FTI Consulting will serve as financial advisor to Pace Industries, which reached an agreement with its senior secured lenders on the terms of a financial restructuring plan and initiated a voluntary prepackaged Chapter 11 process in the U.S. Bankruptcy Court for the District of Delaware.
The restructuring plan will deleverage Pace’s balance sheet and has support from 100% of the holders of Pace’s senior secured notes as well as its revolving credit facility lenders. Upon implementation, the agreement will give Pace the financial foundation necessary to resume normal-course operations following the COVID-19 outbreak, realize the full benefit of its cost-savings initiatives and strategic investments, and continue to serve customers.
In addition, Pace’s senior secured noteholders, along with its existing revolving credit lenders, will provide commitments for up to $175 million in debtor-in-possession financing to help ensure that the company can meet its commitments during the process. Under the terms of the proposed prepackaged plan, Pace will convert its existing senior secured notes into 100% of the equity in the reorganized company. As a result of its noteholder and lender support, Pace expects to complete the process in Q2/20.
Willkie Farr & Gallagher and Young Conaway Stargatt & Taylor will represent Pace Industries.
Schulte Roth & Zabel will represent the senior secured noteholders and McGuireWoods and Conway MacKenzie will represent the revolving credit facility lenders.
Pace’s operations in Mexico are unaffected by the filings.
“Over the past two years, we launched significant new programs for the automotive industry to further penetrate this important growth market and implemented a series of cost-saving initiatives to position our business for long-term success,” Scott Bull, CEO of Pace Industries, said. “Unfortunately, we were not able to realize the full benefits of these new programs and initiatives before the coronavirus weakened demand, disrupted our supply chain and forced us to temporarily close many of our plants in the United States.
“We are confident in our go-forward direction and the underlying strength of our business and are taking these actions now to ensure we are positioned to realize our full potential when we — and our customers — are able to resume normal-course operations,” Bull said. “We thank our lenders, employees, customers and suppliers for their support and look forward to being an even stronger partner as a result of the actions we’re taking to enhance our financial position.”
Pace filed customary motions that will allow it to maintain employee wage and benefit programs, honor customer warranties as usual and continue to pay suppliers. Although the motions remain subject to court approval, the company expects that all trade creditors, employees, sales agents and unsecured creditors will be paid in full and on time in the normal course of business.
Pace Industries is an aluminum, zinc and magnesium die casting company.
