Townsends files Chapter 11 bankruptcy to explore alternatives

By Caroline Salls

Pittsburgh, Dec. 20 - Townsends, Inc. filed Chapter 11 bankruptcy Dec. 19 in the U.S. Bankruptcy Court for the District of Delaware to explore its strategic alternatives, according to a company news release.

The filing also includes four of Townsends' wholly owned subsidiaries.

The company said its operations are expected to continue during the bankruptcy process.

"Since 2008, our company has been impacted by record-high feed-ingredient costs on the one hand and low chicken pricing on the other," chief executive officer Frederick B. Beilstein III said in the release.

"The company's management and its board of directors determined that a Chapter 11 filing was a necessary part of the company's restructuring."

In conjunction with the filing, Townsends is seeking approval to enter into a $52 million debtor-in-possession financing facility to enable normal operation of its business, including the timely payment of employee wages and other obligations.

The loan includes a $12 million revolving credit facility and a roll-up of the company's $40 million pre-bankruptcy revolver.

Wilmington Trust Co. is the administrative agent.

Interest will be Libor plus 670 basis points, with a 2.5% Libor floor.

The facility will mature on the earlier of 90 days after the closing of the interim DIP order and March 29.

The company is seeking interim access to $47 million of the DIP financing.

According to court documents, Townsends has $10 million to $50 million of assets and $50 million to $100 million of debt.

The company's largest unsecured creditors are International Paper Co. of Pittsburgh, with a $1.69 million trade payable claim, and Commodity Specialists Co. of Kansas City, Mo., with a $1.02 million trade payable claim.

Townsends' equity is 100% owned by the Indian River Trust of Wilmington, Del.

The company is represented by Morris Nichols Arsht & Tunnell LLP.

Townsends is a Georgetown, Del.-based poultry processor. Its Chapter 11 case number is 10-14092.

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