Dear Priya,
I hope this email finds you well. I am writing in connection with Calderwood & Harkness's representation of Nexford Industrial Holdings Inc. (C&H Matter No. 1005-00001) in the proposed $1,400,000,000 senior secured Term Loan B refinancing and dividend recapitalization, pursuant to the engagement letter executed on February 3, 2025.
As a threshold update, Crescent Harbor Bank, N.A. delivered its initial term sheet earlier today, and Claudia Merritt and I are reviewing it now. The commitment letter process is expected to move quickly, with a target execution date of mid-February. Additionally, we anticipate that Whitfield & Gage LLP, as counsel to Crescent Harbor in its capacity as lead left arranger and administrative agent, will be circulating a first draft credit agreement in the coming weeks. To ensure we are well positioned for the mark-up and negotiation of that agreement, we need to have certain foundational materials in hand well in advance.
**Comprehensive Due Diligence Request List**
As you know, on February 4, 2025, we transmitted the full due diligence request list to you and David Engstrom. That list covers all standard diligence categories, including corporate and organizational documents, material contracts, litigation, insurance, environmental, labor, real property, intellectual property, tax, regulatory, and financial information. We would ask that the Nexford team begin populating a virtual data room or transmitting materials to us as they become available on a rolling basis.
**Priority / Time-Sensitive Items**
While we appreciate that compiling the full set of materials will take some time, the following categories are needed on an expedited basis — ideally by **February 10–12, 2025** — because they are critical to our review and mark-up of the term sheet, our analysis of the commitment letter, and our early work on the credit agreement and security documents:
**1. Existing Credit Facility Documents**
We need a complete copy of the Credit Agreement dated as of June 14, 2019, among Nexford Industrial Holdings Inc., as Borrower, the Guarantors party thereto, Atlas Meridian Bank, N.A., as Administrative Agent and Collateral Agent, and the Lenders party thereto, together with all four amendments:
- First Amendment (March 20, 2020) - Second Amendment (November 8, 2021) - Third Amendment (April 15, 2023) - Fourth Amendment (September 12, 2024)
The Fourth Amendment is of particular importance, as we understand it waived the prepayment premium on the existing $875,000,000 first lien term loan. We will need to confirm the precise scope and terms of that waiver as part of our payoff analysis.
We also need copies of all existing security agreements, pledge agreements, guarantees, intercreditor agreements, and UCC financing statements filed in favor of Atlas Meridian Bank, N.A.
Finally, please provide a current payoff estimate or, alternatively, the contact information for Sandra Vickers at Atlas Meridian (500 Liberty Avenue, Pittsburgh, PA 15222) so that we can begin coordinating directly on the payoff letter and lien release process. Based on our preliminary calculations, we estimate the payoff amount at closing to be approximately $879,375,000 ($875,000,000 in principal plus approximately $4,375,000 in accrued interest). We understand the existing $190,000,000 revolving credit facility is currently undrawn and will be terminated in connection with the refinancing.
**2. Existing Indenture (Senior Unsecured Notes)**
Please provide a complete copy of the Indenture dated as of November 8, 2021, among Nexford, the Guarantors, and Pinnacle Trust Company, as Trustee, relating to the $250,000,000 aggregate principal amount of 7.250% Senior Unsecured Notes due 2028, together with any supplemental indentures or amendments.
Although the unsecured notes are not being refinanced, we need to carefully analyze the incurrence covenants, restricted payment baskets, change of control provisions, and any other limitations that may apply to the proposed refinancing and the dividend distribution to Granite Peak NIH Holdings, LLC. We will also need to consider the intercreditor arrangement between the new first lien secured parties and the unsecured noteholders, which will need to be negotiated as part of the transaction.
**3. Corporate Organizational Documents**
We need certificates of incorporation or formation, bylaws or LLC agreements, and current good standing certificates for all Loan Parties, including:
- **Nexford Industrial Holdings Inc.** (Delaware corporation, DE File No. 5765432) - **Granite Peak NIH Holdings, LLC** (Delaware LLC, DE File No. 7234891)
And each of the following Subsidiary Guarantors:
- Nexford Precision Components, Inc. (Delaware corp.) - Nexford Engineered Systems, LLC (Delaware LLC) - Nexford Coatings & Surface Technologies, Inc. (Delaware corp.) - Nexford Manufacturing Services, LLC (Illinois LLC) - Nexford Properties, LLC (Delaware LLC) - Nexford International Holdings, Inc. (Delaware corp.) — CFC holdco - Clearfield Tool & Die, Inc. (Pennsylvania corp.) - Summit Industrial Fabrication Co. (South Carolina corp.) - Ridgepoint Specialty Coatings, LLC (Texas LLC) - Lakeshore Precision Engineering, Inc. (Michigan corp.)
We will also need organizational documents for **Nexford Canada Holdings ULC** (British Columbia ULC) and **Nexford Canada Manufacturing, Inc.** (Ontario corp.). Although these foreign subsidiaries will not be guarantors, we need to confirm the CFC holdco structure and the limited pledge arrangement (65% of voting equity / 100% of non-voting equity).
Please note that Sophie Tremblay will be following up separately with more detailed instructions on the organizational documents collection process.
**4. Board / Member Resolutions**
- Copies of the Nexford board resolutions adopted January 13, 2025, authorizing the refinancing and dividend recapitalization. - Copies of the Granite Peak NIH Holdings, LLC manager/member resolutions (also dated January 13, 2025). - To the extent available and shareable, the Granite Peak Capital Partners, LP board or investment committee approval dated January 6, 2025.
