Under the terms of the agreement, the secured lender bank group will provide a debtor-in-possession (DIP), senior secured super priority credit facility for $77,850,000 in the form of a revolving credit loan and letters of credit to provide for the capital and business needs of the company. This credit facility augments the company's cash on hand of approximately $22,000,000 for working capital, capital improvements and restructuring expenses of the Company and its international affiliates.
To facilitate the restructuring, the company and its U.S. subsidiaries and parent companies today filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. The company's subsidiaries outside of the United States are not part of the filing and it is not anticipated that they will be affected by the filing.
Credit Suisse First Boston Private Equity, the majority shareholder of Formica Corporation's parent company, Laminates Acquisition Co. has proposed a restructuring plan to the secured lender bank group under which it would invest an additional $51,000,000 as part of a proposed $100,000,000 investment proposal to pay down the senior secured credit facility. Under the terms of this proposal, secured debt and trade claims would be substantially unimpaired. However, no provision will be made for distribution to senior subordinated notes, preferred stock or common stock holders under the restructuring. The secured lender bank group is considering the proposed restructuring plan. Frank A. Riddick, III, President and Chief Executive Officer of Formica, noted that the company's operations will continue as usual, without interruption, during the restructuring process.
``The restructuring will have no impact on our ability to fulfill our obligations to our employees or to our customers. During the restructuring period and beyond, we will continue to deliver the highest quality products to our customers, on time, to invest in new product and technology, and develop new business,'' he said. ``Our vendors will be paid in the ordinary course for all goods furnished and services rendered subsequent to the filing.'' Riddick emphasized that the company's operations outside the United States have been excluded from the filing, and thus, there will be no impact on their ability to continue to manufacture product and meet the needs of customers, employees and suppliers.
``Like many other companies, Formica has been confronted with serious external and internal challenges due to the recession and the aftershocks of the September 11th tragedy,'' he said. ``We have made significant progress in this difficult environment to strengthen the company, and the important action we have taken today will enable us to reduce our company's burdensome loan obligations and related interest expense, strengthen our balance sheet, invest more of the company's resources in growing and improving the business and compete more effectively. We are confident that Formica will emerge from this process as an improved business.''
Riddick continued, ``Formica has a brand that is truly an American icon, and it has the designs, innovative products and dedicated employees to propel its growth. In the brief period that I have been at the helm, my initial impression has been confirmed repeatedly that we have a great company with strong prospects. The action announced today will allow us to focus on our strategic initiatives and expand our ability to provide our customers with the best products in the marketplace.''
The company noted that during the restructuring period, no principal will be paid on its prepetition credit facility and no interest will be paid on its 10.875% Senior Subordinated Notes until its reorganization plan defining the payment terms has been approved by the Bankruptcy Court. The entities included in the filing are: Laminates Acquisition Co., FM Holdings, Inc., Formica Corporation, STEL Industries, Inc., Wildon Corporation, Wildon Industries, Inc., Design Communications International, Inc., The Diller Corporation, Formica International Corporation (U.S.A.), and Unidur, Inc. (U.S.A.).
Excluded entities are all foreign operating and holding companies in Canada, Mexico, Brazil, Europe and Asia.