Morris Material Handling is to retain its independence after bondholders decided to convert their debt to equity in the company rather than sell out.
The company announced in May that it had filed for Chapter 11 bankruptcy protection and had obtained, subject to court approval, a $35m financing facility from Canadian Imperial Bank of Commerce as agent for a syndicate of banks, including members of the company’s existing bank group. “This commitment is anticipated to be sufficient for the company’s working capital needs during the pendency of the Chapter 11 cases,” the company said.
Morris companies outside of the USA are not affected.
The filing is a major step in restructuring the company’s balance sheet. As previously reported, the company has been in talks with an informal committee of its money lenders (bondholders). At the same time it had also been canvassing for takeover bids but this avenue is now closed – at least for now.
Speaking for the bondholders, Chanin Capital Partners’ managing director Randall Lambert said: “The committee is fully supportive of the company and looks forward to working with the company to implement a capital structure that is appropriate for its operations, which should allow the company to remain competitive and support growth in its core businesses.” Morris president and CEO Jack Stinnett said: “We are confident that the Chapter 11 filing will allow the company to restructure its balance sheet and will result in a stronger, well-capitalised company going forward. We continue to make progress with our existing bank group and other debt holders towards what we expect will be a prompt emergence from Chapter 11. In the past several months we have strengthened our parts and service business through selling directly to customers throughout the USA. New proposal activity for our equipment business is increasing, we expect a rebound from the depressed order levels in 1999 and are confident we can profitably re-grow our core business.”
