UTEX inks restructuring support agreement; plans to file Chapter 11

By Sarah Lizee

Olympia, Wash., Oct. 6 – UTEX Industries Inc. announced that it has entered into a restructuring support agreement with the majority of its lenders on the terms of a comprehensive pre-packaged restructuring.

The balance sheet transaction will reduce UTEX's funded debt by roughly $700 million and will provide UTEX with up to $42.5 million in new financing, according to a press release.

UTEX said it expects to complete the process and consummate its prepackaged restructuring in a matter of weeks.

To implement this balance sheet restructuring, the company will commence a pre-packaged plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code.

UTEX's pre-packaged plan is supported by over 81.6% and 90.4% of UTEX first- and second-lien lenders, respectively.

The company’s lenders have also agreed to provide UTEX with debtor-in-possession financing and the consensual use of cash collateral to enable UTEX to operate its business in the ordinary course.

Details of the DIP financing were not given in the release.

UTEX's prepackaged plan provides that all general unsecured creditors, including UTEX's vendors and business partners, will remain unimpaired and will be paid in full in the ordinary course of business.

The company said it will continue to operate its business in the normal course without disruption to its vendors, customers, employees, or other partners, and, subject to customary approvals, will have access to substantial liquidity to meet its obligations in the ordinary course during the restructuring.

In connection with the financial restructuring, Houlihan Lokey is serving as financial adviser and investment banker, AlixPartners is serving as restructuring adviser, and Weil, Gotshal & Manges LLP is serving as legal adviser to UTEX.

UTEX is a Houston-based manufacturer of engineered sealing and other specialty products used in oil and gas drilling and production, power, mining, water treatment and other industrial sectors.

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