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Anchor Glass funding

US Anchor Glass Container Corp. entered into a definitive agreement for new funding, to be effected through a pre-arranged Chapter 11 bankruptcy filing. In a press release on 15 March, Anchor Glass sa…

US Anchor Glass Container Corp. entered into a definitive agreement for new funding, to be effected through a pre-arranged Chapter 11 bankruptcy filing. In a press release on 15 March, Anchor Glass said Cerberus Capital Management, a New York firm that invests in ailing companies, will put US$ 100 million of new capital into Anchor, US$ 80 million of which will be in the form of equity capital. The glassmaker planned to file for bankruptcy by the end of March, and said the transaction would remove a significant amount of debt from its balance sheet and put the company back on solid financial footing. In connection with the proposed reorganization plan, Anchor won“t make the interest payment on its senior unsecured notes due 15 March or on its first mortgage notes due 1 April. All accured interest on the first mortgage notes will be paid when the plan is confirmed. The closing of the transaction is subject to confirmation of a plan of reorganization by a US bankruptcy court, the absence of material adverse changes in Anchor Glass“ business, settlement of a pending shareholder action, and other conditions. Under the plan, Anchor“s outstanding common stock will be cancelled and receive no distribution. Anchor will replace its existing senior bank facility with a new US$ 100 million credit facility. The company will repay its unsecured notes in cash at 100% of their principal amount, and its first mortgage notes will remain outstanding. The company will give Series A preferred shareholders a cash distribution of US$ 22.5 million and Series B preferred shareholders a cash distribution of US$ 3 million. The company“s Series A stock has a liquidation value of about US$ 82 million, while its Series B stock has a liquidation value of about US$ 106 million. All of Anchor“s other unaffiliated creditors will be paid in full in the ordinary course of business. Also on 15 March, Anchor entered a settlement agreement with Owens-Illinois, Inc. to settle license agreement litigation. Under terms of the settlement, Owens granted Anchor a limited license at the same royalty rates currently in effect through 2005. Anchor“s parent company, Consumers Packaging Inc., filed for creditor protection in May 2001.

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