A reorganization plan that will allow Metal Management Inc., Chicago, to emerge from bankruptcy has been approved by a Delaware bankruptcy court.
“We are pleased our company is moving forward with the solicitation of its plan of reorganization which will put us in a position to emerge from bankruptcy next month,” says MetalManagement chairman and CEO Albert Cozzi. The reorganization plan calls for the company to emerge from bankruptcy on or before June 30.
While the court has approved the plan, Metal Management must still solicit approval from the company’s creditors. The company has been operating as a debtor-in-possession subject to the jurisdiction of the U.S. Bankruptcy Court for the District of Delaware since filing for Chapter 11 relief on Nov. 20, 2000.
Metal Management has been financing its operations during that time with a $200 million lending agreement with BT Commercial Corp., New York, as the lead banker. As of April 30, just $18 million of those funds remained undrawn upon and available.
Operating results for the company’s most recently completed quarter, ending Dec. 31, “reflect the continued weakness in the steel and scrap metal industries,” says Cozzi.
The company also wrote off $280 million in “the carrying value of its goodwill and certain other intangible assets through a one-time non-cash charge to earnings” during thequarter, according to a news release.
The measure, combined with an operations review, can help the company return to profitability in 2002,says Cozzi. “We project our business to be profitable in fiscal 2002, whichstarted in April.”
The scrap industry’s other remaining publicly traded national consolidator, Philip Services Corp. (PSC),Chicago, has reported results that also reflect the difficult market conditions of the scrap industry.
The company, which emerged from bankruptcy in April of 2000, recorded a net loss of $9.2 million for the quarter ending March 31, 2001, and negative cash flow of $37.6 million.
“While PSC posted a first quarter net loss of $9.2 million, this included a negative impact of $9.5million as a result of three of our clients filing for bankruptcy protection,”says PSC president and CEO Anthony Fernandes.
The clients were steel mills that have ceased operations and/or sought bankruptcy protection from creditors.