Foamex International Inc. has gained financing that will allow it to emerge from Chapter 11 bankruptcy proceedings.
The Linwood-headquartered polymer foam processor, which went into Chapter 11 in September 2005, said it has a commitment for new equity investment. Its primary operating subsidiary, Foamex L.P., also gained a commitment for funding its emergence from Chapter 11.
Some conditions must be satisfied for Foamex to get the equity. As part of the equity investment, Foamex International will carry out a $150 million rights offering to existing common and preferred shareholders.
Five existing shareholders-D.E. Shaw Laminar Portfolios L.L.C.; Goldman, Sachs & Co.; Par IV Master Fund Ltd.; Sunrise Partners Ltd. Partnership; and Sigma Capital Associates L.L.C.-will fund any shortfall between $150 million and the proceeds of the rights offering.
Separately, Foamex L.P. has a commitment from lenders led by Bank of America N.A. and Banc of America Securities L.L.C. for up to $790 million in exit financing. The company said it expects to draw about $645 million as it emerges from Chapter 11.
The commitments represent a significant and positive step toward Foamex's emergence from Chapter 11, said Raymond Mabus Jr., chairman and CEO of Foamex International. He expects the firm to emerge from Chapter 11 during the first quarter of 2007, with the ability to compete and grow in the markets its serves.
If successful, Foamex said the new equity investment and the exit financing will allow the company to satisfy all creditors in full. It also will allow holders of Foamex International stock to retain their ownership interests, subject to any dilution that may occur in connection with the rights offering or otherwise.
This story was written by Liz White, Urethanes Technology staff.