TACOMA, Wash., Nov. 24, 2020 /PRNewswire/ -- On November 23, 2020, Northwest Hardwoods, Inc. and certain of its affiliates ("NWH" or the "Company") took the next step in implementing its restructuring support agreement (the "RSA") by filing voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). All of the company's first day motions were approved by the court today on an interim basis, which enables the company to run operations, supply customers and pay vendors per the normal course of business. Significantly, the Bankruptcy Court authorized the Company to use over $22 million of available cash to pay all critical vendors and other service providers any pre-bankruptcy amounts owing as invoices for those amounts become due and owing.
As announced on November 6th, the Company entered into the RSA with holders of more than 95% in principal amount of the Company's secured notes and certain of its existing equity holders to execute a transaction that will delever its balance sheet by ~$270 million and position NWH for future growth and success.
Nathan Jeppson, CEO of Northwest Hardwoods said "Today marks an important milestone in our process to significantly reduce our debt so we can re-invest in long-term growth. Throughout this process, we will continue to serve our customers and deliver on our mission of delivering the best hardwoods products in the industry. Given the strong level of support from our lenders and creditors, we expect to complete this process over the next 60 days"
Today's action is the product of extensive, collaborative, good faith negotiations among NWH and its key stakeholders. The financial restructuring is specifically designed to ensure that NWH's executive team can remain focused on go-forward operations, which will continue in the ordinary course without interruption.
Specifically, the RSA accomplishes several key objectives: 1) reduce the company's debt by $270 million 2) significantly reduces debt service obligations, thereby increasing cash flow available for re-investment in the business and 3) most importantly, accomplishes this without reducing employee pay or benefits and with no expected impairments to customers or vendors.
Upon resolution, the secured noteholders will convert their ~$379 million of secured notes into $110 million of new exit term loans and 99% of the equity in reorganized NWH (subject to dilution by a management incentive plan). The remainder of the reorganized equity will be reserved for the Company's existing equity holders. In addition, NWH has received a commitment from Bank of America and Wells Fargo to refinance the existing ABL facility as part of the financial restructuring, ensuring that the Company will continue to have ready access to a working capital facility going forward.
This approach will ensure that the Company's operations continue without interruption, with employees, suppliers, vendors, contract counterparties and other trade creditors continuing to be paid in full and in the ordinary course.
An ad hoc group of the holders of the company's secured notes (the "Ad Hoc Group"), encompassing over 90% of the company's secured notes, has likewise expressed its support of this agreement. A statement from the Ad Hoc Group stated "We believe in the long-term growth of Northwest Hardwoods, its incredible employees and the strength of its management team. This action will allow the company to meaningfully reduce its overall debt, without any interruption to current operations. We look forward to a successful process and future for Northwest Hardwoods".
NWH is represented by Gibson, Dunn & Crutcher LLP and Young Conaway Stargatt & Taylor, LLP as legal co-counsels and Huron Consulting Group as financial advisor. The secured noteholders are represented by Willkie Farr & Gallagher LLP as legal counsel and Guggenheim Securities, LLC as financial advisor. This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities.
NWH is the largest United States manufacturer of North American hardwood lumber based on sawmill capacity, with a current estimated annual hardwood lumber capacity of approximately 320 million board feet. Its North America operations include 20 facilities that produce over 20 species of domestic hardwoods. The Company serves more than 2,000 active customers across over 60 countries.
SOURCE Northwest Hardwoods