Independence-based Covia Corp. (NYSE: CVIA), a minerals and materials supplier for industrial and energy markets, has filed for Chapter 11 bankruptcy protection, part of a strategy the company characterized as "a major step toward creating a sustainable capital structure by reducing debt and eliminating excess fixed costs by more than $1 billion."
Covia late Monday, June 29, said in a news release that it has entered into a restructuring support agreement, or RSA, with holders of a majority of its secured debt to enact "a comprehensive financial restructuring" of its debt. To implement the RSA, Covia and some of its U.S. subsidiaries have 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, which is in Houston.
Bankruptcy reorganization to reduce debt is only part of the strategy at Covia, which also said it "expects to significantly reduce excess fixed costs (and) improve operating cash flow." Covia did not specify the nature of the cost reductions.
Covia said its U.S. operations will "continue in the ordinary course of business serving customers." (Its foreign subsidiaries, including those in Canada, Mexico and Denmark, were not included in the Chapter 11 filings.) The company at present has cash reserves of about $250 million, which it said is "expected to provide substantial liquidity to fund operations."
The company's stock closed trading on Monday at 48 cents per share, up 3% from the close on Friday, June 26. Covia stock's 52-week high is $2.89 per share, and the 52-week low is 36 cents.
Richard Navarre, chairman, president and CEO of Covia, said in a statement that the actions announced on Monday "are expected to significantly strengthen our balance sheet and improve our operating cash flow. ... 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."
He said that while Covia has "made important and substantial progress over the last year executing our strategy and aligning our business with changing market conditions," the COVID-19 pandemic and recent energy price shocks have significantly affected the company's end markets and customers.
Covia in April announced it was cutting staff and implementing other initiatives designed to reduce overhead expenses by about $25 million from 2019 levels.
Court documents related to the bankruptcy can be found here, at a website hosted by the company's claims agent, Prime Clerk. Covia retained Kirkland & Ellis LLP as its legal adviser, PJT Partners LP as its investment banker and AlixPartners LLP as its financial adviser.
Covia on March 10 reported that revenues for 2019 were $1.6 billion, a decrease of 31% compared with 2018, due mainly to lower energy volumes and pricing. The company's net loss from continuing operations in 2019 was $1.29 billion, including the negative impact of $1.4 million in noncash asset impairment charges. That compared with a net loss from continuing operations of $185.5 million in 2018.
Covia was formed on June 1, 2018, via the merger of Fairmount Santrol and Unimin Corp. The company's stock was trading at $24.50 when markets closed on the day of the merger.
The company on April 8 received notification from the New York Stock Exchange that it no longer is in compliance with NYSE continued listing standards, which require listed companies to maintain an average closing share price of $1 over a consecutive 30 trading-day period.
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June 30, 2020 at 07:22PM
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Covia Corp. files for Chapter 11 bankruptcy protection - Crain's Cleveland Business
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