Mississippi Phosphates files bankruptcy, plans to sell company assets

By Caroline Salls

Pittsburgh, Oct. 29 – Mississippi Phosphates Corp. filed Chapter 11 bankruptcy on Monday in the U.S. Bankruptcy Court for the Southern District of Mississippi.

Chief restructuring officer David N. Phelps said in a statement filed with the court that the company intends to continue to operate and manage its businesses to maintain their going concern value in anticipation of a sale of substantially all of its assets in a court-approved sales process.

Phelps said the cash generated from limited production during the initial stage of the Chapter 11 cases and the money loaned to the Mississippi Phosphates debtors under a debtor-in-possession loan agreement will address environmental matters, including water treatment.

The company plans to file motions within a week of the bankruptcy filing date to establish a formal sales process.

Phelps said that the cumulative effect of natural disasters, market fluctuations, deferred capital expenditures and maintenance, unplanned shutdowns of production facilities and unsuccessful planned turnarounds have had a significant detrimental impact on Mississippi Phosphates’ business operations and financial condition.

On Sept. 16, a waste heat boiler failed in one of the company’s sulfuric acid plants resulting in reduced production and additional expenses in the form of an unplanned cash outlay for repairs, as well as lost revenue from the lowered production.

Cash shortfall

Phelps said this loss of revenue, combined with increased repair and maintenance costs, has created a cash shortfall that could not be remedied by increased production levels.

The company estimated that it needed at least $14 million to address the immediate cash shortfall and in order to properly sustain business operations through March 31, Phelps said. The CRO said the company has not been able to generate sufficient cash to fund its operations and address ongoing environmental requirements.

Also, Mississippi Phosphates’ lenders were not willing to make additional loans to fund additional losses outside of the bankruptcy process without participation from other key constituents or new investors.

DIP financing

In conjunction with the bankruptcy filing, the company obtained a commitment for up to $5 million in debtor-in-possession financing.

STUW, LLC is the DIP loan agent.

Interest will be 7%.

The facility will mature on the earliest of April 30, 2015, the closing of a sale of substantially all company assets, the effective date of a Chapter 11 plan and occurrence of a termination event.

Debt details

According to court documents, Mississippi Phosphates has $100 million to $500 million in both assets and debt.

The company’s largest unsecured creditors are

• OCP Office Cherifien Des Ocpangle Route D'el Jadida De La Grand Ceiinture of Casablanca, Morocco, with a $4.83 million claim;

• Transammonia, Inc. of New York, with a $1.97 million claim;

• Oxbow Sulphur Inc. of The Woodlands, Texas, with a $1.74 million claim;

• Premier Chemicals of Baton Rouge, La., with a $1.46 million claim;

• Central Maintenance & Weld of Lithia, Fla., with a $1.27 million claim;

• Shrieve Chemical of Dallas, with a $1.17 million claim; and

• MS Power Co. of Gulfport, Miss., with a $1.07 million claim.

The company is represented by Butler Snow LLP.

Mississippi Phosphates is a Pascagoula, Miss., fertilizer company. The Chapter 11 case number is 14-51667.

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