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DALLAS–(BUSINESS WIRE)–The undersigned institutions, who comprise the ad hoc committee of lenders (the “Ad Hoc Committee”) under EB Holdings II, Inc.’s (“EBH”) PIK Loan Agreement, dated as of March 23, 2007 (the “PIK Loan”), issued the following statement that they have reached an agreement to effectuate the comprehensive and consensual restructuring of approximately €2.25 billion of EBH’s outstanding PIK Loan obligations (the “Restructuring”).

“Today the Ad Hoc Committee is pleased to begin a new collaboration with Howard M. Meyers, President of EBH and Chairman/Managing Director of Eco-Bat Technologies, Ltd. (“Eco-Bat”). After several months of negotiations, the Ad Hoc Committee, along with other institutions who collectively hold more than 95% in aggregate amount of EBH’s outstanding obligations under its PIK Loan, have reached an agreement with Mr. Meyers, EBH and Eco-Bat to resolve our differences. To that end, a stipulation has been filed to dismiss all pending litigation among the Ad Hoc Committee, Mr. Meyers, EBH, and Eco-Bat, with prejudice, as the parties collectively turn the page on a new chapter in our relationship. As all allegations in the litigations have been dismissed, by moving forward in this new collaboration, the parties wish to repair the reputational damage that may have been caused by the litigation to all those affected, including the members of the Ad Hoc Committee and Mr. Meyers.

The Ad Hoc Committee is fortunate to be working with Mr. Meyers, given his long history and reputation as a global leader in the metals industry, and his success in building the Eco-Bat business. Mr. Meyers is not only an excellent steward of shareholder value but also a prominent philanthropist who has established a long record of charitable giving and community service. His generosity to education and particularly to young people, along with his service on numerous boards, including as a New York University Trustee, have been exemplary.

Having found common ground, we look forward to working with Eco-Bat’s strong management team, to maximize the company’s potential for all of its stakeholders, and to take the next step into Eco-Bat’s future.”

Members of the Ad Hoc Committee

GoldenTree Asset Management LP

Fortress Investment Group LLC

Alcentra Limited

Sound Point Capital Management, LP

H.I.G. Bayside Capital

Värde Partners

Additional information regarding the Restructuring, including a summary thereof, follows below.

EB Holdings II, Inc. (“EBH”), the majority shareholder of Eco-Bat Technologies Limited (“Eco-Bat”), globally the largest producer and recycler of lead, is pleased to announce that it has completed the first of two sets of transactions that will ultimately effectuate the restructuring (the “Restructuring”) of approximately €2.25 billion of EBH’s outstanding debt obligations under its PIK Loan Agreement, dated as of March 23, 2007 (the “PIK Loan”).

The Restructuring, which is summarized below, is being implemented pursuant to a transaction agreement, dated April 15, 2019 (the “Transaction Agreement”) among (i) EBH and certain of its affiliates, (ii) Howard M. Meyers (the “Sponsor”), (iii) Quexco Incorporated (“Quexco”), (iv) RSR Corporation and certain of its affiliates (“RSR”), and (v) lenders holding approximately 95.5% in aggregate amount of the outstanding claims under the PIK Loan (collectively, the “Consenting PIK Lenders”), including the ad hoc committee of such lenders comprised of GoldenTree Asset Management LP, Fortress Investment Group LLC, Alcentra Limited, Sound Point Capital Management, LP, H.I.G. Bayside Capital, and Värde Partners (collectively, the “Ad Hoc Committee”).

The Restructuring also has the support of each of Eco-Bat’s minority shareholders, including LEG Q LLC, MP PB L.P., and Trinity Investments (collectively, the “Eco-Bat Minority Shareholders”), who collectively own approximately 13% of Eco-Bat’s outstanding ordinary shares. The Eco-Bat Minority Shareholders have agreed to support and participate in the Restructuring pursuant to a Contribution and Support Agreement, dated as of July 30, 2019 (the “CSA”).

When the Restructuring is completed, EBH will be reorganized pursuant to a prepackaged chapter 11 plan and fully relieved of its outstanding obligations under the PIK Loan (which will be cancelled and extinguished) and the lenders under the PIK Loan (the “PIK Lenders”) will become equity owners, along with the Sponsor, Quexco, RSR, and the Eco-Bat Minority Shareholders, of EBT NewCo, LLC (“EBT NewCo”), a new company formed in connection with the Restructuring that will be the sole owner of the Eco-Bat business.

