Arclin emerges from Chapter 11 bankruptcy case, CCAA protection

By Caroline Salls

Pittsburgh, Jan. 15 - Arclin emerged from Chapter 11 bankruptcy and protection under the Companies' Creditors Arrangement Act in Canada on Friday, according to a company news release.

"We are pleased to emerge from this process with one of the strongest balance sheets in our industry and enhanced financial flexibility, better positioned than ever to provide our customers with the product quality, innovation and service they have come to expect from Arclin," president and chief executive officer Claudio D'Ambrosio said in the release.

Arclin's plan of reorganization was confirmed by the U.S. Bankruptcy Court for the District of Delaware on Dec. 8, and its plan of arrangement was approved by the Ontario Superior Court of Justice on Dec. 11.

According to the release, the company funded debt has been reduced to $60 million from $234.

Affiliates of lenders Black Diamond Capital Management, LLC and Silver Point Capital, LP have exchanged debt for equity and are now majority owners of Arclin.

Additionally, the company said it has obtained a $25 million revolving line of credit facility from Bank of America.

According to the disclosure statement, the company will have 10 million new equity interests, and it will be authorized to issue 20 million new equity interests.

Creditor treatment

Treatment of creditors will include:

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

• Holders of priority tax claims, other priority claims and other secured claims will have their claims reinstated;

• Holders of $210.03 million in first-lien claims will recover 88.4% through their share of 97% of the new equity interests in the reorganized company and $60 million in new term debt;

• Holders of $31.32 million in second-lien claims will receive a share of $12.66 million of the second-lien claims against the U.S. and Canadian debtors and the Canadian partnerships, 3% of the new equity interests and new warrants; and

• Holders of $9.63 million in general unsecured claims, intercompany claims and existing equity interests will receive no distribution.

Enhancements

"In parallel with the financial restructuring process, we have made important operational enhancements," D'Ambrosio said in the release.

"In particular, we have brought our two remaining overlays facilities under our FSC Chain of Custody certification, making the majority of Arclin's industrial and decorative overlay products Chain of Custody certified to a variety of industries.

"We have also introduced E-Natural and E-Sorb, low/zero emitting wood panel binding systems that will give our customers the ability to target specific green markets and provide architects and design specifiers the ability to control emissions for a given project.

"We believe these strategic product developments, coupled with our strong balance sheet, position Arclin well for 2010 and beyond."

Arclin, a Mississauga, Ont., provider of bonding and surfacing solutions, filed for bankruptcy on July 27. Its Chapter 11 case number is 09-12628.

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