Ceramic Industry

Almatis Files Pre-Packaged Chapter 11 Cases

April 30, 2010

The Almatis Group recently announced that certain subsidiaries filed voluntary petitions in the U.S. Bankruptcy Court for the Southern District of New York for reorganization under Chapter 11 of the U.S. Bankruptcy Code. In conjunction with the filings, the company also filed its prepackaged plan of reorganization, the terms of which have already been approved in a plan support agreement signed by over two-thirds of the holders of the group’s senior first lien debt.

The Chapter 11 filings were made by, among others, Almatis, Inc., Almatis BV and Almatis GmbH, and include the group’s operations in the U.S., Germany and The Netherlands. Chapter 11 allows Almatis Group to continue normal operations, led by the current management team, while restructuring its financial indebtedness. The financial debt of the Almatis Group will be settled as part of the plan. In addition, the company is requesting court authority to pay prepetition claims of its trade vendors, employees and various other non-financial creditors, and it will be able to pay all creditors in the normal course for goods and services provided after the filing.

Creditors entitled to vote have been voting on the plan since April 23 and have until May 7 to submit votes. To date, 100% of the votes that have been received, including 63% of the group’s senior lenders, are votes to accept the plan and, pursuant to the plan support agreement signed by almost 75% of the group’s senior lenders, the group expects to quickly receive more than enough votes to allow approval of the plan by the Bankruptcy Court. The plan is expected to be presented for confirmation to the Bankruptcy Court within the next 45 days.

Following the rapid deterioration of the trading environment in early 2009, the management of Almatis engaged in discussions with its lenders and shareholders about a financial restructuring of its balance sheet. As a result of those discussions, Almatis and lenders holding approximately 75% of the senior debt (including an Oaktree-managed fund, which holds 46% percent of the senior debt, as well as the members of the coordination committee of the senior lenders) executed the plan support agreement committing to support the financial restructuring now proposed in the plan.

The plan would enable Almatis to regain financial flexibility, support future growth and protect the company from future volatility in its marketplace. The company anticipates that the broad support for the plan among senior lenders will help to ensure that the Chapter 11 process is as short as possible.

The company is seeking approval from the court for a series of First Day Motions to ensure that it can continue to operate in the ordinary course during the Chapter 11 process. The company currently has approximately $85 million of available cash to meet operating expenses and anticipates approval, if necessary, of additional funding in the form of debtor-in-possession financing. Following confirmation of the plan, it is anticipated that the Oaktree-managed fund will own a majority of the equity in the restructured Almatis Group. Oaktree has made clear that its managed fund is fully committed to investing in the business to facilitate future growth.

“Implementing the proposed debt restructuring plan through the Chapter 11 filing provides Almatis with an orderly process that allows us to address the necessary balance sheet restructuring while continuing to operate our business in the best interests of all stakeholders, including employees, customers, lenders and other business partners,” said Remco de Jong, CEO of Almatis. “This process has been made possible now that our largest lender, an Oaktree-managed fund, has expressed its full support for the proposal and reaffirmed its commitment to the prospects and opportunities for the business going forward. We are well prepared and will do everything in our power to complete this process as quickly as possible. Our business is fundamentally sound and I am convinced that once we have fixed our balance sheet, we will emerge from this process as a stronger company.”

Additional details are available at www.almatis.com.