April 30, 2020 – The Debtors notified the Court [Docket No. 287] that their prepackaged Plan of reorganization had become effective as of April 30, 2020. The Court had previously confirmed the Debtors’ Plan on March 20, 2020 [Docket No. 245].
On February 7, 2020, American Commercial Lines, LLC and ten affiliated Debtors (“ACL” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of Texas, lead case number 20-30982. In their lead Petition, the Debtors, providers of inland barge transportation services, noted between 10,000 and 25,000 creditors; estimated assets between $1.0bn and $10.0bn; and estimated liabilities between $1.0bn and $10.0bn (NB: the Debtors' requirement to file a schedule of assets and liabilities was waived by the Court).
In a press release announcing their emergence from bankruptcy, the (former) Debtors stated: "American Commercial Barge Line Holding Corp…as successor to American Commercial Lines Inc….today announced that it has successfully completed its recapitalization and emerged from Chapter 11.
With $200 million in new equity capital and having reduced its funded debt by approximately $1 billion, the Company has a strong financial foundation to support investments in future growth initiatives."
Plan Summary
The Debtors' memorandum in support of Plan confirmation [Docket No. 231] provided: "Among other things, the Plan will (i) pay holders of General Unsecured Claims in full, (ii) provide holders of Term Loan Claims with 95% of the New Common Equity (subject to dilution) and 100% of New Take Back Preferred Equity in the Reorganized Debtors, as well as the right to participate in the Rights Offering, which will result in the infusion of $150 million of new equity capital into the Debtors, (iii) provide the Debtors with access to a New ABL Facility in the principal amount of $650 million, and (iv) provide holders of Interests in Finn Holding with the New Sponsor Warrants. The de-leveraging transactions contemplated by the Plan will eliminate approximately $949 million in funded debt from the Debtors’ balance sheet and thereby improve the Debtors’ financial condition and overall creditworthiness and help ensure their continued operations."
The Disclosure Statement provided: "Key elements of the Debtors’ pre-packaged Plan include
- the Allowed Existing ABL Facility Claims, will receive, in full and final satisfaction, settlement, release, and discharge of, and in exchange for, each such Claim, (i) on a dollar-for-dollar basis, first lien, first-out revolving loans or commitments under the ABL DIP Facility, (ii) payment in full in cash, or (iii) such other less favorable treatment as to which ACL and the holder of such Allowed Existing ABL Facility Claim will have agreed upon in writing;
- the Allowed Term Loan Claims, in the aggregate principal amount of approximately $949 million, will be exchanged for (i) the right to participate in the Rights Offering in accordance with the Rights Offerings Procedures, (ii) a Pro Rata share of the New Take Back Preferred Equity or New Take Back Preferred Warrants, subject to dilution from the Management Incentive Plan, and (iii) a Pro Rata share of the New Common Equity or the New Term Lender Warrants, subject to dilution from the New Sponsor Warrants and conversion of the New Money Preferred Equity;
- the Interests in Finn Holding will be exchanged for 5% of the New Common Equity; and
- all other Claims, including all General Unsecured Claims and all Other Secured Claims, will be paid in full or otherwise rendered Unimpaired.
In order to fund the above-described distributions, in connection with consummation of the Plan, (1) ACL anticipates entering into a new asset based loan facility comprising a revolving credit facility (the “New ABL Facility”) and a last-out term facility, and (2) the Reorganized Company will issue the New Common Equity, the New Preferred Equity, and the New Warrants."
Events Leading to the Chapter 11 Filing
The Debtors state: "ACL has faced a confluence of environmental, macroeconomic, and industry-specific factors that has rendered it unable to service their funded debt obligations and meet their liquidity needs. These factors have created a 'perfect storm' that has negatively affected ACL’s businesses."
The Debtors' perfect storm was comprised of:
(i) unusually high levels of rainfall and flooding in the Inland Waterways, resulting in increased operating costs and reduced revenues;
(ii) decreased demand for soybeans and other goods that ACL transports as a result of recent tariffs and trade tensions between the United States and China;
(iii) an oversupply of dry and liquid cargo barge capacity as a result of declines in domestic coal shipments and a shift in distribution patterns to new crude oil pipeline capacity; and
(iv) (the result of i-iii, above) an inability to service prepetition indebtedness, including approximately $1.48bn of secured debt obligations maturing in November 2020 ($536.0mn under the Existing ABL Facility and approximately $949.0mn under the Term Loan Facility). NB: The Existing ABL Facility is subject to a springing maturity date of August 13, 2020 to the extent the Term Loan Facility remains outstanding as of that date
Restructuring Support Agreement
The Debtors have entered into a restructuring support agreement, dated as of January 31, 2020 (the “RSA,” which is attached to the Disclosure Statement), with holders (or advisors to holders) of a majority of the Term Loan Claims (the “Consenting Term Lenders”) and holders (or advisors to holders) of all of the Interests in Finn Holding.
