Faced with nearly $180 million in debt, Amtrol, Warwick, R.I., filed for Chapter 11 protection last December.
“For several years, Amtrol has been constrained by its highly leveraged capital structure,” said Larry T. Guillemette, company chairman, president and chief executive officer, in a prepared news release on Dec. 18. “Quite simply, we have too much debt.”
Elsewhere in the release, the company said it expects to continue operating normally during the debt reorganization process. All manufacturing and distribution facilities will remain open, customers will continue to be served as usual, and all suppliers and employees will continue to be paid without interruption.
For 2005, Amtrol reported annual sales of $218.5 million and employed more than 1,200 in North America and Europe. The company’s foreign operations are not involved in the filing. About 400 people work in the company’s Rhode Island operations.
The primary restructuring plan calls for converting $97 million of a certain class of debt into Amtrol stock. The company says two-thirds of the creditors holding this debt had agreed in principle to convert the notes into equity.
At press time, a court-appointed committee of unsecured creditors was objecting to terms of a $115 million “debtor-in-possession” loan. The company received preliminary court approval for the DIP loan days after filing for bankruptcy. Such loans are a common part of bankruptcy reorganizations and help companies pay for ongoing operations.
Terms of DIP loan packages, however, often determine who gets what, how much and when in reorganizations. The unsecured creditors are owed more than $107 million. The company was to seek final court approval on the arrangement on Jan. 25.
Amtrol first indicated its troubles last May when it filed a quarterly 10-K report that said it had “significant working capital deficiency that raises substantial doubt about its ability to continue as a going concern.”
The Cypress Group LLC, a private-equity investment firm, has owned Amtrol since 1996. Whether Cypress will lose control of its ownership remains to be seen.