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November 30, 2007 |
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SEA CONTAINERS: Court Approves Payment of Diligence Fees The Hon. Kevin Carey of the U.S. Bankruptcy Court for the District of Delaware authorized Sea Containers Ltd. and its debtor-affiliates to pay the due diligence fees or expenses of potential exit lenders up to a maximum amount of US$500,000 per lender and US$1,500,000 in the aggregate. The amount is for reasonable expenses incurred in connection with financial and legal due diligence and development of exit financing proposals that relate to taking out the existing DIP loan upon the Debtors' emergence from Chapter 11. The Order is entered without prejudice to the Debtors' right to seek authority to pay additional expenses or fees related to exit financing as the Debtors believe are reasonable and necessary, Judge Carey said. Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, related that the Debtors are in the process of formulating a Chapter 11 plan and intend to commence their exit from Chapter 11 by filing their plan, disclosure statement, and related materials in the near term. Under any plan scenario, Mr. Morton said, exit financing to repay the DIP loan and provide going-forward capital is an essential component of this process. For these reasons, the Debtors are currently pursuing exit financing from various lenders and are aiming to secure a commitment to fund their exit from Chapter 11. To make a financing commitment, however, potential exit lenders will have to conduct extensive due diligence of the Debtors' assets and operations, thereby incurring significant out-of- pocket costs and expenses, including fees and expenses of their legal and other advisors. To induce potential exit lenders to undertake the expensive and time-consuming work required for an exit financing commitment, the Debtors believe it is necessary to pay the reasonable and actual out-of-pocket costs and expenses they incur in connection with developing, negotiating, and documenting the financing commitment. Without this inducement -- which is a quite common request under the circumstances -- potential exit lenders will not undertake the work needed to complete a financing commitment, thus leaving the Debtors without an exit facility required for their Chapter 11 plan, Mr. Monton explained. He further noted that the Debtors have already received interest from Dune Capital LP and Caspian Capital Partners LP to provide exit financing, but they are unwilling to proceed further unless they are reimbursed for their out-of-pocket costs and expenses associated with their due diligence review ofthe Debtors. In addition to Dune and Caspian, the Debtors hope to pursue exit financing negotiations with other lenders. Parallel negotiations with multiple potential exit lenders will ensure that the Debtors obtain financing with competitive terms, Mr. Monton said. The Debtors believe that the requested expense reimbursement is reasonable for the proposed collateral base, which will include all of the Debtors' assets, including their interests in GE SeaCo and the large network of foreign and U.S. non-debtor subsidiaries, and the fact that the expenses routinely are reimbursed both in and outside of bankruptcy. About Sea Containers Headquartered in Hamilton, Bermuda, Sea Containers Ltd. -- http://www.seacontainers.com/ -- provides passenger and freight transport and marine container leasing. Registered in Bermuda, the company has regional operating offices in London, Genoa, New York, Rio de Janeiro, Sydney, and Singapore. The company is owned almost entirely by United States shareholders and its primary listing is on the New York Stock Exchange (SCRA and SCRB) since 1974. On Oct. 3, the company's common shares and senior notes were suspended from trading on the NYSE and NYSE Arca after the company's failure to file its 2005 annual report on Form 10-K and its quarterly reports on Form 10-Q during 2006 with the U.S. Securities and Exchange Commission. Through its GNER subsidiary, Sea Containers Passenger Transport operates Britain's fastest railway, the Great North Eastern Railway, linking England and Scotland. It also conducts ferry operations, serving Finland and Estonia as well as a commuter service between New York and New Jersey in the U.S. Sea Containers Ltd. and two subsidiaries filed for chapter 11 protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156). Edmon L. Morton, Esq., Edwin J. Harron, Esq., Robert S. Brady, Esq., Sean Matthew Beach, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors and the Financial Members Sub-Committee of the Official Committee of Unsecured Creditors of Sea Containers Ltd. is represented by William H. Sudell, Jr., Esq., and Thomas F. Driscoll, Esq., at Morris, Nichols, Arsht & Tunnell LLP. Sea Containers Services, Ltd.'s Official Committee of Unsecured Creditors is represented by attorneys at Willkie Farr & Gallagher LLP. In its schedules filed with the Court, Sea Containers disclosed total assets of US$62,400,718 and total liabilities of US$1,545,384,083. The Debtors' exclusive period to file a chapter 11 plan expires on Dec 21, 2007. (Sea Containers Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000) |
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