Coatings and composites maker Reichhold Industries (Durham, NC) today filed for Chapter 11 bankruptcy protection in US Bankruptcy Court in the District of Delaware. As part of the filing, Reichhold will pursue a sale of its US business, with the company’s bondholders serving as a “stalking-horse” bidder, establishing a floor on bidding for Reichhold’s assets.
Bondholders will also provide Reichhold with $130 million in financing to continue operations, including $100 million in debtor-in-possession (DIP) financing, which must be approved by the court. Some of the financing will also be used to repay certain secured financing facilities in North America and Europe. Reichhold has as much as $1 billion in debt and $500 million assets, reports say.
In July, credit ratings agency Standard & Poor’s (S&P; New York) downgraded Reichhold and warned of a possible default. S&P said at the time that it did not expect Reichhold to generate enough cash to meet its debt obligations without an infusion of cash from an outside party.
Other details of the sale process for Reichhold’s US business were not immediately available. The company’s operations outside the US were not affected by the Chapter 11 filing. Reichhold will continue operating its business as usual during the Chapter 11 process, and the process has the “full support” of the company’s bondholders, says Reichhold chairman and CEO John Gaither.
By Vincent Valk