Importantly, the Restructuring is not intended or anticipated to have any impact on the day-to-day operations of any of EBH’s subsidiaries, including Eco-Bat. Neither Eco-Bat nor any of its subsidiaries will be affected by EBH’s chapter 11 plan, which will effectuate the Restructuring.

Restructuring Summary

The Restructuring of EBH is being implemented in two steps.

Step one, which closed on July 30, 2019, included the following transactions:

  • Each of Quexco and RSR contributed to EBT NewCo all of the outstanding common shares of Metals HoldCo, Inc., a company holding assets that are necessary to operate the Eco-Bat business, including environmental permits, intellectual property, and management services agreements, in exchange for certain Class A Units of EBT NewCo (“Class A Units”);
  • The Sponsor and certain of his affiliates contributed all of the outstanding common shares of EBH to EBT NewCo in exchange for certain Class A Units;
  • Mutual releases among the respective parties to the Transaction Agreement and the CSA became effective; and
  • Stipulations were filed to dismiss, with prejudice, all pending litigation among EBH, RSR, the Sponsor, and the Ad Hoc Committee, including various actions pending in federal and state courts in Nevada.

With the completion of step one, EBH will soon cause the distribution of a disclosure statement (the “Disclosure Statement”) and ballots to solicit votes from all PIK Lenders on a prepackaged chapter 11 plan (the “Plan”). The Plan will propose, among other things, to effectuate the exchange of 100% of the outstanding PIK Loan claims for common shares of reorganized EBH, which will immediately and automatically be contributed to EBT NewCo in exchange for Class B Units of EBT NewCo (“Class B Units” and such exchange, the “PIK Exchange”). Pursuant to the Transaction Agreement, all Consenting PIK Lenders – who collectively hold approximately 95.5% in aggregate amount of the outstanding claims under the PIK Loan – have agreed to support the Restructuring and to vote in favor of the Plan.

At the conclusion of the Plan solicitation period, EBH will commence a voluntary case under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Nevada (the “Bankruptcy Court”), and seek the entry of an order confirming the Plan.

Step two of the Restructuring, which is expected to occur on or about the effective date of the Plan (to be within 30 days of the entry of the confirmation order by the Bankruptcy Court, and no later than July 2020), will include the following transactions:

  • The PIK Exchange will occur;
  • Pursuant to the CSA, the Eco-Bat Minority Shareholders will exchange 100% of their interests in Eco-Bat for common shares of reorganized EBH, which will immediately and automatically be contributed to EBT NewCo in exchange for Class C Units of EBT NewCo (“Class C Units”); and
  • EBT NewCo’s governing documents will be amended to, among other things, provide for the issuance of the Class B Units and the Class C Units and set out the respective rights of each class of EBT NewCo units.

At the conclusion of step two of the Restructuring, the holders of Class B Units (i.e., the former PIK Lenders) will have the right to assume operational control of EBT NewCo through their control of the EBT NewCo board of directors. The Sponsor, Quexco, RSR, and the Eco-Bat Minority Shareholders will hold certain rights in EBT NewCo through their ownership of Class A Units and Class C Units, as applicable. Among those rights is the right to appoint a limited number of directors to the EBT NewCo board of directors.

The Sponsor, Quexco, RSR, and the former PIK Lenders will be entitled to receive approximately 87% of any distributions by EBT NewCo to all of its members through their ownership of Class A Units and Class B Units, as applicable. The remaining approximately 13% of any such distributions by EBT NewCo will be made to the former Eco-Bat Minority Shareholders, on a pro rata basis, through their ownership of Class C Units.

Distributions to the holders of Class A Units (i.e., the Sponsor, Quexco, and RSR) and Class B Units (i.e., the former PIK Lenders) will be allocated in accordance with the following waterfall:

  • Holders of Class A Units and Class B units will be entitled to receive, on a pro rata basis, (i) 8.5% of any distributions by EBT NewCo to the holders of Class A Units and the remainder to holders of Class B Units until such distributions reach €800,000,000 in the aggregate; (ii) 12.5% of any distributions above €800,000,000 by EBT NewCo to the holders of Class A Units and the remainder to the holders of the Class B Units until all prior distributions to the holders of Class A Units and Class B Units reach €1,200,000,000 in the aggregate; and (iii) thereafter, 20% of any distributions above €1,200,000,000 by EBT NewCo to the holders of Class A Units and the remainder to the holders of Class B Units.

