TPC Group files Chapter 11 bankruptcy to slash $1.3 billion in debt

By Sarah Lizee

Olympia, Wash., June 1 – TPC Group Inc. and seven affiliates filed Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware on Wednesday, according to court documents.

The company said in a press release that it plans to use the Chapter 11 process to implement a financial restructuring with the support of a majority of its secured noteholders.

TPC expects to continue its operations uninterrupted throughout the process.

The company’s chief executive officer, Edward J. Dineen, said the Covid-19 pandemic, supply chain issues, commodity price increases, higher energy costs and operational challenges resulting from 2021 winter storm Uri, and the explosion at the Port Neches plant in November of 2019, have caused financial strain for the company.

In connection with the Chapter 11 filing, the company entered into a restructuring support agreement with an informal group of holders of about 88% of the company’s $205.5 million outstanding 10 7/8% secured notes due 2024 and about 78% of the company’s $930 million outstanding 10˝% secured notes due 2024, and the company’s equity sponsors, among others.

The RSA establishes the framework for the company’s restructuring, which, on emergence, is expected to resolve all tort liabilities arising from the Port Neches explosion and eliminate over $950 million of the company’s roughly $1.3 billion of secured funded debt.

The company said it will emerge with a significantly enhanced liquidity profile by providing for capital infusions in the form of:

• $450 million in connection with two rights offerings and $350 million in exit notes, all of which will be backstopped by some of the supporting noteholders;

• A $323 million delayed-draw debtor-in-possession financing facility provided by some of the supporting noteholders, which includes up to $85 million of new money to support the operations of the company and help fund the restructuring process; and

• A $200 million asset-based revolving DIP facility provided by Eclipse Business Capital LLC and its affiliates, with the company’s option to convert the facility into an exit asset-based revolving facility.

TPC has filed first-day motions with the bankruptcy court so that it can transition into Chapter 11 without disruption to its ordinary course operations.

The company is advised by Baker Botts LLP, Simpson Thacher & Bartlett LLP, Moelis & Co. LLC and FTI Consulting.

The supporting noteholders are advised by Paul Hastings LLP and Evercore. Eclipse Business Capital LLC is advised by Goldberg Kohn Ltd.

In its petition, the company listed $1 billion to $10 billion in both assets and liabilities.

Its largest unsecured creditors are U.S. Bank, NA, based in Cincinnati, with a $567 million 10˝% secured notes due 2024 deficiency claim, Formosa Plastics Corp., based in Livingston, N.J., with a $12.13 million trade debt claim, Chevron-Phillips Chemical Co., LP, based in The Woodlands, Tex., with a $9.68 million trade debt claim, Westlake Petrochemicals LLC, based in Houston, with an $8.12 million trade debt claim, Sasol Chem NA LLC, based in Houston, with a $6.75 million trade debt claim, Nova Chemicals Inc., based in Moon Township, Pa., with a $6.52 million trade debt claim, and Oci Methanol Marketing LLC, based in Houston, with a $4.54 million trade debt claim.

TPC Group is a Houston-based processor and service provider of value-added products derived from niche petrochemical raw materials. The Chapter 11 case number is 22-10493.

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