Oak Brook, Illinois-based metals distributor A.M. Castle & Co. announced that it has reached an agreement in principle with lenders holding more than 92 percent of its aggregate first, second, and third lien debt to complete a comprehensive financial restructuring.
According to the press release, the restructuring will allow the company to address its balance sheet, while ensuring continuity of operations for vendors, customers, and employees. The 92 percent of lenders have agreed to a plan providing for additional cash investments and conversion of a significant amount of their debt into a combination of equity and equity-like instruments. The restructuring process is expected to be completed during the third quarter of fiscal 2017 and the remaining debt holders are being solicited for participation.
Since May 2015, the company’s management team began to restructure its operations which have moved the firm from losses to positive adjusted EBITDA during each month of the first quarter of 2017 for the first time in more than three years. The company seeks to restructure to address its interest burden. The restructuring is expected to reduce cash interest expense by more than 70 percent.
Management warned that it will announce within 4-6 weeks whether the restructuring will be performed under the protection of the bankruptcy court through a pre-packaged proceeding or under direct negotiations. If bankruptcy is initiated, the restructuring is expected to be completed within 45 to 60 days after filing.