Item 1.01 Entry into a Material Definitive Agreement.
Restructuring Support Agreement
On
The RSA contemplates a comprehensive deleveraging of the Company's balance sheet. Specifically, the RSA and Term Sheet provide, in pertinent part, as follows:
• The Company's general unsecured creditors will be paid in full in the ordinary
course of business.
• The Company will enter into debtor-in-possession financing structured as a
delayed draw term loan (the "DIP Facility") providing for a limit of$75 million (including the$5 million refinancing of the New Incremental Loans (as hereinafter defined)). The DIP Facility will mature on the earliest of (i) six months from the date on which the Chapter 11 Cases are commenced (the "Petition Date"), (ii) the conversion or dismissal of the Chapter 11 Cases, (iii) the sale of substantially all of the assets of the Company, (iv) the acceleration of the DIP Facility in accordance with its terms and (v) the effective date of the Plan (the "Effective Date"). The DIP Facility will bear interest at LIBOR + 1000 basis points, payable in cash monthly.
• The DIP Facility will convert into a priority exit facility (the "Priority Exit
Facility") upon the Company's emergence from the Chapter 11 Cases. The Priority Exit Facility will have a 3-year maturity and bear interest at a rate of LIBOR + 1000 basis points payable in cash.
• The Company will enter into a new term loan facility (the "New Term Loan
Facility") on the Effective Date. The New Term Loan Facility will provide for term loans in the principal amount of$225 million , mature 5 years after the Effective Date and bear interest at a rate of LIBOR + 650 basis points, 300 basis points of which will be paid in cash and 350 basis points will be paid in kind; provided that, at the election of the INAP board of directors post-Effective Date, 200 basis points of the LIBOR + 300 basis points cash interest may be payment in kind.
• The Company will use its commercially reasonable efforts to enter into a new
Date.
• The lenders under the Credit Agreement dated
as borrower, certain of its subsidiaries as guarantors,
as administrative and collateral agent and the other lenders thereto (as
amended, the "Credit Agreement") will receive 100% of the new common stock . . .
Item 1.03 Bankruptcy or Receivership.
On
The Company has filed a motion with the
Additional information about the Chapter 11 Cases may be obtained by visiting
https://cases.primeclerk.com/inap or by calling
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under
an Off-Balance Sheet Arrangement of a Registrant.
New Incremental Loans
On
Use of Proceeds. The Company is using the proceeds of the New Incremental Loans to, among other things, (i) fund the ordinary course payments, working capital needs and other expenditures of the Company in advance of and during the Chapter 11 Cases, (ii) pay certain fees, interest, payments and expenses related to the Chapter 11 Cases, and (iii) pay fees and expenses related to the transactions contemplated by the New Incremental Loans in accordance with such budget.
Priority. Priority for the New Incremental Loans will be pari passu with the existing term loans under the Credit Agreement.
Affirmative and Negative Covenants. The New Incremental Loans are subject to the same as those under the Credit Agreement, as amended by the Eighth Amendment (as hereinafter defined).
Events of Default. The events of default for the New Incremental Loans are the same as those under the Credit Agreement, as amended by the Eighth Amendment.
Maturity. The New Incremental Loans will mature on the earliest of: (i)
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Incremental and Eighth Amendment to Credit Agreement
In connection with the New Incremental Loans, the Company entered into the
Incremental and Eighth Amendment to Credit Agreement (the "Eighth Amendment") on
In addition, the Eighth Amendment amended (i) the affirmative covenants to,
among other things, require the Company to provide a cash receipt and
disbursement budget and rolling 13-week forecasts of the same and to meet
certain milestones with respect to the Chapter 11 Cases, including solicitation
of the Plan, entry into the DIP Facility, and confirmation of the Plan by the
The Eighth Amendment further amended the events of default to provide that it will be an event of default for the New Incremental Loans if, among other things, the Company uses the proceeds from the New Incremental Loans in a manner outside of the budget, subject to certain variances or in connection with the Chapter 11 Cases, or the Company supports a plan of reorganization or disclosure statement that does not repay the obligations as set forth in the RSA.
The foregoing description of the Eighth Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the . . .
Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement.
The filing of the Chapter 11 Cases described above in Item 1.03 constitutes an event of default that accelerated the Company's obligations under the Credit Agreement, as a result of which the principal and interest due thereunder became immediately due and payable. The ability of the lenders to enforce such payment obligations under the Credit Agreement is automatically stayed as a result of the Chapter 11 Cases, and the lenders' rights of enforcement in respect of obligations under the Credit Agreement are subject to the applicable provisions of the Bankruptcy Code.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Employee Incentive Arrangements
In connection with the RSA, the Company adopted incentive arrangements for
certain of its senior executives (collectively, the "Incentive Arrangements").
