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Reddy Ice To Seek Bankruptcy Protection For Restructuring - Update

4/12/2012 7:47 AM ET

Packaged ice maker Reddy Ice Holdings Inc. (RDDY.PK) Thursday said it intends to file a voluntary Plan of Reorganization under Chapter 11 of the U.S. Bankruptcy Code in the US Bankruptcy Court for the Northern District of Texas. The company also said it will seek to complete the restructuring process quickly and will request the court approval to emerge from bankruptcy in 45 days or less.

The company noted that its balance sheet restructuring will ensure strong financial footing for the future and allow operations to continue uninterrupted. The plan has the support of a majority of its lenders and major creditors, it added.

Gilbert Cassagne, chief executive officer of the company said, "We expect to emerge from this restructuring as a much stronger company that is well positioned for investment in growth and enhanced profitability."

According to the company, the restructuring plan is intended to recapitalize its business and also for a strategic acquisition of Arctic Glacier Income Fund and its subsidiaries.

It was on March 28 that Reddy Ice submitted a non-binding letter of intent to acquire Arctic Glacier's operations and assets. However, Reddy Ice noted that there can be no assurance that it will be able to consummate the acquisition.

Reddy Ice has secured commitments from Macquarie Bank Ltd., for $70 million in debtor-in-possession financing to fund its working capital needs while in Chapter 11. It has also secured commitments for $50 million in exit financing, which will be available upon emergence from Chapter 11.

Separately, the company reported a wider fourth-quarter loss, citing weaker economic environment, higher commodity costs and heavy debt levels. In the fourth quarter ended December 31, the company's net loss was $33.3 million or $1.46 per share, wider than $29.01 million or $1.26 per share in the previous year. Revenues declined to $54.89 million from $55.25 million in the same quarter last year.

RDDY.PK closed Wednesday's regular trading at $0.07.

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by RTT Staff Writer

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