Nov 16 2006
Collins & Aikman Corporation announced today that it expects to sell its operations, in whole or in parts, to maximize the value of the enterprise for its creditors and preserve the largest number of jobs for its employees.
On August 30, 2006, the Company filed a plan of reorganization that proposed a framework for emergence from Chapter 11. Under the Plan, the Company’s pre-petition secured lenders were to exchange their debt for equity in a reorganized Collins & Aikman. The Plan also provided the flexibility to continue the sale process as an alternative recovery strategy.
After recently announced production cuts by its major customers and projected deterioration in the US automotive sector, the Company, in consultation with its major creditor constituencies, further analyzed the risks and benefits of operating as a stand-alone enterprise. The Company, in conjunction with its creditors, has concluded that a sale process option in the Plan represents the best strategy for maximizing creditor recoveries. The current course of action was recommended by Collins & Aikman’s senior management team and restructuring advisors after meeting with creditors.
“The valiant and successful effort put forth by C&A’s employees and restructuring team to stabilize operations must be commended,” commented Frank Macher, Collins & Aikman’s President and CEO. “However, industry conditions have continued to deteriorate to a point that we have determined it was absolutely necessary for us to pursue a cooperative sale process to provide the maximum value for our creditors and preserve the largest number of jobs for our employees.”
In conjunction with the sale process, the Company anticipates announcing the consolidation or closure of additional facilities in the near future. Rationale for these additional actions will largely be based on buyer interest, which likely will take into consideration projected capacity requirements, plant performance, and the operational restructuring and volume reduction measures recently announced by its largest customers.
“Despite the current environment, there are portions of our operations that have not only shown improvement but are operating at a level that should be very attractive for the right buyer,” added Macher. “We have maintained a dialogue with a number of interested parties throughout our reorganization and feel pursuing this track is the best option available for all of our stakeholders, including employees, customers and creditors.”