Bidding Procedures for Acquiring Outboard Marine
Outboard Marine Corporation
Set forth below are the bidding procedures (the “Bidding Procedures”) to be employed with respect to the prospective sale(s) (the "Sale(s)") of the business and assets of Outboard Marine Corporation and certain of its subsidiaries (individually, a "Seller," and collectively, the "Sellers"). The Sellers will seek entry of an order from the Bankruptcy Court authorizing and approving Sale(s) of the assets to the Qualified Bidder(s) (as hereinafter defined) as the Sellers, after consultation with their financial and business advisors and with the approval of their prepetition lenders (the "Prepetition Lenders"), their post-petition lenders (the "DIP Lenders"), and the committee of unsecured creditors (the "Committee"), may determine to have made the highest or otherwise best offers to purchase assets (the “Successful Bidder(s)”). These Bidding Procedures shall not be subject to material changes without approval of the Bankruptcy Court or, absent such approval, without agreement among the Sellers, the Prepetition Lenders, the DIP Lenders, and the Committee.
Assets to be Sold
The Sellers are offering their assets (the "Assets") for sale in at least fourteen (14) separate lots. As an initial matter, the Sellers are offering for sale substantially all their Assets and businesses as a single unit (the "Entire Business"). Additionally, the Sellers are separately offering for sale substantially all the Assets and business of their outboard marine engine manufacturing enterprise, on the one hand (the "Engine Business"), and their boat manufacturing enterprise, on the other hand (the "Boat Business").
The Sellers are also offering for sale the Assets comprising the Engine Business in four (4) separate components: (i) manufacturing operations, in whole or in part, (ii) the Evinrude and Johnson tradenames, (iii) any and all license or other rights to utilize the "FICHT" and related technology, and (iv) the parts and accessories business. Finally, the Sellers are offering for sale the Assets comprising the Boat Business in seven (7) separate components identified by boat line: (i) Four Winns, (ii) Chris Craft, (iii) Stratos/Javelin, (iv) Lowe, (v) Hydrasport, (vi) Seaswirl, and (vii) Princecraft.
For purposes of these Bidding Procedures, the component parts of the Engine Business and the Boat Business are referred to herein as the "Business Components." Although the Sellers currently intend to offer for sale their Assets and businesses as an Entire Business, the Engine Business, the Boat Business, and each of the ten (10) separate Business Components, the Sellers reserve the right to offer their Assets and businesses for sale in other lots not identified herein, and to offer packages of Business Components in such combinations as the Sellers determine, with the agreement of the Prepetition Lenders, DIP Lenders, and the Committee, will result in the highest or otherwise best collective value for the Sellers' assets.
Reservation of Rights
The Sellers reserve the right to enter into agreements for Sales of the Assets, individually or as part of a package, until the Bid Deadline (as hereinafter defined) which agreements, if any, shall be subject to higher or otherwise better bids at the Auction (as hereinafter defined). The Sellers may offer in such agreements termination fees or other forms of bid protection as authorized by the Bankruptcy Court and described herein. The Sellers shall retain all rights to the Assets that are not subject to a bid accepted by the Sellers and approved by the Bankruptcy Court at the Sale Hearing (as hereinafter defined).
The Bidding Process
The Sellers shall (i) determine whether any person is a Qualified Bidder, in consultation with the Prepetition Lenders, the DIP Lenders, and the Committee, (ii) coordinate the efforts of Qualified Bidders in conducting their due diligence investigations of the Assets, (iii) receive offers from Qualified Bidders, and (iv) negotiate any offers made to purchase the Assets (collectively, the “Bidding Process”). Any person who wishes to participate in the Bidding Process must be a Qualified Bidder. Neither the Sellers nor their representatives shall be obligated to furnish any information of any kind whatsoever relating to the Assets to any person who is not a Qualified Bidder. The Sellers shall have the right to adopt such other rules for the Bidding Process, with the approval of the Prepetition Lenders, the DIP Lenders, and the Committee, which will better promote the goals of the Bidding Process and which are not inconsistent with any of the other provisions hereof or of any Bankruptcy Court order.
Unless otherwise ordered by the Bankruptcy Court for cause shown or as otherwise determined by the Sellers, to participate in the Bidding Process, each person (a “Potential Bidder”) must deliver (unless previously delivered) to the Sellers:
(i) An executed confidentiality agreement in form and substance satisfactory to the Sellers;
(ii) Current audited financial statements of the Potential Bidder, or, if the Potential Bidder is an entity formed for the purpose of acquiring the Assets, current audited financial statements of the equity holder(s) of the Potential Bidder, or such other form of financial disclosure acceptable to the Sellers and their advisors demonstrating such Potential Bidder's ability to close a proposed transaction; and
(iii) A preliminary (non-binding) proposal regarding (i) the Assets sought to be acquired, (ii) purchase price range, (iii) the structure and financing of the transaction (including the amount of equity to be committed and sources of financing), (iv) any additional conditions to closing that it may wish to impose, and (v) the nature and extent of additional due diligence it may wish to conduct.
