Sungevity Inc., a technology-driven solutions provider, commenced voluntary Chapter 11 proceedings in U.S. Bankruptcy Court for the District of Delaware, in order to facilitate a financial and corporate restructuring to strengthen its balance sheet and recapitalize the company. During the Chapter 11 proceedings, it is expected that the company's operations will continue uninterrupted.
In a order dated March 15, U.S. Bankruptcy Judge Kevin Gross approved an interim order for the company to tap a portion of its $20 million post-petition financing package. LSHC Solar Holdings, LLC -- an investment vehicle created for this transaction by Northern Pacific Group -- is listed as DIP lender. Wilmington Trust, N.A. served as the administrative agent.
According to the order:
"The amount available on an interim basis is $10 million with a $5 million Initial Term Loan to be drawn on the Closing Date. The Delayed Draw Term Loans are $15 million, of which $ 10 million will be available after the entry of the Final Order, subject to the terms of the DIP Loan Agreement."
The financing will be used to provide capital for the company's operations and to fund the auction and sale process.
In connection with the restructuring process, and under Section 363 of the Bankruptcy Code, the company has entered into an asset purchase agreement with a group of investors, led by Northern Pacific Group. Under the terms of the agreement, Northern Pacific Group will acquire substantially all of the company's assets, including the equity interests in the European operations. While Sungevity's European operations are part of the transaction, their day-to-day operations will not be impacted as a result of the Chapter 11 proceedings in the U.S. The purchase agreement sets the floor, or minimum acceptable bid, for an auction under the supervision of the court, which is designed to achieve the highest available offer. Sungevity expects to complete its financial restructuring and sale through an expedited process. A final sale approval hearing and closing of the sale is expected to take place by the end of April.
William Nettles, Sungevity's newly appointed Chief Administration Officer, said "The agreement we have reached with the team led by Northern Pacific Group and its co-investors is a testament to their confidence in the future of Sungevity's business. The actions we have announced today will allow Sungevity to emerge as a stronger and more competitive company. With its market-leading software platform and its high quality employees who provide unwavering commitment to customers and exceptional service, Sungevity intends to be at the forefront of the industry as solar continues on its growth trajectory in the years ahead."
"The Board and its advisors reviewed a range of options and ultimately decided that a court-supervised sale represents the best path forward for our customers, suppliers, employees and business partners," said Andrew Birch, Sungevity's Chief Executive Officer. "During the sale process, our team will remain committed to serving our customers and delivering our industry leading service. Our ample on-hand inventory and uninterrupted installment contracts position us well to continue fulfilling our customers' orders. Sungevity has long been a pioneer in the field of residential solar installation, and we believe that this represents a step forward for the company."
The company has filed a number of customary pleadings with the court, seeking authorization to pay certain prepetition obligations, support its business operations, and transition them through the sale process. These include the payment of employee wages, taxes, insurance, critical vendors, and utility providers, as well as the continuation of the company's customer support programs. This will ensure that the company can continue to operate and serve its customers without interruption.