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Law360 (August 24, 2020, 11:20 AM EDT) -- One of the largest crane services providers in the U.S. has applied for Chapter 11 protection in Delaware bankruptcy court, saying the COVID-19 pandemic has left it with no other way to deal with its $666 million in debt than trading lender debt into equity in the company.
In bankruptcy papers filed late Sunday, Houston-based TNT Crane & Rigging said it had been working on ways to address the impending maturity of $466 million of its debt out of court when the pandemic-sparked economic downturn sent it into negotiations with its lenders for a prepackaged Chapter 11 plan that features a debt-for-equity swap.
"Facing a maturity wall during the COVID-19 crisis, the company is compelled to restructure its capital structure through these Chapter 11 cases," CEO Michael Appling Jr. said in his bankruptcy declaration.
Founded in 1985, the company operates about 700 cranes and is the largest open-shop crane services company in North America, according to its Chapter 11 filings. It has about 1,300 employees, it said.
Appling said in his declaration that TNT is highly diversified, with no single industry comprising more than 24% of its business. He said it has been decreasing its involvement in the oil and gas sector in recent years due to the weakness of the energy market, and that currently only 11% of its revenue comes from that market.
"By contrast, several of the end markets that represent a larger proportion of the company's revenue are expected to experience growth as the U.S. economy recovers," he said.
However, $466 million of the company's debt was due to mature by the end of 2020, so in 2019 it began looking for new investors, lenders and potential asset buyers, he said.
"This marketing process was terminated in March 2020 as a result of the lackluster proposals received and the unfavorable market conditions due largely to the COVID crisis which, as described below, materially affected the company's operations and attractiveness to potential bidders," Appling said.
With that avenue cut off, he said the company began negotiations with its first- and second-lien lenders. The result was the current plan, which has the approval of the holders of 98% of the $465.7 million in first-lien revolving and term loans and 93% of the $185 million in second-lien debt.
Under the submitted plan, the company's first-lien lenders will swap their debt for 97% of the equity of a reorganized TNT, with the second-lien lenders receiving the remainder. The holder of the remaining $15.5 million in funded debt, who also approved the plan, will receive warrants for stock purchases.
Under the plan, first-lien lenders will provide a $45 million debtor-in-possession loan facility and a $100 million exit facility.
Appling said the company hopes to have court approval for the plan by the first week of October and to emerge from bankruptcy by the end of that month.
The company has retained Miller Buckfire & Co. as its restructuring adviser and FTI Consulting as its financial adviser.
TNT is represented by Elisha D. Graff, Kathrine A. McLendon, David Zylberberg and Cristina Liebolt of Simpson Thacher & Bartlett LLP and Edmond L. Morton, Sean M. Beach and Allison S. Mielke of Young Conaway Stargatt & Taylor LLP.
The case is In re: TNT Crane & Rigging Inc. et al., case number 20-11982, in the U.S. Bankruptcy Court for the District of Delaware.
--Editing by Marygrace Murphy.
Update: This story has been updated with additional information.
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