Robertshaw files Chapter 11 bankruptcy, plans $670 million debt cut

By Sarah Lizee

Olympia, Wash., Feb. 15 – Robertshaw US Holding Corp. and some of its U.S. affiliates filed Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas, according to a Thursday morning press release.

The company said in court documents that in addition to looming maturities and a challenging capital structure, the debtors have faced financial challenges resulting from the impact of pandemic-era product shortages, logistics and supply chain disruptions.

Robertshaw has entered into a restructuring support agreement with a group of lenders that hold about 85% of the debtors’ first-out tranche and about 49% of the debtors’ second-out tranche of a super-priority credit facility with Acquiom Agency Services LLC and Seaport Loan Products LLC as agents.

The RSA is also supported by One Rock Capital Partners, LLC, which holds about 15% of the first-out tranche and 3% of the second-out tranche.

The informal lender group and One Rock Capital put forward a $273 million stalking horse credit bid to recapitalize the business.

The company said the RSA transaction will enable it to eliminate about $670 million of its debt.

Robertshaw said it will conduct a court-supervised process to determine if there are other potential acquirers for its business who will offer a purchase price higher than the stalking horse bid.

The company’s bid procedures propose a bid deadline of 5 p.m. ET on April 15, an auction on April 19, and a sale hearing on April 30.

The RSA also allows for a Chapter 11 plan process to take place concurrently with marketing of the debtors’ business for sale as a going concern.

“Today’s announcement is an important step forward to strengthen our financial foundation and enable us to further invest in the business for the benefit of our customers,” John Hewitt, chief executive officer of Robertshaw, said in the release.

“With a much-improved balance sheet, we will be well-positioned to maintain and further strengthen our position as a global market leader in the design, engineering, and manufacturing of flow control components, systems, and technologies, and further innovate in safe and reliable solutions and cutting-edge technologies.”

At the outset of the Chapter 11 cases, Robertshaw plans to use cash on hand to continue its business. Robertshaw also plans to obtain $56 million in debtor-in-possession financing from the prepetition first-out lenders.

The DIP term loans will bear PIK interest quarterly at a rate of 9.5% per annum, and cash interest quarterly at term SOFR for the interest period in effect for the borrowing plus the applicable term SOFR adjustment plus 100 bps per annum.

There is a 5% commitment fee, a 1.5% commitment fee, a 1.5% backstop fee and a 5% exit fee, each payable in kind.

The company’s prepetition first-out and second-out secured lenders have an interest in the cash collateral that the debtors seek to use.

The company said it is also using the Chapter 11 process to resolve the claims asserted in two state court litigations related to prior balance sheet transactions.

Robertshaw’s operations outside of the United States are not part of the Chapter 11 process, and the company said it expects little to no disruption to its manufacturing, distribution, or engineering centers in these regions.

In its petition, the company listed $500 million to $1 billion in assets and $500 million to $1 billion in liabilities.

Its largest unsecured creditors are Bain & Co., Inc., based in Boston, with a $2.91 million professional services claim, Alvarez & Marsal Private Equity, based in New York, with a $2.21 million professional services claim, and Providence Enterprise Ltd., based in Sai Lau Kok, Hong Kong, with a $1.01 million trade vendor claim.

Latham & Watkins LLP and Hunton Andrews Kurth LLP are serving as legal counsel, Guggenheim Securities, LLC is serving as investment banker and AlixPartners LLP is serving as financial adviser.

Robertshaw is an Itasca, Ill.-based designer and manufacturer of systems and controls used in residential and commercial appliances, HVAC and transportation applications. The Chapter 11 case number is 24-90052.

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