The YMCA of Metropolitan Milwaukee Announces Comprehensive Restructuring Plan

MILWAUKEE, June 4, 2014 /PRNewswire/ -- The YMCA of Metropolitan Milwaukee announced today a comprehensive restructuring plan that calls for the organization to establish an urban Milwaukee Y comprised of centers within (or very close to) the city of Milwaukee, while selling the majority of its owned real estate assets in order to pay down debt.  The organization today also filed a petition for relief under Chapter 11 of the United States Bankruptcy Code in order to have a protective forum in which to finalize and implement its restructuring plan, including the resolution of remaining debts.  The petition was filed with the United States Bankruptcy Court for the Eastern District of Wisconsin.

The YMCA of Metropolitan Milwaukee fully expects that all centers, camps, programs and other commitments will continue to operate uninterrupted throughout the bankruptcy process.  The Y will also file an emergency motion with the court to allow it to continue paying employee wages and benefits without interruption.  Vendors and suppliers will be paid according to their standard terms for any invoices for post-petition goods and services. 

Since the 1990s, the YMCA of Metropolitan Milwaukee has grown its footprint and reach – including establishing a charter school, building new centers and introducing new programming – financed primarily through borrowing.  Built up over time and with the best intentions, today the YMCA of Metropolitan Milwaukee's debt exceeds $29 million on 2014 budgeted revenue of $37 million and 2014 budgeted EBIDA of $950,000 (a debt to EBIDA ratio of 30 to 1).  With the added impact of external and internal complications over the past few years, including the recession, intensified competition, millions of dollars in deferred maintenance costs, declining membership and decreasing contributions, the YMCA of Metropolitan Milwaukee's current operating and financial model is not sustainable. While much has already been done to address this situation – including staff layoffs, delaying necessary investments in its centers, freezing salaries and benefits, and eliminating some program offerings - absent a significant restructuring and debt reduction, the YMCA of Metropolitan Milwaukee will be insolvent by as soon as this fall.

"The YMCA matters to Milwaukee and is worth saving.  Serving well over 100,000 members, of which more than 30,000 are under the age of 18, we provide vital services and programming that advance healthy living, youth development and social responsibility throughout our shared community," said Julie Tolan, President and Chief Executive Officer of the YMCA of Metropolitan Milwaukee.  "Nobody is turned away from the Y because of an inability to pay.  And we are connectors throughout our communities, bringing together residents, members, other non-profits, health care systems and corporations for the greater community good."

To address its financial and operating challenges, the Board of Directors of the YMCA of Metropolitan Milwaukee nominated a special task force of the Board to analyze all options.  The task force has been meeting weekly since October 2013 and has benefitted from the advice and support of outside financial, legal and other advisors.  The Board also sought and received input from employees, members, benefactors and community leaders.

Unanimously approved by the YMCA of Metropolitan Milwaukee's Board of Directors, the restructuring plan announced today calls for:

