American Commercial Lines Inc. announced Friday it had filed for Chapter 11 bankruptcy.
ACL’s operations are continuing as normal. Upon emergence, ACL said it will continue to provide customers with competitive and reliable barge transportation services.
“Today we are moving forward with our pre-packaged plan to recapitalize the business, significantly reduce the company’s debt and materially increase our liquidity, which we believe will allow us to focus more of our resources on competing in the marketplace and investing in the business to support future growth,” Mark Knoy, president and CEO of ACL, said in a statement. “Because we already have the support of a substantial majority of our term loan lenders, we expect to move through this process very quickly.”
Knoy continued, “In recent days we have reached out to many of our customers, vendors and other partners, and we appreciate the many expressions of support and confidence they have conveyed to us. I also want to thank our dedicated teammates for their continued hard work and focus on working safely. We look forward to continuing to provide the safest, most cost-effective and environmentally friendly barge transportation solutions.”
As previously announced on Feb. 4, ACL has entered into a restructuring agreement with holders of a substantial majority of its term loan lenders on a pre-packaged plan to recapitalize the business, significantly reduce the company’s debt and substantially increase the company’s liquidity. Under the terms of the agreement, ACL will receive $200 million in new equity capital to support liquidity and investments in the business. In addition, the plan provides for a reduction of funded debt by approximately $1 billion.
“ACL has built a decades-long industry leadership position through key investments in our fleet and a relentless focus on safe and reliable operations,” Knoy said. “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 restructuring agreement, ACL has received a commitment for debtor-in-possession (“DIP”) financing consisting of a $640 million asset-based loan (“ABL”) and a $50 million term loan from certain of its existing lenders. Upon court approval, the new financing and cash generated from the company’s ongoing operations will be used to pay off its existing ABL and to support the business during the court-supervised process.
Knoy said the plan will give the company more liquidity to support its operations through economic cycles and weather patterns and additional financial flexibility for fleet management. “In addition, we will be able to focus more of our resources on investing in the business to support future growth,” he said. “We appreciate the support of our financial stakeholders, which we believe represents a statement of confidence in our business and enables us to move through this process on an expedited basis.”
The company intends to pay suppliers in full under normal terms for goods and services provided on or after the filing date. Under terms of the pre-packaged plan, which is subject to court approval, general unsecured pre-petition claims will also be paid in full in the ordinary course.
Knoy thanked customers for their continued support as the company continues to provide them with “the safest, most cost-effective and environmentally friendly barge transportation solutions. I would also like to thank our teammates for their continued hard work and focus on building on our industry leading safety performance.”
Milbank LLP is serving as the company’s legal counsel, Greenhill & Co. is serving as its financial advisor and Alvarez & Marsal North America LLC. is serving as restructuring advisor.