FiberMark, Inc. announced the filing of voluntary petitions for the reorganization of the company and its U.S. operations under chapter 11 of the U.S. Bankruptcy Code. The filing, in U.S. Bankruptcy Court for the District of Vermont, does not include FiberMark's European subsidiaries in Germany and the U.K., which are legally separate, independently funded entities that continue to be financially and operationally strong.
In connection with its filing, FiberMark has obtained a commitment for $30 million of debtor-in-possession financing from GE Commercial Finance. Upon court approval, this new credit facility will be available as needed to supplement FiberMark's existing cash flow from operations and enhance the Company's ability to meet its obligations to its employees, customers, vendors and other business partners during the reorganization process.
Alex Kwader, chairman and chief executive officer of FiberMark, said: "This action reflects our determination to complete the process of properly positioning FiberMark strategically, operationally and financially. Since the company's formation in 1989, we have built a position as a leading independent value-added producer of specialty fiber-based materials. Expanding our capabilities in North America through four acquisitions over the past ten years, we subsequently consolidated our U.S. manufacturing sites to achieve an enhanced mix of operations, improved our organizational efficiency, developed and installed state-of-the-art equipment, implemented aggressive cost reductions and strengthened our management team.
"Since 2001, however, we have felt the effects of a weak economy and of a prolonged recession in most of our key markets, even as our operations in Germany and the U.K. have continued to perform well. These adverse conditions have been further exacerbated over the past two years by the burden of acquisition-related debt and a number of operational issues, including production inefficiencies related to the consolidation of manufacturing facilities, structural sales declines due to business divestitures, instances of product obsolescence and downgrading by customers to lower-valued materials.