Dixie Electric’s Restructuring Support Agreement with Secured Lenders

Davis Polk advised an ad hoc group of secured lenders in connection with the proposed prepackaged chapter 11 reorganization of Dixie Electric, LLC and certain of its affiliates.

On October 26, 2018, the company entered into a restructuring support agreement with the ad hoc group and certain other parties pursuant to which the company has agreed to pursue a chapter 11 plan that contemplates (i) each holder of secured loan claims will receive its pro rata share of 98.25% of the equity of the reorganized company and (ii) each holder of unsecured loan claims will receive its pro rata share of 1.75% of the equity of the reorganized company. The restructuring will extinguish approximately $300 million in funded debt.

To fund the company’s ongoing operations and expenses during the chapter 11 cases, the members of the ad hoc group have committed to extend a debtor-in-possession credit facility consisting of term loans in an aggregate principal amount of $17.5 million. Upon consummation of the plan of reorganization, the outstanding DIP loans will be converted into a senior secured $30 million term loan exit facility. Collectively, the ad hoc group holds more than two-thirds of the company’s prepetition secured loans.

Dixie Electric, LLC (dba Expanse Energy Solutions) is a privately held provider of electrical infrastructure and related services to the oil and gas industry. The company’s corporate headquarters is located in Houston, Texas.

The Davis Polk restructuring team includes partner Damian S. Schaible (Picture), counsel Christian Fischer and associates Adam L. Shpeen and Erik Jerrard. The corporate team includes partner Stephen Salmon and associate Jeffrey C. Lau. Partner William A. Curran and associate Tracy L. Matlock are providing tax advice. Counsel Ron M. Aizen is providing executive compensation advice. Counsel Lawrence R. Plotkin is providing real estate advice.

Simpson Thacher advised Dixie Electric, LLC with a team including Elisha Graff, Kathrine McLendon, Nicholas Baker, Edward Linden and David Baruch (Restructuring and Bankruptcy); Christopher May and Jacqui Bogucki (M&A); Alden Millard, Mike Vernace, Kyle Spies and Leah Nudelman (Banking and Credit); Rise Norman and Conor Colasurdo (Capital Markets); John Creed and Tyler Robbins (Tax); Larry Moss (ECEB); Adeeb Fadil and Timothy Mulvihill (Environmental); and Andrew Pagliughi (Blue Sky).

Involved fees earner: Ron M. Aizen – Davis Polk & Wardwell; William Curran – Davis Polk & Wardwell; Christian Fischer – Davis Polk & Wardwell; Erik Jerrard – Davis Polk & Wardwell; Jeffrey Lau – Davis Polk & Wardwell; Tracy Matlock – Davis Polk & Wardwell; Lawrence Plotkin – Davis Polk & Wardwell; Stephen Salmon – Davis Polk & Wardwell; Damian Schaible – Davis Polk & Wardwell; Adam Shpeen – Davis Polk & Wardwell; Nicholas Baker – Simpson Thacher & Bartlett; David Baruch – Simpson Thacher & Bartlett; Conor Colasurdo – Simpson Thacher & Bartlett; John Creed – Simpson Thacher & Bartlett; Adeeb Fadil – Simpson Thacher & Bartlett; Elisha Graff – Simpson Thacher & Bartlett; Jacqui Bogucki – Simpson Thacher & Bartlett; Edward Linden – Simpson Thacher & Bartlett; Christopher May – Simpson Thacher & Bartlett; Kathrine McLendon – Simpson Thacher & Bartlett; Alden Millard – Simpson Thacher & Bartlett; Laurence Moss – Simpson Thacher & Bartlett; Timothy Mulvihill – Simpson Thacher & Bartlett; Risë Norman – Simpson Thacher & Bartlett; Leah Nudelman – Simpson Thacher & Bartlett; Andrew Pagliughi – Simpson Thacher & Bartlett; Tyler Robbins – Simpson Thacher & Bartlett; Kyle Spies – Simpson Thacher & Bartlett; Michael Vernace – Simpson Thacher & Bartlett;

Law Firms: Davis Polk & Wardwell; Simpson Thacher & Bartlett;

Clients: Dixie Electric; Dixie Electric – Ad Hoc group of secured lenders;

Author: Ambrogio Visconti