Law360 (July 23, 2020, 8:30 PM EDT) -- A Delaware judge on Thursday gave Global Eagle Entertainment Inc. the go-ahead to access $30 million of its Chapter 11 post-petition financing package as the company seeks a buyer after being pushed into bankruptcy by the impact of the COVID-19 pandemic.
During a hearing held virtually, U.S. Bankruptcy Judge John T. Dorsey gave his nod to interim debtor-in-possession financing for the California-based, on-the-road entertainment business, clearing the way for it to immediately access $30 million of an $80 million DIP facility administered by Citibank NA. Approval of the remaining DIP funds will be considered at a future hearing.
"The DIP financing is really critical" and will send a message to customers, vendors, employees and others that the Chapter 11 "is on the right track," Global Eagle attorney Ted A. Dillman of Latham & Watkins LLP told the judge.
Global Eagle and multiple affiliates hit Chapter 11 Wednesday, pointing to the COVID-19 pandemic's flattening of the world's travel industry as one of the reasons for its trip into bankruptcy. The company provides direct entertainment services to the airline, cruise and travel industries, as well as internet services across the same sectors.
Dillman said the pandemic's impact on the travel industry caused a substantial decline in Global Eagle's revenue. In an initial Chapter 11 petition, the debtors reported $630.5 million in assets against $1.086 billion in liabilities.
Included in its debt is first-lien debt administered by Citibank that includes a senior secured term loan with a $503 million balance, maturing in January 2023, and an $81 million balance in a senior secured revolving credit agreement that matures in January 2022.
Also, the debtors owe roughly $189 million of junior secured debt administered by Cortland Capital Market Services LLC and unsecured debt that includes $82.5 million in convertible notes administered by U.S. Bank NA and roughly $24 million in trade debt.
Global Eagle entered Chapter 11 with a restructuring support agreement in place with the majority first-lien lenders to slash $475 million from its debt, according to a company statement. Also in hand is a stalking horse bid from a group of first-lien lenders to use debt owed to purchase Global Eagle's assets, according to court filings. The offer is valued at $675 million, the company said.
In addition to DIP financing, the participating first-lien lenders are set to fund a $125 million "new money" credit agreement for the reorganized company if they are deemed the successful bidder, filings said.
The stalking horse bid group is led by lenders managed by Apollo Global Management, Eaton Vance Management, Arbour Lane Capital Management, Sound Point Capital Management, Mudrick Capital Management and BlackRock Financial Management, the company said.
Global Eagle is represented by Michael R. Nestor, Kara Hammond Coyle and Betsy L. Hammond of Young Conaway Stargatt & Taylor LLP and George A. Davis, Madeleine C. Parish, Ted A. Dillman, Helena G. Tseregounis and Nicholas J. Messana of Latham & Watkins LLP.
The case is In re Global Eagle Entertainment Inc., case number 1:20-bk-11835, in the U.S. Bankruptcy Court for the District of Delaware.
--Additional reporting by Jeff Montgomery and Rick Archer. Editing by Abbie Sarfo.
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