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August 23, 2020 – Privately-held TNT Crane & Rigging, Inc. and six affiliated Debtors (“TNT” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 20-11982. The Debtors, a leading provider of crane services, are represented by Edmon L. Morton of Young Conaway Stargatt & Taylor LLP. Further board-authorized engagements include (i) Simpson Thacher & Bartlett LLP as general bankruptcy counsel, (ii) FTI Consulting, Inc. as financial advisors, (iii) Miller Buckfire & Co., LLC as investment banker and (iv) Prime Clerk as claims agent.
The Debtors’ lead petition notes between 10,000 and 25,000 creditors; estimated assets between $500.0mn and $1.0bn; and estimated liabilities between $500.0mn and $1.0bn. The Debtors' Disclosure Statement notes total assets of $790.1mn and total liabilities of $849.1mn. Documents filed with the Court list the Debtors’ three largest unsecured creditors as (i) IPFS Corporation ($641k insurance claim), (ii) SG Equipment Finance USA Corp ($475k RPO claim) and (iii) Anderson Machinery Company ($445k RPO claim).
In a press release announcing the filing, the Debtors advised that: “…the Prepackaged Plan follows on a Restructuring Support Agreement (the 'RSA') with the significant majority of holders of the Company's first and second lien secured loans, along with other supporting parties. The Prepackaged Plan has the support of holders of 98.6% in principal amount of the Company's first lien secured loans and 93.8% in principal amount of its second lien secured loans….TNT expects to emerge from chapter 11 proceedings within 55 days with a stronger capital structure.”
Plan and RSA Overview (RSA and financing term sheets attached to the Disclosure Statement at Exhibit C)
The Disclosure Statement (mailed to voting creditors on August 7th) provides: "The Debtors and their non-Debtor subsidiaries will, in accordance with the Restructuring Support Agreement, implement financial restructuring transactions (the “Restructuring Transactions”) that will eliminate approximately $665 million of principal indebtedness from their balance sheet and provide the Debtors and Reorganized Debtors at least $225 million of new financing.
…the Restructuring Transactions provide for a comprehensive restructuring of a significant portion of the Claims against and Interests in the Debtors. If the Restructuring Support Agreement is implemented through the Chapter 11 Cases [now the case], then the restructuring will take place on the In-Court Effective Date (as defined below) by
(i) distributing to Holders of First Lien Loan Claims their pro rata share of a combination of (a) new term loans (the “Exit Take Back Term Loans”) under the new senior secured term loan facility (the 'Exit Take Back Term Loan Facility') in an aggregate principal amount equal to $100 million; and (b) 97% (subject to dilution by the MIP and New Warrants) of the common stock, limited liability company membership units, or functional equivalent thereof issued by Reorganized TNT to be authorized, issued and outstanding on and after the Effective Date ('New Common Stock');
(ii) distributing to Holders of Second Lien Term Loan Claims their pro rata share of a combination of 3% (subject to dilution by the MIP and New Warrants) of the New Common Stock and five (5) year warrants issued by Reorganized TNT, exercisable either in cash or net settlement, (the 'New Warrants') that can be exercised for up to 5% of the New Common Stock (subject to dilution by the MIP); and
(iii) distributing to the Sponsor Lender, on account of the Sponsor Term Loan Claims, New Warrants that can be exercised for up to 1% of the New Common Stock (subject to dilution by the MIP).
Other than the Holders of the First Lien Loan Claims, the Second Lien Term Loan Claims and the Sponsor Term Loan Claims (who overwhelmingly support the Plan pursuant to the Restructuring Support Agreement), the Debtors’ other creditors (including employees, vendors, and Holders of general unsecured claims) will be paid in full or otherwise receive such treatment to render them unimpaired."
Events Leading to the Chapter 11 Filing
The Disclosure Statement provides: "The Debtors’ capital structure was put in place in 2013. As a result of substantial exogenous challenges, such as the decline of oil prices and the resulting reduction in activity in the oil & gas end market, the Company’s operating performance has been weaker than was expected at the time the debt was incurred, causing TNT to become overleveraged. Over the last several years, the Company has responded to these challenges by diversifying its customer base and geographies through acquisitions and operational changes (including through the 2015 acquisition of RMS, one of the largest crane and rigging services companies in the Rocky Mountain region). In addition, in 2018, the Company received incremental equity investments from the Sponsor and management, and extended the maturity under its First Lien Revolving Facility from 2018 to 2020. However, these steps, while substantially improving the performance and liquidity of the Company, did not address the coming maturity of the bulk of TNT’s debt obligations in 2020—in the next four months, $466 million of the Company’s debt obligations will mature.
With the economic consequences of the COVID-19 pandemic quickly exacerbating the Company’s already tenuous financial position, the Company engaged Stifel’s restructuring affiliate Miller Buckfire and financial advisor FTI in early March. These advisors, along with Company counsel, Simpson Thacher & Bartlett LLP, began to explore both in-court and out-of-court strategic alternatives with the Company.
In March 2020, with the COVID-19 pandemic impacting both refinancing efforts and business operations, it became clear that the Company would be unable to remain in compliance with both of its Credit Agreements without a waiver or forbearance from one or both of the ad hoc groups. After extensive negotiations with both ad hoc groups, the Company entered into a forbearance agreement with the Ad Hoc Cross-Holder Group on April 7, 2020 in respect of certain events of default that would have occurred under the Second Lien Facility as of the expiration of a five business day grace period that began on March 31, 2020 (the 'Second Lien Forbearance Agreement'). Concurrently with the execution of the Second Lien Forbearance Agreement, the Company also closed certain sale-leaseback transactions which provided the Company with incremental liquidity and allowed it to make certain payments due under its First Lien Credit Agreement, thereby remaining in compliance with the terms of that agreement."
