Elah Holdings Inc fka RELYQ (ELLH)

[Enterprising Investor]

Real Industry and Real Alloy’s U.S. Operations Initiate Chapter 11 Proceedings (11/17/17)

Real Alloy’s operations in Germany, United Kingdom, Norway, Canada and Mexico are not included in the filing

Real Alloy’s U.S. operations obtain additional liquidity through DIP financing

NEW YORK--(BUSINESS WIRE)--Real Industry, Inc. (NASDAQ: RELY) (“Real Industry” or the “Company”) today announced that it has initiated restructuring efforts through the filing of a petition for voluntary Chapter 11 reorganization in the U.S. Bankruptcy Court for the District of Delaware.

In conjunction, Real Alloy Holding, Inc. and its U.S. subsidiaries (“Real Alloy”) today filed petitions for voluntary Chapter 11 reorganization in the U.S. Bankruptcy Court for the District of Delaware. Real Alloy’s operations in Germany, United Kingdom, Norway, Canada and Mexico and its Goodyear, Ariz. joint venture are not included in these filings. During the Chapter 11 process, Real Alloy expects to conduct business as usual in the United States and worldwide and to continue to provide customers, suppliers and other business partners with the high level of service and performance they have come to expect from Real Alloy.

Summary Points on Chapter 11 Proceedings:

• Real Alloy has entered into an agreement in principle with its existing asset-based facility lender and certain of its bondholders for continued use of its $110 million asset-based lending facility and up to $85 million of additional liquidity through debtor-in-possession (“DIP”) financing that will provide Real Alloy the ability to continue to fund ongoing business operations.

• This DIP financing is a consensual arrangement executed with Real Alloy’s principal lender and holders of a majority of its bonds, with the ability to provide Real Alloy with immediate incremental liquidity.

• This substantially increased liquidity at Real Alloy provides it with the financial flexibility to continue to serve its customers and pay its suppliers.

• Real Industry will initiate a plan of reorganization to preserve the value of its net operating loss tax carryforwards (“NOLs”).

Real Alloy

Real Alloy’s operations in the United States have been affected by severely tightened liquidity during the past year, due in part to recently constrained trade credit terms, which hindered Real Alloy’s ability to timely refinance its $305 million 10% senior secured notes due January 2019 (“Senior Secured Notes”) or to expand borrowing capacity under its asset-based lending facility. An extensive review by the Real Industry Board of Directors, Real Alloy Board, management, and advisors determined it would be in the best interest of all Real Alloy stakeholders to initiate the Chapter 11 proceedings.

Real Alloy will undertake this process with enhanced liquidity in the form of DIP financing including a combination of continued use of Real Alloy’s $110 million asset-based lending facility, and up to $85 million in incremental liquidity provided by certain holders of the Senior Secured Notes to maintain normal operations while Real Alloy continues the process of improving its long-term capitalization, including addressing the Senior Secured Notes. The DIP financing also includes the conversion of $170 million of Senior Secured Notes into new notes. Subject to court approval, which is anticipated shortly, this DIP financing combined with funds generated from ongoing operations will be used to support Real Alloy’s normal operating and working capital requirements, including employee wages, salaries and benefits, and supplier payments during the reorganization effort under Chapter 11. Real Alloy has filed the customary motions in order to make these and other normal operating payments during the Chapter 11 proceedings and expects to receive such approval shortly.

Not included in the Chapter 11 filings are Real Alloy’s operations in Germany, United Kingdom, Norway, Canada, and Mexico and its Goodyear, Ariz. joint venture. Real Alloy’s European operations are funded by their own generated cash flows and through a dedicated €50-million Factoring Facility. As part of the reorganization, Real Alloy will not draw funds out of Real Alloy Europe to support North American needs, and further, up to $20 million of the DIP financing will be reserved for potential funding required by Real Alloy Europe. Real Alloy’s Mexican, Canadian and Goodyear, Ariz. joint venture operations are similarly supported by their own cash flows.

Real Industry

As a holding company, Real Industry relies on the operations of its subsidiaries and external financing sources for its liquidity needs. During the past year, the holding company’s liquidity and financial position declined to levels where the Board of Directors of the Company concluded that it was in the best interests of the Company to reorganize under a Chapter 11 filing. Real Industry has initiated efforts to develop a plan of reorganization to attempt to preserve the value of the NOLs. During this process, the Company will cut costs to maintain as much liquidity as possible.

Management

Mr. Terry Hogan will continue to lead Real Alloy as President, and he has been elected to the Real Alloy Board of Directors.

In connection with the filing of Chapter 11 proceedings, Mr. Michael Hobey has been named President and Interim Chief Executive Officer at Real Industry, and he will continue to serve as Chief Financial Officer at the Company. Mr. Hobey will also serve as Chief Financial Officer at Real Alloy.

Mr. Kyle Ross will continue to serve as Chief Investment Officer at Real Industry. Mr. Ross has resigned from the Real Industry Board of Directors.

Additional Information

Court filings and other information related to the court-supervised proceedings are available at a website administered by the Company’s claims agent, Prime Clerk, at https://cases.primeclerk.com/realindustry.

http://www.businesswire.com/news/home/20171117005256/en/Real-Industry-Real-Alloy%E2%80%99s-U.S.-Operations-Initiate