A Qualified Bidder is a Potential Bidder that delivers the documents described in subparagraphs (i), (ii), and (iii) above, whose financial information demonstrates the financial capability of the Potential Bidder to consummate the Sale, and that the Sellers determine is reasonably likely (based on availability of financing, experience and other considerations) to submit a bona fide offer and to be able to consummate the Sale if selected as the Successful Bidder.
Within two business days after a Potential Bidder delivers all of the materials required by subparagraphs (i), (ii), and (iii) above, the Sellers shall determine, and shall notify the Potential Bidder, whether the Potential Bidder is a Qualified Bidder. At the same time that the Sellers notify the Potential Bidder that it is a Qualified Bidder, the Sellers shall allow the Qualified Bidder to conduct due diligence with respect to the Assets sought to be acquired as hereinafter provided.
The Sellers shall afford each Qualified Bidder due diligence access to the Assets sought to be acquired. The Sellers will designate an employee or other representative to coordinate all reasonable requests for additional information and due diligence access from such Bidders. The Sellers shall not be obligated to furnish any due diligence information after the Bid Deadline (as hereinafter defined). Neither the Sellers nor any of their respective representatives are obligated to furnish any information relating to the Assets to any person except to a Qualified Bidder who makes an acceptable preliminary proposal. Bidders are advised to exercise their own discretion before relying on any information regarding the Assets provided by anyone other than the Sellers or their representatives.
A Qualified Bidder that desires to make a bid shall deliver a written copy of its bid to Houlihan, Lokey, Howard & Zukin Capital ("Houlihan"), 685 Third Avenue, 15th Floor, New York, New York, Attention: Michael Kramer, not later than 4:00 p.m. (Prevailing Eastern Time) on January 26, 2001 (the “Bid Deadline”). Houlihan shall then distribute copies of the bids to (i) counsel for the Prepetition Lenders, (ii) counsel for the DIP Lenders, (iii) the financial advisor to the Prepetition Lenders and the DIP Lenders, (iv) counsel for the Committee, (v) the Committee chairman, and (vi) the financial advisor to the Committee. The Sellers shall announce the terms of the highest and best Qualified Bids received by the Bid Deadline, after consultation with the Prepetition Lenders, DIP Lenders, and the Committee, by 12:00 p.m. on February 2, 2001. The Sellers may extend the Bid Deadline once or successively, but are not obligated to do so.
All bids must include the following documents (the “Required Bid Documents”):
• A letter stating that the bidder's offer is irrevocable until the earlier of (x) 2 business days after the Assets upon which the bidder is bidding have been disposed of pursuant to these Bidding Procedures, and (y) 30 days after the Sale Hearing.
• An executed copy of an asset purchase agreement in form acceptable to the Sellers (the "Asset Purchase Agreement").
• A good faith deposit (the “Good Faith Deposit”) in the form of a certified check (or other form acceptable to the Sellers in their sole discretion) payable to the order of the Sellers (or such other party as the Sellers may determine) in an amount equal to at least 3% of the value of such bid.
• Written evidence of a commitment for financing or other evidence of ability to consummate the proposed transaction satisfactory to the Sellers in their sole discretion.
The Sellers will consider a bid only if the bid is on terms that are not conditioned on obtaining financing or on the outcome of unperformed due diligence by the bidder. A bid received from a Qualified Bidder that includes all of the Required Bid Documents and meets all of the above requirements is a “Qualified Bid.”
The Seller may offer, with the prior agreement of the Prepetition Lenders, the DIP Lenders, and the Committee, a termination fee and expense reimbursement of up to 3% of the value of a Qualified Bid to induce a Potential Bidder to make a Qualified Bid (the "Break-Up Fee"); provided, however, that in no event shall more than one Break-Up Fee be offered as to each pool of Assets. Such Break-Up Fee shall only be payable if a higher or otherwise better offer from another bidder results in a closed sale and the party to whom such Bid Protection was provided was not in default of any of its obligations and was otherwise ready, willing and able to close on its proposed transaction. The Break-Up Fee(s) shall be paid only out of the proceeds of sale of any higher or otherwise better offers and shall not constitute administrative expense claims of the Sellers' estates.
“As Is, Where Is”
The sale of the Assets shall be on an “as is, where is” basis and without representations or warranties of any kind, nature, or description by the Sellers, their agents or their estate except to the extent set forth in the applicable Asset Purchase Agreement(s) of the Successful Bidder(s) as accepted by Sellers. Except as otherwise provided in such Agreements, all of the Sellers' right, title and interest in and to the Assets shall be sold free and clear of all pledges, liens, security interests, encumbrances, claims, charges, options and interests thereon and there against (collectively, the “Interests”) in accordance with Section 363 of the Bankruptcy Code, with such Interests to attach to the net proceeds of the sale(s) of the Assets.
