| (a) | This Schedule 13D is filed by each of the entities and persons listed below, all of whom together are referred to herein as the "Reporting Persons":
(i) Gates Capital Management, L.P., a Delaware limited partnership ("Gates Capital"), with respect to the shares of Common Stock held by ECF Value Fund, L.P., a Delaware limited partnership, ECF Value Fund II, L.P., a Delaware limited partnership, and ECF Value Fund International Master, L.P., a limited partnership formed under the laws of the British Virgin Islands (collectively, the "Gates Capital Funds"), as to which Gates Capital serves as investment manager;
(ii) Gates Capital Management GP, LLC, a Delaware limited liability company (the "General Partner"), which is the general partner of Gates Capital, with respect to the shares of Common Stock directly held by the Gates Capital Funds;
(iii) Gates Capital Management, Inc., a Delaware corporation (the "Corporation"), which is the managing member of the General Partner, with respect to the shares of Common Stock directly held by the Gates Capital Funds; and
(iv) Jeffrey L. Gates, a United States citizen, who serves as the President of the Corporation, with respect to the shares of Common Stock directly held by the Gates Capital Funds.
Set forth in the attached Annex A and incorporated herein by reference is a listing of the directors, general partners, managing members and controlling persons of the Reporting Persons (collectively, the "Covered Persons"), and sets forth the principal occupation, citizenship and principal place of business of each Covered Person. |
| | On March 3, 2025, Exela Technologies BPA, LLC and certain of its subsidiaries and affiliates (collectively, the "Debtors") commenced voluntary cases under Chapter 11 of Title 11 of the United States Code ss.ss. 101-1532 (the "Chapter 11 Cases") in the United States Bankruptcy Court for the Southern District of Texas (the "Bankruptcy Court"). On June 23, 2025, the Bankruptcy Court entered an order confirming the Debtors Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code (as amended, the "Plan"). On July 3, 2025, the Issuer entered into a Transaction Support Agreement with Exela Technologies BPA, LLC, pursuant to which the Issuer agreed to support the Plan and to take actions necessary to facilitate the restructuring transactions contemplated therein. On July 29, 2025 (the "Effective Date"), the Plan became effective.
As part of the transactions undertaken in connection with the Plan, on the Effective Date, the Gates Capital Funds received an aggregate of 31,931,506 shares of Common Stock in connection with: (i) the exchange of certain of the 11.5% First-Priority Senior Secured Notes due April 2026 (the "April 2026 Notes") issued by Exela Intermediate, LLC and Exela Finance, Inc. and (ii) Gates Capital's backstop commitments in connection with the Debtors' entry into a senior secured super-priority priming debtor-in-possession credit facility (the "DIP Facility") for an aggregate principal amount of $80 million (the "New Money Loans") and the Gates Exit Facility Agreement (as defined below).
Pursuant to the Plan, in exchange for the Gates Capital Funds' claims under the DIP Facility, on the Effective Date, the Gates Capital Funds received an aggregate of approximately $96 million principal amount of 12.000% First-Priority Senior Secured Notes due 2030 (the "Rollover Exit Notes") issued pursuant to an indenture entered into by and among Exela Technologies BPA, LLC, Exela Finance Inc., the guarantors party thereto, U.S. Bank Trust Company, National Association, as trustee, and Ankura Trust Company, LLC, as collateral agent.
Registration Rights Agreement
Pursuant to the Plan, on the Effective Date, the Issuer entered into a registration rights agreement (the "Registration Rights Agreement") granting registration rights to the certain shareholders, including the Gates Capital Funds, in respect of the Common Stock received under the Plan. The Registration Rights Agreement grants rights to the Gates Capital Funds to register the Common Stock received under the Plan, including through shelf registrations on Form S-3 or Form S-1, which the Issuer must file and maintain effective to allow resale of the shares of Common Stock on a delayed or continuous basis. The Gates Capital Funds may request demand registrations for their shares, provided the offering meets certain financial thresholds, and will be entitled to participate in piggyback takedowns when the Issuer registers its own securities or those of other shareholders. The Registration Rights Agreement includes provisions for underwritten transactions, lock-up periods restricting sales before and after offerings, and the Issuer's undertakings to facilitate registrations, cover registration expenses, and provide indemnification and contribution for liabilities arising from registration statements. The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by the full text of the Registration Rights Agreement, a copy of which is included as Exhibit 99.1 to this Schedule 13D by reference to Exhibit 10.2 of the Issuer's Current Report on Form 8-K, filed with the SEC on August 4, 2025, and is incorporated by reference herein.
