Pemco World Air Services Enters Chapter 11, Secures DIP Financing
Pemco World Air Services, a provider in MRO and conversion services, announced that it has filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. The company expects to quickly restructure and emerge as a stronger and more viable business.
The process will allow Pemco to improve its cost and capital structure, essentially positioning the company more competitively in the marketplace and allowing it to continue to provide outstanding service to its customers. During the restructuring, the company will continue to operate in the normal course of business, without interruption.
To that end, Pemco has secured a debtor-in-possession (DIP) financing from Avion Services Holdings, LLC, an affiliate of Sun Capital Partners. The DIP financing will provide the company with sufficient working capital to continue to meet its ongoing obligations and payments to employees and suppliers throughout the process.
Pemco anticipates that its operations will emerge from bankruptcy within the next 90 days. To meet this accelerated timeline, Pemco will utilize Section 363 of the U.S. Bankruptcy Code and filed with the court a purchase agreement entered into with one of its current lenders, Avion Services Holdings, LLC. The company is also commencing a marketing process to determine if there are other interested parties.
“Pemco’s operations have been impacted in recent years by a number of conditions, including a slowdown in the number and magnitude of MROs, a decrease in airplane conversions in Dothan, and the overall impact of the economic downturn,” said William Meehan, CEO of Pemco. “While we have taken steps to address the challenges, we believe this process is the most effective and efficient way to restructure our business. We are pleased with the support we have received from Avion Services and look forward to expeditiously moving through the restructuring process and quickly emerging with a revised capital structure that will allow us to remain the industry leader.”
The company also announced that it is reviewing its options at its Dothan, AL, facility and anticipates a decision will be made shortly regarding the potential for a prompt closure of the facility.