Northwest Hardwoods
FILING ALERT: Northwest Hardwoods, Inc. Files Prepackaged Chapter 11 in Delaware Providing for Deleveraging of $270M
Mon 11/23/2020 09:05 AM
Relevant Documents:
Voluntary Petition
First Day Declaration
Plan
Disclosure Statement
Cash Collateral Motion
Northwest Hardwoods, Inc., a Tacoma, Wash.-based privately held lumber manufacturer with 20 production facilities in the western, glacial, and Appalachian regions of the United States, filed for chapter 11 protection early this morning, Nov. 23, in the Bankruptcy Court for the District of Delaware, along with two affiliates. The company reports $100 million to $500 million in both assets and liabilities. The debtors are represented by Gibson, Dunn & Crutcher in New York and Young Conaway Stargatt & Taylor in Wilmington, Del., as co-counsel and Huron Consulting Services as financial advisor. Prime Clerk is the claims agent. The jointly administered case number is 20-13005. The case has been assigned to Judge Christopher S. Sontchi. Continue reading for our Americas Middle Market team's analysis of Northwest Hardwoods prepackaged chapter 11 filing and Request a Trial for access to the above documents and analysis as well as our coverage of thousands of other stressed/distressed debt situations.
As previously announced, the debtors have filed a chapter 11 plan of reorganization and disclosure statement premised on a restructuring support agreement supported by certain secured noteholders claims and equityholders. According to the first day declaration of Northwest Holdings chairman and CEO Nathan Jeppson, the RSA was entered into with an ad hoc noteholder group, certain affiliates of Littlejohn & Co. LLC (holds 84.4% of common stock) and Forest Field Limited (holds 94% of common stock), with consenting stakeholders holding more than 95% of the secured notes claims, and 94% of the outstanding common stock in Hardwood Holdings, Inc. The proposed restructuring would (i) “provide the company with access to a new asset-based revolving credit facility with a commitment of $100 million; (ii) deleverage the company’s balance sheet by nearly $270 million, “with significantly reduced annual debt service costs on a go-forward basis” and (iii) provide for satisfaction of claims held by the debtors’ employees, vendors, suppliers, trade and other general unsecured creditors in full in the ordinary course of business. The debtors say that they “enjoy overwhelming support of key stakeholders.” The chapter 11 case would be funded “primarily through the use of cash collateral.”
The RSA milestones envision plan confirmation by no later than 45 days after the petition date and the plan effective date within 60 days of the petition date.
The company’s prepetition capital structure includes:
The disclosure statement includes the following summary of estimated recoveries:
The debtors say that they are seeking a plan voting deadline of Dec. 16, but as of the petition date the debtors “already have garnered votes to accept to Plan from approximately 83% in amount of Class 4 Secured Notes Claims and approximately 98% in amount of Class 9 Existing Equity Interests.”
The company, which originated in 1967 with a single sawmill in Arlington, Wash., attributes the bankruptcy to “increasingly aggressive” trade restrictions between the U.S. and China and operational challenges resulting from the Covid-19 pandemic, which have reduced sales and lowered profitability and challenged the debtors’ ability to service its funded debt.
Reorg First Day will provide a full summary once the first day briefing is complete.
Voluntary Petition
First Day Declaration
Plan
Disclosure Statement
Cash Collateral Motion
Northwest Hardwoods, Inc., a Tacoma, Wash.-based privately held lumber manufacturer with 20 production facilities in the western, glacial, and Appalachian regions of the United States, filed for chapter 11 protection early this morning, Nov. 23, in the Bankruptcy Court for the District of Delaware, along with two affiliates. The company reports $100 million to $500 million in both assets and liabilities. The debtors are represented by Gibson, Dunn & Crutcher in New York and Young Conaway Stargatt & Taylor in Wilmington, Del., as co-counsel and Huron Consulting Services as financial advisor. Prime Clerk is the claims agent. The jointly administered case number is 20-13005. The case has been assigned to Judge Christopher S. Sontchi. Continue reading for our Americas Middle Market team's analysis of Northwest Hardwoods prepackaged chapter 11 filing and Request a Trial for access to the above documents and analysis as well as our coverage of thousands of other stressed/distressed debt situations.
As previously announced, the debtors have filed a chapter 11 plan of reorganization and disclosure statement premised on a restructuring support agreement supported by certain secured noteholders claims and equityholders. According to the first day declaration of Northwest Holdings chairman and CEO Nathan Jeppson, the RSA was entered into with an ad hoc noteholder group, certain affiliates of Littlejohn & Co. LLC (holds 84.4% of common stock) and Forest Field Limited (holds 94% of common stock), with consenting stakeholders holding more than 95% of the secured notes claims, and 94% of the outstanding common stock in Hardwood Holdings, Inc. The proposed restructuring would (i) “provide the company with access to a new asset-based revolving credit facility with a commitment of $100 million; (ii) deleverage the company’s balance sheet by nearly $270 million, “with significantly reduced annual debt service costs on a go-forward basis” and (iii) provide for satisfaction of claims held by the debtors’ employees, vendors, suppliers, trade and other general unsecured creditors in full in the ordinary course of business. The debtors say that they “enjoy overwhelming support of key stakeholders.” The chapter 11 case would be funded “primarily through the use of cash collateral.”
The RSA milestones envision plan confirmation by no later than 45 days after the petition date and the plan effective date within 60 days of the petition date.
The company’s prepetition capital structure includes:
The disclosure statement includes the following summary of estimated recoveries:
The debtors say that they are seeking a plan voting deadline of Dec. 16, but as of the petition date the debtors “already have garnered votes to accept to Plan from approximately 83% in amount of Class 4 Secured Notes Claims and approximately 98% in amount of Class 9 Existing Equity Interests.”
The company, which originated in 1967 with a single sawmill in Arlington, Wash., attributes the bankruptcy to “increasingly aggressive” trade restrictions between the U.S. and China and operational challenges resulting from the Covid-19 pandemic, which have reduced sales and lowered profitability and challenged the debtors’ ability to service its funded debt.
Reorg First Day will provide a full summary once the first day briefing is complete.
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