Item 7.01 Regulation FD Disclosure.
Monthly Operating Report
As previously disclosed, on November 12, 2019, Nuvectra Corporation (the
"Company") filed a voluntary petition for reorganization under Chapter 11 of the
U.S. Bankruptcy Code (the "Chapter 11 Case") in the U.S. Bankruptcy Court for
the Eastern District of Texas (the "Bankruptcy Court"). The Chapter 11 Case is
being administered under the caption In re Nuvectra Corporation, Case No.
19-43090.
On January 15, 2020, the Company filed with the Bankruptcy Court a monthly
operating report for the month ended December 31, 2019 (the "Monthly Operating
Report"). The Monthly Operating Report is attached as Exhibit 99.1 to this
Current Report on Form 8-K and is incorporated by reference into this Item 7.01.
The information in this Item 7.01, including Exhibit 99.1 incorporated by
reference herein, is being furnished under Item 7.01 of Form 8-K and shall not
be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities
of that section, nor shall it be deemed incorporated by reference into any of
the Company's filings under the Securities Act of 1933, as amended, or the
Exchange Act, whether made before or after the date hereof and regardless of any
general incorporation language in such filings, except to the extent expressly
set forth by specific reference in such a filing. The filing of this Current
Report on Form 8-K shall not be deemed an admission as to the materiality of any
information herein that is required to be disclosed solely by reason of
Regulation FD.
Cautionary Note Regarding the Monthly Operating Report
Investors and potential investors should not place undue reliance on the
information contained in the Monthly Operating Report, which was not prepared
for the purpose of providing the basis for an investment decision relating to
any securities of the Company. The Monthly Operating Report is limited in scope,
covers a limited time period, and has been prepared solely for the purpose of
complying with the requirements of the Bankruptcy Court. The Monthly Operating
Report was not audited or reviewed by independent accountants, is in a format
prescribed by applicable bankruptcy laws, and is subject to future adjustment
and reconciliation. The financial information in the Monthly Operating Report
was not prepared in accordance with accounting principles generally accepted in
the United States ("GAAP") and, therefore, may exclude items required by GAAP,
such as certain reclassifications, non-cash items, accruals, valuations and
disclosures. The Monthly Operating Report also contains information for a period
which is different from the historical periods required in the Company's reports
under the Exchange Act, and such information might not be indicative of the
Company's financial condition or operating results that would be reflected in
the Company's financial statements or its reports under the Exchange Act. There
can be no assurance that, from the perspective of an investor or potential
investor in the Company's securities, the Monthly Operating Report is complete.
Results and information set forth in the Monthly Operating Report should not be
viewed as indicative of future results.
Item 8.01 Other Events.
Approval of Sales Process Bidding Procedures
In the Chapter 11 Case, the Company is conducting a sales process to sell the
assets of the Company to one or more bidders under the supervision of the
Bankruptcy Court pursuant to Section 363 of the U.S. Bankruptcy Code. On January
13, 2020, the Bankruptcy Court entered an order approving, among other things,
the bidding procedures to be used in connection with the sale of the Company's
assets (the "Order"). In accordance with the Order, the Company will conduct an
auction on February 27, 2020, commencing at 10:00 a.m. CT, at the offices of
Norton Rose Fulbright US LLP, 2200 Ross Avenue, Suite 3600, Dallas, Texas 75201,
to determine the highest or otherwise best Qualified Bid (as defined in the
Order). In order to participate in the auction, a bidder must submit a Qualified
Bid to the Company in writing no later than February 24, 2020 at 5:00 p.m. CT.
The Bankruptcy Court is scheduled to conduct a sale hearing to approve a sale of
the Company's assets on March 6, 2020 at 10:00 a.m. CT, and the Order provides
that the sale of the assets is scheduled to close no later than March 19, 2020.
Stalking Horse Protections
The Company may select a Qualified Bid as a "stalking horse" bid. The Order
provides that if a stalking horse bidder executes a purchase agreement on or
before February 7, 2020, the stalking horse bidder is entitled to receive deal
protections consisting of (i) reimbursement of reasonable out-of-pocket
expenses, subject to an aggregate cap of $250,000, and (ii) payment of a
break-up fee equal to 3.0% of the cash purchase price set forth in the stalking
horse bidder's Qualified Bid.
The above summary does not purport to be complete and is qualified in its
entirety to the text of the Order, a copy of which is filed as Exhibit 99.2 to
this Current Report on Form 8-K and incorporated by reference herein.
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Additional Information Regarding the Chapter 11 Case
Filings with the Bankruptcy Court related to the Chapter 11 Case are available
electronically at http://www.kccllc.net/nuvectra. Information contained on, or
that can be accessed through, such website or the Bankruptcy Court is not part
of this Current Report on Form 8-K, and the Company disclaims liability for any
such information.
Forward-Looking Statements
This Current Report on Form 8-K contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements are based only on the Company's current beliefs, expectations and
assumptions regarding the future of the Company's business, future plans and
strategies, projections, anticipated events and trends, the economy and other
future conditions, and therefore they are subject to inherent uncertainties,
risks and changes in circumstances that are difficult to predict and may be
outside of the Company's control. The Company's performance may differ
materially from those indicated in the forward-looking statements, and you
should not rely on any of these forward-looking statements. Any forward-looking
statement made by the Company is based only on information currently available
to the Company and speaks only as of the date on which it is made. Important
factors that could cause the Company's actual results to differ materially from
those indicated in the forward-looking statements include: (i) the Company's
ability to obtain Bankruptcy Court approval with respect to motions in the
Chapter 11 Case; (ii) whether the Chapter 11 Case will enable to Company to sell
its assets in an orderly manner (including whether any Qualified Bids will be
submitted and whether any sale of the Company's assets will be consummated by
the closing deadline set by the Bankruptcy Court); (iii) the effects of the
Chapter 11 Case on the Company and the interests of the Company's creditors,
equityholders and other stakeholders; (iv) the length of time the Company will
operate under the Chapter 11 Case; (v) risks associated with third party motions
in the Chapter 11 Case; and (vi) potential adverse effects of the Chapter 11
Case proceedings on the Company's cash position and continuing operations. The
Company undertakes no obligation to publicly update any forward-looking
statement, whether written or oral, that may be made from time to time, whether
as a result of new information, future developments or otherwise.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
99.1 Monthly Operating Report for the month ended December 31, 2019 as filed
with the Bankruptcy Court on January 15, 2020
99.2 Order as entered by the Bankruptcy Court on January 13, 2020
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