Jason Industries to enter Chapter 11
Jason Industries has entered into a restructuring agreement with senior secured lenders and plans to enter into bankruptcy protection.
The agreement outlines a comprehensive restructuring plan that will ultimately deleverage the Jason’s balance sheet by $250 million and anticipates that the company’s vendors, suppliers, and customers will remain unaffected by the transaction.
"Upon implementation of certain of the transactions contemplated by the agreement, the company will have the financial foundation necessary to continue to operate in the ordinary course of business, provide its customers innovative seating solutions and industry-leading surface polishing and finishing products, and realize the full benefit of its cost-savings initiatives and strategic investments," according to a company statement.
The Milwaukee-based company's two brands include Osborn, a provider of metal preparation, polishing and finishing products, and Milsco, a manufacturer of seating solutions for numerous powersport and off-road applications.
To facilitate the changes, the company and its U.S. subsidiaries will pursue protection under Chapter 11 of the U.S. Bankruptcy Code. "We do not anticipate that the company’s operations outside of the U.S., including Europe and Mexico, will be affected by this process, although they will benefit long-term from the actions Jason is taking to recapitalize and strengthen its financial position. The company is anticipated to emerge as a private enterprise, and equity holders are not anticipated to receive a recovery."
The plan is supported by a majority of Jason’s first lien lenders, who have agreed to provide the company with the consensual use of cash collateral to enable Jason to operate its business in the ordinary course and to position Jason for future success. Importantly, the plan will provide for no impairment of general unsecured trade creditors.
“We have worked hard over the past three years to simplify our business, improve operational performance, enhance customer relationships and transform our portfolio. Unfortunately, we were not able to realize the full benefits of these actions, the newly secured platforms and cost-reduction initiatives prior to the impact of the COVID-19 global pandemic which weakened demand, disrupted our supply chain and forced us to temporarily close many of our plants,” said Brian Kobylinski, chief executive officer.
“We remain confident in the underlying strength and direction of our two businesses and are taking this step to directly address our balance sheet so that we are positioned to better serve our customers and realize Jason’s full potential,” Kobylinski continued. “We thank our lenders, employees, customers and suppliers for their support and look forward to being an even stronger partner moving forward.”
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