TPC Group, a provider of products to chemical and petroleum-based companies, took definitive steps to strengthen its balance sheet and position the company to be a stronger and more competitive business. The company and certain of its subsidiaries voluntarily filed for Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware. The company intends to use the proceedings to implement a financial restructuring with the support of a majority of its secured noteholders that will deleverage and recapitalize the company’s balance sheet and definitively address other legacy liabilities. The company expects to continue its operations uninterrupted throughout the process.

In connection with the Chapter 11 filings, the company and certain of its affiliates entered into a restructuring support agreement (RSA) with an ad hoc group of holders of approximately 88% of the company’s $205.5 million outstanding 10.875% secured notes due 2024 and approximately 78% of the company’s $930 million outstanding 10.5% secured notes due 2024 and the company’s equity sponsors, among others. The RSA locks in the support of the supporting noteholders and sponsors and establishes the framework for the company’s restructuring, which, on emergence, is expected to resolve all tort liabilities arising from the Port Neches facility incident and eliminate from the company’s balance sheet more than $950 million of the Company’s approximately $1.3 billion of secured funded debt. The transactions contemplated by the RSA, once consummated, will result in the company emerging from bankruptcy with a significantly enhanced liquidity profile by providing for capital infusions in the form of:

  • $450 million in connection with two rights offerings and $350 million in exit notes, all of which will be backstopped by certain of the supporting noteholders, subject to the terms and conditions set forth in the RSA
  • a $323 million delayed draw debtor-in-possession financing facility provided by certain of the supporting noteholders, which includes up to $85 million of new money to support the operations of the company and help fund the restructuring process, subject to customary conditions
  • a $200 million asset-based revolving debtor-in-possession facility provided by Eclipse Business Capital and its affiliates, with the company’s option to convert such facility into an exit asset-based revolving facility, subject to customary conditions.

“Over the past several years, TPC Group has positioned our business as a critical partner and player in the petrochemical industry. However, a series of unprecedented events including the COVID-19 pandemic, supply chain issues, commodity price increases, higher energy costs and operational challenges resulting from 2021 Winter Storm Uri and the explosion at our Port Neches plant in November of 2019 have caused financial strain for the company,”  Edward J. Dineen, chairman, president and CEO of TPC Group, said. “We have undertaken many efforts to address the impacts of these events and preserve liquidity, which has given us the necessary time to consider the best path forward for our business and our stakeholders. We are confident that through this process, we will bolster our liquidity, substantially improve our debt position and definitively resolve the liabilities associated with the Port Neches facility incident.”

The company is advised in this process by Baker Botts, Simpson Thacher & Bartlett, Moelis & Company and FTI Consulting. The supporting noteholders are advised by Paul Hastings and Evercore. Eclipse Business Capital is advised by Goldberg Kohn.