Constar International Inc. Receives Support of Ad Hoc Committee of Senior Secured Noteholders for a Plan to Reduce Debt & Int...
11 Janvier 2011 - 6:51PM
Business Wire
Constar International Inc. (NASDAQ: CNST) today announced that
it reached agreement with the holders of more than 75% of the
Company’s Senior Secured Floating Rate Noteholders regarding the
terms of a consensual restructuring transaction that will
significantly deleverage its balance sheet. A subgroup of the
Noteholders have also committed to provide $55 million of debtor in
possession financing to permit the Company to continue to operate
in the ordinary course of business during the pendancy of its
restructuring, which will take place through implementation of a
pre-arranged chapter 11 case. In addition, Constar has obtained a
commitment from Wells Fargo Capital Finance, LLC, for a working
capital facility that will come into existence upon Constar's
emergence from chapter 11, anticipated to be early in the second
quarter of 2011.
The restructuring plan calls for, among other things, a
reduction of the Company’s current debt level of $220 million by
approximately $135 million to $150 million, with a significant
corresponding reduction in cash interest. To implement this
prearranged restructuring, Constar and certain of its subsidiaries
today filed voluntary petitions for reorganization under Chapter 11
in the U.S. Bankruptcy Court in Wilmington, Delaware.
All of Constar’s global operations - including all of its
manufacturing and distribution facilities in the U.S. and Europe -
are open and operating on normal schedules, and the Company expects
to continue to fulfill all customer orders as usual and provide
uninterrupted customer service.
Grant Beard, President and CEO of Constar, said, “Today we have
announced a significant step forward for Constar. Having received
the support from the holders of approximately 75% of our
Noteholders for a pre-arranged and consensual restructuring, we
will significantly improve our balance sheet. Upon emergence from
reorganization, we will carry new term debt of not more than $85
million and commensurately reduce annual cash interest obligations.
This is noteworthy in that it frees up cash to reinvest in our
business to support future growth. We intend to continue to operate
as usual during the restructuring process with minimal disruption
to the business.”
Pursuant to the Company’s proposed plan of reorganization,
Noteholders will convert 100% of the face amount of the current
notes into new term debt in the face amount of $70 million and
convertible preferred stock of $30 million, and will become the
majority owners of the new common stock. Under the proposed plan,
the Company’s general unsecured claims will be converted to equity,
and the current equity will be cancelled. The Company anticipates
that the restructuring will be completed by late spring of 2011,
subject to court approval.
The Company’s financial advisor is Greenhill & Co. and its
legal advisor is Wilmer Cutler Pickering Hale and Dorr LLP. The Ad
Hoc Group of Noteholders is represented by Kirkland & Ellis
LLP. Wells Fargo Capital Finance, LLC is represented by Otterbourg,
Steindler, Houston & Rosen, P.C.
Cautionary Note Regarding Forward-Looking Statements
Except for historical information, all information in this news
release consists of forward-looking statements within the meaning
of the federal securities laws, including statements regarding the
intent, belief or current expectations of the Company and its
management which are made with words such as “will,” “expect,”
“believe,” and similar words. These forward-looking statements
involve a number of risks, uncertainties and other factors, which
may cause the actual results to be materially different from those
expressed or implied in the forward-looking statements. Important
factors that could cause the actual results of operations or
financial condition of the company to differ from expectations
include: (i) the Company’s ability to continue as a going concern;
(ii) the Company’s ability to satisfy the conditions to the support
agreement with the Ad Hoc Committee of the Company’s Senior Secured
Bond Holders, the DIP financing agreement and the exit financing
facility commitment; (iii) the ability of the Company to operate
pursuant to the terms of any debtor-in-possession credit facility;
(iv) the Company’s ability to obtain court approval with respect to
motions in the Chapter 11 proceeding; (v) the ability of the
Company to develop, confirm and consummate one or more plans of
reorganization with respect to the Chapter 11 proceeding; (vi)
risks associated with third parties seeking and obtaining court
approval to terminate or shorten the exclusivity period for the
Company to propose and confirm one or more plans of reorganization,
for the appointment of a Chapter 11 trustee or to convert the cases
to Chapter 7 cases; (vii) the ability of the Company to obtain and
maintain normal terms with vendors and service providers; (viii)
the Company’s ability to maintain contracts that are critical to
its operations; (ix) the potential adverse impact of the Chapter 11
cases on the Company’s liquidity or results of operations; (x) the
ability of the Company to fund and execute its business plan;(xi)
the ability of the Company to attract, motivate and/or retain key
executives and employees; and (xii) other risks and factors
regarding the Company identified from time-to-time in the Company’s
reports filed with the SEC, including the risk factors identified
in its Annual Report on Form 10-K for the year ended December 31,
2009, and in subsequent filings made prior to, on or after today.
The Company does not intend to review, revise, or update any
particular forward-looking statements in light of future
events.
About Constar
Philadelphia based Constar is a multi-national producer of PET
(polyethylene terephthalate) plastic containers for food, soft
drinks and water. The Company provides full-service packaging
solutions, from product design and engineering, to ongoing customer
support. Its customers include many of the world's leading branded
consumer products companies.
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