Opinion
Case No. 302-00979, Jointly Administered.
July 11, 2003.
William L. Norton III, Boult Cummings Conners Berry PLC, Nashville, Tennessee, Co-Counsel for Foothill Capital Corporation, Ableco Finance LLC and Regiment Capital II, L.P.
James Peck, David M. Hillman, Schulte Roth Zabel LLP, New York, New York, Co-Counsel for Foothill Capital Corporation, Ableco Finance LLC and Regiment Capital II, L.P.
Craig V. Gabbert, Jr., Barbara D. Holmes, Harwell Howard Hyne, Gabbert Manner, P.C., Nashville, Tennessee, Co-Counsel for the Debtors.
Joel M. Walker, Philip J. Uher, Buchanan Ingersoll, Professional Corporation, Pittsburgh, PA, Co-Counsel for the Debtors.
Randal S. Mashburn, Baker Donelson Bearman Caldwell, Nashville, TN, Co-Counsel for the Creditors Committee.
Charles R. Gibbs, Keith M. Aurzada, Akin Gump Strauss Hauer Feld, L.L.P., Dallas, TX, Co-Counsel for the Creditors Committee.
AGREED ORDER FURTHER AMENDING OCTOBER 8, 2002 FINAL ORDER GRANTING AUTHORITY TO USE CASH COLLATERAL
This matter is before the Court upon the Debtors' "Second Motion Renewing Motion for Order Granting Authority to Continue to Use Cash Collateral and Request for Final Hearing," dated February 12, 2003 (the "Second Renewal Motion") and the agreement among the Debtors, the Creditors Committee and the Lenders as indicated by the signatures of counsel below.
1. Final Order. On October 8, 2002, a final order granting authority to use cash collateral (the "October 8 Order") was entered, which, inter alia, authorized the Debtors to use cash collateral for the period between December 17, 2002, which time was further extended through March 21, 2003, by agreement of the Debtors and the Lenders by subsequent agreed orders.
2. Agreement to Use Cash Collateral. On February 12, 2003, the Debtors filed the Second Renewal Motion. On February 26, 2003, the Creditors Committee filed a response to the Second Renewal Motion. On February 27, 2003, the Lenders objected to the Second Renewal Motion and served discovery requests in connection therewith on the Creditors Committee and the Debtors. The Debtors, the Committee and the Lenders compromised and agreed to the continued use of cash collateral through June 27, 2003 pursuant to a further order entered by the Court on March 18, 2003. Now, the Debtors, Committee and the Lenders have agreed, subject to Court Approval to extend the use of cash collateral on the following terms:
3. Terms. All capitalized terms not otherwise defined herein are defined as set forth in the October 8 Order.
4. Relief Appropriate. The Court finds that the relief requested is appropriate under the circumstances and hereby enters the following order further amending the October 8 Order.
IT IS HEREBY ORDERED that
A. The October 8 Order is amended to authorize the Debtor; to continue to use cash collateral to the extent that collected funds are available, consistent with and limited by the budget attached hereto as Exhibit A (the "Budget") through August 29, 2003, unless terminated earlier by virtue of a Termination Event.
B. The Debtors' current cash balance is approximately $7.9 million. According to the Budget, during the period from June 30 — August 29, 2003 (the "Budget Period"), the Debtors project that they will incur approximately $2.3 million in expenses plus additional adequate protection payments after June 27 and will have a cash balance as of August 29, 2003 equal to approximately $7.0 million minus adequate protection payments of $315,000 during the extension period.
C. During the Budget Period, the Debtors shall continue to pay adequate protection payments to the Lenders in the amount of $35,000 per week (collectively the "Payments"), subject to paragraph D below.
D. In the event that: (i) the Committee/Debtors' Plan ("Plan") is confirmed, (ii) an Effective Date (as defined in the Plan) occurs under the Plan and (iii) there is insufficient cash to satisfy obligations required to be paid under the Plan on the Effective Date or Distribution Date as those terms are defined in the Plan (collectively such terms being referred to as the "Effective Date") to:
1. pay all incurred and unpaid expenses set forth in the Budget ("Unpaid Expenses"), to the extent such expenses are legally required to be paid as of the Effective Date,
2. pay those expenses and claims listed on Exhibit B (collectively, the "Effective Date Payments") provided that such payments are legally required to be paid as of the Effective Date, and
3. fund a $250,000 working capital reserve for New Elk Horn ("Reserve Amount"),
then, the Lender Group shall contribute (from the Payments actually received by the Lender Group after March 1, 2003) the amount needed to cover the insufficiency in available cash (measured as of the Effective Date) to pay the Unpaid Expenses, the Effective Date Payments and to fund the Reserve Amount,provided however in no event shall the Lender Group be obligated to contribute an amount in excess of the Payments actually received by them after March 1, 2003.
E. The Budget shall be modified to limit the payment (but not the incurrence) of fees and expenses for professionals from March 17 — August 29, 2003 to $4.75 million.
F. Fees and expenses of professionals incurred after March 1 will be limited in the same manner as set forth in that certain Court order regarding the payment of professionals, provided the monthly payment of fees incurred after March 1 will be limited to 80% of the amount incurred and the remaining amount (20% after March 1, 2003) will not be paid until the fees are allowed by final fee applications.
