Business News
Constar International Inc. Receives Court Approval on “First Day” Motions in its Reorganization Filing
Wednesday 07. January 2009 - Obtains Interim Approval of $75 Million DIP Financing Facility
Constar International Inc. (NASDAQ: CNST) announced the approval of its operational “first day” motions by the U.S. Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) on December 31, 2008. The Company received, among other things, interim Bankruptcy Court approval of its $75 million debtor-in-possession (DIP) financing. The DIP financing includes the option for the Company to convert it into a three-year exit financing facility, subject to satisfying certain conditions. The DIP and exit financing are being provided by the Company’s existing bank lenders. Constar will use the interim DIP financing and cash generated from its operations to continue to pay vendors and to provide operational and financial stability as it proceeds with its restructuring. The final DIP hearing is scheduled for January 20, 2009.
The Company also announced that it received Bankruptcy Court approval to, among other things, pay pre-petition employee wages, health benefits and other employee obligations during its restructuring under Chapter 11. Additionally, the Company is authorized to pay its ordinary course of business post-petition expenses and to continue to honor all of its current customer contracts without seeking further Bankruptcy Court approval.
“With the prompt approval of our DIP and exit financing and first day motions, we are moving forward while maintaining normal operations,” said Michael Hoffman, President and Chief Executive Officer of Constar. “Throughout this process, we will continue to operate our business without interruption, including paying employee wages and purchasing the goods and services necessary to provide our customers with high quality PET containers and dependable service.”
Constar and its subsidiaries filed to reorganize under Chapter 11 on December 30, 2008, in the U.S. Bankruptcy Court for the District of Delaware. The case number for the consolidated cases is 08-13432.