Atrium Begins Restructuring Process
Atrium Cos. Inc., has reached agreement with lenders on a restructuring plan to reduce the window and door manufacturer’s outstanding debt by more than $350 million. To implement the balance sheet restructuring, the company has filed voluntary Chapter 11 petitions with the United States Bankruptcy Court in Wilmington, Del.
Atrium’s Canadian subsidiary also initiated reorganization proceedings under the Companies’ Creditors Arrangement Act in the Ontario Superior Court of Justice in Toronto. Atrium and each of its subsidiaries intendsto operate as usual during the debt restructuring process, and existing management will remain in place, officials note. The manufacturer expects to deliver on all commitments to customers and honor all warranties in the normal course.
Information on the plan is provided in a special section of the Atrium Web site.
Under the plan, Atrium will receive a $125 million new equity investment from its current majority equity owner, Kenner & Co. Inc., and its co-investor, Golden Gate Capital. The company plans to move forward with the restructuring on an expeditious basis and complete the process in approximately three to four months.
“The balance sheet restructuring announced today will substantially reduce our outstanding debt and put Atrium in a much stronger financial position to grow our business over the long term,” says Gregory T. Faherty, Atrium president and CEO. “We have already done the hard work of lowering our cost structure and reducing excess capacity in light of the difficult environment under which we have been operating for more than three years. And, we are already experiencing the positive impact of these initiatives through increased profitability. Now, as part of the restructuring announced today, we will put in place a healthier capital structure that is more appropriate to the current size of the market, while freeing up additional cash that can be invested in future growth as the housing market rebounds. Once our balance sheet is right-sized, Atrium will be more competitive than ever.”
Atrium officials note that the company has secured a commitment for debtor-in-possession financing of $40 million from its prepetition secured lenders, which in addition to cash on hand and ongoing cash flow from operations, will provide ample liquidity to meet normal operating costs during the restructuring process.
No layoffs or facility closings are anticipated as a result of the debt restructuring, and employee wages and benefits are expected to be paid in the normal and ordinary course. Suppliers will be paid under normal terms for goods and services provided after the filing date of January 20. In addition, and subject to its approval, the reorganization plan provides for the payment for goods and services provided to the Atrium before the filing, it is reported.
“Importantly, we already have the support of an overwhelming number of our senior secured lenders, so we expect to be able to move through the court process relatively quickly and efficiently," states Faherty. "Additionally, the support of Kenner & Company and Golden Gate, and their investment, is evidence of Atrium’s bright future. In the meantime, as an industry leader, we look forward to continuing to deliver the same exceptional quality, value and service that have been a hallmark of Atrium and our brands for years.”