Pace Industries, an aluminum, zinc and magnesium die casting company based in Fayetteville, announced Monday (April 13) it has filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code.
“Upon implementation, this agreement will give the company 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 recently executed, and continue to serve its customers as a leading fully-integrated provider of die cast aluminum, magnesium and zinc components,” the company said in a statement.
The agreement has support from 100% of the holders of the company’s senior secured notes, according to a news release, as well as its revolving credit facility lenders. Pace Industries said its operations in Mexico are not affected by the bankruptcy filing.
Pace Industries’ senior secured noteholders, along with its existing revolving credit lenders, will provide commitments for up to $175 million in debtor-in-possession financing, according to the release. That will ensure that the company can meet its commitments during the bankruptcy process. Under the terms of the proposed prepackaged plan, the company 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 Industries expects to complete the process in the second quarter of 2020.
“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,” CEO Scott Bull said in a statement. “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. 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.”
The company has filed motions that will allow it to maintain employee wage and benefit programs, honor customer warranties and continue to pay suppliers, according to the release. Although the motions remain subject to court approval, the company expects all trade creditors, employees, sales agents and unsecured creditors will be paid in full and on time in the normal course of business.