Over the next two days, an announcement is expected that will affect
the entire industry. The business and assets of Kingston, Pa.-based
Diamond Glass are scheduled to be sold via an auction process, following
the company's filing for bankruptcy on April 1.
Tomorrow, the bids for the company, which were due at noon yesterday,
will be opened in the offices of Young Conaway Stargatt & Taylor
LLP in Wilmington, Del.
The U.S. Bankruptcy Court for the District of Delaware, where the
case is being handled, previously had authorized Diamond's senior
secured lender,Guggenheim, to arrange for any qualified bidder "certain
that would enable such qualified
bidder, if it so desires, to borrow up to $25 million
only if such bidder is determined to be the successful bidder after
In addition, the court authorized Diamond "the right, as they
may reasonably determine to be in the best interests of their estates
and in consultation with counsel to the Creditors' committee"
Once the successful bid and bidder are chosen, the court will review
the bid during a hearing on Friday, June 20, and, once approved,
Diamond will sell all assets to that bidder, according to court
During a May hearing, Diamond Glass counsel Michael Richman of
Foley & Lardner advised the court that the company made some
changes to the planned bid procedures "to accommodate concerns
raised by one potential bidder [Belron]."
"We agreed to eliminate the option that we would have to conduct
any part of the auction under a sealed bid procedure," Richman
said. "In addition, we made clear that the parties who initially
are entitled to receive bids will not disclose them to parties who
are not initially entitled to receive bids, amplifying the confidentiality
of the process and the fairness of it."
He added, "We also agreed to condition our exercise of discretion
with the word 'reasonable.' And we agreed to provide reasonable
access to management for all potential bidders prior to the bid
As of the May hearing, Diamond had received inquiries from more
than 40 parties through its investment banker, National City, according
to court documents.
We have high hopes that there will be lively and
competitive bidding for the company," Richman said. National
City had, at that point, contacted 178 potential buyers, had received
46 requests for confidentiality agreements and had sent executive
summaries to 41 prospective purchasers, according to court documents.
The Guggenheim Factor
When Diamond announced its bankruptcy on April 1, it was also
announced that part of its re-organization plan includes the consideration
of the sale of its business to Diamond Glass's senior secured lenders,
through their agent, Guggenheim Corporate Funding LLC. Through the
auction process, in Guggenheim's bid, a significant portion of Diamond's
debt to the company would be exchanged in part for ownership of
the company. However, it was announced early on that other bidders
would have the opportunity to "better the Guggenheim proposal,"
as noted in Diamond's April 1 press release, issued right after
During a hearing in early May, Richman advised the court that Guggenheim,
Diamond's senior secured lender, had reduced its aggregate credit
bid-lessening the amount others would have to surpass to succeed
in the auction.
"[Guggenheim] has agreed that [it] will not credit-bid the
portion of [its] claim that is covered by the guarantee from Kenneth
Levine," he said. "So, there's approximately $10 million
that [it] will not credit-bid
which then reduces [its] maximum
from roughly $52 to roughly $42 million."
Richman also noted at that time that if Guggenheim does have the
highest bid for the company, he's unaware how they will proceed
with it after the sale.
"You asked me about what we know about whether Guggenheim
is going to take people or not, and I have to be very careful on
how I answer that question because the truth is, we really don't
know. We haven't been told," he said.
"We believe that Guggenheim would try to carry on the business
in substantially the same form as it is today, but no one's assured
us of that
" he said. "
We hope, of course,
that every single person continues to be employed by whoever the
successor entity is if we effectuate a sale, but there's just no
way of knowing that."
Could Diamond Be Belron's Next Acquisition?
While Guggenheim holds the spot as the senior secured lender (the
"Stalking Horse bid," as court documents note), to date,
the only prospective industry bidder who has publicly made known
its interest in Diamond Glass is Belron. Company chief executive
officer Gary Lubner expressed to glassBYTEs.com during an
exclusive interview on April 16 that the company "has interest"
in purchasing Diamond. (CLICK
HERE for related story.)
During an interview less than a week ago, Lubner declined to comment
on what Belron's plans for Diamond might be, should it be successful
in the winning process.
"We can't really comment at this stage, as we are getting
toward the finishing line this week, and I can't even confirm whether
we're going to be at the auction or not," Lubner said.
Belron has been actively involved in the case thus far. The bidding
procedures were changed at Belron's request (see above), and the
hearing was delayed for two weeks due to a motion originally made
by Belron. (CLICK
HERE for related story.) The motion for extension was sealed,
however, as Belron noted that "the status of the discussions
between [Diamond] and Belron is described and detailed throughout
the Bid Extension Motion
While Guggenheim and Belron seem, at this point, to be the most
likely players, based on the information provided in the case so
far, as noted, more than 40 potential bidders requested information.
The winning bidder is scheduled to be chosen tomorrow, and a hearing
for the court to review and approve the winning bidder will be held
on Friday. Stay tuned to glassBYTEs.com for more information
as it becomes available.
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