Mark IV files bankruptcy to improve balance sheet; lenders agree plan

By Caroline Salls

Pittsburgh, April 30 - Mark IV Industries, Inc. filed for Chapter 11 bankruptcy Thursday in the U.S. Bankruptcy Court for the Southern District of New York to reduce debt, improve its capital structure and further strengthen its competitive position, according to a company news release.

None of Mark IV's operations outside of the United States were included in the filing, and its Intelligent Vehicle Highway Systems operations were also excluded from the filing.

The company said it has already reached an agreement in principle with a steering committee of its senior lenders on a plan of reorganization and new capital structure for the reorganized company, which should allow the company to complete its reorganization quickly.

"Ours is a balance sheet problem, not an operational one," Mark IV Power Transmission chief executive officer Jim Orchard said in the release. "The actions we have announced today bring us closer to resolving that issue.

"The Chapter 11 filing and the progress we have already made with our senior lenders sets the foundation for achieving a rational capital structure to support the company's business going forward."

$90 million DIP commitment

In connection with the bankruptcy filing, the company has secured a commitment for up to $90 million in debtor-in-possession financing from a group of lenders led by J.P. Morgan.

The financing will be used to fund post-bankruptcy operating expenses and to meet the company's obligations to employees, customers, and suppliers.

The terms of the restructuring agreement and DIP financing had not yet been filed with the court late Thursday evening.

Mark IV said a large portion of these funds will also be used outside the United States to help ensure the continued adequacy of working capital throughout its global business units.

"Although even during these challenging economic times most of our businesses continue to generate double-digit EBITDA margins, the fact remains that our debt load must be brought in line with our current cash flows," Orchard said in the release.

The company said it has taken a number of steps recently to lower its cost structure, including a 20% reduction of salaried work force in its North American operations, closure of a North American factory and consolidation of redundant activities and offices.

According to court documents, Mark VI has $100 million to $500 million in debt and $500 million to $1 billion in debt.

The company's unsecured creditors with claims of $1 million or more are Carlisle Power Transmission Products Inc. of Springfield, Mo., with a $1.24 million trade claim and Shanghai Sansi Technology Co. of Shanghai, China, with a $1.2 million trade claim.

Mark IV is an Amherst, N.Y., manufacturer of engineered systems and components for the automotive, industrial and transportations markets. Its Chapter 11 case number is 09-12795.

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