Dixie Electric Reaches Restructuring Support Agreement with Secured Lenders

Davis Polk is advising an ad hoc group of secured lenders in connection with the proposed prepackaged chapter 11 reorganization of Dixie Electric, LLC and certain of its affiliates. On October 26, 2018, the company entered into a restructuring support agreement with the ad hoc group and certain other parties pursuant to which the company has agreed to pursue a chapter 11 plan that contemplates (i) each holder of secured loan claims will receive its pro rata share of 98.25% of the equity of the reorganized company and (ii) each holder of unsecured loan claims will receive its pro rata share of 1.75% of the equity of the reorganized company. The restructuring will extinguish approximately $300 million in funded debt.

To fund the company’s ongoing operations and expenses during the chapter 11 cases, the members of the ad hoc group have committed to extend a debtor-in-possession credit facility consisting of term loans in an aggregate principal amount of $17.5 million. Upon consummation of the plan of reorganization, the outstanding DIP loans will be converted into a senior secured $30 million term loan exit facility. Collectively, the ad hoc group holds more than two-thirds of the company’s prepetition secured loans. 

Dixie Electric, LLC (dba Expanse Energy Solutions) is a privately held provider of electrical infrastructure and related services to the oil and gas industry. The company’s corporate headquarters is located in Houston, Texas. 

The Davis Polk restructuring team includes partner Damian S. Schaible, counsel Christian Fischer and associates Adam L. Shpeen and Erik Jerrard. The corporate team includes partner Stephen Salmon and associate Jeffrey C. Lau. Partner William A. Curran and associate Tracy L. Matlock are providing tax advice. Counsel Ron M. Aizen is providing executive compensation advice. Counsel Lawrence R. Plotkin is providing real estate advice. Members of the Davis Polk team are based in the New York and Northern California offices.