The Incentive Arrangements provide incentive payments to five key employees (the
"Incentive Participants") to promote retention and continuity during the Chapter
11 Cases and thereafter. The Incentive Arrangements will be paid in cash, 50% of
which will be paid within five days following the emergence of the Company from
the Chapter 11 Cases and the remaining 50% to be paid on
Name Title Potential Payments Michael Sicoli Chief Financial Officer $ 575,000 Andrew Day Chief Operating Officer $ 200,000 Richard Diegnan General Counsel $ 400,000 John Filipowicz Chief Administrative Officer $ 100,000 Christine Herren Corporate Controller and Chief Accounting Officer $ 200,000 4
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To effectuate the Incentive Arrangements, on
In addition, on
The foregoing description of Amendment No. 1 and the Letter Agreements with the Specified Executives does not purport to be complete and is qualified in its entirety by reference to Amendment No. 1 and the Letter Agreements with the Specified Executives, copies of which are filed as Exhibit 10.3 and Exhibits 10.4 through 10.7, respectively, to this Current Report on Form 8-K and are incorporated by reference in this Item 5.02.
Item 7.01 Regulation FD Disclosure.
In connection with the filing of the Chapter 11 Cases, INAP issued a press
release on
The information included in this Form 8-K under Item 7.01 and Exhibit 99.1 shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to this or such filing. The information in this Form 8-K under Item 7.01 and Exhibit 99.1 shall be deemed to be "furnished" and therefore shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.
Item 8.01 Other Events.
Trading in
INAP cautions that trading in INAP's securities (including, without limitation, its common stock) during the pendency of the Chapter 11 Cases is highly speculative and poses substantial risks. Trading prices for INAP's securities may bear little or no relationship to the actual recovery, if any, by holders of INAP's securities in the Chapter 11 Cases. INAP expects that its equity holders will experience a significant or complete loss on their investment, depending on the outcome of the Chapter 11 Cases. INAP expects to receive a notice of delisting from the Nasdaq Global Market as a result of the Chapter 11 Cases.
Forward-Looking Statements
Certain statements in this Form 8-K contain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements regarding the Company's ability to
obtain approval by the Bankruptcy Court of the Plan or any other plan of
reorganization, including the treatment of the claims of the Company's lenders,
vendors, trade creditors and equity holders, among others under the Plan; the
Company's ability to obtain approval with respect to motions in the Chapter 11
Cases and the
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Therefore, actual future results and trends may differ materially from what is forecast in such forward-looking statements due to a variety of factors, including, without limitation: the decisions of the Court; negotiations with the Company's lenders, creditors and equity holders; the Company's ability to meet the requirements, and compliance with the terms, including restrictive covenants, of the RSA and any other financial arrangement during the pendency of the Chapter 11 Cases; changes in the Company's cash needs as compared to its historical operations or its planned reductions in operating expense; adverse litigation; changes in domestic and international demand for the Company's products; the Company's ability to control operating costs and other expenses; that general economic conditions, including as a result of the outbreak of COVID-19, may be worse than expected; that competition may increase significantly; changes in laws or government regulations or policies affecting the Company's current business operations.
These risks and other important factors discussed under the caption "Risk
Factors" in the Company's most recent Annual Report on Form 10-K filed with the
Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. All forward-looking statements attributable to the Company or persons acting on the Company's behalf are expressly qualified in their entirety by the foregoing forward-looking statements. All such statements speak only as of the date made, and the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits 10.1 Restructuring Support Agreement, dated as ofMarch 13, 2020 by and amongInternap Corporation ,Datagram LLC ,Hosting Intellect LLC ,Internap Connectivity LLC ,SingleHop LLC ,Ubersmith, Inc. andInternap Technology Solutions Inc. and the lenders party thereto. 10.2 Incremental and Eighth Amendment to Credit Agreement, datedMarch 13, 2020 , by and amongInternap Corporation , the lenders party thereto andJefferies Finance LLC as administrative agent. 10.3 Amendment No. 1, datedMarch 13, 2020 to Employment Agreement betweenInternap Corporation andMichael Sicoli datedAugust 26, 2019 . 10.4 Incentive Bonus Letter Agreement datedMarch 13, 2020 betweenInternap Corporation andAndrew Day . 10.5 Incentive Bonus Letter Agreement datedMarch 13, 2020 betweenInternap Corporation andRichard Diegnan . 10.6 Incentive Bonus Letter Agreement datedMarch 13, 2020 betweenInternap Corporation andJohn Filipowicz . 10.7 Incentive Bonus and Severance Letter Agreement datedMarch 13, 2020 betweenInternap Corporation andChristine Herren . 99.1 Press Release datedMarch 16, 2020 . 6
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