US Magnesium - Chapter 11 DIP Terms

DIP Terms

Borrower(s) / Guarantor(s)

• US Magnesium LLC, as Debtor and Borrower

Agent / Lender(s)

• Wells Fargo Bank, National Association, as Lender
• The Renco Group, Inc., as Tranche C DIP Term Loan Participant

DIP Commitments

• $12.3 million senior secured term loan facility comprised of:
  • $5 million Tranche A term loans
  • $5 million Tranche B term loans
  • $1.5 million Tranche C term loans
  • $821,588 LC Tranche A term loans
• Upon entry of the fourth interim order, all outstanding prepetition letters of credit are deemed exchanged for and issued under the ratification and amendment agreement, constituting postpetition obligations.
• The "Maximum Credit" is defined as the lesser of (a) $82.3 million and (b) the sum of the revolving loan limit, the outstanding principal of Term Loan C, and the outstanding DIP term loans.

Cash Collateral

• The Debtor is authorized to use cash collateral and proceeds of the DIP term loans in accordance with the approved budget and the ratification and amendment agreement.
• Authorization terminates upon the occurrence of an event of default.

Interest Rate

• DIP Interest: 8.50%
• LC Tranche A term loans bear interest at the rate applicable to DIP term loans.

Fees

• DIP Exit Fee: $200,000
• Fee: 1.75%
• Origination Fee
• Payment of the Lender's reasonable and documented professional fees and expenses.

Maturity

• The earliest to occur of:
  • February 2, 2026
  • Consummation of a sale of all or substantially all assets or equity interests
  • Termination of borrowing authority under the interim or final orders
  • An event of default, including failure to meet the following milestones (unless extended by Lender):
    • January 9, 2026: Sale Objection Deadline and Assumption/Assignment Objection Deadline
    • January 19, 2026: Bid Deadline
    • January 21, 2026: Auction (if necessary)
    • January 26, 2026: Sale Hearing
    • January 30, 2026: Entry of Sale Order
    • February 2, 2026: Closing of the Sales Transaction

Carve Out

• Post Carve Out Trigger Notice Cap: $450,000 for professional fees incurred after delivery of a trigger notice.
• Pre-trigger professional fees are allowed to the extent set forth in the budget.
• Statutory fees payable to the U.S. Trustee and Clerk of Court.
• The Carve Out excludes fees incurred in connection with investigating or prosecuting claims or avoidance actions against the Lender.

Use of Proceeds

• Fund costs, expenses, and items set forth in the budget
• Pay professional fees and expenses
• Make adequate protection payments

Challenge Period and Budget

• The deadline to file a challenge is December 29, 2025.
• The Committee Budget for restructuring costs is increased to $871,200, with amounts in excess of $750,000 to be funded into a reserve or escrow account.

Securities and Priorities

• First priority perfected security interests in and liens on "Post-Petition Collateral," including:
  • Salt Lake City Property
  • Commercial Tort Claim Collateral related to the Ace Commercial Tort Claim
  • Equity interests in the Skull Valley Joint Venture
• The liens on Post-Petition Collateral secure obligations up to a cap of $3 million.
• Superpriority administrative expense claim status (Section 507(b)) for postpetition obligations up to a cap of $2.5 million.
• Payment Waterfall: Proceeds apply in the following order:
  • First, to Prepetition Obligations (excluding Term Loan C)
  • Second, to Tranche A DIP Term Loans
  • Third, to Prepetition Obligations consisting of Term Loan C
  • Fourth, to Tranche B DIP Term Loans
  • Fifth, to Tranche C DIP Term Loans

Adequate Protection

Prepetition Senior Secured Parties

• Replacement liens on collateral to the extent of any diminution in value.
• Superpriority administrative expense claims for diminution in value.
• Payment of reasonable and documented fees and expenses.
• Cessation of cash interest payments: The Debtor shall not provide adequate protection in the form of cash payments of prepetition interest on or after December 22, 2025, subject to further court order.
• DIP liens do not prime perfected prepetition liens held by Caterpillar Financial Services Corporation or statutory liens held by Forgen.

Waivers

• Subject to entry of the final order:
  • Waiver of Section 506(c) surcharges against the collateral.
  • No costs of administration may be charged against the Lender or collateral.

Permitted Variance

• An Event of Default occurs if there is a "Material Budget Deviation" as defined in the ratification and amendment agreement.