SiO2 Medical disclosure statement hearing scheduled for May 16

By Sarah Lizee

Olympia, Wash., April 6 – SiO2 Medical Products, Inc.’s hearing on approval of the disclosure statement for its Chapter 11 plan has been scheduled for May 16, according to a notice filed Thursday with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the debtors and some affiliates and funds of Oaktree Capital Management, LP, which holds all of the company’s first-lien debt, have developed a comprehensive restructuring.

The restructuring has three main components.

First, Oaktree has agreed to provide a $120 million superpriority debtor-in-possession facility, $60 million of which is new money and $60 million is a rollup of prepetition term loans.

The DIP facility bears interest at 14% per annum, in cash in the case of new money loans, and in kind in the case of rollup loans. It matures in 120 days, subject to earlier termination when certain events occur.

Second, Oaktree has committed to serve as the initial plan sponsor and equitize its allowed DIP claims and allowed first-lien term loan claims into 100% ownership of reorganized SiO2 through a Chapter 11 plan, subject to the company meeting some milestones – including holding a confirmation hearing no later than 78 days after the petition date.

Third, Oaktree agreed to subject its recovery under the plan to an auction process under court-approved bid procedures, so that any party may submit a bid to acquire 100% of the new common stock of reorganized SiO2 through the plan. Oaktree has agreed that it will not participate in the auction process.

The floor for bids is about $349.1 million, which is the anticipated amount of Oaktree’s allowed DIP and first-lien term loan claims.

Oaktree has indicated that it may consent to a recovery different than what is currently contemplated under the plan, and the debtors are encouraging all interested parties to engage in the process, even if they may have a lower preliminary bid.

Under the proposed plan, second-lien term loan lenders will receive their pro rata share of additional value, if any.

General unsecured claims will receive their pro rata share of additional value, if any, after payment of second-lien term loan claims in full.

The Auburn, Ala.-based company creates and manufactures engineered primary packaging container components for the pharmaceutical and biotechnology industry. The company filed bankruptcy on March 29 under Chapter 11 case number 23-10366.

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