Wellman to centralize Mississippi operations
Wellman Inc announced that it has filed an amended plan of reorganization (the "Plan") with the Bankruptcy Court.
It is expected that the Plan will allow Wellman to emerge from bankruptcy by the end of the year with a stronger balance sheet, ample liquidity and an efficient operation focused on the North American PET resins business.
The reorganized company will centralize operations at its low cost, world class Pearl River facility in Hancock County Mississippi.
As part of our Plan, Wellman will be exiting the polyester staple fiber and engineering resins businesses and consolidating PET resin production at the Pearl River facility.
These actions will result in lower debt levels through the monetization of working capital of the polyester staple fiber and engineering resins businesses, improved capacity utilization of the Pearl River facility, and reduced corporate costs.
The combination of lower costs, improved capacity utilization and a strong capital structure will allow Wellman to profitably grow its PET business.
On a proforma basis, Wellman expects to have a financial position, operating results and cash flows comparable to investment grade companies.
Mark Ruday, Wellman's Chief Executive Officer stated, "While it is always difficult to restructure operations, we believe these actions will maximize value for our stakeholders and position Wellman for future growth."
Under the Plan, a group of Second Lien Lenders have committed to provide additional capital to the reorganized Wellman.
The major components of the Plan are:
• Certain Second Lien holders have committed to contribute $70 million in new capital to the reorganized Wellman;
• The existing Second Lien Lenders will convert 100% of their debt in exchange for equity of Reorganized Wellman and receive 90% of the proceeds from a Distribution Trust established under the Plan;
• If the First Lien Lenders as a class vote to accept the Plan, they will receive a $75 million promissory note secured by the property, plant and equipment at the Pearl River facility and the proceeds from the sale of the pledged collateral, including the intellectual property and intangible assets on which the second lien lenders hold security interests, at the facilities to be closed in connection with the operational restructuring plan.
• If the First Lien Lenders as a class vote to reject the Plan, they will receive a promissory note of approximately $70 million secured by the property, plant and equipment at the Pearl River facility and the pledged collateral at the facilities to be closed in connection with the operational restructuring plan (without the related intellectual property and intangible assets on which the second lien lenders hold security interests);
• The General Unsecured Creditors will receive 10% of the proceeds from a Distribution Trust established under the Plan; and
The Plan does not provide for any distributions on the company's capital stock which will be cancelled upon confirmation of the Plan. Wellman plans to emerge from bankruptcy by the end of the year.