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Xerium to implement pre-packaged plan
31
Mar '10
Xerium Technologies, Inc., a leading global manufacturer of industrial textiles and rolls used primarily in the paper production process, announced that it has received overwhelming support from its lenders for a restructuring plan to reduce the Company's debt by approximately $150 million and significantly strengthen its long-term financial health. The Company will implement the "pre-packaged" plan of reorganization with court assistance under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware.

The Company will operate as usual during the court process, which is anticipated to be concluded in 30 to 60 days. The restructuring involves Xerium's companies located in the United States, Canada, Austria and its non-operating holding companies in Italy and Germany. The Company's operating entities in Europe, Asia, South America, Italy, and Germany are not part of the court process or the restructuring.

"We are delighted to receive such overwhelming support from our lenders, which allows us to quickly move forward with our pre-packaged restructuring plan," commented Stephen R. Light, Xerium's Chairman, CEO and President. "This is a major accomplishment for the Company that will enable us to continue implementing our three-part operating strategy; reducing our debt load, introducing new products that our customers value and maximizing the contribution of our employees."

"As a result of the restructuring, the Company will be well positioned to compete successfully in our served markets," said Mr. Light. "The restructuring will allow the company to remain focused on our primary goals, manufacturing and supplying the best products possible to our global customers."

The filing is not intended to impact employees, suppliers or customers. As part of its initial filings, the Company filed motions seeking assurances from the court that employees will continue to receive their usual pay and benefits on an uninterrupted basis, customers receive goods as they normally would, and suppliers will receive all amounts owed to them both before and after the filing in the normal course of business. Additionally, to assure its liquidity during the restructuring process, the Company has secured a commitment from its lenders for an $80 million term and revolving credit facility and has filed motions seeking the Court's approval of the financing.

Among other things, the pre-packaged plan provides that approximately $620 million of existing debt would be exchanged for approximately $10 million in cash, $410 million in new terms loans maturing in 2015, and approximately 82.6% of the common stock of the Company. Existing shareholders would retain a meaningful minority equity ownership of the Company of approximately 17.4% of the common stock and receive four year warrants to purchase up to an additional 10% of the common stock. In addition, the Company would enter into a new revolving loanof up to $20 million and a term loan of $60 million. The implementation of the pre-packaged plan is dependent upon a number of factors, including final documentation, the approval of a disclosure statement and confirmation of the plan in accordance with the provisions of the Bankruptcy Code.

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