UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Introductory Note
As previously disclosed, on May 15, 2022, Pareteum Corporation (the “Company”) and certain of its direct and indirect subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Bankruptcy Code, as amended (the “Bankruptcy Code”), in the United States Bankruptcy Court for the Southern District of New York in New York, New York (the “Bankruptcy Court”). The Debtors’ Chapter 11 cases are being jointly administered under the caption In re Pareteum Corporation., et al., Case No. 22-10615 (the “Chapter 11 Filing”). Through the Chapter 11 Filing, the Debtors seek to implement a sale of substantially all of their assets pursuant to Section 363 of the Bankruptcy Code.
| Item 1.01 | Entry into a Material Definitive Agreement. |
On June 21, 2022, the Bankruptcy Court entered the Final Order (I) Authorizing the Debtors to Obtain Postpetition Senior Secured, Priming and Superpriority Financing (II) Authorizing Use of Cash Collateral, (III) Granting Adequate Protection to Prepetition Secured Parties, and (IV) Granting Related Relief [Docket No. 0130] (the “Final DIP Order”).
Among other things, the Final DIP Order approved, on a final basis, the Debtors obtaining postpetition financing pursuant to the Superpriority Senior Secured Debtor-in-Possession Credit Agreement (the “DIP Credit Agreement”), dated as of May 19, 2022, with a senior secured lender of the Company, Circles MVNE Pte. LTD. (“Circles”), which provides for (i) a new money term loan facility with an aggregate principal amount of up to $6.0 million (the “New Money DIP Loans”) and (ii) roll-up loans equal in an amount equal to the Debtors’ outstanding prepetition senior obligations held by Circles or an affiliate (the “Roll-Up DIP Loans” and, together with the New Money DIP Loans, the “DIP Financing”). The Final DIP Order permits the Company to access the remaining $3.0 million in New Money DIP Loans available in accordance with the DIP Credit Agreement.
The DIP Financing has an interest rate of 9.0% per annum payable in kind, which may be increased by 2.0% per annum following the occurrence and declaration of an Event of Default (as defined in the DIP Credit Agreement). Accrued interest is payable on the first day of each calendar quarter by adding the then amount of such accrued interest to the outstanding principal amount of such loan. In the event of any repayment or prepayment of the DIP Financing, accrued interest on the principal amount repaid or prepaid shall be payable in cash on the date of such repayment or prepayment. The maturity date of the DIP Financing shall be the earliest of (i) 210 days after the closing date of the DIP Credit Agreement, (ii) the close of the sale of the business and assets of the Debtors pursuant to an order of the Bankruptcy Court and (iii) the acceleration of the maturity of the DIP Financing following an Event of Default. The outstanding principal and accrued interest of the DIP Financing is due and payable in full on the maturity date.
The above description of the DIP Credit Agreement is not complete and is qualified in its entirety by reference to the DIP Credit Agreement, which is filed as Exhibit 10.1 to the Current Report filed by the Company on May 19, 2022 and incorporated by reference in this Item 1.01. The above description of the Final DIP Order does not purport to be complete and is qualified in its entirety by reference to the full text of the Final DIP Order which is available on the docket of the Chapter 11 Cases, which can be accessed via PACER at https://www.pacer.gov. Additional information about the Chapter 11 Cases, including the DIP Credit Agreement, the Final DIP Order and other motions, orders and other court filings relating to the Chapter 11 are available for free on the website maintained by the Debtors’ claims agent, Kurtzman Carson Consultants LLC, at https://kccllc.net/Pareteum.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth or incorporated in Item 1.03 is also incorporated by reference in this Item 2.03.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PARETEUM CORPORATION | ||||||
| Dated: June 27, 2022 | By: | /s/ Laura W. Thomas | ||||
| Name: | Laura W. Thomas | |||||
| Title: | Interim Chief Financial Officer | |||||