Media, Pennsylvania - US foamer Foamex International Inc. announced on 18 Feb that, along with some of its subsidiaries, it has voluntarily filed for chapter 11 bankruptcy protection to restructure its borrowings.
Foamex. which has been struggling with its $380-million debt in the current downturn, said recently that it would not make the payment on its loan due 21 Jan 2009. This is the foamer's second time around with Chapter 11: it took this route in late 2005 for similar reasons.
The maker of comfort and technical foams said it plans to use Chapter 11 to "restructure its debt, to give a capital structure more suited to the conditions of today's market environment."
Day to day operations will continue as normal, Foamex said.
Foamex will gain immediate liquidity to continue operating without interruption, said Johnson, president and chief executive officer, in a company statement. The move will allow Foamex to restructure its balance sheet, and strengthen business performance, Johnson added.
"Like many companies around the world, Foamex has been hit by the economic downturn in the markets we serve," Johnson continued. Although it has cut its debt by about $240 million in the last two years, "we cannot support the existing heavy debt load in the current operating environment," he added.
Foamex is continuing to invest in technology, product and market development, Johnson continued, adding that it expects to emerge from Chapter 11 as quickly as possible with a more appropriate capital structure."
The company is also seeking approval from the Delaware bankruptcy court for up to $95 million in debtor-in-possession (DIP) financing provided by MatlinPatterson Global Opportunities Partners III lp and Bank of America. DIP finance allows companies to keep operating during bankruptcy proceedings.