Each bidder shall be deemed to acknowledge and represent that it has had an opportunity to inspect and examine the Assets and to conduct any and all due diligence regarding the Assets prior to making its offer, that it has relied solely upon its own independent review, investigation and/or inspection of any documents and/or Assets in making its bid, and that it did not rely upon any written or oral statements, representations, promises, warranties or guaranties whatsoever, whether express, implied, by operation of law or otherwise, regarding the Assets, or the completeness of any information provided in connection therewith or the Auction, except as expressly stated in these Bidding Procedures or, as to the Successful Bidders, the respective Asset Purchase Agreement(s).
After all Qualified Bids have been received, the Sellers shall conduct an auction (the “Auction”) with respect to any Assets as to which a Qualified Bid has been received. The Auction shall take place at 9:00 a.m. (Prevailing Central Time) on February 5, 2001, at the offices of Skadden, Arps, Slate, Meagher & Flom (Illinois), 333 West Wacker Drive, Suite 1900, Chicago, Illinois, or such later time or other place as the Sellers shall notify all Qualified Bidders who have submitted Qualified Bids. Only a Qualified Bidder who has submitted a Qualified Bid is eligible to participate at the Auction. Based upon the terms of the Qualified Bids received, the level of interest expressed as to particular Assets, and such other information as the Sellers determine are relevant, the Sellers, may conduct the Auction in the manner they determine will result in the highest or otherwise best offer for the Assets. Any Qualified Bid competing with any other Qualified Bid as to which the Debtors have agreed to provide Bid Protection must exceed the original Qualified Bid by an amount at least equal to the Bid Protection.
In particular, the Sellers may commence the Auction by entertaining bids for the Entire Business, the Engine Business, and the Boat Business, followed thereafter by bids for the individual Business Components or other lots as the Sellers determine. Qualified Bidders will be permitted to increase their bids. The Sellers thereafter may offer the Assets in such lots in such successive rounds as the Sellers determine to be appropriate so as to obtain the highest or otherwise best bid or combination of bids for the Assets. The Sellers also may set opening bid amounts in each round of bidding as the Sellers determine to be appropriate.
Upon conclusion of the Auction, the Sellers, in consultation with their financial and business advisors and with the agreement of representatives of the Prepetition Lenders, the DIP Lenders, and the Committee, shall (i) review each Qualified Bid or Bids on the basis of financial and contractual terms and the factors relevant to the sale process, including those factors affecting the speed and certainty of consummating the Sale, and (ii) identify the highest and otherwise best offer or group of offers for the Assets (the “Successful Bid(s)”). At the Sale Hearing, the Sellers shall present to the Bankruptcy Court for approval the Successful Bid(s). The Sellers may adopt rules for the bidding process at the Auction that will better promote the goals of the bidding process and that are not inconsistent with any of the provisions of the Bankruptcy Code, any Bankruptcy Court order, or these Bidding Procedures.
Acceptance of Qualified Bids
The Sellers shall sell the Assets for the highest or otherwise best Qualified Bid(s) received. The Sellers' presentation to the Bankruptcy Court for approval of a particular Qualified Bid does not constitute the Sellers' acceptance of the bid. The Sellers will be deemed to have accepted a bid only when the bid has been approved by the Bankruptcy Court at the Sale Hearing.
The Sale Hearing is presently scheduled to commence on February 8, 2001 at 2:00 p.m. at the United States Bankruptcy Court for the Northern District of Illinois, located at 219 South Dearborn Street, 6th Floor, Chicago, Illinois. The Sale Hearing may be adjourned or rescheduled without notice by an announcement of the adjourned date at the Sale Hearing. At the Sale Hearing, the Sellers may present to the Bankruptcy Court for approval the Successful Bid(s) for the Assets.
Following the Sale Hearing approving the sale Assets to a Successful Bidder(s), if such Successful Bidder(s) fails to consummate an approved sale because of a breach or failure to perform on the part of such Successful Bidder(s), the next highest or otherwise best Qualified Bid, as disclosed at the Sale Hearing, may be deemed to be the Successful Bid and the Sellers may be authorized to effectuate such sale without further order of the Bankruptcy Court.
Return of Good Faith Deposit
Good Faith Deposits of all Qualified Bidders shall be held in escrow until the earlier of (x) 3 business days after all Assets upon which the bidder is bidding have been disposed of pursuant to these Bidding Procedures or (y) 31 days after the Sale Hearing.
The Sellers may (a) determine, with the agreement of representatives of the Prepetition Lenders, the DIP Lenders, and the Committee, which Qualified Bid(s), if any, is the highest or otherwise best offer; and (b) reject at any time before entry of an order of the Bankruptcy Court approving a Qualified Bid, any bid that is (i) inadequate or insufficient, (ii) not in conformity with the requirements of the Bankruptcy Code, the Bidding Procedures, or the terms and conditions of sale, or (iii) contrary to the best interests of the Sellers, their estates, and their creditors. At or before the Sale Hearing, the Sellers may impose such other terms and conditions as they may determine to be in the best interests of the Sellers' estate, their creditors and other parties in interest.