“Business as usual” says PAL following Chapter 11 filing

BY Fraser Tennant

A victim of prolonged travel restrictions and a decline in tourism, Philippine Airlines Inc. (PAL) has filed for Chapter 11 bankruptcy in order to restructure and reorganise its finances to navigate the COVID-19 crisis and emerge as a leaner and better-capitalised airline.

As part of the Chapter 11 process, PAL has filed a restructuring plan, which is subject to court approval, which provides over $2bn in permanent balance sheet reductions from existing creditors and allows the airline to consensually contract fleet capacity by 25 percent.

Also included in the plan is $505m in long-term equity and debt financing from PAL’s majority shareholder and $150m of additional debt financing from new investors. PAL will also complete a parallel filing for recognition in the Philippines under the Financial Insolvency and Rehabilitation (FRIA) Act of 2010.

The flag carrier of the Philippines and the country’s only full-service network airline, PAL was the first commercial airline in Asia and marked its 80th anniversary in March 2021. It was also ranked the 30th best airline in the world in 2019.

PAL has stated that business operations will continue as usual during restructuring. PAL Holdings Inc., the holding company of PAL, and Air Philippines Corporation, known as PAL Express, are not included in the Chapter 11 filing.

“We welcome this major breakthrough,” said Dr Lucio C. Tan, chairman and chief executive of PAL. “This is an overall agreement that enables PAL to remain the flag carrier of the Philippines and the premier global airline of the country, one that is better equipped to execute strategic initiatives and sustain the Philippines’ vital global air links to the world.”

The company expects to emerge from the Chapter 11 bankruptcy process before the end of 2021.

Mr Tan concluded: “We are grateful to our lenders, aviation partners and other creditors for supporting the plan, which empowers PAL to overcome the unprecedented impact of the global pandemic that has significantly disrupted businesses in all sectors, especially aviation, and emerge stronger for the long-term.”

News: Philippine Airlines files for Chapter 11 in U.S. after COVID-19 crisis

US Virgin Islands refinery Limetree Bay files for Chapter 11

BY Fraser Tennant

Following a series of operational setbacks which shuttered its St. Croix facility, US Virgins Islands refinery Limetree Bay Refining, LLC, as well as several of its affiliates, has filed for Chapter 11 bankruptcy.  

Through the Chapter 11 process, Limetree Bay intends to engage in discussions with its lenders, creditors, equity owners and others to evaluate options to maximise the value of the estate and recoveries for stakeholders, including exploring a potential sale of its assets.

Furthermore, the company has received commitments for up to $25m in new debtor-in-possession (DIP) financing that, upon court approval, is expected to provide sufficient liquidity to meet ongoing business obligations related to the maintenance of the refinery during the Chapter 11 process.

The Chapter 11 filing was necessitated in part by the temporary suspension of Limetree Bay’s petroleum refining and processing operations in May 2021 and the indefinite suspension of its plans to restart the refinery due to severe regulatory and financial constraints. The refinery had only restarted in February this year after being idle for nearly a decade.

It is expected that management will continue to be responsible for handling the care and maintenance of the refinery and all other necessary day-to-day operations throughout the Chapter 11 process. At the same time, Limetree Bay’s parent expects to continue operations at its oil storage terminal business.

“We are extremely grateful to our investors, employees and business partners for standing by us through the restart process and these uncertain times,” said Jeff Rinker, chief executive of Limetree Bay. “Severe financial and regulatory constraints have left us no choice but to pursue this path, after careful consideration of all alternatives.”

Capable of processing around 200,000 barrels per day, key restart work at Limetree Bay’s St. Croix site began in 2018, including the 62,000 barrels per day modern, delayed Coker unit, extensive desulfurisation capacity, and a reformer unit to produce clean, low-sulfur transportation fuels. The restart project provided much needed economic development in the US Virgin Islands and created more than 4000 construction jobs at its peak.

Mr Rinker concluded: “The Chapter 11 process provides Limetree Bay with the clearest path to maximise the value of our estate for our stakeholders while safely preparing the refinery for an extended shutdown.”

News: Investors balk as bankrupt St. Croix refinery needs $1 bln to be viable

Avadim Health files for Chapter 11 and agrees ‘stalking horse’ sale

BY Fraser Tennant

Over $100m in debt and unable to turn a profit for years, health products company Avadim Health has filed for Chapter 11 bankruptcy in order to sell its assets and position itself for a “long and prosperous future”.

To facilitate the sale and restructuring, Avadim’s existing lender, Hayfin Capital Management, has entered into a binding stalking horse purchase agreement and committed to provide certain debtor-in-possession (DIP) financing, subject to court approval, to allow Avadim to meet its obligations during the process.

Furthermore, the financing that Hayfin has committed to provide in connection with the Chapter 11 filing, along with Avadim’s cash flow from operations, will provide ample liquidity to operate the business and meet ongoing obligations to customers, vendors and employees through the completion of the sale process.

Avadim has also announced it has retained investment bank SSG Capital Advisors, LLC to initiate a comprehensive marketing of its assets to other potential buyers to ensure it receives the highest and best price.

"Our goal is to pursue a transaction that maximises the value of the company and ensures we have the necessary resources and flexibility to invest in, and grow the business," said Keith Daniels, chief restructuring officer at Avadim. "We will continue to create and market world-class products, including our Theraworx line, that our customers have come to love."

