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Released on June 18, 2008
Magnesium die casting supplier Meridian Technologies Inc., Strathroy,
Ontario, Canada, has reached a restructuring agreement with its lenders
that will reorganize the company as Meridian Lightweight Technologies
with a recapitalized balance sheet and lower debt burden.
The company’s secured lenders, led by agent GE Commercial Finance, have
agreed to provide the reorganized company with $55 million in new
financing, consisting of a $30 million revolving credit facility and a
$25 million term loan upon closing. In addition to the new financing,
the lenders will exchange a significant portion of the existing debt
for all of the equity that is being created by this transaction.
This agreement is excellent news for our company, our employees and our
suppliers and customers worldwide because it means that the cloud of
uncertainty that has created doubts about our long-term viability has
been swept away,” said Chief Restructuring Officer Robert M. Caruso.
“We are extremely pleased that going forward we will have the support
of an owner with resources necessary to successfully operate our
business.”
To effect the transaction, Meridian filed an application for creditor
protection under the Companies’ Creditors Arrangement Act (CCAA) in the
Ontario Superior Court of Justice, along with a Plan of Arrangement
that has the support of the court monitor and the company’s key
constituents, including its major customers. The application includes
only Meridian’s Canadian and United Kingdom operations.
To fund operations during the CCAA process, the secured lenders have
arranged $20 million in interim financing. Once sanctioned by the
court, the plan will transfer ownership of the company’s assets,
including the equity of the company’s subsidiaries, to the new Meridian
Lightweight Technologies. During this time, all of the company’s global
facilities will continue to operate on their normal daily schedules,
its 1,200 employees will be paid normally and suppliers will continue
to be paid in the ordinary course.
Meridian has developed a long-term strategic plan to strengthen the
company operationally, including reducing its cost structure and
opening a new manufacturing facility in Mexico by the end of the year.
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