**5. Financial Information**
- Audited financial statements for the fiscal years ended December 31, 2022, 2023, and 2024 (or the most recent available if the 2024 audit by Ashworth & Kendrick LLP — Helen Yamamoto, engagement partner — is not yet complete). - Unaudited interim financial statements and management accounts through December 31, 2024 (the LTM period). - A detailed reconciliation of LTM Adjusted EBITDA of $385,000,000, showing reported EBITDA of $357,000,000 and the $28,000,000 in permitted add-backs, broken down as follows: - $12,000,000 — acquisition-related costs - $8,500,000 — non-recurring restructuring charges - $4,500,000 — sponsor management fees - $3,000,000 — integration costs - LTM revenue ($2,100,000,000) and capital expenditure ($78,000,000) detail by segment or business unit, to the extent available. - Pro forma capitalization table and sources & uses, reflecting the $1,400,000,000 facility broken down as follows: - ~$879,375,000 to refinance the existing term loan - ~$335,000,000 for the dividend to Granite Peak NIH Holdings, LLC - ~$38,625,000 in transaction fees and expenses - ~$147,000,000 in cash to the balance sheet - Pro forma leverage calculations: first lien net leverage of approximately 3.38x and total net leverage of approximately 4.03x (including the $250,000,000 unsecured notes).
**6. Real Property Information**
We need title reports, surveys, and any existing appraisals for the four properties to be mortgaged:
- **1400 Industrial Parkway, Schaumburg, IL 60173** (Corporate HQ / primary manufacturing facility; Cook County) - **2750 Commerce Drive, Rockford, IL 61101** (Precision Components plant; Winnebago County) - **600 Manufacturers Row, Greenville, SC 29607** (Engineered Systems plant; Greenville County) - **9100 Westpark Industrial Boulevard, Houston, TX 77063** (Coatings facility; Harris County)
We understand that Greystone Valuation Services, Inc. (Daniel Pritchard, lead appraiser) has been engaged for the appraisals, but any existing appraisals or property information you can share in the interim would be very helpful for our preliminary analysis. Please also provide copies of any existing mortgages, deeds of trust, or other encumbrances currently recorded against these properties.
**7. Insurance Program**
- Current insurance certificates and policy summaries for the property/casualty program (Continental Shield Underwriters, Inc.) and the D&O program (Meridian Specialty Insurance Co.). - Please confirm whether we should coordinate directly with Rachel Sorensen (account executive) at Vantage Risk Advisors, LLC regarding the lender insurance requirements, or whether you would prefer to manage that communication internally.
**8. Environmental Reports**
Any existing Phase I Environmental Site Assessment reports for the four mortgaged properties listed above. If new Phase I ESAs are being commissioned, please confirm the engagement of Clearwater Environmental Sciences, Inc. (Dr. Nathan Foley, project manager) and the expected delivery timeline.
**9. Material Contracts**
A list and copies of all material contracts (customer, supplier, joint venture, and lease agreements), with particular attention to any agreements containing change of control, assignment, or consent provisions that could be triggered by the refinancing.
**10. Litigation**
A current litigation schedule and copies of any pending or threatened claims involving Nexford or any subsidiary.
**Timeline and Urgency**
To put the above in context, the key near-term milestones are as follows:
- **This week (February 5–7):** Claudia and I are preparing an annotated mark-up of the Crescent Harbor term sheet and a negotiation strategy memorandum. - **February 14, 2025:** Target execution date for the commitment letter. - **February 18, 2025:** Target execution date for the fee letter. - **~February 19, 2025:** Rating agency presentations to Keystone Ratings Group, Inc. and Sentinel Credit Analytics, LLC. - **Late February:** First draft credit agreement expected from Whitfield & Gage LLP.
Given this timeline, having the priority items in hand by **February 10–12** will allow us sufficient time to complete our initial diligence memoranda and be fully prepared for the credit agreement negotiation. The balance of the full DD request list items can follow on a rolling basis through the end of February.
**Data Room / Delivery Logistics**
Could you please confirm whether Nexford will be setting up a virtual data room for this transaction? If so, we would appreciate access for the following members of the C&H deal team: Marcus Leung, Sophie Tremblay, Claudia Merritt, and Sylvia Hartwell. Alternatively, materials can be transmitted to us via secure email at the addresses on this message.
**Coordination with Granite Peak and Advisors**
We are also coordinating with Ryan Ostrowski at Granite Peak Capital Partners and Patricia Voss at Kellner Brandt & Associates LLP (sponsor's counsel). Any materials that the Granite Peak team can share directly with us would be helpful and would reduce duplication of effort on your end.
Additionally, we understand that Andrew Castellano at Stonebridge Advisory Group, LLC (financial advisor) may have certain financial materials, including the confidential information memorandum and lender presentation, in various stages of preparation. If you could facilitate an introduction or direct sharing arrangement with Andrew, that would be much appreciated.
**Organizational Chart**
As a related item, Sophie Tremblay is preparing a corporate organization chart, which we expect to circulate by approximately February 10, 2025. Once you receive it, we would be grateful if you could review it and confirm its accuracy.
**Next Steps**
If it would be helpful, we are happy to arrange a kick-off call with you, David, and Michelle to walk through the request list in more detail and discuss any questions or sequencing issues. Please let us know what works for your schedules.
Sophie Tremblay is also available for day-to-day coordination on the document collection process and can be reached directly at the email address above.
Thank you very much for your assistance, Priya. We are looking forward to working with you and the Nexford team on this transaction and will do our best to keep the process as efficient and streamlined as possible. Please do not hesitate to reach out if you have any questions in the meantime.
Best regards,
Marcus Leung Associate, Banking & Finance Calderwood & Harkness LLP 425 Lexington Avenue New York, New York 10017 Direct: (212) 554-7183 Email: mleung@calderwoodharkness.com
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