ConvergeOne gets interim access to DIP package; plan hearing set

By Sarah Lizee

Olympia, Wash., April 5 – ConvergeOne Holdings, Inc. received interim approval of two debtor-in-possession facilities, according to an order filed Thursday with the U.S. Bankruptcy Court for the Southern District of Texas.

Also on Thursday, the court set a combined hearing on confirmation of the company’s pre-packaged Chapter 11 plan and final approval of the disclosure statement for May 17.

As a reminder, ConvergeOne has a restructuring support agreement that aims to equitize or cancel about $1.6 billion of debt. Creditors holding about 81% of first-lien debt and 81% of second-lien term loan debt are party to the RSA.

The debtors have also secured commitments for two DIP facilities, and the consensual use of cash collateral, which will permit them to continue accessing their prepetition asset-based lending revolving credit facility with maximum availability of $250 million and draw on a $215 million new money multi-draw term loan facility during the Chapter 11 process.

The company secured interim access to the entire $250 million rollup of ABL debt and $145 million of the new-money term loans.

For the DIP ABL rollup, Wells Fargo Commercial Distribution Finance, LLC, UBS AG, Stamford Branch and Deutsche Bank AG New York Branch are the lenders. Wells Fargo is the DIP agent.

For the DIP new-money term loans, members of the first-lien group and affiliates of PVKG Investment Holdings Inc. are the lenders. Wilmington Savings Fund Society, FSB is the DIP agent.

Both DIP facilities are scheduled to mature in six months.

The DIP ABL rollup bears interest at SOFR (subject to a 0% floor) plus 375 basis points. There is a 0.5% non-use fee.

The DIP new-money term loans bear interest at SOFR plus 800 bps (subject to a floor of 4%). There is a 7% commitment premium and a 3% exit premium, both payable in kind.

The debtors are also negotiating the terms of an exit revolver to fund post-Chapter 11 operations and obligations. The exit facility will be provided either by the debtors’ existing ABL revolving lenders or a third-party financing provider.

ConvergeOne is a Bloomington, Minn.-based provider of managed cloud, cyber security, enterprises networking, data center, application and software development, security infrastructure, and hosted collaboration solutions. The Chapter 11 case number is 24-90194.

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