🌑New Chapter 11 Bankruptcy Filing - Cambrian Holding Company Inc.🌑

Cambrian Holding Company Inc.

June 16, 2019

Pour one out for the fine folks of eastern Kentucky and western Virginia. They can’t seem to catch a break.

Earlier this week, Cambrian Holding Company Inc. (and its affiliate debtors) joined a long line of coal producers/processors (e.g., Cloud Peak Energy, Westmoreland Coal, Mission Coal) who have recently filed for bankruptcy. The company employees approximately 660 people, none of whom are members of a labor union (in contrast to bigger, more controversial, coal filings, i.e., Westmoreland) and most of whom must be fretting over their futures. They must really be getting tired of all of the post-election “winning” that’s going on in coal country.

The company’s problems appear to start in 2015, at the time the company acquired TECO Coal LLC and assumed $40mm of workers’ compensation and black lung liabilities that TECO had previously self-insured. The company sought to leverage its broader scale to increase production but it failed to raise the working capital it needed to live up to its obligations and sustain production at levels necessary to service the company’s balance sheet. Post-acquisition, the company doubled revenues, but it couldn’t sustain that progress and nevertheless recorded net losses from 2015 through 2018. In turn, the company triggered financial covenant and other defaults under its ABL Revolver and Term Loan.

In other words, the company has been in a state of emergency ever since the acquisition. Almost immediately, the company “undertook various efforts to return to a positive cashflow,” which, as you might expect, meant idling or closing certain mining operations, stretching the usable life of equipment, and laying off employees.* Its efforts proved fruitless. Per the company:

Notwithstanding these efforts, the Debtors have been unable to overcome the pressures placed on their profit margins from steadily declining coal prices (along with burdensome regulations and the accompanying decline in demand for coal), all of which have contributed to the Debtors’ substantial negative cashflow and inability to consummate a value-enhancing transaction.

So, what now? The company, with assistance from Jefferies LLC, will attempt to find a buyer willing to catch a falling knife: the plan is to “commence an expeditious sale and marketing process” of the company’s assets (call us crazy, but shouldn’t it be the other way around?). To fund this process, the company has a DIP commitment from affiliates of pre-petition lenders for $15mm.**

*Interestingly, it was in March 2016 when Hilary Clinton infamously stated, “Because we're going to put a lot of coal miners and coal companies out of business.” At the time, Cambrian was already struggling, laying off people in an attempt to generate positive cashflow. That message really must’ve struck a chord down in coal country. WHOOPS.

**The Term Lenders swiftly objected to the terms of the DIP and the use of cash collateral.

  • Jurisdiction: D. of Kentucky (Judge Schaaf)

  • Capital Structure: $48mm ABL Revolver (Deutsche Bank AG New York Branch), $78mm Term Loan (Deutsche Bank Trust Company Americas)

  • Professionals:

    • Legal: Frost Brown Todd LLC (Ronald Gold, Douglas Lutz, Patrica Burgess)

    • Financial Advisor: FTI Consulting Inc. (Bertrand Troiano)

    • Investment Banker: Jefferies LLC (Leon Szlezinger)

    • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on the link above for free docket access)

  • Other Parties in Interest:

    • Term Lenders: Deutsche Bank AG, London Branch, Tennenbaum Opportunities Partners V, LP and Tennenbaum Opportunities Fund VI, LLC

      • Legal: Davis Polk & Wardwell LLP (Brian Resnick, Christopher Robertson, Elliot Moskowitz) & (local) Bingham Greenbaum Doll LLP (Christopher Madden)

    • DIP & Bridge Lender: Richmond Hill Capital Partners, LP

New Chapter 11 Filing - Seadrill Ltd.

Seadrill Ltd.

  • 9/12/17 Recap: Cash rich offshore oil and gas extraction company with global reach filed a prearranged bankruptcy to effectuate a balance sheet restructuring because...well...it was over-levered AF. The company purports to have a deal with its major creditors with secured creditors kicking the can down the road, and $2.3b worth of unsecured bondholders and other unsecured claims converting into approximately 15% of the post-reorg equity (with participation rights in the new secured notes and equity noted below). The company will get $1.06b of new capital by combination of new secured notes ($860mm) and equity ($200mm). Holders of $NADL stock will get a big fat donut.  
  • Jurisdiction: S.D. of Texas (Judge David Jones)
  • Capital Structure: A. Lot. Of. Debt. Like $5.7mm of bank debt and $2.3mm of unsecured bonds.
First Day Declaration.

