Phoenix Services gets final approval to access DIP financing

By Sarah Lizee

Olympia, Wash., Nov. 3 – Phoenix Services LLC received final approval to access a debtor-in-possession facility, according to an order filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, in order to support reorganization efforts, a group of the company's first-lien lenders committed to provide $50 million in new DIP financing. The company already had full access to this amount following an interim order.

Also following the interim order, the company had access to $75 million of a proposed $150 million roll-up of outstanding debt under the first-lien credit agreement. The company now has access to the full roll-up.

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 six months from closing.

The DIP financing will support the company's operations as it completes the Chapter 11 process.

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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