (including dividends, if any, on New Common Stock and interest on the New Debt), and also
include gross proceeds from the sale of any property of a type which can produce U.S. source interest or dividends (which would include New Common Stock and the New Debt). FATCA withholding will apply even if the applicable payment would not
otherwise be subject to U.S. federal nonresident withholding tax.
FATCA withholding rules apply to U.S.-source payments on obligations
issued after July 1, 2014, and to payments of gross proceeds from the sale or other disposition of property of a type that can produce U.S.-source interest or dividends that occurs after December 31, 2016. Although administrative guidance
and Treasury regulations have been issued, the exact scope of these rules remains unclear and potentially subject to material changes.
Each Non-U.S. Holder should consult its own tax advisor regarding the possible impact of these rules on such Non-U.S. Holder’s ownership
of New Common Stock.
The foregoing summary has been provided for informational purposes only and does not discuss all aspects of
U.S. federal income taxation that may be relevant to a particular Holder of a Claim or Interest in light of such Holder’s circumstances and income tax situation. All Holders of Claims and Interests should consult with their tax advisors as to
the particular tax consequences to them under the Plan, including the applicability and effect of any state, local, non-U.S. or other applicable tax laws.
| XIII. |
CONCLUSION AND RECOMMENDATION |
All Holders of Claims and Interests entitled to vote are
urged to vote to accept the Plan and to evidence such acceptance by returning their Ballots so that they will actually be received by the Voting Deadline.
69
Dated: August 28, 2015
|
|
|
| Allied Nevada Gold Corp. |
|
|
| By: |
|
/s/ Stephen M. Jones |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Executive Vice President, Secretary and Chief Financial Officer |
|
| Allied Nevada Gold Holdings LLC |
|
|
| By: |
|
/s/ Stephen M. Jones |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
|
| Allied VGH Inc. |
|
|
| By: |
|
/s/ Stephen M. Jones |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
|
| Allied VNC Inc. |
|
|
| By: |
|
/s/ Stephen M. Jones |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
|
| ANG Central LLC |
|
|
| By: |
|
/s/ Stephen M. Jones |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
70
|
|
|
| ANG Cortez LLC |
|
|
| By: |
|
/s/ Stephen M. Jones |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
|
| ANG Eureka LLC |
|
|
| By: |
|
/s/ Stephen M. Jones |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
|
| ANG North LLC |
|
|
| By: |
|
/s/ Stephen M. Jones |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
|
| ANG Northeast LLC |
|
|
| By: |
|
/s/ Stephen M. Jones |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
|
| ANG Pony LLC |
|
|
| By: |
|
/s/ Stephen M. Jones |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
|
| Hasbrouck Production Company LLC |
|
|
| By: |
|
/s/ Stephen M. Jones |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
| Hycroft Resources & Development, Inc. |
71
|
|
|
| By: |
|
/s/ Stephen M. Jones |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
|
| Victory Exploration Inc. |
|
|
| By: |
|
/s/ Stephen M. Jones |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
|
| Victory Gold Inc. |
|
|
| By: |
|
/s/ Stephen M. Jones |
| Name: |
|
Stephen M. Jones |
| Title: |
|
Chief Financial Officer |
72
EXHIBIT A
PLAN OF REORGANIZATION
See
Exhibit 99.1 to the Allied Nevada Gold Corp. Form 8-K for August 26, 2015
EXHIBIT B
AMENDED AND RESTATED RESTRUCTURING SUPPORT AGREEMENT
See Exhibit 10.1 to the Allied Nevada Gold Corp. Form 8-K for July 23, 2015
EXHIBIT C
FINANCIAL PROJECTIONS
See
Exhibit A to Exhibit 99.3 to the Allied Nevada Gold Corp. Form 8-K/A filed on August 4, 2015
EXHIBIT D
LIQUIDATION ANALYSIS
See Exhibit
A to Exhibit 99.4 to the Allied Nevada Gold Corp. Form 8-K/A filed on August 10, 2015
EXHIBIT E
VALUATION ANALYSIS
See Exhibit C
to Exhibit 99.3 to the Allied Nevada Gold Corp. Form 8-K/A filed on August 4, 2015
EXHIBIT F
DEBTORS’ CORPORATE STRUCTURE
See Exhibit F to Exhibit 99.3 to the Allied Nevada Gold Corp. Form 8-K filed on July 29, 2015
Exhibit 99.3
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
|
|
|
|
|
| In Re: |
|
|
|
Chapter 11 |
| Allied Nevada Gold Corp., et al.
Debtors |
|
|
|
Case No. 15-10503 |
MONTHLY OPERATING REPORT
For the Period July 1, 2015 through July 31, 2015
|
|
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|
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|
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| REQUIRED DOCUMENTS |
|
Form No. |
|
Document
Attached |
|
Explanation
Attached |
|
Attestation Attached |
| Schedule of Cash Receipts and Disbursements |
|
MOR-1 |
|
X |
|
|
|
|
| Bank Account Reconciliations |
|
MOR-1a |
|
|
|
|
|
X |
| Bank Account Balances |
|
MOR-1a |
|
X |
|
|
|
|
| Schedule of Professional Fees Paid |
|
MOR-1b |
|
X |
|
|
|
|
| Statement of Operations |
|
MOR-2 |
|
X |
|
|
|
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| Balance Sheet |
|
MOR-3 |
|
X |
|
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|
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| Status of Postpetition Taxes |
|
MOR-4 |
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|
X |
| Summary of Unpaid Postpetition Debts |
|
MOR-4 |
|
X |
|
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|
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| Accounts Receivable Reconciliation and Aging |
|
MOR-5 |
|
X |
|
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|
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| Debtor Questionnaire |
|
MOR-5 |
|
X |
|
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|
|
I declare under penalty of perjury (28 U.S.C. Section 1746) that this report and the attached documents
are true and correct to the best of my knowledge and belief.
|
|
|
|
|
|
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| /s/ Stephen M. Jones |
|
|
|
August 26, 2015 |
|
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| Signature of Authorized Individual* |
|
|
|
Date |
|
|
|
|
|
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| Stephen M. Jones |
|
|
|
Executive VP, CFO, and Secretary |
|
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| Printed Name of Authorized Individual |
|
|
|
Title of Authorized Individual |
|
|
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
|
|
|
|
|
| In Re: |
|
|
|
Chapter 11 |
| Allied Nevada Gold Corp., et al. |
|
|
|
Case No. 15-10503 |
| Debtors |
|
|
|
|
General Notes
On March 10, 2015 (the “Commencement Date”), Allied Nevada Gold Corp.
