Daily News: February 7, 2012

TBS International Files Chapter 11; BofA, Others Provide DIP Loan

TBS International plc announced that it has reached an agreement with its lenders on the terms of a comprehensive debt restructuring. The proposed plan will restructure the company’s secured debt and pay in full its allowed claims of unsecured creditors, to align the company’s operations and capital structure with the current and expected demand in the global markets.

To implement the restructuring, the company and its subsidiaries negotiated and received affirmative votes from all voting lenders to accept a pre-packaged Chapter 11 Plan of Reorganization that was filed with the U.S. Bankruptcy Court in the Southern District of New York. With the full support of its lenders, the company has requested a prompt combined hearing to approve the disclosure statement for the plan and to confirm the plan.

Notably, the company has, subject to court approval, obtained debtor-in-possession (DIP) financing of $42.8 million to fund operations during the Chapter 11 cases. 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.

The company’s 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 programs 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, CEO 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 emphasize that this agreement ensures that our vessels will not be arrested and cargo will get to its destination as scheduled.”

TBS provides worldwide shipping solutions to a diverse client base of industrial shippers through its Five Star Service: ocean transportation, projects, operations, port services and strategic planning.