G. Nothing in this Order limits (i) the amount of fees and expenses actually incurred and requested in the final fee applications or (ii) the Lenders' right to object to fee applications.
H. All terms of the October 8, 2002 Order (except as modified above) shall continue to apply.
EXHIBIT A
Pen Holdings, Inc. Weekly Cash Flow Projection Beginning June 30, 2003 Projected Projected Projected Projected Projected Projected Projected Projected P Week ending Week ending Week ending Week ending Week ending Week ending Week ending Week ending We 4-Jul-03 11-Jul-03 18-Jul-03 25-Jul-03 1-Aug-03 8-Aug-03 15-Aug-03 22-Aug-03 2 RECEIPTS 240,490 6,615 201,035 200,071 278,459 205,121 2,045 232,569 EXPENDITURES Total expenditures 188,452 377,487 645,277 191,841 180,652 78,702 198,562 560,077 Net Operating Cashflow 52,038 (370,872) (444,242) 8,230 97,807 126,419 (196,517) (560,077) Cumulative Net Operating Cashflow 52,038 (318,834) (763,077) (754,847) (657,040) (530,621) (727,138) (1,287,2 16) FINANCING/CASH COLLATERAL Ending Cash Balance 7,952,038 7,581,166 7,136,923 7,145,153 7,242,960 7,369,379 7,172,862 6,612, 784 OPERATIONS
Coal sales — — — — — — — — — — Royalties 240,490 — — 193,961 258,614 193,961 — — 232,569 1,119,595 Other — 6,615 201,035 6,110 19,845 11,160 2,045 — — 246,810 Total receipts — Payroll 42,650 — 42,650 — 42,650 — 42,650 — 42,650 213,250 Payroll taxes benefits 21,800 48,785 21,800 22,530 — — 73,085 — 22,530 210,530 Contract miners truckers — — — — — — — — — — Utilities telephone vendors 700 700 700 4,900 — 700 700 700 4,900 14,000 Other supply vendors 43,002 18,002 18,002 93,002 78,002 18,002 18,002 18,002 18,002 322,020 Coal and property taxes — — — — — — — — — — Royalty wheelage — — 4,125 1,375 — — 4,125 1,375 — 11,000 Operating lease payments — 250,000 — — — — — — — 250,000 Capital lease payments — — — — — — — — — — Office building debt payment — — — 10,034 — — — — 10,034 20,068 Adequate protection payment 35,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000 315,000 Capital expenditures — — — — — — — — — — Reclamation Bonds/Contingency for Reclaiming Land 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 225,000 Employee Retention and Severance 20,300 — — — — — — — — 20,300 Professional Fees (Restructuring) — — 498,000 — — — — 480,000 — 978,000 Beginning Loan/Cash Balance 7,900,000 7,952,038 7,581,166 7,136,923 7,145,153 7,242,960 7,369,379 7,172,862 6,612,784 7,900,000 Paydown from Receipts 240,490 6,615 201,035 200,071 278,459 205,121 2,045 — 232,569 1,366,405 Operating Expenses (188,452) (377,487) (645,277) (191,841) (180,652) (78,702) (198,562) (560,077) (158,116) (2,579,168) Coal — Tons Produced (excluding Elk Horn) 0 Coal — Tons Produced (Elk Horn) 51,628 62,614 62,614 62,614 65,091 75,000 75,000 75,000 75,000 604,560EXHIBIT B
Pen Holdings, Inc.Estimated Sources and Uses Summary Sources As of Uses As of 8/29/03 8/29/03 Total Sources of Cash $6,687 $6,253
Beginning Cash Balance $6,687 Post-petition AP convenience claims $400 Borrowings under Revolving Exit Financing Facility — Severance/Retention Bonus 3,400 Other New Debt — Professional Fees (a) 1,505 Lease claims (b) 465 Trustee Fees 50 Reclamation claims (c) 433 Note: Assumes confirmation by 8/29/03. (a) Professional Fees Description Estimated As of Other (success fees, deposits, etc.) As of Monthly 8/29/03 8/29/03 Fee Total $505 $65 $1,505 (b) Lease Claims As of 8/29/03 Description Total $465 EYCF — RAS $50 1.0 $500 $550 EYCF — MA — 4.0 (125) (125) EY Tax — 4.0 — — HHH 75 4.0 — 300 BIPC 150 4.0 (300) 300 SR — 4.0 — — Timothy K. Lowe — 4.0 (10) (10) Unsecured Committee Attorneys — Akin 75 2.0 — 150 Unsecured Committee Attorneys — Baker 75 2.0 — 150 John T Boyd 15 4.0 — 60 Vulcan/Benedetto 65 2.0 — 130 Other — — — — Bank One $438 National City 27 Note: These are the claims that have been or are anticipated to be filed and not necessarily representative of the final payment. (c) Reclamation Claims Description Claim Amt As of 8/29/03 Total $433 $433 Fosroc Inc. $14 $14 Fosroc Inc. 19 19 Power Control Products 9 9 Joy Mining Machinery 75 75 BM Repair 8 8 United Central Industrial Supply Co. 302 302 Avmac Services Inc. 6 6 Other — — Note: These are the claims that have been or are anticipated to be filed and not necessarily representative of the final payment.