Covia Files for Chapter 11 Bankruptcy
Covia (NYSE: CVIA) announced that it has taken a major step toward creating a sustainable capital structure by reducing debt and eliminating excess fixed costs by more than $1 billion.
Benzinga · -
Covia (NYSE: CVIA) announced that it has taken a major step toward creating a sustainable capital structure by reducing debt and eliminating excess fixed costs by more than $1 billion. The Company has entered into a restructuring support agreement (the "RSA") with holders of a majority of its secured debt for a comprehensive financial restructuring of its debt. To implement the terms of the RSA, the Company and certain of its U.S. subsidiaries have voluntarily filed petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division. In addition to reducing its debt, the Company expects to significantly reduce excess fixed costs, improve operating cash flow and position the Company to better execute its go-forward business strategy through the Chapter 11 reorganization process. The Company's foreign subsidiaries, including those in Canada, Mexico and Denmark, were not included in the filings, and its international operations are continuing in the ordinary course. Covia's U.S. operations will also continue in the ordinary course of business serving customers. The Company's current cash reserves of approximately $250 million are expected to provide substantial liquidity to fund operations, support its long-term investment program, and manage the reorganization process. "The actions announced today are expected to significantly strengthen our balance sheet and improve our operating cash flow, making Covia an even stronger partner to our customers in both the near- and long-term," said Richard Navarre, Chairman, President and Chief Executive Officer. "Following a careful and comprehensive review, the Board of Directors and management determined these actions are the best option to ensure the long-term success for Covia. We are pleased to have our lenders' support for our restructuring plan, which demonstrates their confidence in our ongoing operations. Their support of our plan should also allow us to complete this restructuring on an expedited timeframe." Mr. Navarre noted that the unprecedented backdrop from the COVID-19 pandemic and recent energy price shocks have significantly impacted the Company's end markets and customers. "We have made important and substantial progress over the last year executing our strategy and aligning our business with changing market conditions, however, the negative impact of the pandemic and energy downturn has required this action," said Mr. Navarre. "The reorganization process we began today serves as the means to a new beginning, and we expect the actions we have taken recently will enhance the competitive position of our high-quality assets for the future." Mr. Navarre commented that the Covia team remains steadfastly focused on operating safely and serving the Company's customers with quality products. "We thank our customers for their support and also appreciate the continued cooperation of our business partners who play a key role in bringing our materials to market," he said. "We also thank our employees for their hard work and commitment to working safely and productively in the face of recent challenges. This gives me great confidence in our ability to continue to meet our customers' needs and successfully exit the process even stronger." Covia has filed a number of customary motions seeking court authorization to support its operations during the court-supervised process, including the continued payment of employee wages and benefits without interruption. The Company intends to pay vendors and suppliers in full under normal terms for goods and services provided after the filing date. Covia expects to receive court approval for these requests and intends to move through the restructuring proceedings as quickly as possible.