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Propex files for protection under chapter 11 reorganization
28
Jan '08
Propex Inc announced that it has filed for protection under Chapter 11 of the U.S. Bankruptcy Code in order to right-size its balance sheet. The company will continue to operate its facilities and offices in the ordinary course of business while it restructures.

Additionally, Propex has arranged a $60 million credit facility for which it will be seeking Court approval. This will provide the company with immediate and sufficient liquidity to operate its business on an ongoing basis.

The company also filed for Bankruptcy Court approval of various First-Day Motions designed to ensure continuation of its ordinary business operations. Specifically, Propex requested and expects that the Court will approve the company's new financing to continue all operations in the normal course, including maintaining payroll and employee benefits; all deliveries to customers; and fulfillment of obligations to critical suppliers.

The company anticipates its First-Day Motions to be approved in the coming days. “Today's steps are part of an important process to strengthen Propex,” said Joe Dana, President of Propex Inc. “We believe the financial reorganization will allow us to implement a restructuring plan that will lower our debt levels and expand our market leadership in key sectors from a position of financial strength.”

The new financing will provide $60 million in immediate liquidity. With this cash infusion, the company can focus on servicing its customersand improving operations. Upon completion, the Chapter 11 restructuring is expected to reduce debt and create additional cash flow that otherwise would be earmarked for debt service.

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