• Establishing a truly urban mission that helps more Milwaukee families build healthy lifestyles and works with more neighbors of all ages to be healthy, engaged members of the community.  Delivered through centers that are primarily leased, restricted or gifted, and one camp, the new Milwaukee YMCA platform will include:
  • Rite-Hite Family YMCA, which is the home to the YMCA Healthy Lifestyle Village – a unique wellness and prevention partnership between the Y, Wheaton Franciscan Healthcare and the Walter Schroeder Aquatic Center.  Under the restructuring plan, the Rite-Hite Family YMCA, located just north of Milwaukee in Brown Deer, will serve as the flagship for the Y's healthy living initiatives.  All other operations at the Rite-Hite Family YMCA will continue to operate as usual. 
  • Northside YMCA, which is located in the Lindsay Heights neighborhood and serves as home to a Children's Hospital of Wisconsin primary care clinic.  All operations at the Northside YMCA will continue to operate as usual.
  • Parklawn YMCA, the first YMCA in the country to be built in a public housing project, is located in the Parklawn Community on Milwaukee's north side.  All operations at the Parklawn YMCA will continue to operate as usual. 
  • Downtown YMCA, which is currently located above the Shops of Grand Avenue and serves as a central point for the Y's corporate wellness initiatives.  Since the Y was founded in Milwaukee more than 150 years ago, it has always had a downtown presence.  All operations at the Downtown YMCA will continue to operate as usual.
  • John C. Cudahy YMCA, which is home to the widely-respected Miracle League, Milwaukee's first universally-adaptive baseball program, as well as other valuable programming.  Under this plan, all summer programs will continue uninterrupted, with the center closing during the fall, winter and spring seasons.
  • Camp Minikani, which is located on the shores of Amy Belle Lake in Hubertus.  For nearly 100 years, Camp Minikani has been home to generations of campers, and is the embodiment of the totality of the Y's mission.  All camp operations will continue to operate as usual.
• Selling the majority of its owned centers to operators better positioned to continue these Y's, and invest in these centers for the long-term. 
  • The YMCA of Metropolitan Milwaukee has a letter of intent from the YMCA of Central Waukesha County to purchase the West Suburban YMCA, Tri-County YMCA and Southwest YMCA. A majority of the proceeds from this transaction will be used for debt reduction.  Pending the sale, which requires court approval, operations, membership benefits, programs and services at these facilities will continue as normal.
  • The YMCA of Metropolitan Milwaukee also has a letter of intent from the Kettle Moraine YMCA to purchase Feith Family Ozaukee YMCA.  A majority of the proceeds from this transaction will also be used for debt reduction.  Pending the sale, which requires court approval, operations, membership benefits, programs and services at this facility will continue as normal.
• Preserving a strong downtown presence while seeking an alternative location for the Downtown YMCA that better serves the Y's needs and its members' preferences.  After new leased space has been identified and secured, the YMCA of Metropolitan Milwaukee will market for sale the current downtown location, using the proceeds to further repay debt.
• Seeking long-term strategic partners for both the South Shore YMCA and Camp Matawa that are better suited to maximize the potential of those operations.
• The completion of the sale of the Young Leaders Academy to Milwaukee College Prep, as previously announced.

"We believe this plan represents the most comprehensive solution possible for resolving the Y's urgent financial and operating challenges, and is the Y's best shot at survival," said Bob Venable, Chairman of the Board of Directors of the YMCA of Metropolitan Milwaukee.  "The Board carefully studied every viable option, and is confident that this plan is designed to achieve our objectives of establishing a sustainable financial and operating platform, while preserving our mission and continuing to best serve our shared community.  With this new footprint, the Y will be able to strengthen its urban mission, can better deploy its human resources to ensure operations are well staffed and managed, will be able to substantially pay down its debt, and will become positioned to reduce its cost structure while maintaining sufficient earned revenue to support ongoing operations."

By filing for Chapter 11, the YMCA of Metropolitan Milwaukee is seeking protection from its creditors in order to allow for an orderly finalization and implementation of this restructuring plan.  In addition, the YMCA of Metropolitan Milwaukee will also be asking its banking partners, who will receive most of the proceeds from these asset sales, to establish a reduced debt level that is both feasible and consistent with the Y's smaller operating platform and will position the organization to emerge from Chapter 11 as an operating entity without the need for further liquidation.  

"This plan called for many difficult decisions, but we are walking towards our challenges and are committed to finding solutions.  Kicking the can down the road is not an option," concluded Tolan.  "Already, so many in our community – from the YMCA of Central Waukesha County, the Kettle Moraine YMCA and Milwaukee College Prep, to individual community members– have shown their resolve in ensuring Southeastern Wisconsin continues to benefit from a strong, healthy Y.  For that we are deeply grateful.  Our hope is that all involved realize that this is the best plan forward to allow the Y to continue operations in Milwaukee."

Anyone seeking more information about this plan and the Chapter 11 process can visit www.ymcamke.org.

About the YMCA of Metropolitan Milwaukee

The YMCA of Metropolitan Milwaukee is a powerful association of men, women and children of all ages and from all walks of life joined together by a shared passion to strengthen the foundations of community through youth development, healthy living and social responsibility.  Since 1858, Milwaukee YMCAs have helped kids and families live healthy lives in spirit, mind and body.  Supported in part through contributions to the Annual Campaign, the Y provides membership assistance and scholarships to programs like summer camp, child care and teen activities, to make sure that everyone, regardless of age, income or background, has the opportunity to be healthy, confident, connected and secure. http://www.ymcamke.org

YMCA of Metropolitan Milwaukee
414-313-9622

SOURCE YMCA of Metropolitan Milwaukee