(“Allied”) and certain affiliates (collectively with Allied, the “Debtors”), each filed a voluntary petition for relief commencing cases (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States
Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware. The Debtors continue to operate their business and manage their properties as debtors in possession pursuant to Bankruptcy Code
sections 1107 and 1108. On March 19, 2015, the United States Trustee for the District of Delaware appointed a statutory committee of creditors pursuant to Bankruptcy Code section 1102(a) and 1102(b). On April 10, 2015, the U.S. Trustee
appointed a statutory committee of equity security holders pursuant to Bankruptcy Code section 1102. Information contained herein may differ from that contained in the pleadings filed by the Debtors on the Commencement Date due to more accurate
information having become available since the Commencement Date.
The financial statements and supplemental information contained herein are preliminary and
unaudited, and may not comply with generally accepted accounting principles in the United States of America (“GAAP”) in all material respects. In addition, the financial statements and supplemental information contained herein represent
information for the Debtors only and exclude all non-Debtor affiliates.
The unaudited financial statements have been derived from the Debtors’ books
and records. This information, however, has not been subject to certain procedures that would typically be applied to financial information in accordance with GAAP. Upon application of such procedures, the Debtors believe that the financial
information could be subject to change, which could be material. The information furnished in this report includes primarily normal recurring adjustments but does not include all adjustments that would typically be made for financial statements in
accordance with GAAP.
The Debtors prepared this Monthly Operating Report (“MOR”) relying
primarily upon the information set forth in their books and records. Consequently, certain transactions that are not identified in the normal course of business in the Debtors’ books and records may not be included in this MOR. Nevertheless, in
preparing this MOR, the Debtors made reasonable efforts to supplement the information set forth in their books and records with additional information concerning transactions that may not have been identified therein.
The results of operations contained herein are not necessarily indicative of results
that may be expected for any other period or for the full year and may not necessarily reflect the consolidated results of operations and financial position of the Debtors in the future.
| 5. |
Prepetition vs. Postpetition Liabilities |
The Debtors allocated liabilities between prepetition and
postpetition periods based upon the information available at the time of, and research conducted in connection with, the preparation of this MOR. As additional information becomes available and further research is conducted, the Debtors’
allocation of liabilities between prepetition and postpetition periods may change. The liability information, except as otherwise noted, is listed as of the close of business as of the end of July 2015. Accordingly, the Debtors reserve all rights to
amend, supplement or otherwise modify this MOR as necessary and appropriate.
To the best of the Debtors’ knowledge, all premiums for insurance policies are current.
Unless otherwise indicated, the values for the assets contained in this MOR are
book values as of the end of July 2015. Amounts ultimately realized from the disposition of the Debtors’ assets may materially vary from the stated book value. Thus, unless otherwise noted, this MOR reflects the carrying values of the assets as
recorded on the Debtors’ books and records as of the end of July 2015 and are not based upon any estimate of such assets’ current market values. The Debtors reserve the right to amend or adjust the value of each asset herein.
| 8. |
Liabilities Subject to Compromise |
As a result of commencing the Chapter 11 Cases, the payment of
prepetition indebtedness is subject to compromise or other treatment under a chapter 11 reorganization plan. Generally, actions to enforce or otherwise effect payment of prepetition liabilities are stayed.
The filing of the Chapter 11 Cases constituted an event of default under, or otherwise triggered repayment obligations with respect to, a number of debt
instruments and agreements relating to direct and indirect financial obligations of the Debtors (collectively, the “Prepetition Debt”). As a result, obligations under the Prepetition Debt became automatically and immediately due and
payable. The Debtors believe that any efforts to enforce the payment obligations under the Prepetition Debt have been stayed as a result of the filing of the Chapter 11 Cases. However, the automatic stay has been lifted in the following situations:
| |
a. |
Atlas Copco, lessor of certain drill rigs, has been granted the right to repossess the drill rigs which secured the related capital lease obligations
of the Debtors. Atlas Copco has |
| |
been granted an allowed secured claim for the sale price of the drill rigs (the “Atlas Allowed Secured Claim”), which Atlas Allowed Secured Claim would be a part of the Class 3 Other
Secured Claims as set forth in the Amended Plan and which shall be fully and finally satisfied by the return of the drill rigs. Atlas Copco shall not be entitled to any other or further distribution from the Debtors and their estates on account of
the Atlas Allowed Secured Claim. |
| |
b. |
Caterpillar Financial Services Corporation (“CAT”), lessor of certain mining equipment, has been granted the right to repossess the identified mining equipment which secured the related term loan and capital
lease obligations of the Debtors. CAT has been granted an allowed secured claim for the sales prices of the identified mining equipment (the “CAT Allowed Secured Claim”), which CAT Allowed Secured Claim would be a part of the Class 3 Other
Secured Claims as set forth in the Amended Plan and which shall be fully and finally satisfied by the surrender of the identified mining equipment. CAT shall not be entitled to any other or further distribution from the Debtors and their estates on
account of the CAT Allowed Secured Claim. |
| |
c. |
Bank of America Leasing & Capital, LLC , People’s Capital and Leasing Corp., MB Financial Bank, N.A., Key Equipment Finance, a division of KeyBank National, Washington Federal, a national banking
association, and Western Alliance Bank dba Alliance Bank of Arizona (all of the foregoing, collectively, the “BAL Group”), lessors of certain mining equipment, have been granted the right to repossess the identified mining equipment which
secured the related capital lease obligations of the Debtors. The BAL Group has been granted an allowed secured claim for the sales prices of the identified mining equipment (the “BAL Allowed Secured Claim”), which BAL Allowed Secured
Claim would be a part of the Class 3 Other Secured Claims as set forth in the Amended Plan and which shall be fully and finally satisfied by the surrender of the identified mining equipment. The BAL Group shall not be entitled to any other or
further distribution from the Debtors and their estates on account of the BAL Allowed Secured Claim. |
The Debtors are currently discussing
with their other lessors the return of certain additional equipment and expect to enter into similar arrangements to those outlined above with respect to the mining equipment that secures the related capital lease obligations.
