Radnor files Chapter 11 bankruptcy; obtains $103 million DIP commitment

By Caroline Salls

Pittsburgh, Aug. 21 - Radnor Holdings Corp. filed for Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the District of Delaware and has agreed to sell substantially all of its assets to an affiliate of Tennenbaum Capital Partners, LLC as stalking horse bidder, according to a company news release.

The assets to be sold include Radnor's WinCup and StyroChem businesses.

According to the release, Radnor expects a sale or alternative reorganization to be completed within 90 days.

The company's foreign subsidiaries in Finland, Canada and Poland were not included in the Chapter 11 filing.

In addition, the secured lenders of the company's Finnish subsidiary have agreed to forbear from exercising any rights or remedies arising out of the company's Chapter 11 filing for 90 days.

The company said the filing will allow it to continue to operate as usual while beginning a sale process for all or a portion of its assets or an alternative reorganization.

In connection with the filing, Radnor said it has secured a commitment for $103 million in debtor-in-possession financing from Silver Point Finance LLC to enable it to maintain stable operations during the Chapter 11 proceedings.

According to court documents, the DIP facility will include a $52 million term loan and a $51 million revolving facility, including a $5 million letter-of-credit subfacility.

The term will be the earliest of 90 days, 30 days after entry of an interim order if a final order has not been entered, upon consummation of a plan of reorganization, upon closing of a sale of substantially all of the company's assets, upon event of default or upon acceleration of the DIP facility.

Interest will be 11%.

The company will pay a 2.25% letter-of-credit fee.

According to the release, about $64 million of the DIP financing will be used to repay the company's outstanding balance under its pre-bankruptcy revolving facility.

The DIP facility will be used to pay the company's operating and other ordinary course obligations, including payment of employee wages and benefits and payments to suppliers for goods and services received after the Chapter 11 filing.

Debt details

According to court filings, the company has $361.45 million in assets and $325.3 million in debt.

Radnor's largest unsecured creditors include:

• Its unsecured bondholders, with a $135 million claim;

• Polar Plastics, Mount Mourne, N.C., with a $9.04 million claim;

• Lyondell Chemical Co., Chicago, with an $8.35 million claim;

• Nova Chemicals Inc., Carol Stream, Ill., with a $6.71 million claim;

• Total Petrochemicals USA Inc., Atlanta, with a $2.33 million claim;

• Formosa Plastics Corp., Los Angeles, with a $1.99 million claim;

• Weyerhauser, Charlotte, N.C., with a $1.44 million claim; and

• Swift Transportation, Cincinnati, with a $1.35 million claim.

The company's financial adviser is Lehman Brothers. Its legal adviser is Skadden, Arps, Slate, Meagher & Flom LLP.

Radnor is a Radnor, Pa.-based foam cup, container and expandable polystyrene bead manufacturer. Its Chapter 11 case number is 06-10894.

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