Daily News: April 12, 2012

Reddy Ice to File for Chapter 11; Secures DIP Financing


Reddy Ice Holdings, Inc. announced that it has filed its Annual Report on Form 10-K for the year ended December 31, 2011, in which the company disclosed that it intends to file a voluntary Plan of Reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Texas.

The company’s plan has the support of a majority of its lenders and major creditors. The balance sheet restructuring will ensure strong financial footing for the future and allow operations to continue uninterrupted. The company has secured commitments from Macquarie Bank for $70 million in debtor-in-possession financing to fund, among other things, the company’s working capital needs while in Chapter 11, and $50 million in exit financing to be available to the company upon emergence from Chapter 11.

As reported in the press release issued announcing the company’s fourth quarter and full year 2011 financial results, Reddy Ice’s financial position has been negatively affected by a weaker economic environment, higher commodity costs and heavy debt levels. In 2011, as EBITDA declined, the company began to explore alternatives to address its capital structure. In recent months these efforts have accelerated, with an ad hoc committee of the largest holders of the company’s existing 11.25% Senior Secured Notes due 2015 and 13.25% Senior Secured Notes due 2015 negotiating the terms of a restructuring of the company’s debt obligations. In addition, an agreement has been reached with the holders of the majority of the principal amount of the existing 10.50% Senior Discount Notes due 2012.

“We expect to emerge from this restructuring as a much stronger company that is well positioned for investment in growth and enhanced profitability,” said Gilbert M. Cassagne, CEO and president.

The restructuring plan is intended to recapitalize the company’s business and provide Reddy Ice with the opportunity to pursue a strategic acquisition of all or substantially all of the operations and assets of Arctic Glacier Income Fund and its subsidiaries. Arctic Glacier filed for creditor protection under the Companies’ Creditors Arrangement Act in Canada (CCAA). The CCAA proceedings have been recognized under Chapter 15 of the Bankruptcy Code in the United States. In its CCAA proceedings, Arctic Glacier obtained court approval for and is implementing a Sale and Investor Solicitation Process (SISP) seeking sale and investment proposals from qualified bidders for Arctic Glacier’s business and assets. On March 28, 2012, Reddy Ice submitted a non-binding letter of intent for the purchase of all or substantially all of Arctic Glacier’s operations and assets in accordance with the SISP. There can be no assurance that Reddy Ice will be able to consummate an acquisition of Arctic Glacier.

Support agreements for the Plan of Reorganization have been executed by the holders of the majority of the principal amount of the first lien notes and second lien notes as well as the discount notes. With the support of its lenders and creditors, the company will seek to complete the restructuring process quickly, efficiently and without disruption to its business, and will request court approval to emerge from bankruptcy in 45 days or less.

Reddy Ice’s legal advisor on the restructuring is DLA Piper LLP (US) and its financial advisors are Jefferies & Company, Inc. and FTI Consulting, Inc.

Reddy Ice Holdings, Inc. is a manufacturer and distributor of packaged ice in the United States.