| 9. |
Liabilities Not Subject to Compromise |
The Debtors have been paying and intend to continue to pay
undisputed postpetition claims in the ordinary course of business.
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
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|
|
|
|
| In Re: |
|
|
|
Chapter 11 |
| Allied Nevada Gold Corp., et al. |
|
|
|
Case No. 15-10503 |
| Debtors |
|
|
|
|
MOR-1
SCHEDULE OF CASH RECEIPTS AND DISBURSEMENTS1
For the Period July 1, 2015 through July 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Bank Accounts |
|
|
Current Month |
|
|
Cumulative
Filing to Date |
|
| |
|
Hycroft Resources &
Development Inc. |
|
|
Allied Nevada Gold Corp. |
|
|
ACTUAL |
|
|
ACTUAL |
|
| CASH BEGINNING OF PERIOD |
|
|
3,792,269.69 |
|
|
|
4,790,285.45 |
|
|
|
8,582,555.14 |
|
|
|
3,722,605.63 |
|
|
|
|
|
|
| RECEIPTS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CASH SALES |
|
|
8,426,609.43 |
|
|
|
|
|
|
|
8,426,609.43 |
|
|
|
58,780,984.59 |
|
| ACCOUNTS RECEIVABLE |
|
|
2,005,057.85 |
|
|
|
|
|
|
|
2,005,057.85 |
|
|
|
8,555,805.35 |
|
| TRANSFERS BETWEEN ACCOUNTS |
|
|
2,000,000.00 |
|
|
|
-2,000,000.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
| SALE OF ASSETS |
|
|
|
|
|
|
|
|
|
|
0.00 |
|
|
|
17,500,000.00 |
|
| OTHER (ATTACH LIST) |
|
|
|
|
|
|
1,418,839.84 |
|
|
|
1,418,839.84 |
|
|
|
1,749,579.93 |
|
| TRANSFERS (FROM DIP ACCTS) |
|
|
|
|
|
|
10,000,162.38 |
|
|
|
10,000,162.38 |
|
|
|
60,000,162.38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| TOTAL RECEIPTS |
|
|
12,431,667.28 |
|
|
|
9,419,002.22 |
|
|
|
21,850,669.50 |
|
|
|
146,586,532.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| DISBURSEMENTS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NET PAYROLL |
|
|
1,600,918.92 |
|
|
|
184,981.30 |
|
|
|
1,785,900.22 |
|
|
|
9,789,858.56 |
|
| PAYROLL TAXES |
|
|
674,151.92 |
|
|
|
78,098.01 |
|
|
|
752,249.93 |
|
|
|
4,087,040.57 |
|
| BENEFITS (INS, 401K, FSA) |
|
|
293,063.98 |
|
|
|
533,231.74 |
|
|
|
826,295.72 |
|
|
|
4,214,262.90 |
|
| SALES, USE, & OTHER TAXES |
|
|
|
|
|
|
|
|
|
|
0.00 |
|
|
|
1,243,805.20 |
|
| SECURED/ RENTAL/ LEASES |
|
|
241,133.31 |
|
|
|
|
|
|
|
241,133.31 |
|
|
|
13,776,940.70 |
|
| BANK FEES (INCLUDING DIP FEES) |
|
|
|
|
|
|
3,505.80 |
|
|
|
3,505.80 |
|
|
|
843,975.34 |
|
| LOAN INTEREST |
|
|
|
|
|
|
759,456.18 |
|
|
|
759,456.18 |
|
|
|
2,232,873.66 |
|
| VENDOR DISBURSEMENTS |
|
|
11,868,918.65 |
|
|
|
726,138.55 |
|
|
|
12,595,057.20 |
|
|
|
75,903,678.33 |
|
| OTHER (ATTACH LIST) |
|
|
|
|
|
|
|
|
|
|
0.00 |
|
|
|
17,817,000.00 |
|
| TRANSFERS (TO DIP ACCTS) |
|
|
|
|
|
|
|
|
|
|
0.00 |
|
|
|
0.00 |
|
| PROFESSIONAL FEES |
|
|
|
|
|
|
2,089,891.54 |
|
|
|
2,089,891.54 |
|
|
|
8,990,067.88 |
|
| U.S. TRUSTEE QUARTERLY FEES |
|
|
|
|
|
|
44,300.00 |
|
|
|
44,300.00 |
|
|
|
74,200.00 |
|
| COURT COSTS |
|
|
|
|
|
|
|
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| TOTAL DISBURSEMENTS |
|
|
14,678,186.78 |
|
|
|
4,419,603.12 |
|
|
|
19,097,789.90 |
|
|
|
138,973,703.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NET CASH FLOW |
|
|
-2,246,519.50 |
|
|
|
4,999,399.10 |
|
|
|
2,752,879.60 |
|
|
|
7,612,829.11 |
|
| (RECEIPTS LESS DISBURSEMENTS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CASH - END OF PERIOD |
|
|
1,545,750.19 |
|
|
|
9,789,684.55 |
|
|
|
11,335,434.74 |
|
|
|
11,335,434.74 |
|
| 1 |
There was no activity in the reporting period for the following Debtors: Victory Exploration Inc., Victory Gold Inc., Allied Nevada Gold Holdings LLC, Allied VGH Inc., Allied VNC Inc., Hasbrouck Production Company
LLC, ANG Pony LLC, ANG Northeast LLC, ANG North LLC, ANG Eureka LLC, ANG Cortez LLC, and ANG Central LLC. |
THE
FOLLOWING SECTION MUST BE COMPLETED
Allied Nevada Gold Corp.
