Intermodal logistics services provider STG Logistics filed for Chapter 11 bankruptcy to restructure the company and reduce debt by nearly $1 billion.
Filed in a New Jersey bankruptcy court, the port-to-door freight transportation and transhipment company entered into a restructuring support agreement with its lenders that eliminated approximately 91 percent of the company’s debt and provided $150 million in new debtor-in-possession (DIP) financing. In total, STG is reducing its debt load by approximately $952 million.
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The drayage and intermodal services company intends to use up to the maximum amount of new capital received to support core business operations during the Chapter 11 process. STG expects to emerge from bankruptcy in five months.
On the company’s website, STG said in its filing that a Chapter 11 bankruptcy does not mean the company will close or liquidate its assets.
But the debt-for-equity swap will result in a new set of owners, as private equity firms Antares Capital, Fortress Investment Group and Invesco will exchange their debt rights for stakes in the business once the company emerges from Chapter 11.
Geoff Anderman, CEO of STG Logistics, said in a LinkedIn post on Monday that it was business as usual across the company amid the changes.
The CEO said the restructuring would have no impact on the company’s service levels for customers, suppliers and partners.
All facilities remain open and fully operational, while roles, responsibilities and daily salaries remain unchanged, STG says. The company says it continues to book, schedule and fulfill shipments across all service lines, and that agreements with transportation partners and truck drivers remain intact.
In a separate statement, Anderman said the decision would strengthen the company amid “one of the most severe freight downturns in history.”
“We are confident that leveraging the Chapter 11 process will better position the business for long-term growth and success,” Anderman said. “I am deeply grateful to our valued team, customers, suppliers and other partners whose support allows us to continue providing solutions for our customers at the highest level while staying true to our core values of safety, service, integrity and efficiency at the forefront of our operations.”
The company has filed several “day one” motions with the court, which, when approved, will allow STG to continue paying employee salaries and benefits, maintain all customer programs, meet future payments to suppliers, and perform other ordinary business functions.