Frequently Asked Questions
June 19, 2017
- What has A.M. Castle announced?
After achieving the support of an overwhelming majority of our secured creditors by aggregate number and dollar value, we have officially filed our Prepackaged Joint Chapter 11 Plan of Reorganization (the “Plan”) with the bankruptcy court in Delaware. The court will now review the Plan which, when approved, will enable us to complete our restructuring later this summer, hopefully within approximately 45 to 60 days after the filing of the bankruptcy case.
Today’s announcement follows our announcement on May 15 that we have decided to complete our financial restructuring through a prepackaged proceeding under the protection of bankruptcy court. We continue to proceed according to the financial restructuring plan we first outlined on April 7.
- Why did you make this decision?
In partnership with our secured stakeholders, Castle leadership has decided this option is best for the Company, our customers, our vendors, our employees, and our other stakeholders, because it minimizes disruption to our operations and expedites our financial transformation.
- Is A.M. Castle going out of business?
Not at all. The restructuring through the Plan builds on the essential work we’ve completed over the past two years to fortify our business, including right-sizing our branch network footprint, empowering our branches and people, and investing in our target markets.
- Isn’t bankruptcy a bad thing?
A prepackaged filing is not what you think of when you hear the word “bankruptcy.” Because it is done collaboratively with a company’s lenders, a prepackaged filing is generally completed quickly, often within 45 to 60 days after commencement of the bankruptcy case, and it is generally “business as usual” for its employees, customers, and vendors while the process is taking place. We fully expect this to be the case with Castle’s proceeding.
Additionally, we believe proceeding through the court via a prepackaged filing will prove more economically efficient, based on considerable cost and tax implications.
- What does this mean for our vendors, customers and employees?
As we communicated on May 15, we will continue to timely pay our vendors, deliver product to our customers without any change in quality and on time performance, and our employees will not be impacted. Because this restructuring is a purely strategic, long-term choice for us based on our recent positive operating results, ensuring this continuity of operations was a critical factor in determining our ultimate path.
- Do our lenders and stakeholders support this decision?
Yes – yesterday’s filing is a milestone and testifies to the support of our secured creditors. Their commitment demonstrates that they not only believe this path forward is the right one for our business, our customers, our vendors, and our employees, but that they believe in the future of Castle.
- How long will this process last?
Because it is done collaboratively with a company’s lenders, a prepackaged filing is generally completed quickly, often within 45 to 60 days after commencement of the bankruptcy case, and it is generally “business as usual” for its employees, customers, and vendors while the process is taking place. We are hopeful this will be the case with Castle’s proceeding.
- How will this make us more competitive?
Our financial restructuring through this prepackaged proceeding will reduce our debt burden to better fit our Company and create a platform for future growth. Through the transaction, we anticipate reducing our annual cash interest expense from $35 million to $10 million or less, positioning us to return to profitability in 2017.
- What is the scope as it pertains to A.M. Castle’s global presence?
No international operations are involved. The prepackaged bankruptcy proceeding is being conducted at the parent Company level and involves only certain U.S. subsidiaries.