TACOMA, Wash. - Northwest Hardwoods (NWH) has entered into a restructuring agreement with shareholders to help it recover $270 million in debt.
The agreement "is the product of extensive, collaborative, good faith negotiations among NWH and its key stakeholders. The financial restructuring is specifically designed to ensure that NWH's executive team can remain focused on go-forward operations, which will continue in the ordinary course without interruption," the company says in a press release.
"Specifically, this agreement accomplishes several key objectives: 1) reduce the company's debt by $270 million 2) significantly reduce debt service obligations, thereby increasing cash flow available for re-investment in the business and 3) most importantly, accomplishes this without impacting our employees, vendors or customers."
The restructuring will enable secured noteholders to convert $379 million of secured notes into $110 million of new exit term loans. The remainder of the reorganized equity will be reserved for the company's existing equity holders. NWH says it has received a commitment from Bank of America and Wells Fargo to refinance the existing ABL facility as part of the financial restructuring, ensuring the company will continue to have ready access to a working capital facility going forward.
"The Company will effectuate the transaction either through an out-of-court debt-for-equity exchange or through a prepackaged chapter 11 plan of reorganization. The terms of the restructuring under each approach are substantially the same, and both approaches will ensure that the Company's operations continue without interruption, with employees, suppliers, vendors, contract counterparties and other trade creditors continuing to be paid in full in the ordinary course. In a chapter 11 scenario, the Company would fund the process with its existing cash collateral.
"The Company expects to make a decision imminently on the specific path it will take to consummate the restructuring transaction."
NWH is among the largest United States manufacturers of North American hardwood lumber based on sawmill capacity, with a current estimated annual hardwood lumber capacity of approximately 320 million board feet. Its North America operations include 20 facilities that produce over 20 species of domestic hardwoods. The company serves more than 2,000 active customers across over 60 countries.
Last November, the company shut down one of its sawmills in Washington - blaming the trade war with China. The closure resulted in 70 layoffs.
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