Linwood, PA, August 15--Foamex International today announced several significant developments in its efforts to strengthen its balance sheet and enhance long term value while continuing normal business operations.
Foamex L.P., Foamex's primary operating subsidiary, has reached an agreement with the agents for its senior lender groups, Bank of America, N.A. and Silver Point Finance, LLC, to amend its Credit Agreements. The amendments will provide additional committed liquidity by allowing Foamex to access the remaining proceeds from the sale of its Rubber & Felt businesses for working capital needs and waive certain default provisions in the agreements.
Foamex is also engaged in discussions with representatives of an ad hoc committee representing a significant majority, in amount,of its Senior Secured Notes due 2009, as well as holders of a majority, in amount, of its Senior Subordinated Notes due August 15, 2005 and in 2007.
The amendments to the senior lender credit agreements waive certain default provisions in order to provide adequate time for the Company to continue these ongoing negotiations. These discussions relate to a possible conversion of a substantial portion of the Company's indebtedness into equity.
In addition, in consideration of its best long-term interest, Foamex will not make the $51.6 million principal payment on its 13 1/2 percent Senior Subordinated Notes that mature today.
The restructuring of Foamex's balance sheet may be implemented by means of a case under chapter 11 of the Bankruptcy Code, possibly through a pre-arranged plan of reorganization. However, no assurance can be given that a consensual plan will be agreed upon.
In the event the company commences a Chapter 11 case, Bank of America and Silver Point have committed to provide debtor-in-possession (DIP) financing, which will roll the existing pre-petition facilities, subject to court approval. Bank of America and Silver Point have also agreed to commitments for exit financing upon the company's emergence from Chapter 11, subject to an acceptable plan of reorganization and other standard requirements for similar financing proposals.
"Today's actions are consistent with our plans to position Foamex for future success," said Tom Chorman, president and chief executive officer. "We are pleased to have the ongoing support of our senior lenders and we will continue to negotiate with our other debtholders to achieve a solution to our legacy balance sheet issues that will result in a much stronger company able to generate long-term value.
"Importantly, these steps and our ongoing negotiations should have no effect on Foamex's day-to-day operations. We remain committed to continuing to provide our customers with the high level of service and products to which they are accustomed and to maintaining strong supplier relationships," Chorman continued.
Foamex also said that it will be filing with the Securities and Exchange Commission (SEC) for a five day extension of the August 12, 2005 filing deadline for its Quarterly Report on Form 10-Q for the fiscal quarter ended July 3, 2005 pursuant to rule 12b-25. In addition, the company announced that Gregory J. Christian, Executive Vice President, General Counsel and Secretary, has also been named Chief Restructuring Officer.