|
|
|
|
|
| DISBURSEMENTS FOR CALCULATING U.S. TRUSTEE QUARTERLY FEES: (FROM CURRENT MONTH ACTUAL COLUMN) |
|
|
|
| TOTAL DISBURSEMENTS |
|
|
4,419,603.12 |
|
| LESS: TRANSFERS TO DEBTOR IN POSSESSION ACCOUNTS |
|
|
0.00 |
|
| PLUS: ESTATE DISBURSEMENTS MADE BY OUTSIDE SOURCES (i.e. from escrow accounts) |
|
|
0.00 |
|
| TOTAL DISBURSEMENTS FOR CALCULATING U.S. TRUSTEE QUARTERLY FEES |
|
|
4,419,603.12 |
|
Hycroft Resources & Development, Inc.
|
|
|
|
|
| DISBURSEMENTS FOR CALCULATING U.S. TRUSTEE QUARTERLY FEES: (FROM CURRENT MONTH ACTUAL COLUMN) |
|
|
|
| TOTAL DISBURSEMENTS |
|
|
14,678,186.78 |
|
| LESS: TRANSFERS TO DEBTOR IN POSSESSION ACCOUNTS |
|
|
0.00 |
|
| PLUS: ESTATE DISBURSEMENTS MADE BY OUTSIDE SOURCES (i.e. from escrow accounts) |
|
|
0.00 |
|
| TOTAL DISBURSEMENTS FOR CALCULATING U.S. TRUSTEE QUARTERLY FEES |
|
|
14,678,186.78 |
|
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
|
|
|
|
|
| In Re: |
|
|
|
Chapter 11 |
| Allied Nevada Gold Corp., et al. |
|
|
|
Case No. 15-10503 |
| Debtors |
|
|
|
|
MOR-1
SCHEDULE OF CASH RECEIPTS & DISBURSEMENTS - OTHER EXPLANATIONS
For the Period July 1, 2015 through July 31, 2015
|
|
|
|
|
|
|
|
|
| BREAKDOWN OF “OTHER” CATEGORY |
|
Current Month |
|
|
Cumulative
Filing to Date |
|
|
|
|
|
|
|
|
|
|
| Hycroft Resources & Development, Inc. Other Deposits |
|
|
|
|
|
|
|
|
| United States Treasury |
|
|
0.00 |
|
|
|
1,161.47 |
|
| Napa Rebate |
|
|
0.00 |
|
|
|
4,214.06 |
|
| Southwest Gas Refund |
|
|
0.00 |
|
|
|
169.13 |
|
| ADP Payroll Refund |
|
|
0.00 |
|
|
|
1,033.16 |
|
| Northern Nevada Recycling Inc. |
|
|
0.00 |
|
|
|
3,267.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
0.00 |
|
|
|
9,845.32 |
|
|
|
|
|
|
|
|
|
|
| Allied Nevada Gold Corp. Other Deposits |
|
|
|
|
|
|
|
|
| United States Treasury |
|
|
0.00 |
|
|
|
5,470.55 |
|
| Discovery Benefits Cobra Reimbursements |
|
|
0.00 |
|
|
|
1,594.60 |
|
| Advanced Mineral Royalty Reciept |
|
|
0.00 |
|
|
|
3,000.00 |
|
| National Bank of Canada Interest |
|
|
0.00 |
|
|
|
165.05 |
|
| Transfer from Adequate Insurance Account |
|
|
0.00 |
|
|
|
309,000.00 |
|
| NV Energy Refund |
|
|
0.00 |
|
|
|
5.09 |
|
| Fedex Refund |
|
|
0.00 |
|
|
|
64.88 |
|
| Discovery Benefits-COBRA Payment |
|
|
0.00 |
|
|
|
1,594.60 |
|
| Nevada Net Proceeds Tax Refund |
|
|
1,418,839.84 |
|
|
|
1,418,839.84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,418,839.84 |
|
|
|
1,739,734.61 |
|
|
|
|
|
|
|
|
|
|
| Allied Nevada Gold Corp. Other Disbursements |
|
|
|
|
|
|
|
|
| Transfer to Adequate Insurance Account |
|
|
0.00 |
|
|
|
317,000.00 |
|
| Transfer to Restricted Cash Account |
|
|
0.00 |
|
|
|
17,500,000.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
0.00 |
|
|
|
17,817,000.00 |
|
|
|
|
|
|
|
|
|
|
August 26, 2015
Office of the United States Trustee
Subject:
Attestation Regarding Bank Account Reconciliations
The Debtors hereby submit this attestation regarding bank account
reconciliations in lieu of providing copies of bank statements and copies of all reconciliations.
