Item 1.03 Bankruptcy or Receivership.
As previously disclosed, on
Confirmation of the Plan of Reorganization
On
Summary of the Plan of Reorganization
The following is a summary of the material terms of the Plan of Reorganization,
as confirmed pursuant to the Confirmation Order. The Plan of Reorganization
contemplates a restructuring process that will result in Emergent moving its
headquarters and operations to its indirect wholly-owned Irish subsidiary,
· Emergent shall cause Lamington to recapitalize, such that all of Lamington's
currently issued promissory notes and profit participating notes are exchanged and converted into (a) Series A Notes (the "Series A Notes"), (b) Series B Notes (the "Series B Notes"), (c) profit participating notes (the "PPNs"), (d) warrants to purchase PPNs (the "PPN Warrants"), and (e) stock appreciation rights that may be settled in PPNs (the "PPN SARs");
· Emergent shall cause Lamington and certain of its other subsidiaries to
dividend ultimately to Emergent, the Series A Notes, the Series B Notes, the PPNs, the PPN Warrants and the PPN SARs;
· Emergent shall (a) form, or shall have formed, a grantor trust under the laws
of theCayman Islands (the "Grantor Trust ") and cause theGrantor Trust to issue trust certificates corresponding to the PPNs issued by Lamington (the "Trust Certificates"), warrants to purchase Trust Certificates (the "Trust Certificate Warrants"), and stock appreciation rights that may be settled in Trust Certificates (the "Trust Certificate SARs"), and (b) contribute the PPNs, the PPN Warrants and the PPN SARs into theGrantor Trust in exchange for the Trust Certificates, the Trust Certificate Warrants (so that upon exercise of any Trust Certificate Warrants the proceeds thereof would be used to exercise the PPN Warrants) and the Trust Certificate SARs (so that upon exercise of any Trust Certificate SARs the proceeds thereof would be used to exercise the PPN SARs);
· Emergent shall cause to have the Series A Notes, the Series B Notes, the PPNs
and the Trust Certificates listed on a stock exchange deemed suitable for such purpose by Emergent, which exchange is expected to be the Vienna MTF, a tier of theVienna Stock Exchange ;
· Emergent shall distribute (pursuant to a mandatory exchange under the Plan of
Reorganization): (a) the Series A Notes to holders of Emergent's 8.5% Senior Secured Notes (the "Senior Notes"); (b) theSeries B Notes and Trust Certificates corresponding to 10 PPNs per$100 principal amount of Emergent's 5.0% Senior Unsecured Convertible Notes (the "Convertible Notes") to holders thereof, and (c) Trust Certificates to holders of common stock, par value$.01 per share (the "Common Stock") and other equity interests in Emergent; provided that, (i) vested warrants to purchase Common Stock will be deemed to be exercised on a cashless exercise basis immediately prior to such distribution, Trust Certificate Warrants to purchase Trust Certificates will be distributed to holders of unvested warrants to purchase Common Stock, and (ii) equity awards of (x) restricted stock under Emergent's 2010 Omnibus Incentive Plan (the "Omnibus Plan") shall be deemed vested as of the Effective Date and treated the same as the other equity interests in Emergent and (y) Trust Certificate SARs exercisable for Grantor Trust Certificates will be distributed to holders of stock appreciation rights outstanding under the Omnibus Plan. In consideration of such distributions, the existing Senior Secured Notes, the Convertible Unsecured Notes, and the equity interests in Emergent shall be canceled and extinguished in accordance with the Plan of Reorganization;
· In order to comply with Irish law requirements, the distributions described
above can only be made to holders of securities receiving a minimum ofUS$125,000 in value of any class or series of securities to be issued by Lamington. Therefore, as of the Effective Date, holders of Senior Notes and/or Convertible Notes valued at less thanUS$125,000 will not participate in such distributions and instead will receive payment in cash of 100% of their outstanding principal amount plus any accrued and unpaid interest thereon, and their Senior Notes and/or Convertible notes, as applicable, will be canceled and extinguished. Holders of Common stock and other equity interests will not be affected by this minimum value requirement.
· Emergent shall terminate, or cause to be terminated, (a) the listing of the
Common Stock on theOTCQX Marketplace and (b) the reporting obligations of Emergent under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and file such other statements, forms, schedules or reports pursuant to the Exchange Act or other federal or state securities laws as the officers of Emergent deem necessary, advisable or appropriate; and
· Emergent shall wind up its remaining operations and affairs, which may include
the sale or other disposition of remaining assets in a tax-efficient manner, and shall take such other actions as the officers deem necessary or advisable to accomplish the purposes of the Plan of Reorganization and consummate the liquidation and winding up of Emergent and its remainingU.S. subsidiaries. Capital Structure
Pursuant to the Plan of Reorganization, as of the Effective Date, each of the Company's common stock, warrants to purchase common stock, SARs, Senior Notes and Convertible Notes will be (a) exchanged for Series A Notes, Series B Notes and PPNs, to be issued by Lamington, and/or Trust Certificates to be issued by the Trust, in each case as set forth in the Plan of Reorganization, and (b) canceled and of no further force or effect.
Forward Looking Statements
This Current Report on Form 8-K and the attached exhibits contain forward
looking statements that are subject to risks and uncertainties. All statements
other than statements of historical fact included in this Current Report on
Form 8-K and the attached exhibits are forward looking statements. Forward
looking statements give our current expectations and projections relating to our
financial condition, results of operations, plans, objectives, future
performance and business. You can identify forward looking statements by the
fact that they do not relate strictly to historical or current facts. These
statements may include words such as "anticipate," "estimate," "expect,"
"project," "plan," "intend," "believe," "may," "will," "should," "can have,"
"likely" and other words and terms of similar meaning in connection with any
discussion of the timing or nature of future cash flows, operating or financial
performance or other events. These forward looking statements are not historical
facts, and are based on current expectations, estimates and projections about
our industry and Company, management's beliefs and certain assumptions made by
management, many of which, by their nature, are inherently uncertain and beyond
our control. Accordingly, readers are cautioned that any such forward looking
statements are not guarantees of future performance and are subject to certain
risks, uncertainties and assumptions that are difficult to predict. Although we
believe that the expectations reflected in such forward looking statements are
reasonable as of the date made, results may prove to be materially different.
Unless otherwise required by law, we disclaim any obligation to update our view
of any such risks or uncertainties or to announce publicly the result of any
revisions to the forward-looking statements made in this report. Additional
factors that may cause results to differ from those described in the
forward-looking statements are set forth in the Company's Annual Report on
Form 10-K for the fiscal year ended
The Company can make no assurances as to when, or ultimately if, the Plan of Reorganization will become effective. More information on the Restructuring may be found at the restructuring section of our website at http://ir.emergentcapital.com/EMG/restructuring/4049, including Investor Frequently Asked Questions that may be updated from time to time prior to the Effective Date (the "FAQs").
The foregoing descriptions of the Plan of Reorganization and the Confirmation Order are not complete and are qualified in their entirety by reference to the such documents, copies of which are attached hereto as Exhibits 2.1 and 99.1 and are hereby incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits EXHIBIT INDEX Exhibit No. Description 2.1 Second Amended Chapter 11 Plan of Reorganization datedDecember 18, 2020 (included as Exhibit A to the Confirmation Order). 99.1 Confirmation Order enteredDecember 30, 2020 .
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