Distributions by EBT NewCo to its members will be subject to the reimbursement of (i) Restructuring fees and expenses, and (ii) solely with respect to holders of Class B Units, certain historical professional fees and expenses, incurred by the Ad Hoc Committee to enforce the PIK Loan.

The Transaction Agreement also provides that the Consenting PIK Lenders have the option to obtain control of EBT NewCo prior to the Plan’s effective date by causing the transfer of certain of their PIK Loan claims to EBT NewCo in exchange for the Class B Units. The parties do not anticipate that the Consenting PIK Lenders will exercise this option; therefore, it is expected that the Sponsor and his affiliates will remain in operating control of EBT NewCo and Eco-Bat until the effective date of the Plan. Further, as part of the Restructuring, Sponsor has agreed, as the Consenting PIK Lenders may request, to remain in operating control for a period not to exceed the second anniversary of the effective date.

Conditions Precedent

Consummation of the Restructuring is subject to a number of conditions, including the solicitation and acceptance of votes on the Plan by holders of claims and interests in EBH, confirmation of the Plan by the Bankruptcy Court, as well as certain approvals and the absence of certain adverse legal and other developments. The failure of any condition may have an adverse effect on the parties’ ability and/or willingness to consummate the Restructuring. Accordingly, no assurance can be given that the transactions described in this press release will be consummated.

Additional Terms

This press release is a summary of the Restructuring only. It highlights selected information contained in the various definitive documents required to effectuate the Restructuring, including, without limitation, the Transaction Agreement, the CSA, and the Plan, and is fully qualified by reference to such definitive documents.

THIS PRESS RELEASE IS NOT, AND SHALL NOT BE DEEMED, A SOLICITATION FOR CONSENTS TO ANY CHAPTER 11 PLAN OF REORGANIZATION PURSUANT TO SECTIONS 1125 AND 1126 OF THE BANKRUPTCY CODE OR A SOLICITATION TO TENDER OR EXCHANGE ANY PIK LOAN CLAIMS. VOTES ON THE CHAPTER 11 PLAN DESCRIBED IN THIS PRESS RELEASE SHALL NOT BE SOLICITED UNTIL HOLDERS OF CLAIMS AND INTERESTS IN EBH HAVE RECEIVED, AS APPLICABLE, THE DISCLOSURE STATEMENT AND THE RELATED BALLOT FOR THE CHAPTER 11 PLAN. HOLDERS OF CLAIMS AND INTERESTS IN EBH ARE URGED TO READ THE DISCLOSURE STATEMENT AND ALL MATERIALS DISTRIBUTED THEREWITH IN THEIR ENTIRETY.

Holders of claims and interests in EBH must make their own decision with regard to participating in the Restructuring, and are urged to consult with their own legal and financial advisors as to the appropriateness of participating in the Restructuring based on their individual circumstances.

This press release includes forward-looking statements within the meaning of the securities laws of certain applicable jurisdictions. By their nature, the forward-looking events described in this press release may not be accurate or occur at all. Accordingly, you should not place undue reliance on these forward-looking statements, which speak only as of the date on which the statements were made.

Advisors

EBH’s legal advisor is Garman Turner Gordon LLP.

Howard M. Meyers’ legal advisors are K&L Gates LLP, Brewer, Attorneys & Counselors and Kasowitz Benson Torres LLP and his financial advisor is Perella Weinberg Partners L.P.

Quexco’s and RSR’s legal advisors are K&L Gates LLP, Brewer, Attorneys & Counselors and Kasowitz Benson Torres LLP and their financial advisor is Perella Weinberg Partners L.P.

The Ad Hoc Committee’s legal advisor is Paul, Weiss, Rifkind, Wharton & Garrison LLP and its financial advisor is Houlihan Lokey Capital Inc.

GLAS USA LLC is the administrative agent under the PIK Loan and its legal advisor is Wilmer Cutler Pickering Hale & Dorr LLP.

The Eco-Bat Minority Shareholders’ legal advisors are Pillsbury Winthrop Shaw Pittman LLP and Friedman Kaplan Seiler & Adelman LLP.

Contacts

Teresa Zaidle

[email protected]