Greatwide Logistics Services, a portfolio company of Dallas, Texas-based Hicks Holdings and Bahrain-based Investcorp, has filed for Chapter 11 bankruptcy protection.
The company’s first lien lenders, including Centerbridge Capital and DE Shaw, will provide $73.6 million of debtor in possession financing to fund ongoing operations and intend to acquire the company from bankruptcy. Additional purchase offers will be entertained through the court-supervised sale process which expected to be completed in early 2009.
Greatwide: load of debt
The Dallas, Texas-based logistics services company has a debt burden of approximately $600 million, according to court filings. The company said it was driven into bankruptcy by rising fuel costs, declining shipments and a demand for $32 million in additional collateral from insurance company Liberty Mutual for continued coverage.
Signs of trouble for Greatwide began on 30 June when the company defaulted on interest payments to its lenders.
The bankruptcy proceedings will allow Greatwide to restructure and meet its capital structure needs without disrupting operations, the company said in a statement.
Hicks and Investcorp, which declined comment, acquired roughly 90 percent of Greatwide in 2007 for $730 million from New York- and Los Angeles-based Fenway Partners. Investcorp holds approximately 70 percent of the company’s equity and Hicks holds approximately 20 percent. Fenway maintains a minority stake.
The equity ownership positions of Hicks and Investcorp will likely be reduced to zero as is typical in bankruptcy situations.
Fenway acquired 60 percent of Greatwide, then known as Transportation Industries, for an undisclosed amount in 2000. Fenway made four times its original investment in the current sale, a source close to the deal said at the time.
Hicks Holdings is a family investment vehicle of Thomas Hicks, the co-founder of the firm formerly called Hicks Muse Tate & Furst, with which Hicks is no longer affiliated. Hicks retired from Hicks Muse, now known as HM Capital Partners, at the end of 2004. He began investing with his own family fortune under Hicks Holdings in January 2005.
Investcorp, which is listed on the stock exchanges of Bahrain and London, has more than $17 billion in invested assets under management. The firm has five lines of business: private equity, hedge funds, real estate, technology and Gulf growth capital. Investcorp has offices in Bahrain, London and New York.
Greatwide is the latest in a string of private equity-backed companies that have gone bankrupt of late due to factors including heavy debt loads, reduced consumer spending and rising fuel costs. Companies to file for bankruptcy in the last several months include Catterton Partners-owned cookie maker Archway & Mother’s, Allied Capital-backed real estate lender Ciena Capital, Madison Dearborn-sponsored plant nursery operator Hines and Bayside-backed air freight service company Gemini Air.