Embattled TPC Group files for Chapter 11

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

Tech company Pareteum files for Chapter 11

BY Fraser Tennant

In order to facilitate an efficient sale process and position itself for long-term success, communications technology company Pareteum Corporation and certain affiliates has filed for Chapter 11 bankruptcy protection.

Prior to the Chapter 11 filing, the board and management of New York-based Pareteum evaluated a wide range of strategic alternatives and implemented a strategic asset sale strategy.

After a thorough marketing process to obtain a ‘stalking horse bidder’ for a court-supervised sale process, and as a result of arm's length negotiations, Circles MVNE Pte. Ltd has combined with Channel Ventures Group, LLC to execute a stalking horse asset purchase agreement for substantially all of Pareteum’s assets.

Pareteum expects to continue operations as usual during the Chapter 11 process and complete the process swiftly. To help fund and protect its operations, the company has received a commitment from Circles for up to $6m in debtor-in-possession (DIP) financing.

Upon approval from the bankruptcy court, the DIP financing, along with normal operating cash flows and the consensual use of cash collateral, will fund post-petition operations and costs under normal terms.

“Pareteum has faced numerous challenges in the last few years, especially in light of an increased cost of capital and the coronavirus (COVID-19) pandemic and has been working towards resolving legacy corporate issues while making progress to lay a foundation for future growth,” said Bart Weijermars, interim chief executive of Pareteum. “Despite our business challenges, our products and services that we provide to customers remain strong and relevant in this competitive industry.”

These challenges include accusations of fraud, as well as a number of shareholder lawsuits filed in the wake of a Securities and Exchange Commission (SEC) investigation into inflated revenue reports.

“We look forward to using the Chapter 11 process to position our business for sustained future success across our business lines,” continued Mr Weijermars. “By taking today's decisive and positive step, we are confident that under new ownership, the business can be best positioned for growth and to reach necessary scale and its full potential.”

News: Communications tech company Pareteum approved to tap bankruptcy loan

New heights: Aeromexico exits Chapter 11

BY Fraser Tennant

Following the successful conclusion of a 21-month financial restructuring process, Mexican carrier Aeromexico has emerged from its Chapter 11 bankruptcy.

The financial reorganisation process is being closed after the carrier capitalised and obtained over $3.7bn in unsecured loans, debtor-in-possession (DIP) financing and new capital contributions.

Aeromexico began the Chapter 11 process due to the impact of the coronavirus (COVID-19) pandemic worldwide, making it the third Latin American carrier to employ the protection of the US bankruptcy code, after Avianca and LATAM Airlines Group.

“This is an exciting time for Aeroméxico and we are ready to soar to new heights as we emerge from Chapter 11,” said Andres Conesa, chief executive of Aeroméxico. “We look forward to starting a new chapter in our company’s history, backed by a sound financial base, solid capital structure, and investors who have full confidence in our future.”

Throughout the restructuring process, Aeroméxico has worked to expand its operations sustainably, opening six new routes, restarting service on more than 30, and increasing its total seat offering by more than 320 percent compared to June 2020 figures.

The company currently flies 84 national and international routes, connecting bustling cities in Mexico, such as Guadalajara and Monterrey, to the European market through Madrid. In 2022, Aeroméxico plans to continue building on this momentum, including the restart of services to London.

“Thanks to the dedication of the entire talented Aeroméxico family, as well as the support, trust and empathy of our customers, unions, authorities, suppliers and business partners, we have successfully completed this process,” added Mr Conesa.

In addition, Aeroméxico has formed a new board of directors, comprised of a majority of Mexican nationals and independent members in full compliance with Mexican foreign investment law and regulations.

Mr Conesa concluded: “As we move forward, we will not only continue to streamline our company to become even more sustainable, resilient and competitive, but we will also significantly expand our network and fleet – all while offering excellent service and maintaining our position as Mexico’s flagship airline.”

