Saturday, June 12, 2004

Formica prepares new start

By James McNair
The Cincinnati Enquirer

With new executive offices awaiting it in downtown Cincinnati, Formica Corp. is preparing for life after bankruptcy.

The 91-year-old maker of laminate countertops said Friday it has completed a major financial reorganization and emerged from Chapter 11 bankruptcy. The court-approved plan lowers Formica's long-term debt by more than two-thirds, although it gives majority control of its stock to outside investors - led by a pair of vulture investment funds - that bought the reborn company's common stock for $175 million in cash.

Formica declared itself insolvent in March 2002 with $540 million in debt. Since then, the company has consolidated manufacturing and warehousing facilities, hammered out a $135 million loan deal with its secured lenders and obtained a $65 million line of credit.

But Formica's lifesaver was the $175 million in cash. Almost all of the money, from a group led by Cerberus Capital Management of New York and Oaktree Capital Management of Los Angeles, will be used to repay secured debt. The reorganization leaves Formica with about $160 million in long-term debt.

Formica received state tax breaks totaling more than $600,000 to move its headquarters from Warren, N.J., to the Chemed Center on Fifth Street in downtown Cincinnati. A spokesman said the move is under way and will bring about 35 jobs downtown.

Formica employs about 400 people at its manufacturing plant in Evendale.



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