Foamex will use chapter 11 to implement its restructuring initiatives, which are designed to restore the Company to long-term financial health, while continuing to operate in the normal course of business. Foamex will seek to emerge expeditiously from chapter 11, and it anticipates that its day-to-day operations will continue as usual without interruption during the chapter 11 process.
Pursuant to the agreement in principle reached with certain members of the ad hoc committee, the Company would eliminate approximately $523 million of outstanding bond indebtedness which, in turn, would result in annual interest savings of $54 million. Specifically, holders of the Company's Senior Secured Notes would convert their debt into 100 percent of the equity of the reorganized Company, subject to dilution.
If unsecured creditors (to the extent their claims are not otherwise treated as critical supplier claims or paid through assumption of their contracts during the case) and the holders of Foamex's Senior Subordinated Notes vote to accept the reorganization plan, then they will receive, on a pro rata basis, warrants to purchase between 5 percent and 10 percent of the equity of the reorganized Company, depending on the ultimate allowed amount of general unsecured claims. Under the agreement in principle, there would be no recovery for holders of equity interests in the Company.
Foamex, headquartered in Linwood, PA, is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high-performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries.
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