Item 1.03.Bankruptcy or Receivership.
As previously announced, on June 29, 2020, Covia Holdings Corporation (the
"Company" and, as it may be reorganized pursuant to the Plan (as defined below),
the "Reorganized Company") and certain of its direct and indirect subsidiaries
(together with the Company, the "Debtors") commenced voluntary cases (the
"Chapter 11 Cases") under Chapter 11 of the United States Bankruptcy Code in the
United States Bankruptcy Court for the Southern District of Texas, Houston
Division (the "Bankruptcy Court"). The Chapter 11 Cases are being jointly
administered under the caption In re Covia Holdings Corporation, et al., No
20-33295 (DRJ).
On December 14, 2020, the Bankruptcy Court entered an order (the "Confirmation
Order") confirming the Modified First Amended Joint Chapter 11 Plan of
Reorganization of Covia Holdings Corporation and Its Debtor Affiliates (the
"Plan"). The Debtors expect that the effective date of the Plan will occur once
all conditions precedent to the Plan have been satisfied (defined in the Plan as
the "Effective Date").
Summary of the Plan
The following is a summary of the material terms of the Plan as approved and
confirmed by the Bankruptcy Court. This summary highlights only certain
substantive provisions of the Plan and is not intended to be a complete
description of the Plan. This summary is qualified in its entirety by reference
to the full text of the Confirmation Order, which includes the Plan as an
exhibit, which is attached hereto as Exhibit 2.1 and incorporated herein by
reference. Among other things, the Plan provides for (in each case, as more
fully described in the Plan, and capitalized terms having the meanings ascribed
to them in the Plan):
• payment in full of Administrative and Priority Tax Claims;
• execution of a New Term Loan in the aggregate principal amount of $825
million (subject to reduction by the Cash Adjustment on a dollar for dollar
basis);
• entry into an asset-based Exit Facility with a commitment size of $135
million;
• issuance of New Common Equity;
• distribution to Holders of Term Loan Claims and Swap Agreements Claims their
pro rata share of (i) Excess Cash, (ii) the New Term Loan; and (iii) 100% of
pro forma equity in the Reorganized Debtors, subject to dilution by the
Management Incentive Plan;
• establishment of a General Unsecured Recovery Cash Pool, to be funded with
$39.75 million in accordance with the Plan and held in trust for
distributions to Holders of Allowed General Unsecured Claims against the
Company and Debtor TechniSand Inc.;
• implementation of Restructuring Transactions to effectuate a corporate
reorganization that will align and consolidate certain of the Debtors'
businesses and related assets and liabilities; and
• cancellation of existing Covia Interests.
Capital Structure
There were 158,195,156 shares of the Company's common stock outstanding as of
November 6, 2020. On the Effective Date, the Company's common and preferred
stock will be cancelled and holders thereof will not receive a distribution on
account of their equity interests. Under the Plan, the Reorganized Company's new
organizational documents will become effective on the Effective Date. The
Reorganized Company's new organizational documents will authorize the
Reorganized Company to issue Class A common units and Class B common units
(collectively, the "common units").
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The common units of the Reorganized Company issued pursuant to the Plan will be
issued without registration under the Securities Act of 1933, as amended (the
"Securities Act"), or any similar federal, state, or local law in reliance upon
section 1145 of the Bankruptcy Code and Section 4(a)(2) of the Securities Act
and Regulation D thereunder.
Certain Information Regarding Assets and Liabilities of the Company
In the Debtors' most recent monthly operating report filed with the Bankruptcy
Court on November 30, 2020, the Debtors reported total assets of approximately
$2.0 billion and total liabilities of approximately $2.4 billion as of October
31, 2020. This financial information has not been audited or reviewed by the
Company's independent registered public accounting firm and may be subject to
future reconciliation or adjustments. This information should not be viewed as
indicative of future results.
Item 7.01.Regulation FD Disclosure.
On December 14, 2020, the Company issued a press release regarding the
foregoing, a copy of which is furnished herewith.
Cautionary Note Regarding the Company's Common Stock
The Company cautions that trading in the Company's securities during the
pendency of the Chapter 11 Cases is highly speculative and
poses substantial risks. On the Effective Date, the Company's common stock will
be cancelled, and holders thereof will not receive any recovery.
Item 9.01.Financial Statements and Exhibits.
(d)Exhibits
Exhibit
No. Description
2.1 Order (I) Confirming the Modified First Amended Joint Chapter 11 Plan
of Reorganization of Covia Holdings Corporation and its Debtor
Affiliates and (II) Granting Related Relief.
99.1 Press release.
104 Cover Page Interactive Data File - the cover page XBRL tags are embedded
within the Inline XBRL document.
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