DIP and Exit Financing
The Debtors have secured commitments from certain of its first lien lenders for $45.0mn of debtor-in-possession ("DIP") financing, which when combined with normal operating cash flows, the Debtors believe will allow for normal operations throughout their Chapter 11 cases." The Debtors have also received commitments for $225.0mn of exit financing to be provided by certain prepetition first lien lenders.
The following is a summary of classes, claims, voting rights and expected recoveries (defined terms are in the Plan and/or Disclosure Statement; see also the liquidation analysis below):
- Class 1 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate amount of claims is $1,580,000 and expected recovery is 100%.
- Class 2 (“Other Priority Claims”) is unimpaired, deemed to accept, and not entitled to vote on the Plan. The aggregate amount of claims is $257,000 and expected recovery is 100%.
- Class 3 (“First Lien Loan Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $465,650,000 and expected recovery is 80.7%. On the Effective Date each Holder thereof (and/or its designee) shall receive its pro rata share of the First Lien Recovery.
- Class 4 (“Second Lien Term Loan Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claim is $185,000,000 and expected recovery is 6.7%. On the Effective Date each Holder thereof shall receive its pro rata share of the Second Lien Term Loan Recovery.
- Class 5 (“Sponsor Term Loan Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claim is $15,500,000 and expected recovery is 5.0%. On the Effective Date each Holder thereof shall receive its pro rata share of the Sponsor Term Loan Recovery.
- Class 6 (“General Unsecured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate amount of claim is $5,900,000 and expected recovery is 100%.
- Class 7 (“Intercompany Claims”) is impaired/unimpaired, deemed to accept/reject and not entitled to vote on the Plan. The aggregate amount of claim is $3,000,000 and expected recovery is N/A.
- Class 8 (“Section 510(b) Claims”) is impaired deemed to reject and not entitled to vote on the Plan. The aggregate amount of claim is N/A and expected recovery is N/A.
- Class 9 (“Intercompany Interests”) is impaired/unimpaired, deemed to accept/reject and not entitled to vote on the Plan. The aggregate amount of claim is N/A and expected recovery is N/A.
- Class 10 (“Existing TNT Equity Interests”) is impaired deemed to reject and not entitled to vote on the Plan. The aggregate amount of claim is N/A and expected recovery is N/A.
On August 23, 2020, the Debtors' claims agent notified the Court of Plan voting results which were as follows [Docket No. 17]:
- Class 3 (“First Lien Loan Claims”) 113 claim holders, representing $459,209,764.49 (or 99.19%) in amount and 99.12% in number, accepted the Plan. 1 claim holder, representing $3,734,148.04 (or 0.81%) in amount and 0.88% in number, rejected the Plan.
- Class 4 (“Second Lien Term Loan Claims”) 97 claim holders, representing $173,491,005.33 (or 99.00%) in amount and 97.98% in number, accepted the Plan. 2 claim holders, representing $1,750,000.00 (or 1.00%) in amount and 2.02% in number, rejected the Plan.
- Class 5 (“Sponsor Term Loan Claims”) 1 claim holder, representing $17,616,438.36 in amount and 100% in number, accepted the Plan.
Exhibits attached to the Disclosure Statement [Docket No. 16]:
- Exhibit A: Plan of Reorganization
- Exhibit B: Corporate Structure of the Debtors
- Exhibit C: Restructuring Support Agreement
- Exhibit D: Financial Projections
- Exhibit E: Valuation Analysis
- Exhibit F: Liquidation Analysis
Proposed Key Dates:
- Voting Deadline: August 21, 2020
- Plan Supplement Filing Deadline: September [●], 2020
- Plan/Disclosure Statement Objection Deadline: September [●], 2020
- Combined Hearing: October [●], 2020
As of the August 7th solicitation date , the Debtors had debt obligations in excess of $665.0mn, with $466.0mn of the Company’s debt obligations maturing in the next four months. The Debtors’ capital structure as of the Solicitation Date consists of the following debt obligations:
Type of Debt
First Lien Revolving Loans
August 27, 2020
First Lien Term Loans
November 27, 2020
Second Lien Term Loans
November 27, 2021
About the Debtors
According to the Debtors: "TNT is a crane services platform that provides operated and maintained ("O&M") crane services and comprehensive lifting services to a broad customer base across multiple sites, with a diversified end market exposure. As a provider of O&M services, the Company supplies its customers with highly skilled operators, technical expertise and project engineering and design in connection with its lifting services."
The Disclosure Statement adds: "As of August 7, 2020….the Company controls nearly 700 cranes in 41 regional branches, servicing more than 4,000 customers. It offers several crane types to meet its customers diverse needs, including truck cranes, all-terrain cranes, rough-terrain cranes, tower cranes and crawler cranes. The crane fleet is young, with an average fleet age of less than 10 years compared to a typical total life for a crane of 25- 40 years.
As of the Solicitation Date, the Company had more than 1,400 skilled employees employed by various business units across its three divisions, which descend from historical acquisitions: (1) TNT Crane & Rigging, Inc., the largest division, conducts operations through lead operating company TNT OpCo, subsidiary Southway Crane & Rigging LLC (“Southway”), and certain other direct and indirect subsidiaries of TNT OpCo; (2) RMS Cranes, LLC, a non-Debtor subsidiary of TNT OpCo acquired by TNT OpCo in 2015, which conducts operations through Rocky Mountain Structures, Inc. and its subsidiaries (collectively, “RMS”); and (3) Allison Crane & Rigging LLC, a non- Debtor, sister division of TNT acquired in July 2018."
Corporate StructureLiquidation Analysis (see Exhibit F to Disclosure Statement for notes)
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