School Specialty, Inc (fka SCHSQ)

[DFYSW]

"School Specialty Inc. noteholders Tuesday blasted the $50 million debtor-in-possession facility proposed by Bayside Capital Inc., alleging the package's roll-up provision, excessive interest and unreasonable milestones are designed for the sole benefit of the private equity firm...The terms attached to DIP financing would force the Wisconsin-based provider of school supplies into an unnecessarily expedited sales process that would end with Bayside rolling up $95 million in prepetition debt ahead of other creditors and acquiring the company at a fire-sale price, according to an objection filed..."

http://www.law360.com/mergersacquisitions/articles/411213/school-specialty-creditors-say-50m-dip-is-for-lender-s-gain

"Indeed, the Debtors’ senior executives stated during their November 20, 2012 earnings call that management believes they can achieve long-term goals at double-digit EBITDA margins and, despite a slight decline in gross revenues, consolidated gross margins improved to more than 39% and net income increased by 59% for the second quarter of fiscal 2013."

"Projected EBITDA for 2013 is approximately $46.4 million. Further, the EBITDA projections for 2014 through 2016 range from $47 million to $59 million...For fiscal year 2013, the implied enterprise value of the Debtors’ enterprise, using reasonable valuation assumptions, is substantially greater than $230 million."

"The proposed Bayside DIP Facility is a transparent attempt by Bayside to seize all control and value from the Debtors at a time when the Debtors need not give up either and cannot meet their burden to prove that they are 'unable to obtain such credit otherwise.'"

http://www.kccllc.net/documents/1310125/1310125130129000000000025.pdf