February 7 - TBS International plc has filed for prepackaged Chapter 11 bankruptcy as part of a comprehensive debt restructuring agreement with its lenders.
In an official statement, TBS said that the proposed plan will restructure the company's secured debt and pay in full allowed claims of unsecured creditors, to align the company's operations and capital structure with the current and expected demand in the global markets.
The plan, which provides for a USD42.8 million debtor-in-possession (DIP) financing from its existing lenders, was approved by all of its voting lenders.
This financing is provided entirely by the company's existing lenders, including Bank of America, DVB Bank,Toronto Dominion Bank and Credit Suisse. Under the Plan, the DIP financing claims and pre-petition secured debt are to be restructured so as to provide new liquidity, extended maturity dates and other terms sufficient to permit the new entity's successful emergence from Chapter 11 and future viability.
TBS says that it is taking actions necessary to ensure that the chapter 11 filing does not affect the Company's operations, its vendors or customers and that its operations will continue as usual during the chapter 11 process, which is expected to be concluded within 60 days.
The company has sought approval to pay all foreign and critical vendors in the ordinary course, as well as customary relief to continue its wage and benefit programmes for its employees. Pursuant to the Plan, ownership of the company's operating subsidiaries will be transferred to a newly-formed entity that will be owned principally by the lenders. Old equity holders will receive no distributions, and the company will cease to be a reporting public company.
"We are very pleased that our banks are supportive of the steps we have taken to improve our balance sheet and, through it, the long-term health of our company," said Joseph E. Royce, chairman, chief executive officer and president. "As a result of the restructuring, we should be positioned to be a financially sound competitor in our global markets. We have taken steps to diminish the impact of this process on our vendors, customers and employees, and we intend to move forward as expeditiously as possible to complete the restructuring. More importantly, I want to emphasise that this agreement ensures that our vessels will not be arrested and cargo will get to its destination as scheduled."
