Synagro wins final DIP approval; asset sale, plan negotiations ongoing

By Jim Witters

Wilmington, Del., May 28 - Synagro Technologies, Inc. won final approval for its $30 million debtor-in-possession financing facility and told the court during a May 28 hearing in the U.S. Bankruptcy Court for the District of Delaware that the company is in negotiations to try to "re-engineer" the sale into a Chapter 11 plan.

"There are ongoing discussions with respect to a plan," Synagro attorney George N. Panagakis said.

But if the attempt to leverage the sale into a plan proves unsuccessful, a plan is doubtful, he said.

Judge Brendan L. Shannon said he is "flexible" regarding the "procedures and mechanics" of getting a proposed plan to confirmation and does not want the prospect of a recovery for creditors "lost because of time and expense."

Shannon offered to conduct a status conference with the relevant parties should they need an inkling of "what I'll buy and what I won't."

Panagakis said the judge's comments were "extremely timely and extremely helpful."

The parties "have a couple of obstacles to get through," but may avail themselves of the status conference if discussions on a plan bear fruit, he told the judge.

The bankruptcy case was filed to allow Synagro to deleverage its balance sheet and sell substantially all of its assets to EQT Infrastructure II in a transaction valued at $465 million.

Panagakis said no competing bids were submitted before the bid deadline, so the June 10 auction was canceled.

A hearing to approve the sale to EQT is scheduled for June 20.

DIP details

Synagro's existing first-lien lenders committed to provide $30 million of additional capital in the form of the DIP financing.

Bank of America, NA is the DIP loan agent.

The financing will mature in the earlier of 270 days from closing and 15 days after the closing of a sale of substantially all company assets.

Interest will be either the Base rate plus 550 basis points or Libor plus 650 bps.

Synagro Technologies, a Houston-based recycler of biosolids and other organic residuals, filed for bankruptcy on April 24. The Chapter 11 case number is 13-11041.

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