Covia Files Bankruptcy, Pact Would Hand Lenders Company

(Bloomberg) -- Covia Holdings Corp., a supplier of sand and other mineral products to the oil and gas industry, filed for Chapter 11 bankruptcy in federal court in the Southern District of Texas on Monday.

The company has a restructuring support agreement with holders of the majority of its secured debt. It currently has cash reserves of about $250 million and U.S. operations will continue as normal, according to a news release.

The Ohio-based company can use its cash collateral to fund its ongoing operations and bankruptcy, Judge David R. Jones ruled in the company's first-day hearing. Jones also approved other motions, including ones to pay wages and to continue to use its cash management systems.

Covia has assets and liabilities each in the range of $1 billion to $10 billion, its bankruptcy petition shows. The restructuring will reduce debt and eliminate excess fixed costs by more than $1 billion, according to the statement.

Holders of the term loan claims and swap agreement claims will receive $825 million in take-back debt and 100% of the equity in a reorganized company, according to a summary of the restructuring agreement filed in court. The restructuring pact still has to be approved by the bankruptcy court.

The effects of the coronavirus and recent energy price shocks have hurt the company's markets and customers, Chief Executive Officer Richard Navarre said in a company statement. “The actions announced today are expected to significantly strengthen our balance sheet and improve our operating cash flow, making Covia an even stronger partner to our customers in both the near- and long-term,” he said.

The case is Covia Holdings Corporation, 20-33295, U.S. Bankruptcy Court in Southern District of Texas (Houston).

(Updates with information from court in the third paragraph and company executive quote in the sixth paragraph.)

©2020 Bloomberg L.P.