ELLH Elah Holdings Inc (PK)

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:    February 5, 2018  

Registrant’s telephone number, including area code: (805) 435-1255  

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:

☐     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 ( §  230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 ( §  240.12b-2 of this chapter).

Emerging growth company ☐  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐  

As previously disclosed, on November 17, 2017, Real Industry, Inc. (the “Company”), Real Alloy Intermediate Holding, LLC (“RAIH”), Real Alloy Holding, Inc. (“Real Alloy”) and certain of Real Alloy’s wholly-owned U.S. subsidiaries (collectively with RAIH and Real Alloy, the “Real Alloy Debtors,” and the Real Alloy Debtors with the Company, the “Debtors”) filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) seeking relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”). The Chapter 11 cases are being jointly administered under the caption “In re Real Industry, Inc., et al.”, Case No. 17-12464, in the Bankruptcy Court (the “Chapter 11 Proceedings”). The Debtors continue to operate their business and manage their properties as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions and orders of the Bankruptcy Code.

Real Alloy Stalking Horse Bid

Also as previously disclosed, in connection with the debtor-in-possession (DIP) financing obtained by the Real Alloy Debtors (the “RA DIP Financing”), the Real Alloy Debtors agreed to pursue a sale of substantially all of their assets pursuant to Section 363 of the Bankruptcy Code (a “Section 363 Sale”) and to obtain approval of the Bankruptcy Court for certain auction and bidding procedures related to such Section 363 Sale (the “Bidding Procedures”), along with certain other Section 363 Sale milestones. On December 19, 2017, the Bankruptcy Court entered an order, Order (I) Establishing Bidding Procedures Relating to the Sale of Assets, (II) Establishing Procedures Relating to the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases, including Notice of Proposed Cure Amounts, (III) Establishing Procedures in connection with the Selection and Protections Afforded to Any Stalking Horse Bidders, (IV) Approving Form and Manner of Notice relating thereto, (V) Scheduling a Hearing to Consider the Proposed Sale, and (IV) Granting Related Relief, approving, among other things, these Bidding Procedures.

The Bankruptcy Court’s final order related to the RA DIP Financing, Final Order (I) Authorizing Debtors to Obtain Postpetition Financing Pursuant to Section 364 of the Bankruptcy Code, (II) Authorizing the Use of Cash Collateral Pursuant to Section 363 of the Bankruptcy Code, (III) Granting Adequate Protection to the Prepetition Secured Parties Pursuant to Sections 361, 362, 363 and 364 of the Bankruptcy Code, (IV) Granting Liens and Superpriority Claims, and Modifying the Automatic Stay  (the “Final DIP Order”),  places additional requirements on the Real Alloy Debtors related to the Section 363 Sale process. Among these is a requirement that the Real Alloy Debtors obtain the prior written consent of a majority of the Required Holders (as defined in the Amended and Restated Note Purchase Agreement,  dated and effective as of January 19, 2018 and as filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed January 25, 2018; the “Required DIP Noteholders”) and Bank of America, N.A.  (as administrative agent and collateral agent under the Debtor-in-Possession Revolving Credit Agreement, dated as of November 20, 2017, and as filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed November 27, 2017;  the “DIP ABL Agent”) in order to sell, or enter into a binding agreement to sell, the assets of the Real Alloy Debtors, unless the obligations under the RA DIP Financing, the prepetition Real Alloy 10% senior secured notes and the prepetition obligations under the Real Alloy revolving credit facility (collectively, the “Required Obligations”) are repaid in full in cash upon the closing of such sale.  Further, under the Final DIP Order, the Required DIP Noteholders, the  DIP ABL Agent, and the collateral trustee/agent for the new money senior secured priming and superpriority postpetition notes (“New Money DIP Notes”) issued as part of the RA DIP Financing must approve any stalking horse bid and bid protections for such stalking horse bid.

