Phoenix Services, a provider of mission critical services to global steel producing companies, has taken the next step in its comprehensive restructuring strategy by filing voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. In order to support its reorganization efforts, a group of the company’s first lien lenders have committed to provide $50 million in new debtor-in-possession financing, subject to court approval.
The proposed DIP financing will support the company’s operations as it completes the Chapter 11 process. The company’s decision to formally restructure follows an exhaustive review of its long-term contracts while facing inflationary headwinds, supply chain constraints and rising fuel costs. Recognizing the need for a swift resolution of negotiations in order to maintain the high level of safe, reliable service to its customers, the company looked to a court-supervised process to protect the business from further erosion and implement the next phase of its strategy.
“The steps we are taking now, to address our contract portfolio, will allow us to continue as an integral partner to our customers providing critical services and create a sustainable and profitable structure for the future,” Mark Porto, CEO of Phoenix Services, said.
The company filed a series of motions that, pending court approval, will enable the business to operate normally during the implementation of its strategy, including meeting obligations to its employees. The company remains dedicated to safety, reliability and operational excellence.
All international affiliates are excluded from the U.S. process and will continue normal operations.
Phoenix Services is being advised by Weil, Gotshal & Manges and Richards, Layton & Finger as its legal advisors, AlixPartners as its financial advisor and PJT Partners as investment bankers.