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SCOTTSDALE - Wind blade manufacturer TPI Composites, Inc. (NASDAQ:TPIC), with a market capitalization of just $14.25 million, announced Monday that it has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Texas. According to InvestingPro data, the company has been struggling with weak financial health, reflected in its concerning current ratio of 0.88.
The company has reached an agreement with senior secured lenders affiliated with Oaktree Capital Management for up to $82.5 million in debtor-in-possession financing, subject to final documentation and court approval. The DIP package includes $27.5 million in new money and $55 million rolled up from the company’s existing senior secured credit facility.
TPI also secured approval for the use of approximately $50 million in cash collateral to support ongoing operations during the restructuring process.
"Despite recent progress, industry-wide pressures have created financial challenges that must be addressed," said Bill Siwek, Chief Executive Officer of TPI. "We explored a variety of alternatives to address the challenges facing the Company and believe that a chapter 11 process is necessary to position the Company for success."
The Scottsdale-based company, which manufactures composite wind blades for wind turbine manufacturers, stated it plans to continue normal operations throughout the bankruptcy process. TPI has filed motions seeking court authorization to support its operations, including payment of employee wages, salaries, and benefits.
TPI operates factories in the U.S., Mexico, Türkiye, and India, with additional engineering development centers in Denmark and Germany. The company has engaged Weil, Gotshal & Manges LLP as legal counsel, Jefferies LLC as financial advisor, and Alvarez & Marsal North America as restructuring advisor.
The company aims to reach agreement with stakeholders on a plan of reorganization that will allow it to right-size its balance sheet and compete effectively in the current economic environment, according to the press release statement.
In other recent news, TPI Composites reported a larger-than-expected loss for the first quarter. The financial results surprised analysts and led to a notable reaction in the market. Meanwhile, Jefferies adjusted its price target for TPI Composites, raising it to $0.70 from $0.50, while maintaining an Underperform rating. The firm highlighted concerns about production disruptions in Mexico and Turkey that could affect future results. Additionally, TD Cowen downgraded TPI Composites from Buy to Hold, lowering the price target to $1.00 from $2.00. This downgrade was influenced by concerns over the company’s debt and lack of a clear plan to reduce it. These developments reflect ongoing challenges for TPI Composites amidst policy risks and capital structure issues. Investors are closely monitoring the company’s strategies to address these challenges.
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