Posted February 10, 2020
Jeffersonville, Ind., headquartered American Commercial Lines Inc., one of America’s largest barge transportation companies, reports that it has entered into a restructuring support agreement (RSA) with a substantial majority of its term loan lenders on a “pre-packaged” plan to recapitalize the business and significantly reduce the company’s debt.
Under the terms of the RSA, ACL will receive $200 million in new capital to support liquidity and investments in the business. In addition, the RSA provides for a reduction of funded debt by approximately $1 billion.
To implement the RSA, the company and certain related entities are currently in the process of soliciting approval of the “pre-packaged” plan and expect to file voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division in the coming days.
The company expects its operations to continue as normal throughout the contemplated court-supervised process. On emergence from Chapter 11, ACL will continue to provide customers with competitive and reliable barge transportation services.
Mark Knoy, President and Chief Executive Officer of American Commercial Lines, said, “ACL has built a decades-long industry leadership position through key investments in our fleet and a relentless focus on safe and reliable operations. Like many others in our industry, over the last four years ACL has been affected by challenging market conditions, the weather and the closure of key areas of the river system for extended periods of time. We have responded to these challenges by reducing costs and maintaining a high degree of financial discipline. The actions we are now taking will significantly reduce our outstanding debt and the associated costs to service that debt, freeing up our available resources to be fully devoted to competing in today’s market.”
Knoy continued, “With this plan, we will have more liquidity to support our operations through economic cycles and weather patterns and additional financial flexibility for fleet management. In addition, we will be able to focus more of our resources on investing in the business to support future growth. We appreciate the support of our financial stakeholders, which we believe represents a statement of confidence in our business and enables us to move through this process on an expedited basis.”
In connection with the RSA and the expected Chapter 11 filing, ACL has received a commitment for debtor-in-possession (“DIP”) financing consisting of a $640 million asset based loan (“ABL”) and a $50 million term loan from certain of its existing lenders. On court approval, the new financing and cash generated from the company’s ongoing operations will be used to pay off its existing ABL and to support the business during the court-supervised process.
The company says it intends to seek to pay suppliers in full under normal terms for goods and services provided on or after the filing date. Under terms of the pre-packaged plan, which is subject to court approval, general unsecured pre-petition claims will also be paid in full in the ordinary course.
Milbank LLP is serving as the company’s legal counsel, Greenhill & Co. is serving as its financial advisor and Alvarez & Marsal North America, LLC. is serving as restructuring advisor.
Additional information is available HERE