WILLOWS, Calif. - CalPlant I LLC, the manufacturer of Eureka MDF – the world's first no-added-formaldehyde rice straw-based medium-density fiberboard – has entered into a plan support agreement with its senior bondholders, while pursuing a sale of the company.
The PSA provides for a comprehensive financial restructuring of the company's debt and the investment resources to complete the commissioning of CalPlant's manufacturing facility.
To facilitate the sale process and implement the PSA, CalPlant has voluntarily filed for Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware. The company said it will continue to operate in the normal course without disruption to its vendors, customers, or employees, and will have sufficient liquidity to meet its financial obligations throughout the restructuring process.
"The road to fully commissioning our plant has not been smooth," said Jeffrey Wagner, executive chairman. "We started commissioning our facility in early March 2020, then the pandemic hit. Suddenly, the usual challenges and delays associated with a startup were compounded with navigating a startup using first-of-its-kind technology during a global pandemic. Still, our team remained dedicated, resilient, and ready to pivot to continue our momentum towards completion. Today's actions are a testament to our team's relentless determination to continue pressing forward despite the numerous road bumps we have hit along the way."
The Northern California-based company launched Eureka MDF in November 2020. The agrifiber panel was on display in July at the AWFS Fair in Las Vegas, where Woodworking Network's Will Sampson interviewed Wagner about the product.
At full capacity, the company said it expects to process around 280,000 tons of otherwise non-recyclable rice straw from its surrounding regions per year to produce sustainable MDF products. The process will help eliminate the need for post-harvest re-flooding, thus reduce water usage and methane emissions to help drive local and global economic development and transformation, the company said.
"We are confident that leveraging the benefits of the Chapter 11 process will allow us to emerge with a stronger financial structure that enables us to continue leading the manufacturing industry with innovative sustainable MDF," Wagner said. "We are also encouraged and thankful to have the support of our bondholders and board of directors, which we believe represents their confidence in our plan of reorganization and our ongoing operations and we expect to move efficiently and successfully through this voluntary restructuring and sale process."
CalPlant has secured commitments for up to $30.1 million in debtor-in-possession financing from certain of the company's senior bondholders to support the business during the Chapter 11 process.
"We want to thank our CalPlant team for their continued dedication and commitment to what our company is working hard to achieve," Wagner said. "Their resilience and passion gives me great confidence in our ability to successfully exit this process even stronger, allowing us to continue our commitment to innovate products and solutions that create a positive impact on our environment."
He continued, "We also want to thank our supply base, including our rice farmers, balers and transportation partners, who play an invaluable role in putting our innovative products into the marketplace. We could not achieve success without them, and we greatly appreciate their ongoing support as we work to strengthen our capital structure for a mutually beneficial long-term partnership. Finally, we thank our customers for their continued patience and support as we continue to innovate and improve our product mix to provide the best eco-friendly MDF in the market."
CalPlant said it intends to conduct a court-supervised sale process and complete the sale through a Chapter 11 plan. Interested parties should contact Sheon Karol, firstname.lastname@example.org, (646) 391-6913, or Peter Richter, email@example.com, (630) 291-6027. The company is being advised by Morrison & Foerster LLP, as restructuring counsel, and Paladin, as financial advisor and investment banker.
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