On February 5, 2018, the Real Alloy Debtors filed a Notice of Stalking Horse Proposal Deadline and Submission of Credit Bid Proposal from Prepetition Lenders with the Bankruptcy Court in the Chapter 11 Proceedings (the “Stalking Horse Notice”), reiterating the above information and advising that on February 2, 2018, the Required DIP Noteholders notified the Real Alloy Debtors of their intention to provide a credit bid to purchase substantially all of the assets of the Real Alloy Debtors (the “Credit Bid Proposal”). The Real Alloy Debtors and Required DIP Noteholders intend to finalize the terms of the Credit Bid Proposal in a binding definitive agreement (the “Noteholder Credit Bid”), which shall be filed with the Bankruptcy Court once executed.

The Stalking Horse Notice states that the Real Alloy Debtors determined that each of the proposed bids from the three entities interested in serving as a stalking horse bidder would be insufficient to pay the Required Obligations in full in cash upon closing of such transaction. Further, the Stalking Horse Notice states that the Required DIP Noteholders, DIP ABL Agent, and trustees of the collateral under the New Money DIP Notes and Roll-Up Notes issued as part of the RA DIP Financing DIP Collateral Trustee (collectively, the “DIP Lender Consultation Parties”) do not believe the offers reflect the true value of the Real Alloy Debtors’ assets, and thus have informed the Real Alloy Debtors that the DIP Lender Consultation Parties would decline to consent to a sale on the terms in the proposed stalking horse bids, as well as bid protections in connection with such proposals.

Following entry into the Noteholder Credit Bid, the Debtors may no longer consult with the parties submitting the Noteholder Credit Bid with respect to a sale of the Real Alloy assets or the Noteholder Credit Bid unless and until the Noteholder Credit

Bid is revoked. Pursuant to the Bidding Procedures, in order to determine the highest and otherwise best offer for the assets of the Real Alloy Debtors and whether or not to conduct an auction for substantially all of the Real Alloy Debtors’ assets, the Debtors will continue to consider and evaluate all bids meeting the requirements set forth in the Bidding Procedures for the assets of the Real Alloy Debtors.

Important factors that may cause such differences include, but are not limited to, the decisions of the bankruptcy court; negotiations with Real Alloy’s debtholders,  our creditors and any committee approved by the bankruptcy court;  negotiations with lenders on the definitive DIP financing, equity investment and post-emergence credit facility documents; the Company’s ability to meet the closing conditions of its DIP financing, equity investment or post-emergence credit facilities; the Debtors’ ability to meet the requirements, and compliance with the terms, including restrictive covenants, of their respective DIP financing arrangements and any other financial arrangement while in Chapter 11 proceedings; changes in our operational or cash needs from the assumptions underlying our DIP budgets and forecasts; changes in our cash needs as compared to our historical operations or our planned reductions in operating expense; adverse litigation; changes in domestic and international demand for recycled aluminum; the cyclical nature and general health of the aluminum industry and related industries; commodity and scrap price fluctuations and our ability to enter into effective commodity derivatives or arrangements to effectively manage our exposure to such commodity price fluctuations; inventory risks, commodity price risks, and energy risks associated with Real Alloy’s buy/sell business model; the impact of tariffs and trade regulations on our operations; the impact of the recently approved U.S. tax legislation and any other changes in U.S. or non-U.S. tax laws on our operations or the value of our NOLs; our ability to successfully identify, acquire and integrate additional companies and businesses that perform and meet expectations after completion of such acquisitions; our ability to achieve future profitability; our ability to control operating costs and other expenses; that general economic conditions may be worse than expected; that competition may increase significantly; changes in laws or government regulations or policies affecting our current business operations and/or our legacy businesses, as well as those risks and uncertainties disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Real Industry, Inc.’s Forms 10-Q filed with the Securities and Exchange Commission (“SEC”) on May 10, 2017, August 8, 2017 and November 9, 2017 and Form 10-K filed with the SEC on March 13, 2017, and similar disclosures in subsequent reports filed with the SEC.