The Debtors have, on a timely basis,
performed all bank account reconciliations in the ordinary course of its business. Copies of the bank account statements and reconciliations are available for inspection upon request by the office of the United States Trustee.
|
|
|
| /s/ Stephen M. Jones |
| Name: |
|
Stephen M. Jones |
| Position: |
|
Executive Vice President, Chief Financial Officer and Secretary |
|
|
|
|
|
| Sworn to and Subscribed Before me on this
26th Day of August, 2015 |
|
|
|
|
|
|
|
| /s/ Jacqueline Martinez |
|
|
|
|
| Notary Public |
|
|
|
|
|
|
|
| My Commission Expires: 2-2-2019 |
|
|
|
|
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
|
|
|
|
|
| In Re: |
|
|
|
Chapter 11 |
| Allied Nevada Gold Corp., et al. |
|
|
|
Case No. 15-10503 |
| Debtors |
|
|
|
|
MOR-1a
SCHEDULE OF BANK ACCOUNTS AND BALANCES
As of July 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
| Case # |
|
Related Entity |
|
Bank Name |
|
Bank Account
Ending In: |
|
|
Balance1 |
|
| 15-10503 |
|
Allied Nevada Gold Corp. |
|
Wells Fargo Bank |
|
|
6528 |
|
|
|
0.00 |
|
| 15-10503 |
|
Allied Nevada Gold Corp. |
|
Wells Fargo Bank |
|
|
6536 |
|
|
|
9,780,684.55 |
|
| 15-10503 |
|
Allied Nevada Gold Corp. |
|
Wells Fargo Bank |
|
|
9536 |
|
|
|
9,000.00 |
|
| 15-10503 |
|
Allied Nevada Gold Corp. |
|
Scotiabank |
|
|
1210 |
|
|
|
0.00 |
|
| 15-10514 |
|
Hycroft Resources & Development, Inc. |
|
Wells Fargo Bank |
|
|
6544 |
|
|
|
0.00 |
|
| 15-10514 |
|
Hycroft Resources & Development, Inc. |
|
Wells Fargo Bank |
|
|
6551 |
|
|
|
1,545,750.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
11,335,434.74 |
|
|
|
|
|
|
| 15-10503 |
|
Allied Nevada Gold Corp. - restr. cash |
|
Wells Fargo Bank |
|
|
9615 |
|
|
|
0.00 |
|
| 1 |
Book balance per the Debtors’ general ledger. |
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
|
|
|
|
|
| In Re: |
|
|
|
Chapter 11 |
| Allied Nevada Gold Corp., et al. |
|
|
|
Case No. 15-10503 |
| Debtors |
|
|
|
|
MOR-1b
SCHEDULE OF PROFESSIONAL FEES AND EXPENSES PAID
For the Period July 1, 2015 through July 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Payee |
|
Period Covered |
|
Amount
Approved |
|
|
|
|
Check |
|
Current Month |
|
|
Cumulative Filing to Date |
|
| |
|
|
Payor |
|
Number |
|
Date |
|
Fees |
|
|
Expenses |
|
|
Fees |
|
|
Expenses |
|
| Stroock & Stroock & Lavan |
|
5/01/2015 - 5/31/2015 |
|
|
503,935.97 |
|
|
Allied Nevada |
|
52143 |
|
7/6/2015 |
|
|
499,263.00 |
|
|
|
2,672.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,241,364.75 |
|
|
|
11,549.35 |
|
| Wachtell, Lipton, Rosen, & Katz |
|
6/01/2015 - 6/30/2015 |
|
|
120,392.80 |
|
|
Allied Nevada |
|
52204 |
|
7/27/2015 |
|
|
117,182.50 |
|
|
|
3,210.30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
571,393.74 |
|
|
|
9,476.84 |
|
| RPA Advisors LLC |
|
5/01/2015 - 5/31/2015 |
|
|
74,228.78 |
|
|
Allied Nevada |
|
52142 |
|
7/6/2015 |
|
|
74,049.75 |
|
|
|
179.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
473,936.00 |
|
|
|
9,685.03 |
|
| Houlihan Lokey Capital Inc. |
|
5/24/2015 - 6/23/2015 |
|
|
126,495.70 |
|
|
Allied Nevada |
|
52141 |
|
7/6/2015 |
|
|
125,000.00 |
|
|
|
1,495.70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
525,000.00 |
|
|
|
12,036.04 |
|
| Paul Hastings LLP |
|
3/01/2015 - 3/31/2015 |
|
|
10,783.01 |
|
|
Allied Nevada |
|
52220 |
|
7/30/2015 |
|
|
10,248.75 |
|
|
|
534.26 |
|
|
|
|
|
|
|
|
|
|
|
4/01/2015 - 4/30/2015 |
|
|
29,370.00 |
|
|
Allied Nevada |
|
52220 |
|
7/30/2015 |
|
|
29,370.00 |
|
|
|
0.00 |
|
|
|
|
|
|
|
|
|
|
|
5/01/2015 - 5/31/2015 |
|
|
41,252.50 |
|
|
Allied Nevada |
|
52220 |
|
7/30/2015 |
|
|
41,252.50 |
|
|
|
0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
470,490.00 |
|
|
|
17,873.69 |
|
| Prime Clerk |
|
6/01/2015 - 6/30/2015 |
|
|
95,014.98 |
|
|
Allied Nevada |
|
Wire |
|
7/24/2015 |
|
|
95,014.98 |
|
|
|
0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
503,616.87 |
|
|
|
90,214.76 |
|
| Fennemore Craig |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,467.10 |
|
|
|
0.00 |
|
| Wilmington Savings Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
800.00 |
|
|
|
0.00 |
|
| Morris, Nichols, Arsht & Tunnell |
|
6/01/2015 - 6/30/2015 |
|
|
4,156.17 |
|
|
Allied Nevada |
|
52171 |
|
7/21/2015 |
|
|
3,973.00 |
|
|
|
183.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,053.29 |
|
|
|
608.20 |
|
| Akin Gump Strauss |
|
5/01/2015 - 5/31/2015 |
|
|
664,574.90 |
|
|
Allied Nevada |
|
Wire |
|
7/24/2015 |
|
|
653,861.00 |
|
|
|
10,713.90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,371,451.00 |
|
|
|
19,688.02 |
|
| Blank Rome, LLP |
|
5/01/2015 - 5/31/2015 |
|
|
43,920.02 |
|
|
Allied Nevada |
|
Wire |
|
7/24/2015 |
|
|
43,674.00 |
|
|
|
246.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
235,565.20 |
|
|
|
28,294.75 |
|
| Young Conaway Stargatt & Taylor |
|
5/01/2015 - 5/31/2015 |
|
|
28,421.68 |
|
|
Allied Nevada |
|
52172 |
|
7/21/2015 |
|
|
28,147.00 |
|
|
|
274.68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
129,223.50 |
|
|
|
2,651.57 |
|
| Fasken Martineau |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,459.60 |
|
|
|
0.00 |
|
| Polsinelli PC |
|
5/01/2015 - 5/31/2015 |
|
|
14,144.40 |
|
|
Allied Nevada |
|
Wire |
|
7/24/2015 |
|
|
14,144.40 |
|
|
|
0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,328.64 |
|
|
|
494.00 |
|
| Zolfo Cooper, LLC |
|
5/01/2015 - 5/31/2015 |
|
|
38,349.50 |
|
|
Allied Nevada |
|
52205 |
|
7/27/2015 |
|
|
38,146.80 |
|
|
|
202.70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
184,889.20 |
|
|
|
550.95 |
|
| FTI Consulting, Inc. |
|
5/01/2015 - 5/31/2015 |
|
|
40,448.40 |
|
|
Allied Nevada |
|
Wire |
|
7/24/2015 |
|
|
40,448.40 |
|
|
|
0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
284,400.40 |
|
|
|
17,042.63 |
|
| Arent Fox, LLP |
|
5/01/2015 - 5/31/2015 |
|
|
118,753.79 |
|
|
Allied Nevada |
|
Wire |
|
7/24/2015 |
|
|
118,635.20 |
|
|
|
118.59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
