Formica Exits Chapter 11
Cincinnati, OH, Jun. 10--Formica Corporation announced today that it has completed the necessary steps to implement its Plan of Reorganization and has successfully emerged from Chapter 11.
"This achievement is attributable to the confidence that our sponsors have in our company and our future, the loyalty of our customers, the professionalism and dedication of our employees, the commitment and support of our creditor groups, and the recognition of the strength of the Formica brand and its reputation for quality, durability and industry leading innovation," said Frank A. Riddick, III, President and Chief Executive Officer of Formica. "We accomplished what we set out to do at the outset of our Chapter 11 restructuring. We have substantially decreased our long-term debt, while we streamlined and improved our service and operations. With the Chapter 11 process behind us, we can now increase our focus on what continues to be our top priority--providing our global customers with a portfolio of design coordinated, branded surfacing solutions and products."
Formica exits Chapter 11 with a strengthened balance sheet, including consolidated debt of approximately $160 million in long term financing, down from more than $540 million in debt at the time of the filing in March 2002, lower interest expense and improved efficiencies arising from the consolidation of manufacturing and warehousing facilities.
As part of the Plan of Reorganization, a group of investors led by Cerberus Capital Management L.P. and Oaktree Capital Management LLC have purchased the common shares of the Successor Company for $175 million in cash. Substantially all of these proceeds will be used to repay existing secured lenders. Management will hold options to purchase approximately 10% of the common shares.
In January, the firm sold the equipment assets of its Formica Flooring business to the Shaw Diversified Services, Inc. unit of Shaw Industries Group, Inc.
The equipment was sold to Shaw for cash and the assumption of certain liabilities. Formica did not transfer its brand name, products or designs to Shaw.
Formica withdrew from laminated flooring manufacturing in North Americain order to better meet its obligations to its customers.
Related Topics:Shaw Industries Group, Inc.
