Foamex files for bankruptcy protection
North America’s leading flexible foam maker Foamex International Inc. (Linwood/Pennsylvania, USA) has filed for protection under chapter 11 of the US Bankruptcy Code. The filing on 19 Sept in the Bankruptcy Court for the District of Delaware follows years of uncertainty at Foamex caused by a large inherited debt burden and, more recently, rising raw materials costs. Foamex said it had reached an “agreement in principle” with certain major creditors to stabilise its financial position as part of a proposed reorganization of the company. The plan, it said, includes a debt-for-equity scheme that would eliminate around $523 million of outstanding bond debt and provide annual interest savings of $54 million. Foamex is also seeking Bankruptcy Court approval to arrange a $240-million revolving credit facility to help it meet day-to-day operating costs and pay certain critical suppliers and employees. The proposed financing combined with normal sales income should enable Foamex to pay for the goods and services its needs to continue operating, the company said. “The chapter 11 process will allow Foamex to gain immediate liquidity and continue operating without interruption, while giving us the opportunity we need to restructure our balance sheet, strengthen our business performance and create long-term value,” said Tom Chorman, president and CEO of Foamex. “We expect to emerge from this process as quickly as possible with a more appropriate capital structure that will allow us to be a healthier, more competitive company. We greatly appreciate the ongoing support of our long-term lenders, senior debt holders, customers, suppliers and employees,” added Chorman.