459,138.80 |
|
|
|
1,543.30 |
|
| JDS Energy & Mining |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,131.08 |
|
|
|
230.83 |
|
| Broadridge |
|
6/17/2015 |
|
|
2,394.97 |
|
|
Allied Nevada |
|
52161 |
|
7/21/2015 |
|
|
2,394.97 |
|
|
|
0.00 |
|
|
|
|
|
|
|
|
|
|
|
6/11/2015 |
|
|
1,621.89 |
|
|
Allied Nevada |
|
52161 |
|
7/21/2015 |
|
|
1,621.89 |
|
|
|
0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,539.94 |
|
|
|
0.00 |
|
| Upshot Services, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,646.91 |
|
|
|
0.00 |
|
| Erwin & Thompson, LLP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,600.00 |
|
|
|
0.00 |
|
| Moelis & Company |
|
5/01/2015 - 5/31/2015 |
|
|
133,631.90 |
|
|
Allied Nevada |
|
Wire |
|
7/24/2015 |
|
|
120,000.00 |
|
|
|
13,631.90 |
|
|
|
120,000.00 |
|
|
|
13,631.90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,056,428.14 |
|
|
|
33,463.40 |
|
|
|
8,754,496.02 |
|
|
|
235,571.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
|
|
|
|
|
| In Re: |
|
|
|
Chapter 11 |
| Allied Nevada Gold Corp., et al. |
|
|
|
Case No. 15-10503 |
| Debtors |
|
|
|
|
MOR-2
STATEMENTS OF OPERATIONS1
For the Period July 1, 2015 through July 31, 2015
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Allied Nevada
Gold Holdings
LLC |
|
|
Allied Nevada Gold
Corp. |
|
|
Hycroft Resources
& Development,
Inc. |
|
|
Allied VNC,
Inc. |
|
|
Victory Gold, Inc. |
|
|
Elimination |
|
|
Debtors
Consolidated |
|
| Revenue |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
10,832,841 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
10,832,841 |
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Production costs |
|
|
— |
|
|
|
— |
|
|
|
7,963,522 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,963,522 |
|
| Depreciation and amortization |
|
|
— |
|
|
|
23,249 |
|
|
|
2,202,129 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,225,378 |
|
| Write-down of production inventories |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total cost of sales |
|
|
— |
|
|
|
23,249 |
|
|
|
10,165,651 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,188,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Exploration, development, and land holding |
|
|
— |
|
|
|
34,329 |
|
|
|
127,173 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
161,502 |
|
| Accretion |
|
|
— |
|
|
|
— |
|
|
|
84,527 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
84,527 |
|
| General and administrative |
|
|
— |
|
|
|
870,505 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
870,505 |
|
| Separation and severance costs |
|
|
— |
|
|
|
— |
|
|
|
1,388,673 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,388,673 |
|
| Asset impairments, dispositions, and loss on assets classified as held for sale, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
| Reorganization items, net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Currency swap valuation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Notes carrying value adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Legal and professional fees |
|
|
— |
|
|
|
4,397,966 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,397,966 |
|
| Diesel swaps valuation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Warrant liability adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from operations |
|
|
— |
|
|
|
(5,326,049 |
) |
|
|
(933,183 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,259,232 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest income |
|
|
— |
|
|
|
1,176 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,176 |
|
| Interest expense |
|
|
— |
|
|
|
(1,095,548 |
) |
|
|
(91,546 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,187,094 |
) |
| Other, net |
|
|
— |
|
|
|
72,271 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
72,271 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss before income taxes |
|
|
— |
|
|
|
(6,348,150 |
) |
|
|
(1,024,729 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7,372,878 |
) |
| Income taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
$ |
— |
|
|
$ |
(6,348,150 |
) |
|
$ |
(1,024,729 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(7,372,878 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1 |
There was no activity in the reporting period for the following Debtors: Victory Exploration Inc., Allied VGH Inc., Hasbrouck Production Company LLC, ANG Pony LLC, ANG Northeast LLC, ANG North LLC, ANG Eureka LLC, ANG
Cortez LLC, and ANG Central LLC. |
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
|
|
|
|
|
| In Re: |
|
|
|
Chapter 11 |
| Allied Nevada Gold Corp., et al. |
|
|
|
Case No. 15-10503 |
| Debtors |
|
|
|
|
MOR-3
BALANCE SHEETS1
As of July 31, 2015
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Allied Nevada
Gold Holdings
LLC |
|
|
Allied Nevada Gold
Corp. |
|
|
Hycroft Resources
& Development,
Inc. |
|
|
Allied VNC, Inc. |
|
|
Victory Gold,
Inc. |
|
|
Elimination |
|
|
Debtors
Consolidated |
|
| Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
— |
|
|
$ |
9,789,685 |
|
|
$ |
1,545,750 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
11,335,435 |
|
| Accounts receivable |
|
|
— |
|
|
|
— |
|
|
|
2,446,051 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,446,051 |
|
| Inventories |
|
|
— |
|
|
|
— |
|
|
|
16,361,711 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
16,361,711 |
|
| Ore on leachpads, current |
|
|
— |
|
|
|
— |
|
|
|
195,072,571 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
195,072,571 |
|
| Prepaids and other |
|
|
— |
|
|
|
1,303,322 |
|
|
|
2,419,701 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,723,024 |
|
| Assets held for sale |
|
|
— |
|
|
|
— |
|
|
|
3,162,137 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,162,137 |
|
| Deferred tax assets, current |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current assets |
|
|
— |
|
|
|
11,093,007 |
|
|
|
221,007,921 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
232,100,927 |
