Media, Pennsylvania - Major US foam producer Foamex International Inc. is talking to lenders regarding restructuring options, including a possible amendment to its First Lien Term Loan facility.
Foamex, which has seen sales drop over the last 12 months as a result of reduced US demand for foam products, said this is one of several efforts aimed at restructuring its balance sheet to enhance long-term value, while continuing its normal business.
In order to continue restructuring its balance sheet, Foamex said, it has not made the $7.3 million interest payment on its First Lien and Second Lien Loans that was due by 21 Jan 2009. To help discussions with its lenders, the company anticipates that it will soon enter into a forbearance agreement with its lenders.
"Today's actions are consistent with our number one priority over the past two years to deleverage," said Jack Johnson, president and chief executive officer. "We will continue to negotiate with our First Lien lenders to strengthen our business by restructuring our debt. We have reduced debt by about $240 million in the last two years."
Johnson stressed that these steps "should have no effect on Foamex's day-to-day operations. We continue to have enough cash to support our daily operations and Bank of America, the agent for our Revolving Credit facility, continues to work constructively with us during these discussions."
In its third quarter 2008 results, Foamex reported sales of $234 million, down from $291 million in Q3 of 2007, following lower sales volumes across all segments. Gross profit was $25.7 million, or 11 percent of net sales, compared to $34.1 million, or 12 percent of net sales, in the same period of 2007.
Income from operations for Q3 2008 was $9.9 million, compared to $12.2 million in Q3 2007. Consolidated earnings (EBITDA) for Foamex LP were $15.7 million for Q3, 2008.