News: Aeroméxico exits Chapter 11 bankruptcy

Nordic Aviation files for Chapter 11

BY Fraser Tennant

One of the world's largest aircraft leasing companies Nordic Aviation Capital (NAC), together with its subsidiaries, has filed for Chapter 11 bankruptcy in order to implement a financial restructuring plan.  

Under the terms of its restructuring support agreement (RSA), NAC’s debt obligations will be comprehensively restructured, including the conversion of a substantial amount of its debt to equity, with an infusion of $537m in additional capital through a $337m new equity rights offering and a new $200m revolving credit facility.

Furthermore, NAC has obtained an additional $170m debtor in possession financing facility from its existing creditors to help fund operations during the Chapter 11 process. The additional capital will serve to support the company’s liquidity position and its plans to pursue growth in purchasing aircraft.

Following its emergence from the Chapter 11 process, the reorganised NAC will be majority-owned by its largest creditors, which are committed to the company’s long-term success and will invest substantial new equity capital in the business.

“NAC is taking this proactive step in the US because we believe it is the most efficient and effective way to implement a consensual and comprehensive financial restructuring,” said Justin Bickle, vice chairman of NAC and chairman of its restructuring committee. “With the strong support we’ve received from our lenders to date, we are pleased to be entering the Chapter 11 process with a restructuring support agreement in place.”

The industry’s leading regional aircraft lessor serving almost 70 airlines in approximately 45 countries, NAC’s fleet of 475 aircraft includes ATR 42, ATR 72, De Havilland Dash 8, Mitsubishi CRJ900/1000, Airbus A220 and Embraer E-Jet family aircraft.

“I am comforted to see the significant support demonstrated by the lenders and their confidence in NAC’s business model,” concluded Martin Moller, former chairman and founder of NAC. “I have the utmost confidence in the company’s resilience and ability to continue to serve customers in a sustainable manner throughout this process and beyond.”

News: Nordic Aviation Capital Files Bankruptcy to Overhaul Debt

Flight plan: LATAM Airlines eyes Chapter 11 exit

BY Fraser Tennant

In a bid to exit its Chapter 11 bankruptcy, airline holding company LATAM Airlines Group SA and its affiliates in Brazil, Chile, Colombia, Ecuador, Peru and the US have filed a plan of reorganisation alongside a restructuring support agreement (RSA).

The largest airline in Latin America, Chile-based LATAM sought Chapter 11 bankruptcy protection in New York in May 2020 as world travel came to a halt amid the  disruption caused by the coronavirus (COVID-19) pandemic.

The plan of reorganisation proposes the infusion of $8.19bn into the group through a mix of new equity, convertible notes and debt, which will enable the group to exit Chapter 11 with appropriate capitalisation to effectuate its business plan. Upon emergence, LATAM is expected to have total debt of approximately $7.26bn and liquidity of approximately $2.67bn.

Furthermore, LATAM will raise a $500m new revolving credit facility and approximately $2.25bn in total new money debt financing, consisting of either a new term loan or new bonds. The group also used and intends to use the Chapter 11 process to refinance or amend the group’s pre-petition leases, revolving credit facility and spare engine facility.

“The last two years have been characterised by hardship across the globe,” said Roberto Alvo, chief executive of LATAM. “We have reeled as global aviation and travel were brought to a virtual standstill by the largest crisis to ever face our industry. While our process is not yet over, we have reached a critical milestone in the path to a stronger financial future. 

“We are grateful to the parties who have come to the table through a robust mediation process to reach this outcome, which provides meaningful consideration to all stakeholders and a structure that adheres to both US and Chilean law,” he continued. “Their infusion of significant new capital into our business is a testament to their support and belief in our long-term prospects.”

Upon confirmation of the plan of reorganisation, the group intends to launch an $800m common equity rights offering, open to all shareholders of LATAM in accordance with their preemptive rights under applicable Chilean law, and fully backstopped by the parties participating in the RSA.

Mr Alvo concluded: “We are thankful for the exceptional team at LATAM that has weathered the uncertainty of the past two years and enabled our business to keep operating and serving our customers as seamlessly as possible.”

News: LATAM Airlines files restructuring plan to exit bankruptcy