VPX Sports files bankruptcy, lines up $100 million new money DIP loan

By Sarah Lizee

Olympia, Wash., Oct. 11 – Vital Pharmaceuticals, Inc., which does business as VPX Sports, and some of its domestic subsidiaries and affiliates filed Chapter 11 bankruptcy on Monday in the U.S. Bankruptcy Court for the Southern District of Florida, according to a press release.

VPX Sports, the maker of Bang energy drinks and other products, said it intends to “reclaim the formidable market share that dwindled while Pepsi was the national distributor of Bang energy drink products.”

“Immediately prior to VPX/Bang Energy switching to Pepsi in early 2020, Bang’s share of the energy drink market was roughly 9.7%. Under Pepsi’s distribution, roughly 3.4% of that market share was lost,” the company said.

“At $200 million per share point, that equates to $680 million in today’s energy drink market.”

The company said its newly orchestrated and soon-to-launch direct store distribution network currently covers nearly 95% of the entire U.S. market.

VPX called the filing a “restorative action” to help it recover from recent challenges, including multiple lawsuits that impacted the company’s short-term outlook and the cost impact of reconstituting its national distribution network that resulted in a summer revenue gap.

DIP financing

The company has lined up $100 million of additional new money debtor-in-possession financing from Truist Bank as administrative agent and its syndicate lenders to help ensure operations continue uninterrupted during the restructuring process.

The facility also includes a $354.77 million roll-up of debt under a prepetition credit agreement.

The DIP facility will mature in seven months and bear interest at one-month SOFR plus 850 basis points. There is a 2.5% upfront fee on new money only.

Under the terms of the financing, the company has three and a half months to secure commitments to refinance its existing debt before being required to start a sale process for the company and designate a stalking horse bidder.

Other details

In its petition, the company listed $500 million to $1 billion in assets and $500 million to $1 billion in liabilities.

Its largest unsecured creditors are Monster Energy Co., based in Los Angeles, with a $292.94 million litigation claim, Orange Bang, Inc., based in Irvine, Calif., with a $214.76 million litigation claim, Pepsico, based in East Hanover, N.J., with a $115 million settlement agreement claim, Doehler USA, Inc., based in Cartersville, Ga., with a $22 million settlement agreement claim, Stellar Group, Inc., based in Jacksonville, Fla., with an $18.88 million trade vendor claim, American Bottling Co., based in Wilmington, Del., with a $17.68 million litigation claim, and Dairy Farmers of America Inc., based in Kansas City, Mo., with a $14 million litigation claim.

The company is represented by Latham & Watkins LLP and Berger Singerman LLP as counsel. Huron Consulting Group serves as financial adviser.

The Pembroke Pines, Fla.-based consumer product maker filed Chapter 11 bankruptcy under case number 22-17842.

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