Reddy Ice Planning For Bankruptcy Protection
DALLAS (AP) – Reddy Ice Holdings Inc., which makes packaged ice, said Thursday that it plans to file for Chapter 11 bankruptcy protection as it reported a bigger fourth quarter loss than a year ago.
The Dallas company said it wants to pursue a possible buyout of Canadian competitor Arctic Glacier, which is also operating under bankruptcy protection, and its subsidiaries.
Reddy Ice said that its business has been hurt by softer economic conditions, increased commodity costs and heavy debt levels. The company said its plan to file for bankruptcy and restructure has the support of its lenders and major creditors and that its operations will continue uninterrupted. It plans to pay unsecured trade vendors in full.
The company said that it is looking to finish the restructuring process quickly, and that it will ask for approval from the U.S. State Bankruptcy Court for the Northern District of Texas to exit from bankruptcy in 45 days or less.
Reddy Ice has secured commitments from Macquarie Bank Ltd. for $70 million in debtor-in-possession financing to fund its working capital needs and other things while in Chapter 11. The bank will also make $50 million in exit financing available to Reddy Ice once it exits bankruptcy protection.
Reddy Ice said that its restructuring plan is aimed at recapitalizing its business and giving it the chance to pursue a potential Arctic Glacier deal. Arctic Glacier Income Fund is a mutual fund trust that mostly looks to invest in the packaged ice manufacturing and distribution business in Canada and the U.S. through its ownership of Arctic Glacier Inc.
Reddy Ice said that Arctic Glacier has filed for creditor protection and is actively looking for sale and investment proposals from qualified bidders. Reddy Ice submitted a letter of intent to buy Arctic Glacier in late March.
Arctic Glacier said Thursday that it has receiving non-binding letters of intent from several interested parties, including Reddy Ice. The company it would not disclose the identities of any of the other parties. Arctic Glacier said that it will now give additional information to the parties it is potentially interested in a deal with and will then seek binding proposals from them.
For the fourth quarter, Reddy Ice reported a net loss of $33.3 million, or $1.46 per share versus a net loss of $29 million, or $1.26 per share, in the prior-year period.
Revenue for the three months ended Dec. 31 dipped 1 percent to $54.9 million from $55.3 million.
Operating expenses rose to $15.4 million from $12.6 million.
For the full year, Reddy lost $69.5 million, or $3.05 per share versus a loss of $40.5 million, or $1.80 per share, a year earlier. Annual revenue increased 4 percent to $328.5 million from $315.5 million.
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