Citing high debt levels and rising prices for aluminum and other raw materials, Werner Co., Greenville, PA, and its affiliated companies have filed for Ch. 11 bankruptcy protection.
Werner is a global manufacturer and distributor of ladders, climbing equipment and ladder accessories.
In papers filed in U.S. Bankruptcy Court in Delaware, Werner reported audited net sales of $472.3 million for the year ending Dec. 31, 2005. As of March 31, 2006, Werner reported assets of $201 million and liabilities of $473.4 million.
Werner is highly-leveraged and is facing the maturity of significant portions of debt in its current capital structure, court documents reveal. At the same time, Werner says, it is undergoing a significant operational restructuring, including transferring operations to a new facility in Juarez, Mexico.
Werner also cites strain from the rising price of aluminum and other raw materials used to make its goods. The company says in court documents it has experienced “significant constraints on profit margins and liquidity.”
Werner explored out-of-court options, including the sale of business segments and other assets. But due to liquidity constraints, Werner reports it was forced to file for protection under Ch. 11 of the Bankruptcy Code.
“The strategic repositioning of Werner is well underway. In the past few years, we have moved significant production to Mexico and China in an effort to become the low-cost provider of climbing products. We have revitalized our product development team, resulting in the planned rollout of 15 new products and brand extensions over the next year,” said Steven P. Richman, Werner’s president and CEO.
“… In recent years, however, Werner has been constrained by its highly leveraged capital structure and by the continuing unprecedented high prices for aluminum and other raw materials. Quite simply, we have too much debt. We intend to use the Chapter 11 process to reduce this debt significantly and develop and implement a new capital structure that will allow us to invest in the business.”
To help fund its operations during the reorganization process, Werner has secured a commitment for $99 million in debtor-in-possession (DIP) financing from Black Diamond Commercial Finance.
Subject to court approval, these funds will be available to satisfy obligations associated with conducting the company’s business, including payment to suppliers under normal terms for goods and services provided after the Chapter 11 filing and payment of wages and benefits to employees and independent sales representatives.
Werner expects its operations to function normally during the Chapter 11 process, with little impact on how it conducts business:
- Customers will be served in the normal course. Werner’s manufacturing and distribution facilities are open on normal schedules, and the company expects to continue to fulfill customer orders and provide uninterrupted customer service.
- Suppliers will be paid. Werner plans to continue paying suppliers for all goods and services they provide after the filing.
- Employees will continue to be paid. Werner plans to provide all wages and benefits for active employees as usual and without interruption. Likewise, the company plans to provide its independent sales representatives with their usual commissions on a timely basis.
The Chapter 11 filings by Werner and its affiliates were made in the U.S. Bankruptcy Court for the District of Delaware. Werner’s principal legal advisors for the Chapter 11 proceedings are Willkie Farr & Gallagher LLP and Young Conaway Stargatt & Taylor LLP. The Company’s financial advisors are Rothschild Inc. with Loughlin Meghji + Co. assisting Werner with its operational restructuring.More information about Werner’s reorganization is available on the company’s Web site at www.wernerladder.com.
class=textbody1>Werner Co. Ch. 11 Filing
Werner Co. Filing in Support of Ch. 11 Petition