Masonite emerges from bankruptcy with significantly reduced debt

By Caroline Salls

Pittsburgh, June 9 - Masonite International Corp. emerged from Chapter 11 bankruptcy and its Companies' Creditors Arrangement Act case on Tuesday, according to a company news release.

Masonite said it worked with its lenders to reduce its debt to $11.3 million of term debt and less than $2 million of other debt at foreign subsidiaries from a total of $2.2 billion of debt in March.

Immediately upon emergence, Masonite said it would pay off the $11.3 million of term debt, leaving less than $2 million of debt on the balance sheet with cash on hand of more than $140 million.

In addition, the company said it expects to close shortly on an up to $150 million asset-backed revolving line-of-credit facility.

"This restructuring process has made Masonite a financially healthier and stronger company better positioned for the future," president and chief executive officer Fred Lynch said in the release.

"We achieved our goal to successfully complete our debt restructuring plan and emerge from Chapter 11 and CCAA within 120 days of filing in no small part because of the extraordinarily constructive work we undertook with our lenders to develop an outstanding capital structure to support our long-term business objectives."

Chief financial officer Tony DiLucente said in the release: "The successful financial restructuring, together with the closure of the ABL facility in the near future, provides Masonite with significant financial flexibility to meet our liquidity needs while simultaneously funding future growth opportunities."

As previously reported, the company's plan of reorganization was confirmed by the U.S. Bankruptcy Court for the District of Delaware on May 29. The Ontario Superior Court of Justice approved the CCAA plan on June 1.

Plan creditor treatment

Treatment of creditors under the plan will include:

• Holders of administrative claims and priority claims will be paid in full in cash;

• Holders of senior secured claims will receive a share of a new term loan in the amount equal to the amount of the senior secured claim the holder elects to apply to the new term loan; to the extent the holder elects to apply for a new PIK loan, $1 in amount of new PIK loan for each $2 of new common stock the holder would have received of plan equity value, subject to reduction so the new PIK loan does not exceed the maximum allowed amount; and a share of 97.5% of new common stock;

• Other secured claims will either be reinstated or rendered unimpaired;

• Holders of senior subordinated notes claims will receive a share of 2.5% of the new common stock and 100% of new warrants to purchase 10% of new common stock;

• Holders of general unsecured claims will receive full payment in cash of the unpaid portion of their claims, provided that the company can request court approval to pay some of the general unsecured claims before the plan effective date;

• Intercompany claims will either be reinstated or cancelled with no distribution;

• Intercompany interests will be reinstated; and

• Holders of equity interests in Masonite Holding Corp. and section 510(b) claims will receive no distribution.

Masonite, a Mississauga, Ont.-based manufacturer of residential and commercial doors, filed for bankruptcy on March 16. Its Chapter 11 case number is 09-10844.

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