Nitrocrete, affiliates file for Chapter 11 bankruptcy protection

FORT COLLINS — Nitrocrete LLC and four affiliated entities, including parent Nitro Holdings LLC, have filed for Chapter 11 bankruptcy protection, blaming disruption caused by the COVID-19 pandemic.

Bankruptcy petitions were filed Nov. 18 with the U.S. Bankruptcy Court in Denver for those two entities, as well as affiliates Nitrocrete IP LLC, Nitrocrete Equipment LLC and Nitrocrete  Holdings LLC.

Nitrocrete provides solutions for concrete temperature control. Its Nitrogen Application Technology Unit includes technology and software to maintain nitrogen in a liquid form during the concrete-cooling process. 

“This technology drives cost and time savings for the Nitro Debtors’ concrete producer customers and project owners of large-scale commercial projects, such as skyscrapers, and civil projects, such as bridges and dams,” Nitrocrete chief financial officer Kathleen Walton said in a declaration submitted to the court.

The companies employ about 30 people in Fort Collins and remotely across the U.S., according to bankruptcy filings.

Walton said in the declaration that demand for concrete cooling decreased in 2020 due to “unprecedented COVID-19-related work stoppages and project delays.” The companies maintained revenue of $12.1 million, a gross profit of 53.7% and a net loss of $4.8 million.

Through Sept. 30, 2021, the companies recorded revenue of $11.9 million and a net loss of $3.3 million.

Nitrocrete maintains a term loan and revolving line of credit with Vectra Bank and in 2020 partnered with Mantucket Capital, which acquired a controlling equity stake in the business for $15 million.

The companies also obtained interim subordinated debt financing from Nitrocrete founder and executive chairman Drew Nelson and “several related parties” in early 2021 “to continue to pay down some bank debt, cover operating expenses and invest in planned growth expansion,” according to Walton’s declaration.

“The nature of the Nitro Debtors’ business is seasonal, with revenue largely occurring in late spring through early fall,” Walton wrote. “Unfortunately, the debtor has faced short-term financial hurdles that have made it necessary to seek relief in this court. “The COVID-19 pandemic has impacted the debtor’s operations, and that coupled with accruing obligations under onerous legacy vendor contracts and heavy debt burdens, have created an untenable liquidity situation. Further, an unseasonably cool season in certain concentrated geographies this past summer impacted the debtor’s ability to survive through to the spring season.”

Prior to filing for bankruptcy protection, Nitrocrete sought to reduce costs, increase revenues and expand profitability, Walton stated, including surrendering the company’s previous headquarters and signing a new, more-affordable month-to-month lease for office space and a one-year lease for warehousing equipment. The company also reduced its workforce and engaged in discussions with Vectra Bank over its “distressed” lending relationship.

“Vectra Bank has offered various proposals to the debtor’s majority investor, but no resolution could be reached,” Walton wrote. “It became evident that absent an infusion of additional capital, the liquidity situation and legacy contract debt would worsen.”

Walton said that beginning in October 2021, Nitrocrete engaged with a financial adviser and investment banker to evaluate strategic alternatives, including “raising debt, obtaining financing, equity and/or sale of all or certain subsidiaries and subsidiary interests and all Nitro Debtors together.

“Despite the efforts of the debtor and its financial advisers and investment bankers, no third-party investors have committed to provide financing or acquisition proposals,” Walton stated.

Walton said Nitrocrete believes “it has a strong opportunity to reorganize or sell as a going concern. The short-term, however, presents a challenge.”

Nitrocrete in May named Stephen De Bever as its new CEO, replacing founder Nelson, who shifted to executive chairman. De Bever previously served as CEO of Standard Precast Inc. in Jacksonville, Florida.

BizWest reached out to De Bever, Walton and Matthew Faga, an attorney with Markus Williams Young and Hunsicker LLC out of Denver, which is representing Nitrocrete.

“I appreciate you reaching out, but at this time neither Nitrocrete nor my office as its bankruptcy counsel have any comment,” Faga said in an email.

Liabilities reported Dec. 2 for the five entities range from $7.24 million for Nitrocrete IP LLC to $13 million for Nitrocrete LLC. However, each entity shows a common liability, $7.2 million owed to Zions Bancorporation N.A., doing business as Vectra Bank Colorado.

Assets, liabilities and top creditors include:

• Nitrocrete LLC reported assets of $8,366,060 and liabilities of almost $13.1 million. Its largest unsecured creditors include Air Products and Chemicals Inc., Charlotte, North Carolina, $778,816; Linde, Boston, $551,529; Matheson Trigas, Dallas, $524,467; Beitzel Corp., Grantsville, Maryland, $360,592; and Airgas USA LLC, Dallas, $313,396. Its largest secured creditor is Zions Bancorporation N.A., doing business as Vectra Bank Colorado, which is owed $7.2 million.
• Nitrocrete Holdings LLC reported assets of $1,191,098 and liabilities of $7,293,835. Vectra Bank holds a secured claim of $7,214,270, with Nitro Holdings having an unsecured claim of $78,875.
• Nitrocrete IP reported assets of $6,461,768 and liabilities of $7,242,227. Vectra Bank holds a secured claim of $7,214,270, with Polsinelli PC of Kansas City, Missouri, holding an unsecured claim of $27,957.
• Nitrocrete Equipment reported assets of $9,090,524 and liabilities of $11.1 million. Nitrocrete LLC is owed $3,894,325 in an unsecured claim. Nitrocrete Equipment’s largest secured creditor is Zions Bancorporation N.A., doing business as Vectra Bank Colorado, which is owed $7.2 million.
• Nitro Holdings LLC reported assets of $25,184,956 and liabilities of $12,881,205. Its largest unsecured creditors include the Drew R. Nelson Trust No. 2, Bozeman, Montana, $2,518,274; Mark E. Nelson Trust No. 2, Bozeman, Montana, $1,399,041; TN Family LLC, Fort Collins, $559,616; Tad M. Johnson, Muskego, Wisconsin, $448,022; and the Drew R. Nelson Trust No. 2, Bozeman, Montana, $161,104. Its largest secured creditor is Zions Bancorporation N.A., doing business as Vectra Bank Colorado, which is owed $7.2 million.

Nitrocrete topped BizWest’s Mercury 100 fastest-growing private companies list in 2020, with two-year revenue growth of 731%. Nelson was also named to the publication’s 40 Under Forty Class of 2020.

Nelson also was named a finalist for the Ernst & Young Entrepreneur of the Year 2021 Mountain Desert Region Award in June 2021.

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