|
|
|
|
|
|
|
|
|
| Restricted cash |
|
|
— |
|
|
|
— |
|
|
|
38,147,218 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
38,147,218 |
|
| Ore on leachpads, non-current |
|
|
— |
|
|
|
— |
|
|
|
83,602,530 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
83,602,530 |
|
| Other assets, non-current |
|
|
— |
|
|
|
590,739 |
|
|
|
286,344 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
877,083 |
|
| Plant, equipment, and mine development, net |
|
|
— |
|
|
|
176,055 |
|
|
|
266,176,518 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
266,352,573 |
|
| Mineral properties, net |
|
|
— |
|
|
|
— |
|
|
|
13,731,196 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
13,731,196 |
|
| Investment in subsidiary |
|
|
66,549,819 |
|
|
|
25,000 |
|
|
|
(9,071,738 |
) |
|
|
(3,807,909 |
) |
|
|
(2,860,022 |
) |
|
|
(50,835,150 |
) |
|
|
— |
|
| Deferred tax assets, non-current |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Intercompany receivable |
|
|
— |
|
|
|
1,011,124,193 |
|
|
|
— |
|
|
|
2,003,610 |
|
|
|
3,501,338 |
|
|
|
(1,016,629,141 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets |
|
|
66,549,819 |
|
|
|
1,023,008,993 |
|
|
|
613,879,988 |
|
|
|
(1,804,299 |
) |
|
|
641,316 |
|
|
|
(1,067,464,291 |
) |
|
|
634,811,527 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities not subject to compromise: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts payable |
|
|
— |
|
|
|
8,868,951 |
|
|
|
14,153,865 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
23,022,816 |
|
| Interest payable |
|
|
— |
|
|
|
673,044 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
673,044 |
|
| Other liabilities, current |
|
|
— |
|
|
|
76,911,689 |
|
|
|
1,953,903 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
78,865,592 |
|
| Debt, current |
|
|
— |
|
|
|
118,401,772 |
|
|
|
6,405,523 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
124,807,295 |
|
| Deferred tax liabilities, current |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Asset retirement obligation, current |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current liabilities not subject to compromise |
|
|
— |
|
|
|
204,855,456 |
|
|
|
22,513,291 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
227,368,747 |
|
|
|
|
|
|
|
|
|
| Other liabilities, non-current |
|
|
— |
|
|
|
55,595 |
|
|
|
1,188,329 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,243,924 |
|
| Debt, non-current |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Asset retirement obligation, non-current |
|
|
— |
|
|
|
— |
|
|
|
20,524,930 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
20,524,930 |
|
| Deferred tax liabilities, non-current |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Intercompany payable |
|
|
68,318,961 |
|
|
|
— |
|
|
|
948,310,180 |
|
|
|
— |
|
|
|
— |
|
|
|
(1,016,629,141 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total liabilities not subject to compromise |
|
|
68,318,961 |
|
|
|
204,911,052 |
|
|
|
992,536,730 |
|
|
|
— |
|
|
|
— |
|
|
|
(1,016,629,141 |
) |
|
|
249,137,602 |
|
|
|
|
|
|
|
|
|
| Liabilities subject to compromise: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Senior notes |
|
|
— |
|
|
|
316,640,001 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
316,640,001 |
|
| Accounts payable |
|
|
— |
|
|
|
1,708,403 |
|
|
|
14,191,597 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
15,900,000 |
|
| Term and security deposit loan |
|
|
— |
|
|
|
— |
|
|
|
17,974,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
17,974,000 |
|
| Interest payable |
|
|
— |
|
|
|
7,515,000 |
|
|
|
1,621,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,136,000 |
|
| Accrued compensation and benefits |
|
|
— |
|
|
|
26,000 |
|
|
|
156,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
182,000 |
|
| Currency swap derivative instrument |
|
|
— |
|
|
|
891,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
891,000 |
|
| Capital leases |
|
|
— |
|
|
|
— |
|
|
|
118,984,244 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
118,984,244 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total liabilities subject to compromise |
|
|
— |
|
|
|
326,780,404 |
|
|
|
152,926,841 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
479,707,245 |
|
|
|
|
|
|
|
|
|
| Total Liabilities |
|
|
68,318,961 |
|
|
|
531,691,455 |
|
|
|
1,145,463,572 |
|
|
|
— |
|
|
|
— |
|
|
|
(1,016,629,141 |
) |
|
|
728,844,847 |
|
|
|
|
|
|
|
|
|
| Stockholders’ Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common stock |
|
|
— |
|
|
|
125,990 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
125,990 |
|
| Additional paid-in capital |
|
|
77,328,475 |
|
|
|
749,643,150 |
|
|
|
62,037,260 |
|
|
|
— |
|
|
|
309,583 |
|
|
|
(116,008,140 |
) |
|
|
773,310,328 |
|
| Accumulated other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| (Accumulated deficit) retained earnings |
|
|
(79,097,617 |
) |
|
|
(258,451,603 |
) |
|
|
(593,620,843 |
) |
|
|
(1,804,299 |
) |
|
|
331,733 |
|
|
|
65,172,990 |
|
|
|
(867,469,638 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total stockholders’ equity |
|
|
(1,769,142 |
) |
|
|
491,317,538 |
|
|
|
(531,583,583 |
) |
|
|
(1,804,299 |
) |
|
|
641,316 |
|
|
|
(50,835,150 |
) |
|
|
(94,033,320 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total liabilities and stockholders’ equity |
|
$ |
66,549,819 |
|
|
$ |
1,023,008,993 |
|
|
$ |
613,879,988 |
|
|
$ |
(1,804,299 |
) |
|
$ |
641,316 |
|
|
$ |
(1,067,464,291 |
) |
|
$ |
634,811,527 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1 |
There was no activity in the reporting period for the following Debtors: Victory Exploration Inc., Allied VGH Inc., Hasbrouck Production Company LLC, ANG Pony LLC, ANG Northeast LLC, ANG North LLC, ANG Eureka LLC, ANG
Cortez LLC, and ANG Central LLC. |
August 26, 2015
Office of the United States Trustee
Subject: Attestation Regarding Postpetition Taxes
The Debtors hereby submit this attestation regarding postpetition taxes.
