Citing debt, interest expenses and the difficulties of dealing with the current recession, Formica Corp. (Cincinnati) has filed for Chapter 11 bankruptcy protection. The giant laminate company — one of the largest suppliers of countertop and flooring materials to the store design industry — says it is securing $78 million in credit to cover operating costs while it develops a financial reorganization plan.
“The restructuring will have no impact on our ability to fill our obligations to our employees or to our customers,” said president and ceo Frank Riddick III in a prepared statement. Company spokesman Richard Wool reported that no layoffs are anticipated and that vendors and secured creditors will be paid normally. Wool said the company's assets amount to $858.6 million, while its debt is $816.5 million. The company has about $22 million in cash on hand, Wool said, which will be combined with $77.85 million in credit, obtained from a group of banks in the form of a secured revolving credit line and letters of credit, to fund operating expenses, capital improvements and restructuring costs.
Credit Suisse First Boston Private Equity, the majority shareholder of Formica's parent company, Laminates Acquisition Co., has proposed a restructuring plan to the bank group providing the new credit. Under the proposal, Credit Suisse would invest $51 million and the banks together would provide $49 million to give Formica a total of $100 million to pay down existing debt.
Formica was founded in 1913, and has manufacturing plants in Algona, Wash.; Evendale, Ohio; Mount Bethel, Pa.; Odenton, Md.; and Rocklin, Calif.