Shiloh Industries, Inc. Receives Court Approval of "First Day" Motions to Support Business Operations
September 02 2020 - 7:20PM
Business Wire
Obtains Interim Approval to Access Additional
Financing
Company’s Operations, including in Asia, Europe
and Mexico, Continue as Normal
Shiloh Industries, Inc. (NASDAQ: SHLO) (the “Company”) an
environmentally focused global supplier of lightweighting, noise
and vibration solutions, today announced that it has received
approvals from the U.S. Bankruptcy Court for the District of
Delaware for all of its “First Day” motions related to the
Company’s voluntary Chapter 11 petitions filed on August 30,
2020.
The Court granted Shiloh interim approval to access up to $18.1
million of the $123.5 million in committed debtor-in-possession
(“DIP”) financing from its existing lenders, consisting of
approximately $23.5 million new money subfacility and a roll-up of
approximately $100 million of commitments under the Company’s
existing revolving credit facility, which, combined with cash
generated from the Company’s ongoing operations, will be used to
support the business throughout the sale process. Among other
things, the Court has authorized the Company to continue to pay
employee wages and benefits without interruption, honor customer
commitments and otherwise manage its day-to-day operations in the
ordinary course through the court-supervised sale process.
“We are pleased to have received the Court authorization we need
to continue our operations during the sale process,” said Cloyd J.
Abruzzo, Interim chief executive officer of Shiloh. “As we move
through this process, we look forward to continuing to serve our
customers and meet their needs as the automotive industry recovers
from the COVID-19 pandemic. I would also like to thank our
employees for their continued dedication to our company.”
As previously announced, Shiloh entered into a stalking horse
stock and asset purchase agreement with Grouper Holdings, LLC
(“Grouper”), a subsidiary of MiddleGround Capital LLC
(“MiddleGround”) pursuant to which Grouper will acquire
substantially all of the Company’s assets, including the equity
interests of certain of the Company’s direct and indirect
subsidiaries for an aggregate consideration of $218 million in
cash, subject to working capital and net debt adjustments, and
assumption of certain liabilities of the Company. To facilitate the
sale, the Company and certain of its U.S. subsidiaries filed
voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code
for the District of Delaware. The transaction is being undertaken
pursuant to Section 363 of the U.S. Bankruptcy Code. Accordingly,
MiddleGround, via Grouper, is serving as the "stalking horse
bidder" in a court-supervised sale process, subject to higher or
otherwise better offers, among other conditions.
Shiloh intends to pay its suppliers in full under normal terms
for goods and services provided on or after August 30, 2020. The
Company intends to work with its suppliers to minimize any
disruption resulting from the Chapter 11 filing.
Additional information is available on Shiloh’s restructuring
website at www.shilohrestructuring.com, or by calling
Shiloh’s Restructuring Hotline at (877) 462-4380 (toll-free in the
U.S. and Canada) or (347) 817-4091 (for calls originating outside
the U.S. and Canada). Court documents and additional information
about the court-supervised process are available on a separate
website administered by Shiloh’s claims agent, Prime Clerk, at
https://cases.primeclerk.com/shiloh.
Jones Day is serving as legal counsel to Shiloh, Houlihan Lokey
Capital Inc. is serving as financial advisor, and Ernst & Young
LLP is serving as restructuring advisor.
About Shiloh Industries, Inc.
Shiloh Industries, Inc. (NASDAQ: SHLO) is a global innovative
solutions provider focusing on lightweighting technologies that
provide environmental and safety benefits to the mobility market.
Shiloh designs and manufactures products within body structure,
chassis and propulsion systems. Shiloh’s multicomponent,
multi-material solutions are comprised of a variety of alloys in
aluminum, magnesium and steel grades, along with its proprietary
line of noise and vibration reducing ShilohCore® acoustic laminate
products. The strategic BlankLight®, CastLight® and StampLight®
brands combine to maximize lightweighting solutions without
compromising safety or performance. Shiloh has approximately 3,450
dedicated employees with operations, sales and technical centers
throughout Asia, Europe and North America.