The Debtors are current on all of their postpetition tax obligations to the extent that the taxes are not in dispute or subject to
reconciliation. To the best of my knowledge, there are no material tax disputes or reconciliations.
|
|
|
| /s/ Stephen M. Jones |
| Name: |
|
Stephen M. Jones |
| Position: |
|
Executive Vice President, Chief Financial Officer and Secretary |
|
|
|
|
|
|
|
| Sworn to and Subscribed |
|
|
|
|
|
|
| Before me on this 26th |
|
|
|
|
|
|
| Day of August, 2015 |
|
|
|
|
|
|
|
|
|
|
| /s/ Jacqueline Martinez |
|
|
|
|
|
|
| Notary Public |
|
|
|
|
|
|
|
|
|
|
| My Commission Expires: 2-2-2019 |
|
|
|
|
|
|
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
|
|
|
|
|
| In Re: |
|
|
|
Chapter 11 |
| Allied Nevada Gold Corp., et al. |
|
|
|
Case No. 15-10503 |
| Debtors |
|
|
|
|
MOR-4
UNPAID POSTPETITION PAYABLES1
As of July 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Number of Days Past Due |
|
| |
|
Current |
|
|
0-30 |
|
|
31-60 |
|
|
61-90 |
|
|
Over 90 |
|
|
Total |
|
| Allied Nevada Gold Corp. Accounts Payable |
|
$ |
8,868,951 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
8,868,951 |
|
| Hycroft Resources & Development, Inc. Accounts Payable2 |
|
$ |
14,153,865 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
14,153,865 |
|
| Total Postpetition Debts |
|
$ |
23,022,816 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
23,022,816 |
|
| 1 |
Other than the Debtors referenced above, no other Debtors had unpaid postpetition accounts payable balances as of July 31, 2015. |
| 2 |
Amount includes $4 million due to Jacobs in April 2016 that has been reclassified from noncurrent accounts payable. |
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
|
|
|
|
|
| In Re: |
|
|
|
Chapter 11 |
| Allied Nevada Gold Corp., et al. |
|
|
|
Case No. 15-10503 |
| Debtors |
|
|
|
|
MOR-5
ACCOUNTS RECEIVABLE RECONCILIATION AND AGING1
For the Period July 1, 2015 through July 31, 2015
|
|
|
|
|
| Hycroft Resources & Development, Inc. Accounts Receivable Reconciliation |
|
Amount |
|
| Total Accounts Receivable at the beginning of the reporting period |
|
|
2,124,581 |
|
| + Amounts billed during the period |
|
|
12,222,060 |
|
| - Amounts collected during the period |
|
|
-11,900,590 |
|
|
|
|
|
|
| Total Accounts Receivable at the end of the reporting period |
|
|
2,446,051 |
|
|
|
|
|
|
| Hycroft Resources & Development, Inc. Accounts Receivable Aging |
|
Amount |
|
| 0 - 30 days old |
|
|
1,477,927 |
|
| 31 - 60 days old |
|
|
199,485 |
|
| 61 - 90 days old |
|
|
253,489 |
|
| 91+ days old |
|
|
515,150 |
|
| Total Accounts Receivable |
|
|
2,446,051 |
|
| Amount considered uncollectible (Bad Debt) |
|
|
0 |
|
|
|
|
|
|
| Accounts Receivable (Net) |
|
|
2,446,051 |
|
|
|
|
|
|
Accounts Receivable are routinely collected from 60 to 180 days after sales due to significant time to agree on the final
assays.
| 1 |
Hycroft Resources & Development, Inc. is the only Debtor with revenues and related accounts receivable. |
Debtor Questionnaire
|
|
|
|
|
|
|
|
|
| Must be completed each month |
|
Yes |
|
|
No |
|
| 1. Have any assets been sold or transferred outside the normal course of business this reporting period? If yes, provide an explanation
below. |
|
|
|
|
|
|
X |
|
|
|
|
| 2. Have any funds been disbursed from any account other than a debtor in possession account this reporting period? If yes, provide an
explanation below. |
|
|
|
|
|
|
X |
|
|
|
|
| 3. Have all postpetition tax returns been timely filed? If no, provide an explanation below. |
|
|
X |
|
|
|
|
|
|
|
|
| 4. Are workers compensation, general liability and other necessary insurance coverages in effect? If no, provide an explanation
below. |
|
|
X |
|
|
|
|
|
|
|
|
| 5. Has any bank account been opened during the reporting period? If yes, provide documentation identifying the opened account(s). If an
investment account has been opened provide the required documentation pursuant to the Delaware Local Rule 4001-3. |
|
|
|
|
|
|
X |
|