Vertellus Files for Chapter 11 Bankruptcy
US fine and specialty chemicals manufacturer Vertellus Specialties has filed for Chapter 11 bankruptcy protection in the US state of Delaware as its loan lenders agreed to purchase most of the assets for $453.8 million. The offer serves as a “stalking horse” bid, providing a floor for a sale of the company under US bankruptcy law.
The filing follows downgrades from ratings agencies and a missed payment. In February this year, Moody’s cut Vertellus’ credit rating citing a significant deterioration in earnings from weak agricultural markets as well as a growing risk of environmental liabilities and increased competition from China.
A court-supervised sale is the best and most efficient way to create a sustainable financial structure for the firm, said president and CEO Richard Preziotti. He added that the Chapter 11 process will allow Vertellus to significantly reduce its debt, realize the full benefits of operational improvements made to date and position it for future growth.
Included in the bankruptcy are Vertellus Specialties, its parent Vertellus Specialties Holding and its US-based subsidiaries. International entities in Belgium, the UK, India and China are excluded from the bankruptcy, but will be part of the sale.
The Chapter 11 case does not include Vertellus Performance Chemicals, its sodium borohydride business. Based in Elma, Washington, the company has separate financing agreements in place. It is also excluded from the sale and will remain under the ownership of US private equity firm Wind Point Partners, which acquired Vertellus in December 2007 in partnership with Preziotti.
Vertellus has secured $110 million from its existing lenders to maintain operations while it undergoes bankruptcy proceedings and a sale. The company expects to complete the sale within the next three to four months.