Elah Holdings Inc fka RELYQ (ELLH)

[EM]

This ticker caught my eyes after having seen the 210 Capital LLC involvement: i was and i am a PIOE shareholders (since ACPW) and what they do there has been GREAT for shareholders!

Basically 210 Capital LLC has a proven track record (PIOE and CRSS for example) for this kind of procedures: they target a stressed Company full of NOLs and full of debts just delisted (or going to be delisted) in the Pink Sheets OTC market, they set up a new Company (here 210/RELY investment), they restructure debts trough a prepackaged procedure in BK Court (pursuant to chapter 11), they bring it out from chapter 11, they take 49% of the new and debt-free shell Company trough issuance of new shares, they preserve existing NOLs and they buy profitable companies in order to valorize them thereby increasing shareholders value.

That said, i think this could be something bigger if Court will approve the plan considering the partnership with Goldman Sachs and the huge amount of NOLs.

Must admit is not easy to read all these legal documents so i will just share single facts.
Notice that the whole operation replicate what exactly i saw in my PIOE (Active Power then P10 industries then P10 Holdings) experience ....

1. On December 27, 2017, Real Industry sought approval of postpetition financing from Goldman Sachs & Co. LLC (“Goldman”). Shortly after seeking such relief, Real Industry received an unsolicited offer for alternative financing from 210 Capital, LLC and the Private Credit Group of Goldman Sachs Asset Management, L.P. (collectively, “210/GSAM”). 210/GSAM agreed to provide Real Industry with a facility on better terms than those offered by Goldman (the “Real Industry DIP Financing”);

2. On January 22, 2018, the Court approved the Real Industry DIP Financing with 210/GSAM. As part of the financing, 210/GSAM agreed to provide: (i) an equity commitment of $17.5 million for 49% of the reorganized Real Industry equity; (ii) $5.5 million in postpetition financing with an 11% interest rate; and (iii) a commitment to provide an acquisition financing facility of up to $500 million after emergence on terms to be negotiated.
https://www.sec.gov/Archives/edgar/data/38984/000003898418000002/rely-20180110x8k.htm

Related to the financing: On January 24, 2018, Real Industry borrowed the first $4.0 million of the 210 DIP Facility, and borrowed the remaining $1.5 million on February 5, 2018.

Related to Equity commitment: 210 and Goldman Sachs have committed to provide or arrange the Post-Reorganization Credit Facility to enable the Company to pursue its business plan, including the acquisition of operating businesses, grating RELY approx $500 millions.

The DIP Order also approved certain chapter 11 case “milestones” (the “Milestones”), including the following:
1) no later than February 16, 2018, Borrower shall have filed a chapter 11 plan and disclosure statement with respect to the chapter 11 plan, in each case in form satisfactory to the DIP Lenders (the “Plan/DS Milestone”);
2) entry by the Bankruptcy Court of an order approving the disclosure statement in form and substance acceptable to the DIP Lenders by no later than March 29, 2018, subject to court availability;
3) execution of the definitive documents related to the Equity Commitment (as defined in the 210 DIP Credit Agreement) no later than five (5) days before the hearing to consider confirmation of the chapter 11 plan;
4) entry by the Bankruptcy Court of an order confirming the chapter 11 plan by no later than May 1, 2018, subject to court availability; and
5) no later than 10 days after entry of the confirmation order, Real Industry shall have taken all steps reasonably necessary to satisfy all conditions for consummating the chapter 11 plan.

3. The prepackaged plan contemplates: 1) appointment of 210/GS's Directors to the board of directors of the Reorganized Debtor, and shall stand for re-election to the Reorganized Debtor’s board of directors in 2020 at the Reorganized Debtor’s annual meeting of shareholders; 2) the cancellation of Interests in the Debtor and Issuance of New Common Stock in the Reorganized Debtor (49% to 210/GS and 51% existing shareholders); 3) The sale of the Real Alloy: Under the asset purchase agreement, the noteholder group has agreed to acquire substantially all of Real Alloy’s US and international operations for an estimated total purchase consideration of approximately US$364 million, plus the assumption of certain liabilities. Under the terms of the “stalking horse bid”, the Company is expected to see its secured debt obligations reduced by approximately $200 million, which will provide the Company with a strong balance sheet and ample liquidity post Chapter 11 emergence.
The Court hearing for the approval of the Asset Purchase agreement is March 29.
from the liquidation analysis:
"The Plan recoveries are based on the proposed Plan treatment of prepetition creditors and prepetition equity holders and the value of the reorganized equity that is implied by the equity commitment of the SPA Investors under the Plan. Specifically, under the terms of the Plan, the SPA Investors have agreed to purchase 49% of the reorganized equity for $17.5 million, implying a total value of $35.7 million for the reorganized equity. The ultimate value of the reorganized equity that will be distributed to prepetition equity holders under the Plan is uncertain and highly dependent on the business ultimately acquired post-effective date".

IF they will respect all milestones timeline and the prepackaged plan and the asset sale will be approved by Court as 210/GS have indicated, we could end with a pretty clean shell company with 1 bln in NOLs, cash amount (approx 17mm plus Bank deposit after having paid the claims) ready to acquire profitable businesses with a $500mm line credit and owned by at least 75% by Institutional investors!

Current O/S: 29,8mm shares
Current market cap: $9,5mm