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STG Logistics Preparing to Potentially File for Chapter 11 Bankruptcy
STG Logistics is preparing to potentially file a chapter 11 bankruptcy as soon as this month, as the company is contending with liquidity pressure amid worsening financial performance, according to sources.
The company is working with Kirkland & Ellis and PJT Partners, and an ad hoc group of lenders is working with Gibson Dunn and Evercore, the sources said. No final decision has been made about a chapter 11 filing since the situation is fluid, they added.
The provider of a range of transportation, logistics and supply chain services is facing a lawsuit from excluded lenders challenging the company’s October 2024 liability management exercise. The plaintiffs and defendants disagreed on various issues such as sacred rights, including interest payments and the grace period associated with them. The excluded lenders are represented by Selendy Gay.
The company raised $300 million in debt and equity through the transaction to shore up its liquidity, but depressed freight rates and supply chain disruptions have affected the company’s financial performance, the sources said.
The $795 million term loan due 2028 was indicated today at 24.75/25, according to Solve.
Fitch Ratings downgraded the company in September to CCC- from CCC+, citing “tightening financial flexibility and lengthening recovery in freight market conditions.”
“The payment in kind (PIK) period on the term loans will end in October 2027, adding around $55 million of annual debt service costs. STG will also need to address the December 2027 springing covenant on its term loans and revolver if the legacy (pre-debt restructuring) $57 million term loan remains outstanding,” the rating agency said.
An estimate of CLOs with the largest exposure is shown below:
STG Logistics, its sponsors Wind Point and , Kirkland & Ellis, Gibson Dunn and Evercore did not respond to requests for comment. Oak Tree Capital and PJT declined to comment.
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