Item 1.02. Termination of a Material Definitive Agreement.
As previously reported, on June 29, 2020, Covia Holdings Corporation (the
"Company") and certain of its direct and indirect subsidiaries (collectively,
the "Company Parties") voluntarily commenced cases under chapter 11 (the
"Chapter 11 Cases") of title 11 of the United States Code in the U.S. Bankruptcy
Court for the Southern District of Texas (the "Bankruptcy Court").
In connection with the Chapter 11 Cases, the Company Parties entered into a
Restructuring Support Agreement (the "Restructuring Support Agreement") with
certain creditors (the "Consenting Stakeholders"), which contemplated
agreed-upon terms for a prearranged plan of reorganization (the "Plan"). Under
the Restructuring Support Agreement, the Consenting Stakeholders agreed, subject
to certain terms and conditions, to support a financial restructuring of the
existing debt of, existing equity interests in, and certain other obligations of
the Company Parties, pursuant to the Plan as filed with the Bankruptcy Court.
On July 1, 2020, as part of the Plan and with the approval of the Bankruptcy
Court, the Company terminated the Receivables Facility (as defined below),
including the Receivables Financing Agreement (the "RFA") by and among (i) the
Company, as initial servicer, (ii) Covia Financing LLC, a special purpose entity
and wholly owned subsidiary of the Company, as borrower ("Covia Financing"),
(iii) the persons from time to time party thereto, as lenders, (iv) PNC Bank,
National Association, as LC bank and as administrative agent ("PNC"), and (v)
PNC Capital Markets LLC, as structuring agent ("PNC Capital"). In connection
with the RFA, (i) the Company, as originator and servicer, and Covia Financing,
as the buyer, had entered into a Purchase and Sale Agreement ("PSA"), and (ii)
various of the Company's subsidiaries, as sub-originators ("Sub-Originators"),
and the Company, as the buyer and servicer, entered into the Sub-Originator
Purchase and Sale Agreement ("Sub-PSA"). Together, the RFA, the PSA, and the
Sub-PSA established the primary terms and conditions of an accounts receivable
securitization program (the "Receivables Facility").
As previously reported, the commencement of the Chapter 11 Cases constituted an
event of default under, and resulted in the acceleration of, the Company
Parties' obligations under the RFA.
In connection with the termination of the Receivables Facility, the Company
repaid all of the outstanding obligations in respect of principal, interest and
fees under the Receivables Facility and terminated and released all security
interests and liens in the assigned receivables granted in connection therewith.
Further, with the approval of the Bankruptcy Court, the Receivables Facility was
replaced with a letter of credit facility pursuant to an interim order
authorizing, among other things, (i) the Company's funding of a new letter of
credit collateral account held at Covia Financing, (ii) entry into the Payoff
and Reassignment Agreement (the "Payoff Agreement"), among the Company, Covia
Financing, the Sub-Originators, PNC, and PNC Capital, (iii) the Company's, Covia
Financing's and the Sub-Originators' entry into, and performance of, their
respective obligations under the Payoff Agreement and, as applicable, the
Reimbursement Agreement for Cash-Collateralized Standby Letters of Credit, among
PNC, Covia Financing, and the Company (the "Reimbursement Agreement" and,
together with the Payoff Agreement, the "Letter of Credit Agreements"), and (iv)
execution of the transactions contemplated by the Letter of Credit Agreements.
Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
On June 30, 2020, the Company was notified by the staff of NYSE Regulation, Inc.
("NYSE Regulation") that it had determined to commence proceedings to delist the
Company's common stock from the New York Stock Exchange ("NYSE"). NYSE
Regulation reached its decision that the Company is no longer suitable for
listing pursuant to NYSE Listed Company Manual Section 802.01D after the Company
commenced the Chapter 11 Cases. The Company does not intend to appeal the
determination and, therefore, it is expected that its common stock will be
delisted.
Item 8.01 Other Items.
On June 30, 2020, the Bankruptcy Court entered a final order approving the
relief requested in the Motion for Entry of an Order Approving Notification and
Hearing Procedures for Certain Transfers of and Declarations of Worthlessness
with Respect to Stock,
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Docket No. 73 (the "NOL Order"). The NOL Order is designed to assist the Company
Parties in preserving certain of their tax attributes by establishing, among
other things, the procedures (including notice requirements) that certain
stockholders and potential stockholders must comply with regarding transfers of,
or declarations of worthlessness with respect to, the Company's common stock, as
well as certain obligations with respect to notifying the Company Parties with
respect to current stock ownership (the "Procedures"). The terms and conditions
of the Procedures were immediately effective and enforceable upon entry of the
NOL Order by the Bankruptcy Court. Any actions in violation of the Procedures
(including the notice requirements) are null and void ab initio, and (a) the
person or entity making such a transfer will be required to take remedial
actions specified by the Company Parties to appropriately reflect that such
transfer of the Company's common stock is null and void ab initio and (b) the
person or entity making such a declaration of worthlessness with respect to the
Company's common stock will be required to file an amended tax return revoking
such declaration and any related deduction to reflect that such declaration is
void ab initio. The foregoing description of the NOL Order is not complete and
is qualified in its entirety by reference to the NOL Order.
Additional Information on the Chapter 11 Cases
Court filings and information about the Chapter 11 Cases, including the NOL
Order, can be found at a website maintained by the Company's claims agent Prime
Clerk LLC at http://cases.primeclerk.com/Covia, by calling 1-877-606-3610
(toll-free), or by sending an email to CoviaInfo@PrimeClerk.com. The documents
and other information available via website or elsewhere are not part of this
Current Report and shall not be deemed incorporated herein.
Cautionary Note Regarding the Company's Common Stock
The Company cautions that trading in the Company's common stock during the
pendency of the Chapter 11 Cases is highly speculative and poses substantial
risks. Trading prices for the Company's common stock may bear little or no
relationship to the actual recovery, if any, by holders of the Company's common
stock in the Chapter 11 Cases. The Company expects that holders of the Company's
common stock could experience a significant or complete loss on their
investment, depending on the outcome of the Chapter 11 Cases.
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