(Bloomberg) — Some of Ascend Performance Materials Inc.’s creditors provided fresh financing to the troubled chemicals firm, giving it time to restructure its debt, according to people with knowledge of the matter.
The SK Capital Partners-backed firm will get a new $100 million loan, of which $40 million will be funded initially, said the people, who asked not to be identified discussing a private matter. All lenders are open to participate in the financing, they said.
The financing, details of which were disclosed to a broader group of lenders Friday, includes cash and a payment-in-kind component, which allows the borrower to defer paying interest in cash and instead pay with additional debt. The loan will pay 8.5% interest in kind and 1.5% cash, said some of the people.
A representative for the company declined to comment, while a representative for SK Capital Partners did not respond to a request for comment.
The stopgap measure comes as the Houston-based firm is looking to get ahead of a loan maturity next year and shore up its liquidity pool amid earnings pressure. Proceeds from the loan will be used for general corporate purposes and working capital needs, the people said. The company produces various chemicals, fibers and plastics for different industries, including automotive and textile sectors.
Since the start of the year, its more-than $1 billion first-lien loan coming due in 2026 has collapsed deeper into distressed territory. It was quoted at around 47 cents on the dollar on Friday afternoon, down from 72 cents on Feb. 27 and around 85 cents at the beginning of the year, according to data compiled by Bloomberg.
The firm is working with PJT Partners and Kirkland & Ellis, while a group of lenders has retained Gibson Dunn & Crutcher, Bloomberg previously reported.
A representative for PJT declined to comment. Representatives for Kirkland and Gibson Dunn didn’t immediately respond to requests for comment.
SK Capital Partners bought Ascend from Solutia Inc. in 2009 for about $54 million. Ascend then grew rapidly, buying facilities in Europe and China, using capital from a small pool of investors.
Moody’s Ratings lowered Ascend’s ratings deeper into junk territory this week, citing weak liquidity and its high debt stack, according to a report.
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