By Liz White, UT editor
Linwood, Pennsylvania-Major US foamer, Foamex International Inc. announced 17 Oct that it has gained new finance which will allow it to emerge from chapter 11 bankruptcy proceedings.
The Linwood-headquartered foam maker, which went into Chapter 11 in September 2005, said it has got commitment for new equity investment. Its primary operating subsidiary, Foamex LP has also gained commitment for funding its emergence from chapter 11.
Some conditions must be satisfied for Foamex to get the equity.
As part of the new equity investment, Foamex International will carry out a $150 million rights offering to existing common and preferred shareholders. Five existing shareholders-DE Shaw Laminar Portfolios llc, Goldman, Sachs & Co., Par IV Master Fund Ltd, Sunrise Partners Ltd Partnership, and Sigma Capital Associates llc (the 'Significant Equityholders')-will fund any shortfall between $150 million and the proceeds of the rights offering.
Separately, Foamex LP has a commitment from lenders led by Bank of America NA and Banc of America Securities llc for up to $790 million in exit financing. The group said it expects to draw about $645 million as it emergence from chapter 11.
"These commitments represent a significant and very positive step toward Foamex's emergence from chapter 11, and, combined with our notable operating performance over the past several months, provide further evidence that we are gaining strong momentum," said Raymond Mabus Jr, chairman and ceo of Foamex International, in a company statement.
Recognising the hard work that has gone into this process, and by all Foamex employees "who have produced such impressive results so far this year," Mabus added, "we expect to emerge from chapter 11 during the first quarter of 2007." He sees Foamex then as "better able to compete and grow in the markets in which we operate and .., to provide our customers with quality products and the high level of service they demand."If successful, Foamex said, the new equity investment and the exit financing will allow the company to satisfy all creditors in full. It will also allow holders of Foamex International stock to retain their ownership interests, subject to any dilution that may occur in connection with the rights offering or otherwise.
Foamex said it has filed a motion in the Bankruptcy Court seeking approval of the above moves, scheduled for 30 Oct 2006.