Ultrapetrol files for Chapter 11

FEBRUARY 7, 2017— Ultrapetrol (Bahamas) Limited and a number of its subsidiaries yesterday filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of New York yesterday.

Ultrapetrol operates hundreds of barges on Latin American rivers, plus an offshore services fleet and two products tankers and two box ships.

The company says it filed for Chapter 11 to implement an agreement reached with lenders and bondholders on the terms of a comprehensive debt restructuring.

To implement the restructuring, the company and its subsidiaries negotiated and received affirmative votes from all voting lenders and from 99.9% of the company's bonds voting to accept a prepackaged chapter 11 Plan of Reorganization.

According to Bankruptcynews.com:

"Concurrent with the Chapter 11 petition, the Company also filed with the Court a Second Amended Prepackaged Joint Plan of Reorganization and related Disclosure Statement. According to the Disclosure Statement, "Under the Parent-Included Plan, pursuant to the Investment Agreement, …(i) Sparrow River Investments Ltd. ('New Holdco 1'), an affiliate of Sparrow Capital Investments Ltd. and Sparrow C1 Sub Ltd. (together, 'Sparrow'), will acquire the River Business (free and clear of any and all claims, interests, liens and encumbrances), including 100% of the New River Business Holding Company Common Stock to be issued pursuant to the Plan, in exchange for cash consideration in the amount of $73.0 million, which will be used to fund distributions to creditors and (ii) Sparrow Offshore Investments Ltd. ('New Holdco 2'), an affiliate of Sparrow, will acquire the Offshore Business, including 100% of the equity of the Offshore Business Holding Company, a non-Debtor, in exchange for cash consideration in the amount of $2.5 million."

Sparrow Capital Investments Ltd is a subsidiary of Southern Cross Latin America Private Equity Funds III and IV. 

According to Ultrapetrol's press release,

"Pursuant to the Plan, after an exhaustive and competitive marketing effort conducted by a special committee of independent directors and its independent financial and legal advisors, ownership of the Company's river business subsidiaries and offshore business subsidiaries will be purchased by a newly-formed entity owned by affiliates of the Company's largest shareholder which submitted the highest and best bids for the Company's river business and offshore business, respectively. Under the Plan, creditors holding in excess of $290.1 million principal amount are to receive approximately $84.0 million in cash in full settlement of their indebtedness. None of the Company's equity holders will receive any distributions, and the Company expects that shortly after emergence from Chapter 11 it will dissolve and cease to be a reporting public company.

"Under the plan, creditors holding in excess of $290.1 million principal amount are to receive approximately $84.0 million in cash in full settlement of their indebtedness. None of the company's equity holders will receive any distributions, and the company expects that shortly after emergence from Chapter 11 it will dissolve and cease to be a reporting public company.

"The company expects that cash on hand, cash from operating activities, and cash expected to be made available under a cash collateral order will be sufficient to fund its projected cash needs during its financial restructuring, and therefore it does not intend to seek debtor-in-possession (DIP) financing."

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