NEW YORK (Reuters) – Masonite International Inc, a Canadian doormaker, and its U.S. operations filed for bankruptcy on Monday as part of a pre-arranged plan to restructure the company’s crippling debt.
The company, one of the world’s largest doormakers, has been trying to restructure its operations since 2005, when it was acquired by private equity firm Kohlberg Kravis Roberts & Co [KKR.UL]. But, the company has been slammed by the slide in the housing and construction markets and the loss of one of its largest customers in 2007.
Masonite Corp, the U.S. operations of the privately held company, listed debt of $2.64 billion and assets of $1.53 billion in its Chapter 11 bankruptcy filing in Delaware.
The company said it expects quick approval of the reorganization plan, which provides a full recovery for its general unsecured creditors. Secured claims will range from full recovery to 4.8 percent recovery for senior subordinated notes.
The plan wipes out equity investors.
The bankruptcy filing will help the company cut its debt load by almost $2 billion and reduce annual cash interest costs by about $145 million, Masonite said in a release. The filing comes after an agreement made with its senior secured lenders and holders of some senior subordinated notes.
The company, which reported worldwide sales of $1.82 billion in 2008, said it will continue to operate its businesses as usual.
“Because they already have a deal negotiated with their primary creditor constituencies, the Masonite debtors expect these Chapter 11 cases to move swiftly, which will reduce, to the extent practicable, any adverse impacts of the bankruptcy filing on their businesses,” the company said in court documents.
The company and 15 of its affiliates filed for Chapter 11 in the United States. At the same time, three of the Masonite affiliates and four of its Canadian units also sought relief from creditors in the Ontario Superior Court of Justice in Toronto.
The company, which was founded in 1925, sold about 36 million doors in 2008 in more than 70 countries. It employs about 8,500 people worldwide, including almost 4,500 in the United States and Canada.
The case is: In re Masonite Corp, U.S. Bankruptcy Court, District of Delaware, No. 09-10844.
(Reporting by Chelsea Emery, Tom Hals, editing by Leslie Gevirtz)