Formica Exits Chapter 11 With New Structure

Formica Exits Chapter 11 With New Structure

Cincinnati Formica Corp. has completed the necessary steps to implement its Plan of Reorganization and has successfully emerged from Chapter 11, the company announced.

The Cincinnati-based manufacturer of decorative surfacing materials, including high-pressure laminate and solid surfaces, said it is exiting 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 company's Chapter 11 filing.

Formica Corp. filed for Chapter 11 bankruptcy protection in March of 2002.

Company officials noted that Formica has also achieved lower interest expense and improved efficiencies arising from the consolidation of manufacturing and warehousing facilities.

"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," said Formica president and CEO Frank Riddick, III.

"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," Riddick added.

"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."

In conjunction with its Chapter 11 emergence, Formica Corp. said it has entered into an amended Term Loan Facility for $135 million with its existing secured lenders. The company also said that it has closed on a $65-million revolving credit facility.

"This exit financing will provide the company with sufficient liquidity to continue to meet our financial requirements and grow our business globally," Riddick said.

As part of the company's 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, Formica said. Substantially all of these proceeds will be used to repay existing secured lenders, company officials noted, adding that management will hold options to purchase approximately 10% of the common shares.

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