Indianapolis Downs said that “multiple parties” submitted bids to purchase the company’s assets in connection with its proposed dual-track reorganization plan, but that the company did not accept any of them because they were either too low or contained unacceptable conditions, court documents show.
Although the company had previously committed to deciding by now which reorganization path to pursue – an asset sale or a standalone plan – in motions filed on June 7 with the bankruptcy court in Wilmington, Del., the company said that it “believes sufficient interest exists [in its assets] to warrant the continued marketing of the assets with the intention to pursue the sale transaction if the debtors receives acceptable bids.”
As a result, the company has decided, on the one hand, to move ahead with its standalone reorganization plan, but at the same time is seeking to give potential buyers interested in acquiring the company’s assets another bite at the apple by continuing its sales solicitation process and retaining the ability to hold an auction if the company “receives interest in the assets which may result in the necessary level of consideration.”
According to the company’s two motions – one seeking approval of bidding procedures and the other a motion to approve the disclosure statement — both tracks are scheduled to culminate by Aug. 22, at which time the company is seeking to schedule a hearing to either approve a proposed sale or confirm a proposed standalone reorganization plan.
As reported, a hearing to approve the adequacy of the company’s disclosure statement has been scheduled for June 21. If approved, creditors will have until July 31 to cast a ballot on whether to accept the plan.
As also reported, under the company’s dual-track reorganization, if there is a sale transaction the proposed plan is fairly straightforward, calling for holders of the company’s second-lien notes to receive a pro rata share of the net sales proceeds, less a required “third-lien recovery” payment, and for holders of third-lien notes claims to receive the designated “recovery” payment plus any proceeds remaining after second-lien notes are paid off.
Under the standalone track, second-lien note claims would receive a new second-lien term loan or, alternatively, proceeds from an alternative second-lien financing, plus a share of a new unsecured PIK term loan and new series A warrants. Third-lien notes claims would receive a share of the new unsecured PIK term loan, plus a share of new series A warrants and new series B warrants.
Unsecured creditors and equity holders would not receive any recovery under the plan, under either a sale or standalone-reorganization scenario.
Beyond those broad terms, however, the plan and disclosure statement, filed April 25, were short on details. In a motion filed at the time with the bankruptcy court seeking to keep the terms of the restructuring under wraps, the company explained, “The restructuring term sheet contains information regarding release prices and restructuring terms that, if public, could materially impact the sale process.”
The company said that it would “make public the terms of the restructuring term sheet after the sale process is concluded, but prior to the confirmation hearing,” but argued that “given the parallel plan and sale process, the debtors believe that making public the restructuring term sheet could adversely impact any potential sale transaction.”
Similarly, the company also said it would provide details of its new second-lien term loan, PIK term loan, and the series A and B warrants to be distributed under the standalone-reorganization alternative, as well as the terms of a new first-lien term loan called for under the plan in that scenario, in a plan supplement that it expects to file by July 30.
The bidding procedures
In the meantime, a hearing to approve proposed bidding procedures is also set for June 21. Under the proposed procedures, the bidding deadline would be July 20, and if the company opts to move ahead after receiving the bids, an auction would occur on July 27, with a sale hearing to be scheduled no later than Aug. 22.
The company said the bidding procedures would “promote active bidding from seriously interested parties and will dispel any doubt as to the highest or otherwise best offer available for the assets.”
As reported, the company said in its previously filed disclosure statement that its marketing process had begun on March 26, that the company had contacted 32 parties, and had entered into non-disclosure agreements with 12.
In its June 7 motion seeking approval of the bidding procedures, the company updated the process, saying it received six initial letters of interest with first round bids, out of which the company selected four parties “to proceed with management presentations and additional diligence to further encourage bids.”
The company said that “after the management presentations, multiple parties submitted second round bids, and an additional party submitted a letter of interest.”
The company said that the bids were either not high enough or contained unacceptable conditions, but did not provide any details. – Alan Zimmerman
