Mississippi Chemical Corporation (OTC BB:MSPI.OB) announced
on May 16 that it has filed for reorganization under Chapter
11 of the U.S. Bankruptcy Code. The company will continue
to operate its businesses during the period of the reorganization
process.
The filing includes the parent company and its subsidiaries
Mississippi Chemical Company, L.P., Mississippi Nitrogen,
Inc., MissChem Nitrogen, L.L.C., Mississippi Chemical Management
Company, Mississippi Phosphates Corporation, Mississippi
Potash, Inc., Eddy Potash, Inc., Triad Nitrogen, L.L.C.,
and Melamine Chemicals, Inc. The company’s affiliate
Farmland MissChem Limited and its associated companies,
as well as the company’s foreign subsidiaries and
Houston, Texas ammonia terminal, are not included in these
proceedings. The voluntary Chapter 11 petitions were filed
in the U.S. Bankruptcy Court in Jackson, Miss., on May 16.
Following a review by its Board of Directors, the company
determined that a Chapter 11 reorganization is in the best
long-term interests of the company and its stakeholders.
“Over the past five years, the combination of the
depression in the agricultural sector and the extreme increase
and volatility in the price of domestic natural gas, the
company’s primary raw material, has resulted insubstantial
financial losses for the company,” said Charles O.
Dunn, president and ceo of the company in a written statement.
“Despite widespread actions to materially reduce our
operating costs, it is apparent to the company’s management
and our lenders that the cumulative effect of these losses,
along with the current industry environment, requires that
the capital structure of the company be modified significantly.
The most efficient way of accomplishing this under the circumstances
is through a Chapter 11reorganization.”
Several of the company’s existing lenders, led by
Harris Trust and Savings Bank, will provide debtor-in-possession
(DIP) financing of up to $37.5 million, subject to approval
by the Bankruptcy Court. “We are pleased that several
of our banks, with whom we have been working with over the
past few years, have agreed to provide the company with
a level of financing during the reorganization process which
we believe will be adequate,” Dunn said. This financing
will be used to assist the company during its reorganization
process and to support normal operating costs, such as employee
payroll and benefits, vendor payments and production operation
expenses.
Mississippi Chemical has also engaged Gordian Group, LLC
to assist it in exploring various financial restructuring
alternatives, including stand-alone recapitalization and
third-party investment scenarios.Since the company has filed
for reorganization, it did not make the semi-annual interest
payment due on May 16 on the 7 1/4 percent senior notes.
Mississippi Chemical’s management is in discussions
with several of the company’s key constituencies,
including lenders under the company’s existing senior
secured credit facility and an informal committee of holders
of the company’s unsecured 7 1/4 percent senior notes,
regarding possible re organization structures.
The company expects that its trade suppliers, unsecured
trade creditors, employees and customers will not be materially
adversely affected by the outcome of this process. “We
will do all that we can to see that the restructuring goes
as expeditiously as possible. We have a very dedicated workforce
and some excellent operating assets.
We expect to emerge from this process as a stronger, more
flexible company with an ability to better focus our attention
on the needs of our customers,” Dunn concluded. Mississippi
Chemical Corporation is a producer of nitrogen, phosphorus
and potassium products used as crop nutrients and in industrial
applications. Production facilities are located in Mississippi,
Louisiana and New Mexico, and through a joint venture in
The Republic of Trinidad and Tobago. DBJ
