Formica Corp. has signed a stock purchase agreement with an investment group sponsored by Cerberus Capital Management L.P. and Oaktree Capital Management LLC, under which they have committed to invest $175 million in the company. This step is necessary to implement the restructuring of Formica’s balance sheet, and to emerge from Chapter 11.
Under the stock purchase agreement, the equity investment by Cerberus and Oaktree will be the basis for the company’s plan of reorganization. Formica said that it has submitted this agreement to the bankruptcy court for approval and, if necessary, procedures for entertaining higher or better offers.
Formica said it expected to emerge from Chapter 11 before the end of the first quarter of 2004. The proposed plan of reorganization to be implemented in conjunction with the stock purchase agreement would provide for a reduction in the outstanding amount of the company’s secured bank debt from over $300 million to approximately $127 million, utilizing $173 million of the $175 million investment. The plan would also provide for the elimination of $215 million in pre-Chapter 11 unsecured bond debt.