VPX’s $454.77 million DIP loan draws another objection from Monster

By Sarah Lizee

Olympia, Wash., Nov. 29 – A motion from Vital Pharmaceuticals, Inc., which does business as VPX Sports, seeking final approval of $454.77 million in debtor-in-possession financing drew an objection Monday from the company’s largest creditor, Monster Energy Co., according to documents filed with the U.S. Bankruptcy Court for the Southern District of Florida.

Of the total amount requested, $100 million is new money and the rest is a roll-up of prepetition debt, as previously reported. Monster had also objected to the motion for interim access to the DIP loan.

Monster said Monday that it is concerned the Chapter 11 cases are “set up for failure,” and that the DIP loan’s short maturity and case milestones, coupled with the continuing dominant role of the debtors’ founder, chief executive officer and sole shareholder, Jack Owoc, may be a “road to a very bad outcome.”

Under the case milestones under the DIP loan, the debtors have until Jan. 23 to find an investor to assist in confirming a reorganization plan, which must provide that all of the DIP lenders’ and prepetition lenders’ debt be taken out in full, accompanied by executed financing commitment letters.

Failing that condition, the debtors will be forced to sell all of their assets.

“The debtors entered bankruptcy with no defined exit strategy, but Mr. Owoc has spoken boldly about reorganizing the debtors, presumably in a manner that will maintain his control,” Monster said in its objection.

“Given the mountain of claims against the debtors totaling over a billion dollars, that does not seem a realistic possibility.”

Monster also took issue with the fact that less than 22% of the facility is new money, and of that amount, nearly 60% will be round-tripped back to the lenders in the form of upfront fees, commitment fees, adequate protection and interest payments, or escrowed to pay for professional fees.

The Pembroke Pines, Fla.-based the maker of Bang energy drinks and other products filed Chapter 11 bankruptcy on Oct. 10 under case number 22-17842.

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