So here is a bit of news....from the newly filed bankruptcy case in Nevada concerning the auction. Not the best of news.
SALE BACKGROUND AND THE DEBTORS’ PREPETITION EFFORTS
8. In early summer of 2012, the GBG Group began exploring a sale of
substantially all of its assets, including the Nevada Operations. At such time, GBGL engaged
CIBC World Markets, Inc. (“CIBC”) to evaluate a potential sale of some or all of the assets of
GBGL’s international mining company. In connection with these initial efforts, CIBC contacted
seventy-one (71) parties concerning the Nevada Operations, with twenty-six (26) of these parties
signing confidentiality agreements. Although these efforts resulted in a few indications of
interest for the Nevada Operations, the GBG Group ultimately placed the sale process on hold to
address severe liquidity issues. These liquidity issues culminated in GBGL filing an application
for protection from its creditors in Canada (commencing the “CCAA Proceedings”) pursuant to
the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 or other insolvency laws in the
Supreme Court of British Columbia Vancouver Registry (the “CCAA Court”) on September 19,
2012. The CCAA proceedings were commenced, among other reasons, in order to obtain the necessary financing to continue operations while the GBG Group continued to investigate and
explore strategic options.
9. Upon the commencement of the CCAA Proceedings, GBGL worked to
stabilize its business and garner support from GBGL’s creditor constituencies for a sale process
for the Nevada Operations and separately for the GBGL Group’s assets in South Africa. In
connection with GBGL’s efforts to sell the Nevada Operations, on October 25, 2012, the CCAA
Court approved CIBC’s engagement to act as financial advisor in connection with the sale of the
Nevada Operations, among other things.
10. The Debtors, through their advisors and CIBC, had numerous discussions
with representatives of their key creditor constituencies regarding the potential sale of their
Nevada Operations, and the optimal process for maximizing value for such assets. To that end,
in late December 2012, CIBC launched a pre-marketing process for the sale of the Nevada
Operations. Based upon early favorable feedback from certain key potential acquirers, in early January, CIBC commenced a broader and more formal process to identify a stalking horse bidder
for the Nevada Operations.
11. During this formal sale process, CIBC reached out to twenty two (22)
potential acquirers that it believed might have a legitimate interest in purchasing, and the ability
to purchase, the Nevada Operations. As a result of CIBC’s efforts, the Debtors entered into
confidentiality agreements with fifteen (15) potential purchasers. The potential purchasers
conducted varying levels of due diligence. As a key component of this diligence process, each of
the parties that entered into confidentiality agreements were given access, over a period of
approximately a month and a half, to an electronic data room containing various financial data
and other relevant and confidential information. On top of reviewing the Debtors’ data, seven
(7) of such potential purchasers conducted site visits. Upon information and belief, certain of the
potential purchasers also hired legal advisors and other advisors.
12. Firm, binding bids for the stalking horse bidder position were due on
February 15, 2013. Although multiple bids were received by the deadline, neither the Debtors
nor Credit Suisse AG (“Credit Suisse”) – the agent for the Existing Hollister Facility and the Canadian DIP Facility (both as defined in the Dombrowski Declaration) believed that the bids
were sufficient to warrant a stalking horse designation and related stalking horse bid protections.
For example, certain of the bids were contingent upon the prospective bidder being afforded
more time to conduct additional due diligence. The Debtors did not believe they had sufficient
liquidity outside of a chapter 11 filing to afford these bidders such additional time. The Debtors,
in consultation with Credit Suisse, therefore decided to proceed with an open auction of the
Nevada Operations.
13. The Debtors commenced these Chapter 11 Cases in order to access
sufficient liquidity and stabilize their business while they pursued the sale of the Nevada
Operations.
AI