Gates Exit Facility Agreement
Further, on the Effective Date, the Gates Capital Funds entered into a financing agreement (the "Gates Exit Facility Agreement"), which funded $40 million of the New Money Loans to refinance the Debtors' prepetition senior secured term loan facility, plus accrued interest, fees, and expenses, and $6 million of take-back loans provided to certain other lenders under the DIP Facility. Of the $40 million of New Money Loans provided for under the Gates Exit Facility Agreement, Gates Capital funded approximately $39 million of such loans. The foregoing description of the Gates Exit Facility Agreement does not purport to be complete and is qualified in its entirety by the full text of the Gates Exit Facility Agreement, a copy of which is included as Exhibit 99.2 to this Schedule 13D by reference to Exhibit 10.3 of the Issuer's Current Report on Form 8-K, filed with the SEC on August 4, 2025, and is incorporated by reference herein.
Other Matters
Pursuant to the Plan, an ad hoc group of creditors (the "Consenting Creditors"), including Gates Capital, was granted a one-time right to designate four nominees for appointment to the board of directors of the Issuer upon consummation of the Plan on behalf of all the recipients of Common Stock under the Plan, with a lead independent director selected from the independent directors by a majority vote of the directors. The four directors appointed by the Consenting Creditors were Regina Paolillo, Robert D. Pryor, Sanjay Srivastava and Randal T. Klein. In connection with the foregoing appointments, two members of the Issuer's board of directors, Martin P. Akins and J. Coley Clark, resigned effective on the Effective Date.
Except as set forth herein, the Reporting Persons have no present plan or proposal that would relate to or result in any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule 13D. Nevertheless, the Reporting Persons may have discussions with officers and directors of the Issuer in connection with the Reporting Persons' investment in the Issuer. The topics of these conversations may cover a range of issues, including those relating to the business of the Issuer, management, investor communications, operations, capital allocation, dividend policy, financial condition, mergers and acquisitions strategy, overall business strategy, executive compensation, corporate governance and environmental and social matters related to the Issuer's business and stakeholders. The Reporting Persons may also have similar conversations with other stockholders or other interested parties, such as industry analysts, existing or potential strategic partners or competitors, investment professionals and other investors and may exchange information with any such persons or the Issuer pursuant to appropriate confidentiality or similar agreements (which may contain customary standstill provisions). The Reporting Persons may at any time reconsider and change their intentions relating to the foregoing.
The Reporting Persons intend to review their investment in the Issuer on a continuing basis and depending upon various factors, including without limitation, the Issuer's financial position and strategic direction, the outcome of any discussions referenced above, overall market conditions, other investment opportunities available to them, and the availability of securities of the Issuer at prices that would make the purchase or sale of such securities desirable, may endeavor (i) to increase or decrease their positions in the Issuer through, among other things, the purchase or sale of the shares of Common Stock and/or other equity, debt (including, New Money Loans and/or Rollover Exit Notes), derivative securities or other instruments that are convertible into such securities, or are based upon or relate to the value of such securities or the Issuer (collectively, "Securities") on the open market or in private transactions, including through a trading plan created under Rule 10b5-1(c) or otherwise, on such terms and at such times as the Reporting Persons may deem advisable and/or (ii) to enter into transactions that increase or hedge its economic exposure to the shares of Common Stock or other Securities without affecting the Reporting Persons' beneficial ownership of the Common Stock or other Securities. |
