BY ROBERT P. MADER
OF CONTRACTOR'S STAFF
WEST WARWICK, R.I. — Hydronics manufacturer Amtrol has filed for Chapter 11 bankruptcy protection because it cannot repay nearly $180 million in debt that came due December 2006, the company said. The firm is reportedly seeking to convert its debt into $97 million in Amtrol stock.
"Amtrol found itself in position of just having what we call in the financial world a ‘difficult balance sheet' to deal with," Joseph L. DePaula, executive vice president and chief financial officer, told CONTRACTOR. "The business has been and continues to be a strong business, a profitable business, but it cannot pay off all the debt that has accumulated over the years."
A syndicate of investors has purchased the majority of Amtrol's bonds with the idea of converting the debt into equity, DePaula said, and the investors will become Amtrol's new owners. The company has obtained $115 million in debtor-in-possession financing from Barclays Bank that it can use to pay all its current obligations.
"There will be no interruption in delivery of product, and we continue to manufacture as I sit here today," DePaula said.
Amtrol makes hydronic expansion tanks, indirect water heaters, well tanks, boiler fill valves and other hydronic accessories. It also makes products to remove arsenic, hydrogen sulfide, iron and manganese from well water, as well as a line of refrigerant cylinders. Products are marketed under the Well-X-Trol, Extrol, Therm-X-Trol and BoilerMate brand names.
Amtrol announced that its manufacturing and distribution facilities are open on normal schedules, and the company will continue to fulfill customer orders and provide uninterrupted customer service. Amtrol said it would honor all commitments to its customers, including warranties and the payment of sales rebates.
Amtrol said it would continue paying suppliers for all goods and services they provide after the filing. The restructuring anticipates that all suppliers will be paid in full for goods and services provided before the filing.
Amtrol said it would pay all wages and benefits for active employees as usual and without interruption. The company will pay its independent sales representatives their usual commissions on a timely basis.
Amtrol has not made a quarterly filing with the Securities & Exchange Commission since last April, when it said it was in trouble.
"The company has a significant working capital deficiency that raises substantial doubt about its ability to continue as a going concern," Amtrol reported in April 2006 in its quarterly 10-K filing. "The working capital deficit is a direct result of all of the company's North American debt maturing in December 2006."
According to the SEC filing, Amtrol said it had retained an investment banker to explore the possible sale of all or a portion of the business. In addition, the company retained the services of a financial adviser to establish a strategy to recapitalize or restructure of the debt of the business should the sale process be unsuccessful.
"However, there can be no assurance that these options will be successful and, if unsuccessful, the company may be forced to default on its debt obligations," the filing statement continued. "If an event of default occurs, the creditors can pursue any available remedy to collect the payment of principal of or interest on the debt, thereby resulting in the company's inability to continue as a going concern."
Amtrol was founded in 1946. In 1954, the company introduced Extrol, the first hydronic pre-pressurized diaphragm expansion tank. Subsidiaries include Watersoft, a manufacturer of specialized residential and commercial water treatment equipment based in Ohio, and Amtrol Alfa, in Portugal, specializing in heating and refrigerant gas cylinders. Amtrol employs 1,700 people worldwide.
The company is headquartered in West Warwick, with manufacturing facilities in Rhode Island, Maryland and Kentucky and in Portugal.