Vertex Energy, Inc. (VTNR) shares are taking a nosedive in pre-market trading on Wednesday after the company announced its decision to file for Chapter 11 bankruptcy. This move comes on the heels of a Restructuring Support Agreement (RSA) signed with its term loan lenders, securing their full support. The company has filed the customary first-day motions and plans to maintain normal operations while pursuing a comprehensive restructuring strategy under the RSA.
To facilitate this restructuring process, the Consenting Term Loan Lenders have pledged to provide $80 million in Debtor-In-Possession financing, subject to specific terms and conditions. Vertex Energy has also submitted a Chapter 11 plan and bidding procedures, aiming to solidify its Chapter 11 plan by year’s end.
Seth Bullock, Chief Restructuring Officer of Alvarez & Marsal, expressed optimism about the agreement, stating, “We have gained significant momentum with the partnership of Vertex’s lenders over the last several months and believe the restructuring support agreement and related milestones will allow the Company to initiate a fresh start and improve long-term value as it singularly concentrates on strengthening its foundation for continued growth and stability.”
As of June 30, 2024, Vertex Energy held $18.9 million in total cash and cash equivalents, including $0.1 million in restricted cash, resulting in a net debt position of $284.9 million. Notably, the company announced the departure of Doug Haugh as Chief Commercial Officer (CCO) earlier this month. Joshua Foster has stepped in as the new CCO, while CEO Benjamin P. Cowart will assume the role of interim Chief Operating Officer.
The impact of the bankruptcy filing on Vertex Energy’s stock is evident in the pre-market trading, where VTNR shares have plummeted by 59.1% to $0.1475.
