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Paper Source selects Elliott affiliate as winning bidder for assets
By Sarah Lizee
Olympia, Wash., May 11 – Paper Source, Inc. named Papershop HoldCo Inc., an affiliate of Elliott Investment Management LP, successful bidder for substantially all of the company’s assets, according to a notice filed Monday with the U.S. Bankruptcy Court for the Eastern District of Virginia.
The bid includes a purchase price of over $91.5 million, consisting of at least $40 million in cash, which would be used to repay the debtor-in-possession facility and a portion of the pre-petition first-lien obligations; about $51.6 million in the form of new first-lien term loans to the purchaser; and the assumption of some liabilities, payment of cure amounts, and funding of various other costs.
The bid also includes preservation of the settlement terms reached with the official committee of unsecured creditors, which includes ensuring that the estates retain funding to satisfy accrued administrative expenses that are unpaid as of the sale closing date, up to $2.5 million to satisfy section 503(b)(9) claims, and $1 million for the wind down of the debtors’ estates.
Midcap Funding Investment XI LLC, which served as stalking horse bidder for the assets, was named backup bidder.
Under the stalking horse agreement, MidCap agreed to credit bid the full amount of obligations under the DIP facility and the full amount under the pre-petition first-lien facility, which was about $72.8 million as of the petition date.
A sale hearing will be held on May 13.
Chicago-based Paper Source designs, manufactures and markets paper products. The company filed bankruptcy on March 2 under Chapter 11 case number 21-30660.
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