Philip Services Corporation (PSC), headquartered in Houston, Texas, announced on August 5, 2003 that the U.S. Bankruptcy Court for the Southern District of Texas approved a commitment for a US$35-million in debtor-in-possession (DIP) loan facility from an affiliate of Icahn Associates Corp.
The DIP financing availability is effective immediately and will remain in place until a plan of reorganization is confirmed by the court, the company sells its assets under Section 363 of the Bankruptcy Code, or December 31, 2003, whichever occurs first.
On June 2, 2003, the company and 43 of its subsidiaries filed for protection under Chapter 11. The DIP financing along with existing consensual use of cash collateral held by a senior secured lender will enable the company to continue normal operations during the reorganization proceedings.
At the same time, the company agreed to a proposed “stalking horse” plan to reorganize with another affiliate of Icahn Associates Corp. and filed a notice of opportunity for other third parties to submit alternative reorganization plans or purchase assets under Section 363. The company will solicit alternative plan proposals as well as bids for all or defined parts of the company’s assets until August 29, 2003. Thereafter, the company will select, and the Court will hold hearings to confirm, the highest and best proposal. The “stalking horse” proposal also contains certain rights to a break up fee of $5-million and up to $1-million in expense reimbursement if the Icahn Associates affiliate is not the prevailing bidder.
PSC has two operating groups: PSC Industrial Services, which provides industrial cleaning and environmental services, and PSC Metals Services, which provides scrap charge optimization, inventory management, scrap sourcing, and industrial scrap removal.
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