American Commercial Lines reaches deal to restructure via Chapter 11

By Caroline Salls

Pittsburgh, Feb. 4 – American Commercial Lines Inc. is soliciting votes on a pre-packaged Chapter 11 plan of reorganization after entering into a restructuring support agreement with holders of a substantial majority of its term loan lenders to recapitalize the business and significantly reduce debt, according to a news release.

Under the restructuring support agreement, ACL will receive $200 million in new capital to support liquidity and investments in the business. In addition, the agreement provides for a reduction of funded debt by approximately $1 billion.

The company said it expects to make a pre-packaged Chapter 11 bankruptcy filing in the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas in the coming days.

ACL expects its operations to continue as normal throughout the court-supervised process. Upon emergence, ACL said it will continue to provide customers with competitive and reliable barge transportation services.

“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 area in the river system for extended periods of time,” president and chief executive officer Mark Knoy said in the release.

“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.”

“With this plan, we will have more liquidity to support our 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.”

In connection with the restructuring support agreement and the expected Chapter 11 filing, ACL said it has received a commitment for debtor-in-possession financing consisting of a $640 million asset-based loan and a $50 million term loan from some of its existing lenders.

Upon court approval, the new financing and cash generated from ongoing operations will be used to pay off the company’s existing ABL and to support the business during the court-supervised process.

ACL said it will seek court approval to pay suppliers in full under normal terms for goods and services provided on or after the filing date.

Under the pre-packaged plan, general unsecured pre-bankruptcy claims will also be paid in full in the ordinary course.

Milbank LLP is serving as the company’s legal counsel, Greenhill & Co. is serving as its financial adviser, and Alvarez & Marsal North America, LLC. is serving as restructuring adviser.

American Commercial, a portfolio company of Platinum Equity, is a Jeffersonville, Ind.-based marine transportation service company.

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