CTI Foods Restructuring Ad Hoc Group Form


Davis Polk is advising an ad hoc group of lenders (the “Ad Hoc Group”) under a $347 million first-lien and a $140 million second-lien term loan credit facility in the chapter 11 cases of CTI Foods, LLC and certain of its subsidiaries (collectively, “CTI”).

On March 8, 2019, the Ad Hoc Group entered into a Restructuring Support Agreement with CTI supporting a comprehensive restructuring to be implemented through a prepackaged chapter 11 plan of reorganization. The restructuring contemplates that, upon consummation of the plan, among other things, prepetition secured term lenders will equitize their loans in exchange for substantially all of the equity in reorganized CTI.

In addition, Davis Polk is advising the agent on a $75 million DIP term loan facility provided by certain first-lien and second-lien lenders and fully backstopped by the Ad Hoc Group. The loans under the DIP term loan facility will convert into loans under an exit term loan facility.

On March 11, 2019, CTI filed its joint prepackaged plan together with its voluntary chapter 11 petitions in the Bankruptcy Court for the District of Delaware and a “first day” hearing was held on March 12, 2019. The Bankruptcy Court approved all of the relief sought, including the DIP, on a fully consensual basis. Approximately 85% of the first-lien lenders and approximately 75% of the second-lien lenders have already voted in favor of the plan.

CTI is one of the leading independent providers of custom food solutions to major chain restaurants in North America. CTI’s headquarters are located in Saginaw, Texas, and it operates seven production facilities throughout the U.S. CTI has approximately 1,900 employees.

The Davis Polk restructuring team includes partner Damian S. Schaible (Picture), counsel Michelle M. McGreal and associates Stephen D. Piraino and Omer Netzer. The credit team includes partner Jinsoo H. Kim, counsel Jon Finelli and associate Kwesi Larbi-Siaw. The corporate team includes partner Michael Davis and associate Camila Panama. Associate Jennifer M. Wolff is providing executive compensation advice. All members of the Davis Polk team are located in the New York office.

Evercore Group L.L.C. is acting as financial adviser to the Ad Hoc Group.

Involved fees earner: Jon Finelli – Baker Botts; Michael Davis – Davis Polk & Wardwell; Jinsoo Kim – Davis Polk & Wardwell; Kwesi Larbi-Siaw – Davis Polk & Wardwell; Michelle McGreal – Davis Polk & Wardwell; Omer Netzer – Davis Polk & Wardwell; Camila Panama – Davis Polk & Wardwell; Stephen Piraino – Davis Polk & Wardwell; Damian Schaible – Davis Polk & Wardwell; Jennifer Wolff – Davis Polk & Wardwell;

Law Firms: Baker Botts; Davis Polk & Wardwell;

Clients: ad hoc group CTI Foods Restructuring;