BY Fraser Tennant
In a move designed to position itself for future growth opportunities, chemical and petroleum-based products provider TPC Group Inc. and certain of its subsidiaries have voluntarily filed for Chapter 11 bankruptcy protection.
In connection with the Chapter 11 filing, the company has entered into a restructuring support agreement (RSA) to implement a financial restructuring with the support of a majority of its secured noteholders that will deleverage and recapitalise its balance sheet and definitively address other legacy liabilities.
The RSA locks in the support of supporting noteholders and sponsors and establishes the framework for the company’s restructuring, which, upon emergence, is expected to resolve all tort liabilities arising from the Port Neches facility incident and eliminate from the company’s balance sheet over $950m of the company’s approximately $1.3bn of secured funded debt.
“A series of unprecedented events including the coronavirus (COVID-19) pandemic, supply chain issues, commodity price increases, higher energy costs and operational challenges resulting from 2021 Winter Storm Uri, as well as the explosion at our Port Neches plant in November of 2019 have caused financial strain for the company,” said Edward J. Dineen, chairman, president and chief executive of TPC Group. “However, we have undertaken many efforts to address the impacts of these events and preserve liquidity, which has given us the necessary time to consider the best path forward for our business and our stakeholders.”
The transactions contemplated by the RSA, once consummated, will result in the TPC Group emerging from bankruptcy with a significantly enhanced liquidity profile by providing for capital infusions in the form of: (i) $450m in connection with two rights offerings and $350m in exit notes; (ii) a $323m delayed draw debtor-in-possession (DIP) financing facility; and (iii) a $200m asset-based revolving DIP facility.
Headquartered in Houston, TPC Group is a leading producer of value-added products derived from petrochemical raw materials such as C4 hydrocarbons, and provider of critical infrastructure and logistics services along the Gulf Coast.
The company expects to continue its operations uninterrupted throughout the Chapter 11 process.
Mr Dineen concluded: “We are confident the Chapter 11 process will bolster our liquidity, substantially improve our debt position, and definitively resolve the liabilities associated with the Port Neches facility incident.”
News: Chemical maker TPC Group files pre-arranged bankruptcy