PES Energy and its subsidiaries have filed for bankruptcy protection under Chapter 11 of the U.S. Code and had entered into a proposed DIP financing agreement with holders of the company’s outstanding term loan debt providing for up to $100 million in new funding.
According to documents filed with the court, Cortland Capital Market Services is serving as administrative agent and collateral agent for the transaction. The court also authorized an option to draw up to an additional $20 million of incremental loans from the DIP lenders.
This proposed financing provides the company with a strong financial foundation to support existing operations, undertake the work necessary to ensure the refinery complex is safely positioned for rebuilding and restart and complete its reorganization process.
With the proposed financing agreement, the company will work with its stakeholders toward a restructuring implemented through a Chapter 11 Plan. The company expects to establish an orderly process for the evaluation of a range of potentially value-maximizing transactions in the weeks ahead and to work expediently with its insurers, stakeholders, and third parties toward our goal of reaching a consensual plan, rebuilding the damaged infrastructure and resuming refining operations.
“Today’s agreement provides PES Energy with the additional financing and liquidity necessary to ensure we can safely wind down our refining operations and, with the support of our insurers and stakeholders, best position the company for a successful reorganization, the rebuilding of our damaged infrastructure, and a restart of our refining operations. We will continue our ongoing cooperation with the federal, state and city governmental agencies investigating the June 21 accident and thank them and our employees for their diligent efforts at this difficult time. The success of our plan is critical to energy supply and security for the region, the Commonwealth of Pennsylvania and the City of Philadelphia,” said Mark Smith, CEO of PES Energy.
The recent fire and explosions at the company’s alkylation unit caused substantial property damage, impacted the company’s liquidity, and caused the recent suspension of refining operations at the complex. The company will work on a comprehensive resolution with its stakeholders and insurers in the weeks ahead with the goal of rebuilding the damaged facilities.
PES Energy is the indirect parent company of Philadelphia Energy Solutions Refining and Marketing, which owns and operates the Point Breeze and Girard Point oil refineries located on an integrated, 1,300-acre refining complex in South Philadelphia.