(Reuters) – Masonite International Inc, a Canadian door maker owned by private equity firm Kohlberg Kravis Roberts & Co., has reached an agreement in principle with committees representing its secured lenders and bondholders on terms of a restructuring plan, two sources familiar with the matter said on Monday.
The plan aims to reduce the company’s debt from $2.2 billion today to about $300 million. It will also reduce the company’s annual cash interest expense by $145 million, one of the sources, who is familiar with the company, said.
To implement the plan, Masonite plans to initiate a voluntary Chapter 11 filing in the U.S. and Canada, although no date has been set for that action, the source said.
The plan also calls for Masonite’s vendors and trade creditors to be paid in full, the source said.
The company is not seeking a debtor-in-possession loan because it has more than adequate cash on hand of $160 million, the source said.
The Wall Street Journal website had reported earlier on Monday that the door maker was planning to file for bankruptcy protection to cut its debt.
KKR bought Masonite in 2005 and took it private for more than $2.7 billion, according to the Journal
The company started losing money from 2005 onward due to rising material prices and slowing sales, according to the Journal, which said that in 2007 Home Depot (HD.N), then its largest customer, switched to another door supplier.
(Reporting by Megan Davies; additional reporting by Sinead Carew; Editing by Kim Coghill)