Forward-Looking Statements
All statements contained in this press release that are not
historical facts are “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. The forward-looking
statements are made on the basis of management’s assumptions and
expectations. As a result, there can be no guarantee or assurance
that these assumptions and expectations will in fact occur. The
forward-looking statements are subject to risks and uncertainties
that may cause actual results to materially differ from those
contained in the statements due to a variety of factors, including
(1) the duration and severity of the COVID-19 pandemic, any
preventive or protective actions taken by governmental authorities,
the effectiveness of actions taken globally to contain or mitigate
its effects, and any unfavorable effects of the COVID-19 pandemic
on either the Company’s manufacturing operations, or those of its
customer’s or suppliers; (2) reduction in demand for the Company’s
solutions, including any reduction in demand as a result of a
COVID-19 triggered economic recession, including any determination
that the value of its assets is impaired or that it does not have
the ability to continue as a going concern; (3) the Company’s
ability to accomplish its strategic objectives; (4) the Company’s
ability to obtain future sales; (5) changes in worldwide economic
and political conditions, including adverse effects from terrorism
or related hostilities; (6) costs related to legal and
administrative matters; (7) the Company’s ability to realize cost
savings expected to offset price concessions; (8) the Company’s
ability to successfully integrate acquired businesses, including
businesses located outside of the United States; (9) risks
associated with doing business internationally, including economic,
political and social instability, foreign currency exposure and the
lack of acceptance of the Company’s products; (10) inefficiencies
related to production and product launches that are greater than
anticipated; (11) changes in technology and technological risks;
(12) work stoppages and strikes at the Company’s facilities and
that of its customers or suppliers; (13) the Company’s dependence
on the automotive and heavy truck industries, which are highly
cyclical; (14) the dependence of the automotive industry on
consumer spending, which is subject to the impact of domestic and
international economic conditions affecting car and light truck
production; (15) regulations and policies regarding international
trade; (16) financial and business downturns of the Company’s
customers or vendors, including any production cutbacks or
bankruptcies; (17) increases in the price of, or limitations on the
availability of aluminum, magnesium or steel, the Company’s primary
raw materials, or decreases in the price of scrap steel; (18) the
successful launch and consumer acceptance of new vehicles for which
the Company supplies parts; (19) the impact on financial statements
of any known or unknown accounting errors or irregularities, and
the magnitude of any adjustments in restated financial statements
of the Company’s operating results; (20) the Company’s ability to
obtain Bankruptcy Court approval with respect to motions in the
Chapter 11 Cases; (21) the effects of the Chapter 11 Cases on the
Company and on the interests of various constituents; (22)
potential delays in the Chapter 11 process due to the effects of
the COVID-19 virus; (23) objections to the Stock and Asset Purchase
Agreement, DIP Credit Agreement or other pleadings filed that could
protract the Chapter 11 Cases; (24) the Bankruptcy Court’s rulings
in the Chapter 11 Cases, including the approvals of the terms and
conditions of, and the transactions contemplated by, the Stock and
Asset Purchase Agreement and the DIP Credit Agreement (25); the
outcome of the Chapter 11 Cases in general; (26) the length of time
the Company will operate under the Chapter 11 Cases; (27) risks
associated with third-party motions in the Chapter 11 Cases; (28)
the potential adverse effects of the Chapter 11 Cases on the
Company’s liquidity or results of operations and increased legal
and other professional costs related to the Chapter 11 Case; (29)
the ability of the Company to meet the closing conditions and
successfully consummate the Stock and Asset Purchase Agreement;
(30) employee attrition and the Company’s ability to retain senior
management and other key personnel due to the distractions and
uncertainties; (31) the trading price and volatility of the
Company’s common stock and the ability of the Company to remain
listed on The NASDAQ Global Select Market; (32) increases in
pension plan funding requirements; (33) the Company’s ability to
derive a substantial portion of its sales from large customers;
(34) a successful transition of the CEO position and the Company’s
ability to successfully identify a qualified and effective
full-time CEO; and (35) other factors besides those listed here
could also materially affect the Company’s business. See (a) “Part
I, Item 1A. Risk Factors” in the Company’s Annual Report on Form
10-K for the fiscal year ended October 31, 2019 and (b) Part II,
Item 1A. Risk Factors” in the Company’s Quarterly Reports on Form
10-Q for the fiscal quarters ended January 30, 2020 and April 30,
2020 for a more complete discussion of these risks and
uncertainties. Any or all of these risks and uncertainties could
cause actual results to differ materially from those reflected in
the forward-looking statements. These forward-looking statements
reflect management’s analysis only as of the date of this press
release. The Company undertakes no obligation to publicly revise
these forward-looking statements to reflect events or circumstances
that arise after the date of this press release. In addition to the
disclosures contained herein, readers should carefully review risks
and uncertainties contained in other documents the Company files
from time to time with the Securities and Exchange Commission.
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version on businesswire.com: https://www.businesswire.com/news/home/20200902005959/en/
Investor: For inquiries, please contact our Investor
Relations department at 1-646-378-2986 or at investors@shiloh.com.
Media: For inquiries, please contact Hilary Brazin at
1-734-738-1362 or at hilary.brazin@shiloh.com or Joele Frank,
Wilkinson Brimmer Katcher Andy Brimmer / Michael Freitag / Andrew
Squire (212) 355-4449
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