Notice of Procedure Re Sales Motion To Prospective Purchasers of the Assets of Orco Construction

April 28, 2009 - PRLog -- This Notice is intended to supplement information that you may have already received from ORCO Construction Supply, Inc., the debtor in possession in the above-referenced chapter 11 case (“ORCO”), or its financial advisor M&A Capital, LLC (“M&A”) regarding the upcoming sale of substantially all of ORCO’s assets and, in connection with that sale, the assignment of its executory contracts and unexpired leases to the highest and best bidder at an auction, subject to approval by the United States Bankruptcy Court for the Northern District of California (Oakland Division) (the “Court”).

At a hearing on April 23, 2009, at 9:30 a.m., the Court approved certain procedures in connection with a Motion Of Debtor In Possession For (1) Sale Of Substantially All Its Assets, (2) Sale Free And Clear Of Liens, Claims And Interests, Or Alternatively Determination That Liens Are Void To Extent They Exceed Collateral Value, (3) Assumption And Assignment Of Certain Executory Contracts And Unexpired Leases, And (4) Rejection Of All Other Executory Contracts And Unexpired Leases (the “Sale Motion”).

To insure immediate and convenient access, the Sale Motion and supporting documents, as well as any amendment or update thereto, will be posted at www.howardrice.com/legal/orco (the “Web Site”). ORCO has entered into an agreement, subject to overbids, with a prospective purchaser. That agreement is the Asset Purchase Agreement (the “APA”), dated as of April 5, 2009, between ORCO and ACSP, LLC “ACSP”). A MS Word copy of the APA will be posted at the Web Site. In summary, the APA contemplates a sale, free and clear of liens and interests to the greatest extent permitted by the Bankruptcy Code, of essentially all of the Debtor’s assets to ACSP for cash consideration at “Closing” equal to $14,000,000 (subject to an adjustment at the Closing, based on any variance in the value of the Debtor’s accounts receivable and inventory between execution of the APA and the Closing, defined as the “Working Capital Adjustment” in the APA) (the “Cash Consideration”), plus ACSP’s (i) cure of monetary defaults under those executory contracts and unexpired leases which ACSP requests Debtor assume and assign to it at Closing, and (ii) assumption of certain other liabilities, as described more fully in the APA (the “Initial Offer”). The winning bidder is referred to in this Notice and in the Sale Motion as the “Ultimate Purchaser.”

An auction will be held at the offices of ORCO’s counsel on May 13, 2009, with an initial overbid to be not less than $400,000 above the dollar amount of the bid in the APA (as noted above) and any subsequent overbids to be in increments of not less than $100,000. After the auction, ORCO in consultation with the Committee and its counsel will select a prospective purchaser as the highest and best bid, and may select one or more backup bidders, all subject to Court resolution of any disputed issues. Any objections to the Sale Motion, including any objection to the proposed treatment of executory contracts and unexpired leases, must be filed and served no later than May 15, 2009. Any reply to those objections must be filed and served no later than May 18, 2009 at 3:00 p.m. (Pacific Time). The Court will hear any disputes regarding the selection of the highest and best bid, and any other objections to the Sale Motion at a hearing on May 19, 2009 at 9:30 a.m., and will determine who is the Ultimate Purchaser. The Court may at that time make a determination regarding any disputes involving executory contracts and unexpired leases, or may continue the hearing and set a schedule for further briefing, discovery, or determine any other procedural or substantive matters. The sale will be consummated at a Closing on June 1, 2009 at the law offices of ORCO’s counsel.

Financial Advisor to Orco:
M&A Capital, LLC
32129 Lindero Canyon Road, 204
Westlake Village, CA
Thomas Murphy, Managing Director
Telephone: 818-707-8300
tjmurphy@mandacap.com