Capstone Green Energy receives confirmation of Chapter 11 plan

By Sarah Lizee

Olympia, Wash., Nov. 14 – Capstone Green Energy Corp. received confirmation of its pre-packaged Chapter 11 plan of reorganization, according to an order filed Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the company entered into a transaction support agreement with Goldman Sachs Specialty Lending Group, LP as collateral agent under a note purchase agreement dated as of Oct. 1, 2020 and Broad Street Credit Holdings LLC, an affiliate of the collateral agent, in its capacity as purchaser under the agreement.

Capstone also secured a commitment from Goldman Sachs for $30 million in debtor-in-possession financing in the form of super-priority senior secured notes. Of that amount, $12 million is new money, and $18 million is a rollup of prepetition notes. The company secured final approval of the DIP facility on Tuesday.

The DIP financing will be converted into exit financing at emergence along with a new $5 million revolver, also from Goldman Sachs.

The joint pre-packaged Chapter 11 plan of reorganization contemplates Capstone becoming a private company that will continue to own assets consisting of right, title and interest in and to trademarks of Capstone and all assets relating to distributor support services.

Capstone Turbine International, Inc., a subsidiary of the company, will be renamed Capstone Green Energy Corp., which expects to be the successor to Capstone for purposes of Securities and Exchange Commission reporting and will be the successor to Capstone with respect to some of its business, assets and liabilities through its ownership interest in a new operating subsidiary.

Under the plan, all holders of allowed general unsecured claims will receive payment in full in cash in the ordinary course or such other treatment so as to render such claim unimpaired.

Existing stockholders of Capstone Green Energy will receive their pro rata share of 100% of the equity in the reorganized public company, subject to dilution from any stock that may be issued as equity incentive compensation to employees.

All existing warrants and restricted stock units will be canceled and will not receive any distribution.

Other than the retained assets described above, the existing operating assets and liabilities of Capstone Green Energy will be transferred to a new subsidiary, with some limited exceptions, the common shares of which will be 100% held by the reorganized public company, and 100% of its non-dilutable preferred shares will be held by the reorganized private company.

On a fully diluted basis, the reorganized public company will own 62.5% of the new subsidiary, and the reorganized private company will own 37.5%.

Los Angeles-based Capstone Green Energy provides customized microgrid solutions and on-site energy technology systems. The company filed bankruptcy on Sept. 28 under Chapter 11 case number 23-11634.

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