Phoenix Services Announces Path to Exit from Chapter 11

17 March 2023

Phoenix Services LLC  has received support from an Ad Hoc Group of lenders (defined below) for terms of a restructuring that (i) creates a path to emerge from chapter 11 mid-year, (ii) provides $45mm of new money to invest in the business, (iii) reduces over $500mm of funded indebtedness, (iv) positions the Company to be more profitable and competitive while continuing to provide best-in-class service.

Phoenix Services, a premier provider of mission critical services to leading, global steel, stainless steel, and iron ore producing companies, announced that lenders representing approximately 78% of the Company's debtor-in-possession indebtedness (the "DIP Facility") and approximately 76% of the Company's other prepetition secured indebtedness (collectively the "Ad Hoc Group") have agreed to support the Company's restructuring, subject to various approvals, conditions and final documentation.

The agreed timeline will allow the management team to finalize new contracts with existing customers ahead of the Bankruptcy Court's consideration of the plan of reorganization and disclosure statement that will implement the Company's restructuring.

"Today's announcement moves Phoenix a step closer to emerging from chapter 11 and creating customer relationships to take the Company into the future. We look forward to working with our customer partners and lenders to bring new equipment, manpower and expertise to safely and efficiently perform our necessary work," said Mark Porto, Chief Executive Officer of Phoenix Services.

The Board of Managers supports the restructuring terms and is pleased that the Company has reached this agreement with the Ad Hoc Group on a path to move forward.

Key Terms of the Restructuring Contemplate:

  1. New money investment of $45 million;
  2. Reduction in net leverage to approximately 2x on a pro forma basis (reduction in funded indebtedness of over $500 million);
  3. Pro forma indebtedness to include partial PIK-pay interest to position the Company to generate cash flow, reinvest in existing customer sites, and pursue new growth opportunities; and
  4. Path for the Company to (i) file a disclosure statement and plan of reorganization with the Bankruptcy Court on or around March 31, 2023, and (ii) emerge from chapter 11 mid-year.