First Day Declaration.

 

  • Company Professionals:
    • Legal: Kirkland & Ellis LLP (Jayme Sprayragen, Anup Sathy, Ross Kwasteniet, Adam Paul, Brian Schartz, Anna Rotman, Jeffrey Zeiger, Anthony Grossi, Spencer Winters) & (local) Jackson Walker LLP (Patricia Tomasco, Matthew Cavenaugh, Rachel Biblo Block)
    • Restructuring Advisor: Alvarez & Marsal LLC (Jeffrey Stegenga, Ed Mosley)
    • Financial Advisor: Houlihan Lokey (David Hilty, Gavin Kagan, Dimitar Voukadinov, Drew Talarico, David Wang, Brian Keenan, Varun Desai, Daniel McManus) & Morgan Stanley
    • Claims Agent: Prime Clerk LLC (*click on company name for docket)
  • Other Parties in Interest:
    • Conflicts Committee of Board of Directors of North Atlantic Drilling Limited and to the Conflicts Committee of the Board of Directors of Sevan Drilling Limited
      • Legal: Willkie Farr & Gallagher LLP (Jennifer Hardy, Andrew Mordkoff, Derek Osei-Bonsu)
      • Financial Advisor: Baker Tilly Virchow Krause LLP (Susan Seabury)
    • Conflicts Committee of Seadrill Partners LLC
      • Legal: Orrick Herrington & Sutcliffe LLP (Katherine Treistman, Raniero D'Aversa, Laura Metzger, Debra Felder)
    • New Money: Hemen Holding Ltd., Centerbridge Partners LP
      • Legal: Cadwalader Wickersham & Taft LLP (Greg Petrick, Yushan Ng, Nicholas Vislocky) & Fried Frank Harris Shriver & Jacobson LLP (Brad Scheler, Jennifer Rodburg, Andrew Minear) & (local) Dykema Cox Smith (Deborah Williamson, Patrick Huffstickler, Aaron Kaufman)
    • Consenting Lender Group
      • Legal: White & Case LLP (Scott Greissman, Philip Abelson, Andrew Katz) & (local) Andrews Kurth Kenyon LLP (Robin Russell, Timothy A. Davidson II, Joseph Rovira)
    • Aristeia Capital L.L.C., GLG Partners LP, Saba Capital Management LP and Whitebox Advisors LLC
      • Legal: Akin Gump Strauss Hauer & Feld LLP (Philip Dublin, Ira Dizengoff, David Staber, Abid Qureshi, Sara Brauner)
    • ARCM Master Fund III, Ltd.
      • Legal: Paul, Weiss, Rifkind, Wharton & Garrison, LLP (Elizabeth McColm, Andrew Rosenberg, Catherine Goodall)
    • Indenture Trustee: Deutsche Bank Trust Company Americas
      • Legal: Morgan, Lewis & Bockius LLP (Chad Steward, Glenn Siegel, Crystal Axelrod, Rachel Jaffe Mauceri)
    • Daewoo Shipbuilding & Marine Engineering
      • Legal: Pachulski Stang Ziehl & Jones LLP (Shirley Cho, Bradford Sandler, Steven Golden)
    • Samsung Heavy Industries Co., Ltd.,
      • Legal: Hogan Lovells US LLP (Robin E. Keller, Ronald J. Silverman, Christopher R. Bryant, Michael Shane Johnson) & (local) 
    • Official Committee of Unsecured Creditors (Nordic Trustee AS, Deutsche Bank Trust Company Americas, Computershare Trust Company NA, Daewoo Shipbuilding & Marine Engineering Co. Ltd., Samsung Heavy Industries Co. Ltd., Pentagon Freight Services Inc., Louisiana Machinery Co. LLC)
      • Legal: Kramer Levin Naftalis & Frankel LLP (Thomas Moers Mayer, Douglas Mannal, Jennifer Sharret) & (local) Cole Schotz PC (Michael Warner, Benjamin Wallen)

Updated 10/5/17 12:03 pm CT