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Phoenix Services gets interim approval to access DIP financing
By Sarah Lizee
Olympia, Wash., Sept. 30 – Phoenix Services LLC received interim approval to access a proposed debtor-in-possession facility, according to an order filed with the U.S. Bankruptcy Court for the District of Delaware, according to a press release.
In order to support reorganization efforts, a group of the company's first-lien lenders has committed to provide $50 million in new DIP financing. The company now has access to the full $50 million in new money.
Also following the interim order, the company has access to $75 million of a proposed $150 million roll-up of outstanding debt under the first-lien credit agreement.
Credit Suisse Loan Funding LLC is DIP lender, and Wilmington Savings Fund Society, FSB is agent.
Lenders will have a tag right under which they can elect to convert the DIP loans into equity if a third party invests in the debtors through equity or equity-linked securities on economically similar terms.
The DIP financing bears interest at SOFR plus 1,200 basis points. With respect to new money, SOFR plus 200 bps is payable in cash and the remainder is payable in kind. All interest on the roll-up is payable in kind.
The financing includes a 5% upfront fee and a 5% backstop fee, both payable in kind, and a 3% exit fee. There is also a 1% extension fee on each one-month maturity extension.
The financing is set to mature in six months.
The DIP financing will support the company's operations as it completes the Chapter 11 process.
A final hearing on the DIP financing is scheduled for Oct. 27.
Radnor, Pa.-based Phoenix Services is a provider of outsourced slag handling, metal reclamation and complementary services to steel mill customers. The company filed bankruptcy on Sept. 27 under Chapter 11 case number 22-10906.
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