WKI Holding files for Chapter 11; receives commitment for $75 million DIP

By Sara Rosenberg

New York, May 31 - WKI Holding Co. made a prepackaged Chapter 11 filing to implement a financial restructuring that is intended to increase financial flexibility by cutting its funded debt by approximately $440 million to $373 million from $812 million.

The filing includes WKI, which operates mainly through World Kitchen Inc., and all of its direct and indirect, wholly-owned U.S. subsidiaries.

Funding for operations during the Chapter 11 process will come from existing cash, cash flow from operations and up to $75 million in a new debtor-in-possession financing facility committed by a bank group led by JPMorgan Chase Bank.

Under the restructuring, the bank group will convert $189 million of debt into equity, an affiliated lender of the company's $25 million credit facility will convert the loan into equity and $200 million of senior subordinated bondholders' claims will be converted into equity, WKI said.

The terms of the restructuring have been agreed by a steering committee for WKI's bank group and by affiliated parties. JPMorgan Chase Bank is a member of the bank steering committee and is administrative agent for the company's existing credit facility. The affiliated parties consists of the company's primary shareholder and largest bondholder, with 40% of the company's outstanding senior subordinated bonds. Due to the support of parties holding more than 80% of funded debt, the company expects to emerge from bankruptcy "on an expedited timeline," the release said.

"This company simply has too much debt to fully execute its business strategy. The development of our proposed financial restructuring is an important accomplishment and its implementation will give us financial flexibility to operate our business more efficiently. Equally important, the support we have received from our stakeholders in developing this plan illustrates their confidence in World Kitchen's future prospects," said Steven Lamb, president and chief executive officer, in a news release.

"While we regret the impact that our chapter 11 filing might have on some of our constituencies, it is the right course of action to establish a capital structure that will enable us to realize our full potential," Lamb continued.

Elmira, N.Y.-based WKI produces kitchenware and tableware under such brands as Corelle, CorningWare, Pyrex, Revere, Visions, Revere, EKCO, Baker's Secret, Chicago Cutlery, Regent Sheffield, OXO and Grilla Gear.

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