"We are confident this action provides us with the most efficient and effective way to pursue a transaction while at the same time allowing us to address financial challenges and best position the company going forward," he continued. "To be clear, the action has no impact on our day-to-day business or our ability to continue serving our customers."

Based in North Carolina, Avadim Health develops and sells topical products to improve immune health, neuromuscular health and skin barrier health – products that target the institutional care and self-care markets.

Mr Daniels concluded: “We are proud of the important and meaningful work Avadim has done over the years and are committed to ensuring the company has the right resources in place to continue its mission. We are excited about our future."

News: Avadim Health Files Chapter 11 to Put Lenders in Control

Hertz chooses Chapter 11 exit plan

BY Richard Summerfield

Hertz Global Holdings Inc has selected an ‘enhanced’ restructuring offer from a consortium of company bondholders and private equity (PE) investors that have agreed to supply the billions of dollars in equity capital the company requires to exit Chapter 11 bankruptcy protection.

A consortium made up of Centerbridge Partners LP, Warburg Pincus LLC and Dundon Capital Partners LLC has been chosen to sponsor Hertz’s exit from Chapter 11 along with bondholders that agreed to take control of the reorganised company. Hertz remains on track to exit bankruptcy protection in June.

The offer from the PE consortium was chosen ahead of a rival offer from Knighthead Capital Management LLC and Certares Management LLC, according to papers filed in the US Bankruptcy Court in Wilmington, Delaware.

Under the terms of the restructuring deal, the supporting noteholders have given approval for the exchange of their unsecured funded debt claims against the company for approximately 48.2 percent of the equity in the reorganised company, and the right to purchase an additional $1.6bn of equity in the future.

Hertz’s restructuring plan requires the approval of the bankruptcy court and will be subjected to a creditor vote. Hertz said Saturday that more than 85 percent of its unsecured bondholders, the biggest voting class in the bankruptcy, support the proposal backed by Centerbridge, Warburg and Dundon.

“We are pleased to be moving forward with an enhanced proposal supported by our largest creditor constituency and that delivers excellent value to all our stakeholders,” said Paul Stone, president and chief executive of Hertz. “This plan accomplishes all the goals we set out to achieve through our financial restructuring. Our new sponsors combined with our strong leadership team will bring significant operational experience across fleet financing and management, which will benefit all of our stakeholders. We look forward to emerging from Chapter 11 in the second quarter financially and operationally stronger, and well-positioned to achieve the opportunities in the rebounding travel market.”

Last week, Hertz Global Holdings completed the $850m sale of Donlen Corp, which it operated as a wholly-owned subsidiary for nearly a decade. Under the terms of that deal, Athene Holding Ltd paid $891m in cash for Donlen, a business which Hertz acquired for $250m in September 2011.

Hertz filed for bankruptcy protection in May 2020 amid the dramatic downturn in travel during the early stages of the COVID-19 pandemic, which had a significant impact on the car rental business. The company had planned to raise funds by selling stock, but the US Securities and Exchange Commission took issue with that plan.

News: Hertz selects Chapter 11 exit plan backed by Centerbridge, Warburg, Dundon

Speedcast emerges from Chapter 11 under new ownership

BY Fraser Tennant

Having successfully completed its restructuring process, satellite communication provider Speedcast International Limited has emerged from Chapter 11 proceedings under the ownership of private investment firm Centerbridge Partners.

Over the past 12 months, Speedcast has taken steps to reduce its cost structure and strengthen its operations. Furthermore, the company plans to transform its business and help customers evolve what their remote operations can achieve with fully connected systems that harness future-ready technologies and applications.

As part of this transformation, Speedcast will also integrate its previous mobility networks with a comprehensive, unified global platform capable of supporting the most demanding customer operations and digitalisation requirements.

“We are pleased to have reached the completion of this process which is the culmination of a lot of hard work from our entire team,” said Joe Spytek, chief executive of Speedcast. “I’m eager to work with Centerbridge to position the business for success and give our customers the tools to advance the performance of their operations in today’s changing market landscape.”

Following Centerbridge’s $500m equity investment in the company, Speedcast now has a clean balance sheet with no secured debt and a healthy cash balance, optimally positioning it as a stable, long-term partner for its employees, customers and vendors.

“We look forward to supporting Speedcast’s management team in building upon the company’s strong foundation to realise the growth opportunities that exist as they move forward,” said Jared Hendricks, senior managing director at Centerbridge. “We are excited to work together to help Speedcast further strengthen its service offerings to ensure the company is poised to thrive.”

Speedcast filed for Chapter 11 in July 2020, citing significant industry pressures, as well the global impact of coronavirus (COVID-19) pandemic –  dynamics that made it impossible for the company to complete its planned equity raise.

Founded in 1989, Speedcast is the world’s largest remote communications and IT services provider. Serving more than 3200 customers in over 140 countries, the company has a strong customer focus and a strong safety culture.

Mr Spytek concluded: “I especially want to thank our customers and partners who extended us their trust as we completed our restructuring, and our employees for their dedication to supporting client operations throughout this process.”

News: Speedcast emerges from Chapter 11 bankruptcy debt free