| Item 1.01 |
Entry into a Material Definitive Agreement |
As previously disclosed, on June 1, 2023, Diebold Nixdorf, Incorporated (the “Company”) and certain of its subsidiaries (collectively, the “Debtors”) filed voluntary petitions in the U.S. Bankruptcy Court for the Southern District of Texas (the “U.S. Bankruptcy Court”) seeking relief under chapter 11 of title 11 of the U.S. Code (the “U.S. Bankruptcy Code”). The cases are being jointly administered under the caption In re: Diebold Holding Company, LLC, et al. (Case No. 23-90602) (the “Chapter 11 Cases”). Additionally, as previously disclosed, on June 1, 2023, Diebold Nixdorf Dutch Holding B.V. filed a scheme of arrangement relating to certain of the Company’s subsidiaries and commenced voluntary proceedings (the “Dutch Scheme Proceedings”) under the Dutch Act on Confirmation of Extrajudicial Plans (Wet homologatie onderhands akkoord) in the District Court of Amsterdam (the “Dutch Court”). The Debtors continue to operate their businesses as “debtors-in-possession” under the jurisdiction of the U.S. Bankruptcy Court and in accordance with the applicable provisions of the U.S. Bankruptcy Code and orders of the U.S. Bankruptcy Court.
On June 2, 2023, the U.S. Bankruptcy Court approved the Debtors’ proposed $1.25 billion senior secured superpriority debtor-in-possession term loan credit facility (the “DIP Facility”) on an interim basis pursuant to the DIP Facility Interim Order (as defined herein). On June 5, 2023, the Company, as borrower, entered into the credit agreement governing the DIP Facility along with certain financial institutions party thereto, as lenders, and GLAS USA LLC, as administrative agent, and GLAS Americas LLC, as collateral agent (the “DIP Credit Agreement”), and the closing of the DIP Facility occurred on the same day. The DIP Facility provides for two tranches of term loans to be made on the closing date of the DIP Facility: (i) a $760.0 million Term B-1 tranche (the “Term B-1 Term Loans”) and (ii) a $490.0 million Term B-2 tranche (the “Term B-2 Term Loans”).
The entire $1.25 billion under the DIP Facility was drawn on June 5, 2023, and the proceeds were used in accordance with the DIP Facility budget to, among other things, (i) in the case of the proceeds of the Tranche B-2 Term Loans, repay in full all obligations under the Company’s superpriority credit facility; and (ii) in the case of the proceeds of the Tranche B-1 Term Loans, (a) repay in full (or cash collateralize issued letters of credit) all obligations under the Company’s asset-based revolving credit facility; (b) pay costs, fees and expenses related to the court-supervised restructuring proceedings; and (c) fund the working capital needs and expenditures of the Debtors and their non-debtor affiliates during the pendency of the court supervised restructuring proceedings.
The DIP Facility will terminate on the earliest of (i) October 2, 2023; (ii) the consummation (as defined in section 1101(2) of the U.S. Bankruptcy Code) of any plan of reorganization under the Chapter 11 Cases; and (iii) the date of acceleration of the term loans and the termination of unused commitments with respect to the DIP Facility in accordance with the terms of the DIP Credit Agreement. All outstanding principal and other obligations under the DIP Facility are due and payable in full upon termination.
The obligations of the Company under the DIP Facility are guaranteed by (i) in the case of the Tranche B-1 Term Loans, certain subsidiaries of the Company that are organized in the United States (the “U.S. Guarantors”) and (ii) in the case of the Tranche B-2 Term Loans, certain subsidiaries of the Company that are organized outside of the United States (the “Foreign Guarantors”) and the U.S. Guarantors. The DIP Facility and related guarantees are secured by perfected senior security interests and liens having the priorities set forth in the DIP Facility Interim Order on (i) in the case of the Tranche B-1 Term Loans, substantially all assets of the Company and each U.S. Guarantor and (ii) in the case of the Tranche B-2 Term Loans, substantially all assets of the Company, each U.S. Guarantor and each Foreign Guarantor, as further described in the DIP Facility Interim Order.
Loans under the DIP Facility bear interest at an adjusted secured overnight financing rate with a one-month tenor rate plus 7.50% per annum or an adjusted base rate plus 6.50% per annum. In addition, the DIP Facility provides for the following premiums and fees, as further described in the DIP Credit Agreement: (i) a participation premium equal to 10.00% of new common equity securities of the Company upon reorganization (subject only to dilution on account of the New Management Incentive Plan (as defined in the DIP Credit Agreement)) (“New Common Stock”); (ii) a backstop premium equal to 13.50% of New Common Stock; (iii) an upfront premium equal to 7.00% of New Common Stock and (iv) an additional premium equal to 7.0% of New Common Stock.
The DIP Facility includes conditions precedent, representations and warranties, affirmative and negative covenants and events of default that are customary for financings of this type and size.