In addition to establishing the parameters for the $690.0mn of debtor-in-possession (“DIP”) DIP financing described below, the RSA sets forth the terms and conditions for the comprehensive Restructuring of ACL’s balance sheet including: "
On the Effective Date, the Allowed Claims under the Existing ABL Facility shall (i) receive, in full and final satisfaction, settlement, release, and discharge of, and in exchange for, each such Claim, payment equal to the Allowed amount of such Claim, in Cash, or (ii) be otherwise rendered Unimpaired; On the Effective Date, all of the Allowed Term Loan Claims will be fully equitized into 100% of the Take Back Preferred Equity and 95% of the New Common Equity (or, in each case, New Warrants therefor);
- On the Effective Date, certain holders of Allowed Term Loan Claims will contribute $200 million of new money in exchange for a like-amount of mandatorily convertible New Money Preferred Equity in Reorganized ACL, junior in priority to the Take Back Preferred Equity and senior in priority to the New Common Equity (or, in each case, New Warrants therefor), of which (x) $150 million will be contributed pursuant to the Rights Offering which will be backstopped by the Backstop Commitment Parties, and (y) $50 million will be deemed contributed in exchange for the Term Loan DIP Facility Claims; and
- Substantially all other Claims against ACL, including all General Unsecured Claims, will either be paid in full in cash in the ordinary course after the Effective Date or otherwise be Unimpaired."
The following is a summary of classes, claims, voting rights and expected recoveries (defined terms are as defined in the Plan and/or Disclosure Statement)
- Class 1 (“Priority Non-Tax Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Expected Recovery is 100%.
- Class 2 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Expected Recovery is 100%.
- Class 3 (“Existing ABL Facility Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Expected Recovery is 100%.
- Class 4 (“Term Loan Claims”) is impaired and entitled to vote on the Plan. Expected Recovery is 38%. Each holder of an Allowed Class 4 Claim will be entitled to receive distribution in the form of (i) New Common Equity to the extent permitted under the Jones Act Restriction and (ii) New Term Lender Warrants to the extent that New Common Equity cannot be issued to such holder because it is a Non-U.S. Citizen and the Pro Rata share of New Common Equity to be delivered to it under all sections of the Plan, when added to the New Common Equity being issued under the Plan to other Non-U.S. Citizens as of the Effective Date, would exceed the Jones Act Restriction.
- Class 5 (“General Unsecured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Expected Recovery is 100%.
- Class 6 (“Intercompany Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Expected Recovery is 100%.
- Class 7 (“Intercompany Interests”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Expected Recovery is 100%.
- Class 8 (“Interests in Finn Holding”) is impaired and entitled to vote on the Plan. Expected Recovery is N/A. Each holder of an Allowed Class 8 interest will receive its pro rata share of the New Sponsor Warrants.
Liquidation Analysis [please see also Docket No. 233 for notes]
Prepetition Equity Holdings
The prepetition principal stockholders of the Debtors' ultimate parent (Finn Holding Corporation) were private equity investment funds advised by Platinum Equity, LLC (see organizational chart below).
Prepetition Debt
- Prepetition ABL Credit Facility: The Debtors are party to the Prepetition ABL Credit Agreement (the “Prepetition ABL Credit Facility”) which provided for revolving loans and other credit products up to a maximum commitment of $640.0mn, subject to a borrowing base. As of the Petition Date, approximately $536.0mn in borrowings and approximately $16.6mn of letters of credit are outstanding under the Prepetition ABL Credit Facility resulting in $29.7mm of availability on the Petition Date.
- Prepetition Term Loan Facility: The Debtors are party to the Prepetition Term Loan Credit Agreement (the “Prepetition Term Loan Facility”), which provided for an original principal balance of $1,150.0mn. As of the Petition Date, approximately $949.0mn in principal amount was outstanding under the Prepetition Term Loan Facility.
About the former Debtors
[As described prepetition] ACL is one of the largest providers of liquid and dry cargo barge transportation services in the United States, operating a modern fleet of approximately 3,500 cargo barges on the Mississippi River, its tributaries, and on the Gulf Intracoastal Waterway (collectively, the “Inland Waterways”). In addition, ACL operates a series of strategically-placed harbor services facilities throughout the region, providing fleeting, shifting, cleaning, and repair services to their fleet of barges and 188 towboats, as well as to third-parties. With approximately 2,100 employees as of the Petition Date, and customers that include many of the country’s major energy, petrochemical, industrial, and agricultural companies, ACL comprises one of the largest and most diversified marine transportation and service companies of its kind.
Founded in 1915 and headquartered in Jeffersonville, Indiana, ACL is one of the only marine companies that offers barge transportation of both liquid and dry cargoes and terminal and fleeting services throughout the Inland Waterways.
Prepetition Organizational Structure Chart
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The post American Commercial Lines, LLC −Inland Barge Operator Emerges from Chapter 11 with $200mn of New Equity Capital, Minus $1bn of Funded Debt and 95% Owned by Former Term Loan Lenders appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.