Ascend Performance’s Chapter 11 Filing Affects $639M in CLO Holdings

Reporting: Chloe Wang
Ascend Performance Materials, one of the largest U.S. producers of nylon, filed for chapter 11 bankruptcy protection in the Southern District of Texas as part of a balance-sheet restructuring effort yesterday, April 22, raising exposure concerns among 31 U.S. CLO managers with total holdings of $638.98 million in Ascend-related debt.

Following the filing on April 22, S&P Global Ratings downgraded all of Ascend’s term loans to D from CCC+, according to an announcement from the ratings agency.

At the first day hearing, interim approval was granted on Ascend Performance’s DIP motion, which includes $150 million in new-money term loans and a $500 million ABL DIP facility. The second hearing is scheduled for May 21, and the company said it hopes to exit chapter 11 within six months.

Ascend Performance’s filing comes amid ongoing liquidity stress driven by post-pandemic demand weakness, pricing pressure from Chinese competitors and operational disruptions in the third quarter of 2024.

Over the past month, Ascend Performance’s term average loan price dropped to 12.75 from 38.13, with the most recent quote showing a bid of 10 and an offer of 13, according to Solve.

Based on Octus’, formerly Reorg’s, CLO holdings data, the largest exposures to Ascend Performance are held by Sound Point Capital Management , MJX Asset Management and Invesco.

See the table below for details:

Octus’ legal analysts have completed a case summary of Ascend’s chapter 11 filing, which can be found HERE.