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Vertellus Specialties Files Chapter 11, Obtains $110MM DIP Loan

May 31, 2016, 08:11 AM
Filed Under: Bankruptcy

Vertellus Specialties Inc., a global manufacturer of fine and specialty chemicals, announced it has reached an agreement through which its existing term loan lenders would purchase substantially all of Vertellus Specialties Inc.'s U.S. and international assets for $453.8 million. This agreement would provide long-term financial stability, allow the Company to maintain production at the highest standards for quality, safety and environmental responsibility, and give Vertellus Specialties Inc. the opportunity to implement its go-forward business strategy under the leadership of its existing management team.

To achieve its financial objectives and facilitate the sale, Vertellus Specialties Inc., its corporate parent Vertellus Specialties Holding Corp., and its U.S.-based subsidiaries filed voluntary Chapter 11 petitions in the United States Bankruptcy Court for the District of Delaware. The filings do not include Vertellus Specialties Inc.'s international entities in Belgium, the U.K., India and China, although these entities are included in the sale process.

The Chapter 11 case also does not include Elma, Washington-based Vertellus Performance Chemicals, the legal entity containing the Company's sodium borohydride (SBH) business, which has separate financing agreements in place. Vertellus Performance Chemicals is not included in the agreement with lenders and will remain under the ownership of Wind Point Partners.

"After evaluating a range of options to address the competitive and macroeconomic challenges facing our Agriculture and Nutrition business and the corresponding impact on our Company's overall financial performance, it became clear that a sale of the Company through the Chapter 11 process was the best, most efficient means of creating a sustainable financial structure for our Company," said Richard Preziotti, President and Chief Executive Officer. "We believe this is a positive outcome for our business, as well as our employees, customers and suppliers, because it allows us to significantly reduce our debt, realize the full benefits of the operational improvements we have already made and position our Company for future growth."

Vertellus intends to continue normal operations in all of its plants and corporate offices throughout this process, ensuring its continued ability to fulfill customer orders as usual. To this end, the Company has secured a commitment from its existing lenders for $110 million of new debtor-in-possession financing to ensure continuity through the sale process. The Company also has filed motions on behalf of the U.S. businesses included in the Chapter 11 case that, once approved by the Bankruptcy Court, will allow these businesses to continue employee wages, medical benefits and other programs without interruption and to pay suppliers on a timely basis for all goods and services delivered on or after May 31, 2016. These motions are typical of the Chapter 11 process and are generally heard in the first days of the case.

Vertellus Specialties Inc.'s agreement with lenders serves as the "stalking horse" in this sale process under section 363 of the U.S. Bankruptcy Code through which Vertellus Specialties Inc. will evaluate any competing bids that may be submitted to ensure it receives the highest and best offer for its assets.

Additional information can be found at

Vertellus is advised in this transaction by DLA Piper, Jefferies and FTI Consulting. The lenders are advised in this transaction by Milbank, Tweed and Moelis & Company.

Vertellus is a global specialty chemicals company focused on the manufacture of ingredients used in pharmaceuticals, personal care, nutrition, agriculture, and a host of other market areas affected by trends favoring "green" technologies and chemistries.

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