Car hauler Jack Cooper Enterprises Inc. and Jack Cooper Holdings Corp. have averted a Chapter 11 bankruptcy on June 29 after nearly 99% of those holding debt approved a plan to send back notes and receive fractions on the dollar.
As a result, Jack Cooper will be able to extinguish $429.2 million of long-term debt on its balance sheet, which was crippling the company with interest payments greater than its operating income, putting it into the red in recent quarters. Nearly nine out of 10 notes, or $373.9 million, were secured from the holdings corporation, which will be retrieved for 55 cents on the dollar. The remaining $55.3 million was unsecured notes with the enterprise group and will be retrieved for 15 cents on the dollar.
Michael Riggs, Jack Cooper Holdings CEO, told Transport Topics that Chapter 11 bankruptcy protection is “off the tables” and the “need and desire [for Chapter 11] is extinguished.”
AUGUST 2019 UPDATE: Car hauler files Chapter 11
“We are pleased to announce the results of the Exchange Transactions for the Existing Notes. The Exchange Transactions, coupled with the 2016 exchange transactions, will reduce the company’s outstanding debt by over $300 million. In addition, the Exchange Transactions will decrease the company’s annual interest expense by over $9.8 million,” Riggs said in a statement. “This deleveraging event is a critical milestone in the company’s efforts to create a healthy and sustainable balance sheet for all of our constituencies — including our lenders and investors, employees, unions, owners, and most importantly, our customers.”
Riggs told TT the transaction would be recorded as a cancellation of debt on the income statement and won’t be subject to taxes.
The Kansas City, Mo. company ranks No. 42 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.