Amcast Agrees on Debt Restructuring, Files Bankruptcy

After sell-offs, aims to reduce debt

Foundry holding company Amcast Industrial Corp. filed a voluntary petition to reorganize under federal bankruptcy law (Chapter 11) in November, after agreeing with lending banks and noteholders on a financial restructuring plan. The plan aims to reduce the Amcast’s debt by approximately $30 million and strengthen its balance sheet.

Lenders have committed up to $15 million to the company in new debtor-in-possession (DIP) financing. Subject to bankruptcy-court approval, the DIP financing and cash from Amcast’s continuing operations, is seen funding the company’s business during the Chapter 11 reorganization process.

The reorganization strategy follows several months of effort by Amcast to address its debt issues. The group sold its Flow Control division to Aalberts Industries in July 2004 and its Automotive Components division to Park-Ohio Holdings in August 2004.

According to Amcast chairman, president, and CEO Byron Pond, "We have been involved in discussions with our lenders for several months in an effort to address our balance sheet issues. We believe this agreement achieves what we set out to do at the outset, namely to improve our prospects for long-term success.

"This restructuring, once fully implemented, will allow Amcast to take full advantage of the fundamental strength of our business and continue to be a valuable business partner to our customers and suppliers. We will have a much improved balance sheet and a capital structure that is more appropriate for the business," Pond said.

He emphasized that the restructuring process should have no significant impact on Amcast’s ability to fulfill obligations to customers and employees.

According to the restructuring agreement, Amcast's senior lenders and noteholders agreed to exchange $109 million of existing senior debt for a combination of about $75 million in senior and subordinated debt and all of the equity in the reorganized company. Thus, when Amcast emerged from Chapter 11, all its current equity will be cancelled.

A reorganization plan and disclosure statement will be issued soon, Amcast stated.

"The restructuring will result in a much stronger company," Pond said. "It directly addresses our balance sheet issues and removes the uncertainties and concerns created by our burdensome debt obligations, which have placed significant financial pressure on the company". It will permit Amcast to effectively put the challenges of the past behind us, and provides the Company with a more appropriate capital structure and financial resources to help secure our future."

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