Covia Holdings Corp. emerged from Chapter 11 on Dec. 31, 2020, the company announced, saying that the reorganization reduced its long-term debt by about $750 million and its fixed costs, including railcar obligations, by an additional $300 million.

The Houston bankruptcy court confirmed the company's reorganization plan on Dec. 14, after Covia reached a deal with the unsecured creditors' committee in the case, which had mounted a confirmation challenge, at the conclusion of a five-day confirmation hearing.

Following emergence, the company said its capital structure now consists of roughly $175 million in total liquidity, including $105 million in cash and $70 million of availability under a $135 million, five-year asset-based lending facility provided by PNC Bank, along with a new $806 million term loan B maturing in July 2026.

Under the company's reorganization plan, holders of $1.559 billion of pre-petition term loan claims received 100% of the equity in the reorganized company, along with a new $825 million term loan (which was subject to a $25 million reduction) at L+400, with a 1% Libor floor, payable in cash (or, if the company elects, at L+450, with a 1% Libor floor, with 2.75% PIK and L+175 payable in cash), and excess cash on the reorganized company's balance sheet.

Unsecured creditors received $39.75 million in cash under the plan, in settlement of certain potential fraudulent conveyance and other claims arising out of the 2018 merger between Unimin Corp. and Fairmount Santrol. Of that amount, $36 million was provided by term lenders and $3.75 million was provided by Sibelco, the company's largest shareholder.

The cash settlement replaced a distribution of equity under the company's initial reorganization plan that, according to a complex calculation based on the allocation of unencumbered assets at the company's parent and various subsidiaries, would have resulted in a recovery for unsecured creditors (at the parent level) of 9%-12%, based on allowed claims of $782 million-$857 million, including term loan deficiency claims in excess of $500 million.

The unsecured creditors' committee in the case had sought derivative standing to pursue the claims against the company's lenders, Sibelco and the company's officers and directors. Initially, the panel reached a settlement deal with the lenders and continued to litigate the standing issue with respect to Sibelco, arguing that the claims against Sibelco could be worth as much as $800 million. The company and Sibelco argued, however, that the potential clams did not even meet the relatively low "colorable" standard necessary to justify further litigation, and in the end the company and Sibelco said that the minimal settlement represented the nuisance value of litigating the panel's motion for derivative standing.

Kirkland & Ellis, PJT Partners and AlixPartners advised the company throughout the reorganization.