NBG Home lender Black Diamond Capital offers alternate DIP loan, stalking horse deal

By Sarah Lizee

Olympia, Wash., Feb. 27 – A lender of Nielsen & Bainbridge, LLC, which does business as NBG Home, is proposing alternative debtor-in-possession financing and a competing stalking horse bid, according to documents filed Friday with the U.S. Bankruptcy Court for the Southern District of Texas.

First-lien term loan lender Black Diamond Capital Management, LLC said it’s ready to provide the financing and bid on better terms than what the company is seeking court approval of.

As previously reported, the company has entered into a restructuring support agreement with KKR Credit Advisors (US) LLC and Silver Point Capital, LP, which hold most of the company’s debt.

KKR and Silver Point have offered to provide a $60 million DIP facility, consisting of $30 million in new money and a $30 million rollup of prepetition loans.

Black Diamond said it was never solicited to provide DIP financing, and its request to participate in the existing DIP facility was rejected by KKR and Silver Point.

“For effectively $30 million of new money the initial plan sponsors are (a) purchasing 100% of the equity of the reorganized company at a deep discount to the detriment of all other stakeholders, (b) imposing an unreasonable dollar-for dollar roll-up of their first-lien term loans under the DIP facility, shifting significant value away from the other first-lien lenders, and (c) gaining control over the cases by tying the existing DIP facility to a plan that benefits the initial plan sponsors, while providing no recovery to the other first-lien lenders,” Black Diamond said in an objection filed Friday.

Black Diamond said it has provided the debtors with a term sheet outlining its proposal.

Black Diamond deal terms

The alternative DIP financing would provide the debtors with $35.7 million of new money and a reduced roll-up of $17.85 million at a 0.5 to 1 ratio of roll-up to new money.

Black Diamond said its offer is significantly less expensive than the existing DIP facility, with interest rates and fees cut in half.

Its stalking horse bid offers a higher purchase price, equal to the sum of the $57.7 million outstanding debt under an asset-based lending credit facility and the Black Diamond DIP, plus either (i) $5 million or (ii) warrants to purchase 49.9% of the equity of the buyer.

This would leave a minimum recovery of $5 million for first-lien lenders while also allowing them to share in about 50% of the upside for no additional capital.

Black Diamond said it is willing to work with the debtors to implement its bid under the current plan structure.

“Together, the Black Diamond DIP and Black Diamond bid provide a greater economic benefit to the debtors and their estates and maximizes value for the benefit of all stakeholders, including by providing a recovery to the first-lien lenders as a class,” Black Diamond said.

KKR, Silver Point terms

The KKR and Silver Point DIP facility matures in two months and bears interest at SOFR plus 1,000 basis points, payable in kind and subject to a SOFR floor of 1%. Default interest would be an additional 2% above the interest rate.

There is a PIK commitment premium of 5% on the new money.

KKR and Silver Point’s stalking horse bid is a credit bid against the DIP and amounts outstanding under the ABL facility.

Under the proposed bid procedures, the bid deadline is 6 p.m. ET on March 19, an auction will be held on March 21, and a sale hearing will be held on March 24.

A final hearing on the DIP financing is scheduled for March 1.

The home decor company is based in Austin, Tex. The company filed bankruptcy on Feb. 8 under Chapter 11 case number 23-90071.

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