Indiana-based barge company American Commercial Lines announced Tuesday an agreement with its lenders to file for Chapter 11 bankruptcy as part of a pre-packaged plan to raise new capital and reduce its debt.
The “Restructuring Support Agreement” will inject $200 million in new capital into the business and reduce debt by approximately $1 billion.
ACL and certain related entities are expected 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, ACL said.
The company expects to continue operations as normal throughout the court-supervised process and, upon emerging from Chapter 11 will continue to provide customers with “competitive and reliable barge transportation services.” ACL said it also intends to pay suppliers in full under normal terms for goods and services provided on or after the filing date.
American Commercial Barge Line, as it is commonly referred, is one of the largest and most diversified marine transportation companies in the United States’ inland river Jones Act trade, operating a fleet of approximately 3,550 dry and liquid bulk barges as well as 190 towboats, according to ACBL’s website.
Over the last five years, the company has invested over one billion dollars in its fleet and operations.
ACL was acquired in 2010 by private equity firm Platinum Equity in a deal valued at $800 million.
“ACL has built a decades-long industry leadership position through key investments in our fleet and a relentless focus on safe and reliable operations,” said Mark Knoy, President and Chief Executive Officer. “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.”
In connection with the RSA and the expected Chapter 11 filing, ACL has received a commitment for debtor-in-possession financing consisting of a $640 million asset based loan and a $50 million term loan from certain of its existing lenders. ACL intends to pay off the loan from its ongoing operations upon court approval.
Milbank LLP is serving as the ACL’s legal counsel, with Greenhill & Co. as its financial advisor and Alvarez & Marsal North America, LLC. as its restructuring advisor.