By Stephanie Gleason
Of DOW JONES DAILY BANKRUPTCY REVIEW
International shipping company TBS International Plc (TBSI)
filed for Chapter 11 bankruptcy protection Monday, blaming factors
that have led other shipping companies to seek similar relief under
the Bankruptcy Code, including a weak global economy, increased
fuel costs, industry overcapacity and poor liquidity in the credit
markets.
TBS International submitted a prepackaged plan to restructure
its $220 million debt load, according to documents filed with the
U.S. Bankruptcy Court in White Plains, N.Y. The company has $369.7
million in assets.
The plan pays some secured lenders a share of $151 million in
new loans and 90% equity in the new company, rolls over other
secured loans and pays unsecured creditor claims in full.
The new structure of these loans, which TBS International
described as a "silo approach," secures its four major loans with
assets owned by separate subsidiaries. In addition, the plan
restructures TBS International as a private company and pays
current stockholders nothing.
To facilitate its Chapter 11 plan, TBS International is asking
for court approval of a $42.8 million bankruptcy loan. This
debtor-in-possession, or DIP, financing is being lent by TBS
International's secured lenders: Bank of America Corp. (BAC), DVB
Bank SE (DVB.FF), Toronto-Dominion Bank (TD, TD.T) and Credit
Suisse Group (CS).
"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," Chief Executive Joseph Royce said
in a statement.
In addition to the usual first-day motions, TBS International is
asking the court for an order to present to foreign creditors that
confirms the protections TBS International has under the Bankruptcy
Code. The company said it believes this order will protect it from
foreign creditors who might otherwise attempt to seize its assets
or terminate contracts.
"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," Royce
said.
The Yonkers, N.Y., company operates a 41-vessel fleet of
tweendeckers and handymax dry bulk carriers in 20 countries with
routes between Latin America and Japan as well as South Korea and
China. It filed for Chapter 11 once before, in July 2000, after its
business was impacted by the Asian financial crisis.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection.)
-Stephanie Gleason, Dow Jones Daily Bankruptcy Review;
202-862-1347; stephanie.gleason@dowjones.com