NOTE 25—SUBSEQUENT EVENTS

Real Industry Bankruptcy

As further described in Note 3—Liquidity and Bankruptcy Proceedings, On January 24, 2018, with Bankruptcy Court approval, the Company entered into the $5.5 million RELY DIP Facility, of which the $4.0 million was available for immediate borrowing and an additional $1.5 million became available to be borrowed on January 31, 2018. The RELY DIP Facility bears interest at an annual rate of 11%, and matures on the earliest of, among other things, November 17, 2018, the effective date of a Chapter 11 plan of reorganization that has been confirmed by the Bankruptcy Court, or acceleration and termination of the RELY DIP Facility due to an event of default under the RELY DIP Credit Agreement or Bankruptcy Court order for the RELY DIP Facility. An additional 2% interest applies upon and during the continuation of an event of default. The RELY DIP Facility is secured by the assets of Real Industry and its subsidiaries, SGGH and Cosmedicine, but excludes any assets of the Real Alloy Debtors. Real Industry has drawn the entire amount of such facility as of the date of the filing of this Annual Report.

The terms of the RELY DIP Credit Agreement provide for the RELY DIP Lenders to sponsor a plan of reorganization for Real Industry. They further contemplate the RELY DIP Lenders’ entry into definitive equity purchase agreements pursuant to which the RELY DIP Lenders, or their affiliates, will purchase up to 49% of the Company’s common stock at emergence from the RI Chapter 11 Case for $17.5 million, inclusive of the repayment of the RELY DIP Facility. In the event that the Company terminates the Equity Commitment without the RELY DIP Lenders’ consent, the Company will owe $0.3 million and 4.9% of the Company’s outstanding stock as a break-up fee.

Under the RI Plan as proposed, at effectiveness of such RI Plan,

the Plan Sponsor will purchase 49% of the issued and outstanding common stock of Reorganized RELY for $17.5 million, net of repayment of the RELY DIP Facility plus interest;

the holder of the Company’s Redeemable Preferred Stock will receive a $2.0 million cash payment plus 31% of the newly issued equity in Reorganized RELY, in exchange for full settlement of its $28.5 million liquidation preference and $1.8 million of accrued dividends (as of December 31, 2017);

the Company’s existing common stockholders will receive their pro rata share of 20% of the newly issued common equity in Reorganized RELY, assuming the Company’s stockholders vote to accept the RI Plan as a class; and

in the event the common stockholders do not vote to approve the RI Plan as a class, then the common stockholders will receive 16% of the newly issued equity in Reorganized RELY, and the holder of the Redeemable Preferred Stock will be issued 35% of the newly issued equity in Reorganized RELY, in addition to the aforementioned $2.0 million cash payment.

On March 29, 2018, the Bankruptcy Court approved the RI Disclosure Statement and authorized Real Industry to begin solicitation of the RI Plan in advance of a voting deadline of April 25, 2018. While there can be no assurance that we will receive the necessary approvals of holders of claims or interests under the RI Plan, approval or the necessary confirmation of the Bankruptcy Court, or that once confirmed, that we will successfully execute the RI Plan, we anticipate that the RI Plan will be confirmed and effective in 2018.

Real Alloy Bankruptcy

As more fully described in Note 3—Liquidity and Bankruptcy Proceedings, following December 31, 2017, Real Alloy received final confirmation of the Bankruptcy Court in respect of the RA DIP Financing Facility, including the New Money DIP Term Notes, Roll Up DIP Term Notes and RA DIP ABL Facility; the Section 363 Sale and bidding/auction procedures; and approval of a stalking horse bid from a group of its existing noteholders providing the RA DIP Financing Facility.

On February 2, 2018, Real Alloy received the Credit Bid Proposal from certain holders of Real Alloy’s Senior Secured Notes. On March 7, 2018, this noteholder group, the Real Alloy Debtors and the UCC agreed upon a form of Asset Purchase Agreement in respect of such Credit Bid Proposal, as well as reached an agreement whereby the Asset Purchase Agreement provides for the assumption by the buyers of up to $18.6 million of priority and unsecured claims against the Real Alloy Debtors’ estates; the receipt by the holders of claims for as much as 100% recovery against the Real Alloy Debtors for claims entitled to priority under section 503(b)(9) of the Bankruptcy Code in exchange for terms including negotiated credit limits, volume, and pricing; the potential recovery by vendors of the Real Alloy Debtors holding general unsecured claims against the Real Alloy Debtors, depending upon credit and other commercial terms offered; and no recovery to Real Industry (or its equity holders).

On March 27, 2018, the Real Alloy Debtors and noteholder purchasers of the Real Alloy business (through an entity named RA Acquisition Purchaser LLC) executed the final Asset Purchase Agreement, providing for purchase consideration of $364 million plus the assumption of various liabilities associated with the Real Alloy business in the United States and Real Alloy operations and facilities in Europe. The Real Alloy Debtors filed the executed Asset Purchase Agreement with the Bankruptcy Court on the same date. On March 29, 2018, the Bankruptcy Court approved the Asset Purchase Agreement and the Section 363 Sale. While there can be no assurance that the conditions to closing and third party approvals (including antitrust requirements in the United States and Mexico) will be satisfied or received, as the case may be, and thus that transaction will be effected, we anticipate that the closing of this transaction will occur by the end of April 2018.