Intermodal logistics services provider STG Logistics has filed for Chapter 11 bankruptcy to restructure the company and reduce debts by nearly $1 billion.
Filed in a New Jersey bankruptcy court, the “port-to-door” cargo hauling and transloading company entered into restructuring support agreement with its lenders that eliminated roughly 91 percent of the firm’s debt and provides $150 million in new debtor-in-possession (DIP) financing. In total, STG is reducing its debt load by approximately $952 million.
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The intermodal and drayage services company intends to use up to the maximum amount of new capital received to support core business operations during the Chapter 11 process. STG expects to exit the bankruptcy in five months.
On the company website, STG said in its filing that a Chapter 11 bankruptcy does not mean the company is going out of business or liquidating its assets.
But the debt-for-equity swap will result in a new stable of owners, as private equity firms Antares Capital, Fortress Investment Group and Invesco will trade in their debt claims for stakes in the business once the company exits from Chapter 11.
Geoff Anderman, CEO of STG Logistics, said in a LinkedIn post Monday that it was “business as usual” across the company amid the changes.
The CEO said the restructuring would have no impact on the company’s service levels for customers, vendors and partners.
All facilities remain open and fully operational, while day-to-day roles, responsibilities and wages remain unchanged, STG says. The company says it is continuing to book, schedule and fulfill shipments across all service lines, with agreements with freight partners and truck drivers remaining intact.
In a separate statement, Anderman said that the decision would strengthen the company amid “one of the most severe freight recessions in history.”
“We are confident that leveraging the Chapter 11 process will best position the business for long-term growth and success,” Anderman said. “I am deeply grateful to our valued team, customers, vendors, and other partners whose support enables us to continue delivering solutions for our customers at the highest levels while staying true to our core values of safety, service, integrity, and efficiency at the forefront of our operations.”
The company has filed several “first day” motions with the court, which upon its approval, will enable STG to continue to pay employee wages and benefits, maintain all customer programs, fulfill go-forward payments to vendors and execute other ordinary business functions.
