Caraustar Emerges from Chapter 11
August 21, 2009
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ATLANTA—Caraustar Industries, Inc. announced that it has emerged from Chapter 11 as a newly reorganized private company eliminating approximately $135 million in debt. Michael J. Keough, president and chief executive officer, said, “We are gratified that the company has been able to expeditiously implement its Plan of Reorganization with minimal business disruption and in record time. As a result, Caraustar emerges with a strong, stable platform from which to operate, invest and grow our business. This is a tremendous accomplishment.”
Under the Plan, shares of the company’s common stock will be retired and previous shareholders will receive a pro rata share of $2.9 million. The company’s 7-3/8 percent and 7-1/4 percent Senior Notes have been exchanged for an aggregate of $85 million in new Senior Secured Notes and 100 percent of the common stock of the reorganized company.
Caraustar has closed on a new $75 million revolving credit facility with General Electric Capital Corporation, which provides Caraustar with more than adequate liquidity to meet all of its working capital needs, including any future capital investments. The company has made no borrowings against the new facility.
Keough said, “We are in a significantly stronger competitive position today than we have been at any time in the past decade. With one of the strongest balance sheets in the industry, we look forward to building upon our 70-year heritage to continue to provide the innovation, products and services our customers have come to expect from Caraustar, as well as implementing future plans to re-invest in the business and continuing our growth.
“During the brief 82-day period in which Caraustar operated under Court supervision—a record for the Bankruptcy Court for the Northern District of Georgia—customers continued to receive superior customer service; vendors were paid in the ordinary course of business with no losses; and all of our employees worked incredibly hard to support the company's reorganization efforts.”
The company has been very active in rationalizing its portfolio by exiting under-performing businesses, right-sizing operations through consolidation of facilities and reducing selling, general and administrative expenses. Restructuring the company’s balance sheet through the exchange of debt for equity complements that effort.
“We are the same company, but with increased financial strength, organizational stability and momentum,” Keough said. “Our new capital structure, combined with the cost savings achieved by operating as a private entity, provides a lean and flexible foundation for sustainable profitability.”
Under the Plan, shares of the company’s common stock will be retired and previous shareholders will receive a pro rata share of $2.9 million. The company’s 7-3/8 percent and 7-1/4 percent Senior Notes have been exchanged for an aggregate of $85 million in new Senior Secured Notes and 100 percent of the common stock of the reorganized company.
Caraustar has closed on a new $75 million revolving credit facility with General Electric Capital Corporation, which provides Caraustar with more than adequate liquidity to meet all of its working capital needs, including any future capital investments. The company has made no borrowings against the new facility.
Keough said, “We are in a significantly stronger competitive position today than we have been at any time in the past decade. With one of the strongest balance sheets in the industry, we look forward to building upon our 70-year heritage to continue to provide the innovation, products and services our customers have come to expect from Caraustar, as well as implementing future plans to re-invest in the business and continuing our growth.
“During the brief 82-day period in which Caraustar operated under Court supervision—a record for the Bankruptcy Court for the Northern District of Georgia—customers continued to receive superior customer service; vendors were paid in the ordinary course of business with no losses; and all of our employees worked incredibly hard to support the company's reorganization efforts.”
The company has been very active in rationalizing its portfolio by exiting under-performing businesses, right-sizing operations through consolidation of facilities and reducing selling, general and administrative expenses. Restructuring the company’s balance sheet through the exchange of debt for equity complements that effort.
“We are the same company, but with increased financial strength, organizational stability and momentum,” Keough said. “Our new capital structure, combined with the cost savings achieved by operating as a private entity, provides a lean and flexible foundation for sustainable profitability.”
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