Synthego Corporation - Plan / RSA Terms

RSA Terms

Overview

• The Debtor’s capital structure includes secured debt, unsecured non-convertible notes, and unsecured convertible notes.
  • As of the petition date, outstanding debt included approximately $73.9 million under a prepetition credit agreement, with Perceptive Credit Holdings III, LP serving as administrative agent (the “Prepetition Agent”).
  • The Debtor also has approximately $97 million outstanding under its 2024 Non-Convertible Notes and approximately $43 million outstanding under its 2023 Convertible Notes.
  • Pursuant to subordination agreements, the Prepetition Lenders’ claims are senior to the 2024 Non-Convertible Notes, which are in turn senior to the 2023 Convertible Notes.
• The restructuring is centered on a sale of substantially all of the Debtor’s assets, supported by the Prepetition Lenders.
  • The Prepetition Lenders are also providing postpetition DIP financing and serving as the stalking horse bidder for the Debtor’s assets.

DIP Financing

• The Prepetition Lenders, with Perceptive as DIP Agent, have agreed to provide a senior secured, superpriority debtor-in-possession financing facility totaling $25 million.
• The DIP facility consists of:
  • $15 million in new money multiple draw term loans.
  • A $10 million roll-up of obligations under the Prepetition Credit Agreement.

Sale Transaction

• The Debtor is pursuing a sale of substantially all of its assets pursuant to section 363 of the Bankruptcy Code.
• Perceptive, acting as the Stalking Horse Bidder, entered into an asset purchase agreement with the Debtor. The consideration for the sale includes:
  • A credit bid of the amounts owed under the DIP Facility and the Prepetition Credit Agreement, less $1 million.
  • The assumption of certain liabilities.
  • A waiver of rights in certain excluded cash for the benefit of the Debtor’s estate.
• No qualified overbids were received by the June 24, 2025, bid deadline.

Chapter 11 Plan of Liquidation

• Following the consummation of the sale, the Debtor will be wound down through a liquidating plan.
• A Post-Effective-Date Debtor Representative, to be selected by the Debtor with the consent of the Prepetition Agent, will administer the Debtor’s estate, resolve claims, and make distributions to creditors.

Claim Treatment & Recoveries

• Class 2 - Prepetition Lenders Secured Claims: In the stalking horse sale, these claims will be satisfied via the credit bid, with the exception of a $1 million “Prepetition Lenders Stub Claim.”
  • The Stub Claim will receive proceeds from any remaining collateral and cash after payment of administrative and priority claims.
  • If Class 4 votes to accept the plan, the Prepetition Lenders will contribute any distributions on account of the Stub Claim to a fund for general unsecured creditors.
• Class 4 - General Unsecured Claims: Treatment for this class is contingent on its vote on the plan.
  • If Class 4 votes to accept the plan:
    • Holders will receive a pro rata share of a $200,000 GUC Fund.
    • In the stalking horse sale scenario, they will also receive distributions that would otherwise be made on account of the Prepetition Lenders Stub Claim (expected to be approximately $1 million).
    • The Prepetition Lenders’ deficiency claim will not participate in distributions to Class 4.
  • If Class 4 votes to reject the plan:
    • No GUC Fund will be established.
    • Holders will share pro rata in any available cash alongside the Prepetition Lenders’ deficiency claim.
• Class 5 - 2024 Non-Convertible Notes Claims: Pursuant to subordination agreements, any distributions that would be made to holders of these claims will instead be paid to holders of Class 2 claims until they are paid in full. No distributions are expected for this class.
• Class 6 - 2023 Convertible Notes Claims: Pursuant to subordination agreements, any distributions will be turned over first to holders of Class 2 claims and then to holders of Class 5 claims until they are paid in full. No distributions are expected for this class.
• Class 7 - Interests: All interests in the Debtor will be cancelled on the effective date and will receive no distribution.

Releases & Exculpation

• The plan provides for releases for the Debtor, the Post-Effective-Date Debtor, the Prepetition Lenders and Agent, and the DIP Lenders and Agent, among others (the “Released Parties”).
• The releases are granted by the Debtor and by any claimant who votes to accept the plan and does not opt out of the third-party release.
• The plan also includes an exculpation provision for the Debtor, its professionals, and its directors, officers, and employees who served during the chapter 11 case, including the Debtor’s CRO, for actions taken in good faith in connection with the case.

Plan Milestones

• Conditions to plan confirmation include court approval of the combined disclosure statement and plan and the closing of the sale transaction.
• Conditions to the effective date include the confirmation order becoming a final order and the funding of required reserves, including the GUC Fund if applicable.