(Batavia, Ohio) – Equipment manufacturer Milacron says it has reached an agreement in principle with an investor group that would purchase substantially all of the company's assets as part of a comprehensive financial restructuring that includes a voluntary Chapter 11 filing for its U.S. and Canadian operations.
All of the company's operations – including all of its manufacturing and distribution facilities in the U.S. and around the world – are open and operating on normal schedules, fulfilling customer orders as usual and providing uninterrupted customer service, according to a news release posted to the company's website.
Milacron - a global supplier of plastics-processing technologies and industrial fluids - made the deal with Avenue Capital Group and certain funds and/or accounts managed by DDJ Capital Management LLC, which together hold approximately 78% of the company's 11˝% Senior Notes. The proposed restructuring includes a commitment by Avenue Capital and DDJ to enter into an $80 million debtor in possession (“DIP”) term loan facility, which will provide Milacron with $40 million in new funds.
It also contemplates that Avenue Capital and DDJ, together with eligible Noteholders who accept an invitation to participate in the transaction, would purchase substantially all of the company's assets. In return for these assets, the agreement contemplates that, among other things, the participating Noteholders will repay the full debtor-in-possession facilities, including a new revolver, assume certain of the company's ordinary course liabilities and provide additional consideration to Noteholders who do not participate in the acquisition. The acquisition is intended to permit Milacron to continue as a going concern with substantially less debt.
Despite aggressive cost reduction and ongoing capacity rationalization over the past several years, severely reduced sales and orders in recent months – precipitated by the ongoing credit crisis and deteriorating global economic conditions – have impacted liquidity to the point that Milacron elected to voluntarily file for Chapter 11 protection in the Southern District of Ohio in Cincinnati and an ancillary proceeding in Canada. The filings enable Milacron to implement the restructuring and continue to operate its business in the normal course. The filings include Milacron's Canadian and U.S. operations only and should not affect the company's European, Asian or any other non-North American operations.
“Pursuit of these transactions is a positive step that is in the best interests of the company, our employees, customers, suppliers and other constituents,” said Dave Lawrence, Milacron president and chief executive officer. “Avenue Capital and DDJ's continued support is indicative of their faith in Milacron's brands, products and people, each helping to create value in the marketplace. This process will allow the business to withstand current economic conditions as part of a new enterprise with a healthy balance sheet.”
In addition to the $80 million DIP facility with Avenue Capital and DDJ, Milacron has received a $55 million DIP revolving credit facility from General Electric Capital Corporation, which replaces the company's pre-petition revolver. Availability under the new revolver is subject to a borrowing base formula. These DIP facilities are subject to approval by the bankruptcy court.
The agreement in principle is subject to certain conditions, including execution and delivery of a mutually satisfactory definitive asset purchase agreement as well as bankruptcy court approval. Upon execution of a definitive purchase agreement, Milacron will solicit competing bids from other potential purchasers and conduct a sales process approved by the bankruptcy court. Milacron's assets would be sold to the bidder submitting the highest and best offer.
For more information about the company visit http://www.milacron.com/
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