Reddy Ice Holdings Inc (OTCQB: RDDY) intends to file a voluntary plan of reorganization under Chapter 11 of the US Bankruptcy Code in the US Bankruptcy Court for the Northern District of Texas. This disclosure was made in the firm’s annual report on Form 10-K filed for the year ended Dec 31, 2011.
The company’s plan has the support of a majority of its lenders and major creditors. Balance sheet restructuring will ensure strong financial footing for the future and allow operations to continue uninterrupted. The company has secured commitments from Macquarie Bank Limited for $70 million in debtor-in-possession financing to fund, among other things, the company’s working capital needs while in Chapter 11, and $50 million in exit financing to be available to the company upon emergence from Chapter 11.
Reddy Ice’s financial position has been negatively affected by a weaker economic environment, higher commodity costs, and heavy debt levels. In 2011, the company began to explore alternatives to address its capital structure.
“We expect to emerge from this restructuring as a much stronger company that is well-positioned for investment in growth and enhanced profitability,” said Gilbert M Cassagne, chief executive officer and president.
The restructuring plan is intended to recapitalize the company’s business and provide Reddy Ice with the opportunity to pursue a strategic acquisition of all or substantially all of the operations and assets of Arctic Glacier Income Fund and its subsidiaries. Arctic Glacier filed for creditor protection under the Companies’ Creditors Arrangement Act in Canada (CCAA). The CCAA proceedings have been recognized under Chapter 15 of the Bankruptcy Code in the United States. In its CCAA proceedings, Arctic Glacier obtained court approval for and is implementing a Sale and Investor Solicitation Process (SISP) seeking sale and investment proposals from qualified bidders for Arctic Glacier’s business and assets. Reddy Ice submitted a non-binding letter of intent March 28, 2012, for the purchase of all or substantially all of Arctic Glacier’s operations and assets in accordance with the SISP.
The company expects to commence the bankruptcy case promptly. This process is not expected to have an impact on Reddy Ice’s operations.
Additional information is available at www.reddyice.com.