TRENTON, N.J., March 5, 2002 (AP) -- Formica Corp., the maker of laminated countertops and flooring, has filed a petition for voluntary bankruptcy reorganization and has secured $78 million in credit to cover operating costs and other needs.
The Warren-based company cited "challenges due to the recession," as well as "burdensome" debt and interest expenses as reasons for filing the Chapter 11 petition Tuesday. The petition, which covers Formica Corp. and nine related U.S. businesses, was filed in the U.S. Bankruptcy Court for the Southern District of New York in Manhattan.
"The restructuring will have no impact on our ability to fill our obligations to our employees or to our customers," Frank A. Riddick III, president and chief executive officer, said in a prepared statement.
No layoffs are anticipated, and vendors and secured creditors will be paid normally, said company spokesman Richard Wool. The company's assets, $858.6 million, exceed its debt of $816.5 million.
"The (filing's) purpose is to restructure the balance sheet, reduce debt and lower interest costs," Wool said. "It gives you ... a breathing spell to reorganize your finances."
Privately held Formica Corp. has about $22 million in cash on hand, Wool said. That will be combined with $77.85 million, just secured through a revolving credit line and letters of credit, to fund operating expenses, capital improvements and restructuring costs.
Credit Suisse First Boston Private Equity, the majority shareholder of Formica's parent, Laminates Acquisition Co., has proposed a restructuring plan to the bank group providing the new credit. Under the plan, Credit Suisse and the other lenders would invest an additional $51 million to provide a total of $100 million to pay down some of Formica's existing, higher-interest debt.
If the bankruptcy reorganization plan is approved, Formica will temporarily stop paying off the principal on an existing credit line and will not pay interest on 10.875 percent bonds.
Copyright 2002 Associated Press