TPC gets access to $232 million of DIP financing, plus partial rollup

By Sarah Lizee

Olympia, Wash., June 3 – TPC Group Inc.’s motion seeking approval of a $523 million debtor-in-possession facility gained interim approval on Friday, according to an order filed with the U.S. Bankruptcy Court for the District of Delaware.

The DIP facility is made up of a $85 million new money term loan and a $200 million new money ABL facility, and a roll up of about $238 million of prepetition notes. This financing is to be provided by a majority of holders of the 10˝% notes and 10 7/8% notes.

Following Friday’s interim order, the company can draw $32 million from the term loan and the full amount of the ABL. About $59.3 million of the notes are deemed rolled up and converted into the term loan on a cashless dollar-for-dollar basis.

As previously reported, the financing drew an objection from an informal group of senior noteholders, who hold about 9.7% of the company’s 10˝% senior secured notes.

The group has filed a related adversary proceeding in the case, but the filing was sealed.

It added that it has offered alternative financing with the same amount of new money, but on better overall terms and without a rollup.

The informal group called the DIP financing inappropriate because there is a strong likelihood that some of the notes being rolled up are actually junior to notes held by the objecting noteholders that the proposed DIP would prime.

Under the now partially-approved DIP financing, interest is 11%, paid in cash. The financing contains certain milestones in line with a restructuring support agreement signed by the consenting noteholders and debtors. There are certain conditions on the company’s ability to draw on the facility, and the debtors won’t be able to make a final draw if they have not filed an RSA plan.

In comparison, the informal noteholder group’s financing would bear interest at 11%, with 3% paid in cash and an option to pay 8% in kind. This financing contains no milestones or covenants tied to treatment of prepetition claims.

“The members of the ad hoc group of usurping noteholders have exploited their majority position in the 10.5% notes to strong-arm the debtors to reject a superior postpetition financing proposal that is more favorable to the 10.5% noteholders as a whole (and, indeed, to all other junior creditors) to improperly shift value to themselves and away from the non-consenting noteholders,” the group had said in its objection.

TPC Group is a Houston-based processor and service provider of value-added products derived from niche petrochemical raw materials. The company filed bankruptcy on June 1 under Chapter 11 case number 22-10493.

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