CTI Foods, a custom foodservice manufacturer supplying top U.S. restaurant chains and branded food companies, reached an agreement with the majority of its lenders on a comprehensive balance sheet restructuring that will reduce the company’s debt by more than $400 million and provide significant financial flexibility to support continued investments by the company on behalf of its customers.
To implement the restructuring plan, CTI filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the District of Delaware along with a pre-packaged plan of reorganization with the support of its major stakeholders, including members of an ad hoc group of creditors holding CTI’s first lien and second lien term loan debt and equity holders.
According to the company’s Prim Clerk court filings, Barclays Bank and Wells Fargo will provide the company with $155 million in debtor-in-possession financing, which, subject to court approval, will be used to pay down existing debt and fund ongoing operations during the Chapter 11 cases. Barclays will serve as administrative agent on the financing.
CTI has sufficient liquidity to meet all of its obligations and will continue to operate its business as usual throughout the restructuring process. Its facilities and distribution centers are open and fulfilling orders, and CTI has been working with its key vendors and manufacturing partners to help ensure that products will continue to be delivered to customers on time. The long-standing vendor and manufacturing relationships essential to CTI’s success are expected to be unimpaired and paid in full during this process.
“With the support of our lenders and equity sponsors, we are taking this positive and strategic step forward that will allow us to improve our capital structure and reduce our debt on an expedited basis while continuing to provide customers the custom food solutions and services they expect from CTI,” said Mike Buccheri, CTI president and CEO. “With increased financial flexibility, we will be able to continue taking actions to best position CTI for long-term growth with both existing and new customers. It is a testament to the hard work of our employees and commitment to our customers’ success that many of our largest customers are not only standing by us through this process, but are also increasing their business. We are confident in the future of CTI, and believe this process will enhance our ability to drive value for all of our stakeholders.”
CTI has filed a number of customary motions with the Bankruptcy Court seeking authorization to support its operations during the financial restructuring process, including authority to continue to pay employee wages and provide health and other benefits, and to pay vendors and manufacturing partners in full for all goods and services provided. The company expects to receive Bankruptcy Court approval for these requests.