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The Middlebury, Connecticut-based company said that its non-U.S. subsidiaries were not included in the filing and will not be subject to the requirements of the U.S. Bankruptcy Code.
Chemtura said that, in conjunction with the filing, it has received a commitment for up to $400 million in debtor-in-possession or DIP financing from Citibank, N.A., as administrative agent. The company also indicated that upon Court approval, the DIP financing, combined with cash from the company's ongoing operations, would be used to support the business during the Chapter 11 process.
Chemtura said it expects to continue to meet its obligations to its employees, customers and suppliers.
The company, in response to declining order volumes, said that it has taken a number of actions to reduce costs and improve liquidity such as realigning its businesses into strategic business units, suspending the payment of dividends, reducing inventories and reducing fixed costs by $50 million.
As previously announced on December 11, 2008, Chemtura is also in the process of adjusting plant production rates to meet reduced customer demand, aggressively managing working capital and establishing a new Executive Committee to oversee these initiatives. Additionally on February 25, 2009, the company had announced plans to further reduce inventories and to restrict capital expenditures to approximately $60 million during fiscal year 2009.
Chemtura indicated that it will file a series of motions with the court to ensure the continuation of normal operations, including a request for court approval to continue paying employee wages and salaries and providing employee benefits without interruption.
The company has also asked for authority to continue honoring all current customer policies and programs to ensure that the restructuring process will not negatively affect its customers. Chemtura expects that the court will approve its requests. During the Chapter 11 process, the company said, suppliers will be paid in full for all goods and services provided after the filing date as required by the Bankruptcy Code. Chemtura indicated having taken steps to ensure continued supply of goods and services to its customers.
Craig Rogerson, Chemtura's Chairman, President and CEO, said, "Like other companies in our industry and around the world, Chemtura's order volumes have declined markedly in recent months due to the impact of the global economic recession on our customers and the industries they serve. This has led to a significant decrease in our liquidity and cash flow. Despite our efforts to increase liquidity, including through the potential sale of a business, our reduced liquidity position, combined with the anticipated expiration of our bank waiver, led us to determine that a court-supervised restructuring was the best course of action."
Rogerson believes that through this process, the company will continue to focus on operating the business while continuing its efforts to strengthen balance sheet and gain financial flexibility in order to position Chemtura as a strong, viable, and profitable competitor in the specialty chemicals marketplace.
Chemtura stated it has a solid, diverse portfolio of businesses with strong operations around the world and lenders have shown tremendous confidence in its business by providing additional funding. The company's worldwide operations are expected to continue without interruption throughout the restructuring process.
Chemtura last traded at $0.12 on the NYSE.
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