Milacron, in Chapter 11 bankruptcy since March, has agreed to sell its assets for an estimated $175 million to a group consisting primarily of current investors.
Milacron’s prospective buyer isa company formed by Avenue Capital Group, DDJ Capital Management LLC and certain other entities that together hold about 93 percent of Milacrons senior secured notes.
The definitive agreement announced yesterday is substantially the same as one announced March 10, the same day Milacron filed for Chapter 11 bankruptcy protection in Cincinnati. The acquisition is considered part of a comprehensive financial restructuring that aims to enable Milacron to continue as a going concern with substantially less debt. We went from an agreement in principle to a definitive agreement, which is much more serious and binding, Milacron spokesman Al Beaupre told Lube Report.
The $175 million figure represents a rough approximation of the sale price, said Milacrons Beaupre. Its still a moving target, he noted. Theyve agreed to take on our debt levels. This is just a more refined calculation of debt and other liabilities that theyre assuming, as well as money theyve already committed to putting in. This is a better, closer estimate, but it is still subject to change.
Avenue Capital Group and DDJ Capital Management LLC previously committed to an $80 million agreement under which they will provide $40 million in new funds to Milacron. Milacron also received a $55 million revolving credit facility from General Electrical Capital Corp.
This is a significant milestone in our restructuring process, said Dave Lawrence, Milacron president and chief executive officer. Since we began this reorganization process on March 10, we have experienced a great outpouring of support from across the industry. This … positions us well for sustained long-term success moving forward.
The definitive agreement is still subject to bankruptcy court approval and potential competing bids from other parties, as well as other conditions. Milacron has requested the bankruptcy court approve procedures to solicit submission of other qualified bids for Milacrons assets. Under the proposed procedures, if no other qualified bids are received by June 24, Milacron will request bankruptcy court approval of the sale on June 26.
Some parties have shown an interest, Beaupre said. Whether theyll make an official bid or not, well have to wait and see.
If at least one other qualified bid is received, an auction will be held July 17, and Milacrons assets will be sold to the qualified bidder submitting the highest and best offer, subject to bankruptcy court approval.
Cincinnati-based Milacrons Industrial Fluids segment supplies metalworking and industrial fluids. The companys larger business supplies plastics-processing technologies.
New York-based Avenue Capital Group describes itself as a pioneer in the distressed debt market, having invested in the public and private debt and equity securities of distressed companies across a variety of industries for more than 20 years. Waltham, Mass.-headquartered DDJ Capital Management is a registered investment advisor specializing in high yield securities and special situation investing.