Mar 18 2009
Chemtura Corporation (NYSE: CEM) today announced that it and 26 of its U.S. affiliates (together, the "Company") have filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the "Court").
Chemtura's non-U.S. subsidiaries were not included in the filing and will not be subject to the requirements of the U.S. Bankruptcy Code. Chemtura's U.S. and worldwide operations are expected to continue without interruption during the restructuring process.
Craig A. Rogerson, Chemtura's Chairman, President and Chief Executive Officer, said, "Like other companies in our industry and around the world, Chemtura's order volumes have declined markedly in recent months due to the impact of the global economic recession on our customers and the industries they serve. This has led to a significant decrease in our liquidity and cash flow. Despite our efforts to increase liquidity, including through the potential sale of a business, our reduced liquidity position, combined with the anticipated expiration of our bank waiver, led us to determine that a court-supervised restructuring was the best course of action. Through this process, we will continue to focus on operating our business while continuing our efforts to strengthen our balance sheet and gain financial flexibility in order to position Chemtura as a strong, viable, and profitable competitor in the specialty chemicals marketplace."
Today Chemtura announced that, in conjunction with the filing, it has received a commitment for up to $400 million in debtor-in-possession (DIP) financing from Citibank, N.A., as administrative agent. Upon Court approval, the DIP financing, combined with cash from the Company's ongoing operations, will be used to support the business during the Chapter 11 process. In addition, the Company anticipates that it will continue to meet its obligations going forward to its employees, customers and suppliers.
"Chemtura has a solid, diverse portfolio of businesses with strong operations around the world, and our lenders have shown tremendous confidence in our business by providing additional funding," Rogerson said. "We look forward to working together with all of our stakeholders to complete a successful financial restructuring. Our worldwide operations are expected to continue without interruption throughout the restructuring process, and Chemtura remains committed to providing our customers with the highest quality products and services. We appreciate the ongoing dedication of all our employees, whose hard work is critical to our success and the future of the Company. I would also like to thank our customers, suppliers and business partners for their continued support during this process."
As previously announced on December 11, 2008, in response to declining order volumes, the Company has taken a number of actions to reduce costs and improve liquidity, including realigning its businesses into strategic business units, suspending the payment of dividends, reducing inventories, reducing fixed costs by $50 million, adjusting plant production rates to meet reduced customer demand, aggressively managing working capital and establishing a new Executive Committee to oversee these initiatives. In addition, on February 25, 2009, the Company announced plans to further reduce inventories and to restrict capital expenditures to approximately $60 million during fiscal year 2009.
Chemtura will file a series of motions today with the Court to ensure the continuation of normal operations, including requesting Court approval to continue paying employee wages and salaries and providing employee benefits without interruption. The Company has also asked for authority to continue honoring all current customer policies and programs to ensure that the restructuring process will not negatively affect its customers. The Company expects that the Court will approve these requests. During the Chapter 11 process, suppliers will be paid in full for all goods and services provided after the filing date as required by the Bankruptcy Code, and Chemtura has taken steps to ensure continued supply of goods and services to its customers.